I respectfully dissent from the Commission’s decision to retain the national television ownership and cable/television cross-ownership rules and from its refusal to even consider repeal of the newspaper/broadcast cross-ownership rule.¹ For the reasons that follow, I believe that the Commission’s rationale for refusing to repeal or modify these rules is fatally flawed. In my view, these rules simply should be repealed.²

1. The Commission’s Rationale For Refusing To Repeal Or Modify The Regulations Is Fatally Flawed

The Commission claims that it should not take any action on the national television ownership and crossownership rules chiefly because it needs to assess the effects of last year’s relaxation of local broadcast ownership rules. See Biennial Review Report ("Report") at para. 4, 25-26, 93, 109. This rationale for refusing to deregulate suffers from fatal flaws. As discussed below, this reasoning fails to respond to the actual question posed by the statute; is weak as a factual and logical matter; and constitutes, at least with respect to nationally applicable rules, an unexplained departure from past policy assessments of such rules.

The main problem with the Commission’s argument – that it needs to study the effects of last August’s limited local deregulation -- is that it is utterly nonresponsive to the statute. Under section 202(h), the Commission’s job is to explain why changes in competition have not rendered broadcast ownership rules superfluous in promoting the public interest. See 47 U.S.C. section 202(h) (Commission "shall determine whether any of [its broadcast ownership] rules are necessary in the public interest as the result of competition"). This Report does not fulfill that obligation.

As I explained in the Notice of Inquiry, a helpful analytical approach for answering the statutory question posed by section 202(h) would be to consider:

Separate Statement of Commissioner Harold W. Furchtgott-Roth, Notice of Inquiry, 1998 Biennial Regulatory Review, 13 FCC Rcd 11,276 (1998).

In its analysis of whether to repeal or modify the national cap or crossownership rules, however, the Commission never analyzes the continued utility of the rules "as the result of competition," as the statute requires. Instead of considering the effect of competition on the need for the rules, the Commission myopically discusses the effect of regulatory action on the rules – namely, the impact of its 1999 local broadcast rulemaking. See Report at paras. 25-29 (concluding that national television ownership rule should be retained because effects of local changes should be observed and last increase in cap resulted in acquisitions that need to be studied as well); paras. 95-102 (concluding that cable/television crossownership rule should be retained because it furthers policies of competition and diversity and prevents discrimination against competitors).

This discussion fails to broach -- much less answer in a persuasive way -- the question asked by the statute. Section 202(h) says nothing about basing decisions regarding deregulation on past regulatory action. Rather, it requires us to consider changes in the market landscape in deciding whether to keep the rules. That the Commission simply has not done. And the analysis that it does provide gets the statute exactly backwards; the question is not "what are the effects of the rule on competition?", see, e.g., id. at para. 94, but "what are the effects of competition on the continued need for the rule?." This latter question is never asked or answered in the discussion of the decision to retain any of these rules.

Finally, and for the record, I feel compelled to note that the Report that the Commission actually voted to adopt on May 26, 2000, did not include any findings of facts on the state of competition in the services relevant to the national cap. Cf. Report at para. 28 & nn. 80-82. Thus, not only did the Commission fail to ask and answer the statutory question, it did not discuss competition at all. The Report likewise did not include the (x-ray thin) "public interest" analysis of the lifting of the cap. See id. at para. 30. It gave only its "wait and see" reason in connection with local deregulation and Congress’ 1996 increase in the cap. These are not just ministerial or non-substantive changes. Rather, this material provides an entirely new rationale and makes new findings of fact to support the decision to keep the cap.

This language was added more than two weeks after the Commission formally voted to adopt the Report and publicly announced its action.³ Not coincidentally, these revisions immediately followed one prominent broadcasting company’s public announcement of its intent to appeal the national cap decision.⁴ Putting aside the related issue whether a majority of the Commission can agree to make these sorts of changes before an adopted document is officially released, I question here which Report it is that the Commission actually voted to adopt.

For we cast only one set of votes, and it was on the first Report, which we then publicly announced as adopted. There was no withdrawal of those votes or a revote on the materially revised version. If the first document represents the officially adopted Report of the Commission, then the original analysis, absent the findings of facts on competition and explication of the public interest, controls. And if the second, materially retooled document is the official one, then the Report issued today violates the statutory deadline⁵ and thus may well be invalid for that procedural reason alone.⁶ In the end, however, the Commission cannot have it both ways: it must either claim the benefit (such as it is) of the new rationale and findings of fact, or it must confess error in transgressing the statutory deadline.

For the foregoing reasons, I do not think the Commission adequately justifies the decision to retain the rules in their present form. See Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983) (agency acts in arbitrary and capricious fashion if it "has relied in factors which Congress has not intended it to consider [or] entirely failed to consider an important aspect of the problem"). The to-ing and fro-ing on why to keep the cap and post-adoption backfilling of the Report well illustrate the capricious, results-oriented nature of the Commission’s decisionmaking.

Apart from failing to address the inquiry required by the statute, the Commission’s "wait and see" reasoning suffers from several factual and logical infirmities.

First, although the Commission and most commentators generally anticipated a flood of applications under the newly revised local broadcast rules, the fact is that the Mass Media Bureau has received very few such applications. Specifically, since the rules went into effect, broadcast interests have filed a total of 101 television station assignment or transfer applications. Of those 100 applications, however, only 42 were duopoly requests and 19 of those requests involved the purchase of television stations already programmed by the buyer pursuant to local marketing or time brokerage agreements. Thus, the Commission has received just 23 applications to create new television duopolies – even assuming that every application is granted, this is hardly the sort of seismic change in the broadcast landscape that requires extensive study. As for radio and television cross-ownership requests, broadcasters have filed about 30 of those; this is likewise not a surge towards consolidation.⁷ Simply put, the reality is that there is very little of an "effect" to be assessed here, which deprives the Commission’s rationale of much persuasive force.

Second, even if the amount of filings under the newly loosened rules had been numerous, I fail to see why we could not have satisfactorily reviewed their impact in this Report. Far from being unavailable, the information necessary to evaluate consolidation ensuing from the new rules is uniquely in the Commission’s possession. We need only have pulled the filings described above in order to find facts about that consolidation. Surely we have had enough time to perform such an assessment: this Report is being issued well into the second year since the release of the Notice of Inquiry.

Third, if one accepts the assertion that the Commission lacks sufficient information to assess the effect of the new local rules, that rationale applies with equal force to the other ownership rules included in the Report. Today the Commission decides to change some of those other rules, for example, the dual network rule or the experimental license rule. But the Commission never explains why it lacks sufficient information on the effect of the 1999 changes in order to modify the national cap and cross-ownership rules but why it has enough such information to go forward with these others. This flat inconsistency suggests, to me at least, that the argument from "lack of information" is pretextual.

Finally, even assuming that I am wrong about all of the foregoing, there remains the question of the relevance of changes in local rules to national rules such as the broadcast cap. As the Commission itself has often recognized, local information is not pertinent to a discussion of nationally applicable rules. See, e.g., Amendment of Multiple Ownership Rules, 100 FCC 2d 17, 37 (1984) (noting irrelevance of national rules to diversity in local markets). If this is so, as Commission precedent has it, then I fail to see how local deregulation rationally could bear on our decisions with respect to national deregulation.

The Commission’s reason for maintaining the subject rules boils down to this: it feels that it has deregulated enough for the time being and simply does not want to go any further. This rationale is wholly unsatisfying to those regulated entities whose rulemaking happened to come second in time. They possess a statutory right to regulatory review and, if warranted by the effect of competition on regulation, deregulatory action. To say that other, tangentially-related deregulation occurred first, and therefore they can not have any regulatory relief, is a sorely inadequate response.

The Commission’s refusal to modify the national broadcast ownership cap in even in the smallest way contradicts its prior conclusions about the utility of national ownership limits. Specifically, in an Order repealing the former "Seven Stations rule," the Commission found that "as a policy matter, the total elimination of presumptive national ownership rule[s] would benefit the public interest." Amendment of the Commission’s Rules Relating to Multiple Ownership, 100 FCC 2d 74 at para. 50 (1984).

The Commission based this conclusion on the fact that, while competition and diversity are traditional broadcast policy goals, national ownership rules are "irrelevant" to viewpoint diversity and "unnecessary" to prevent competitive harm. Amendment of the Commission’s Rules Relating to Multiple Ownership, 100 FCC 2d 17 at paras. 63, 73. The "more correct focus for addressing viewpoint diversity and economic competition concerns is the number and variety of information and advertising in local markets." Id. at para. 10. In addition, multiple ownership of broadcast stations can "foster news gathering, editorializing and public affairs programming, and the development of independent programming by regional or national ad hoc networks." Id. at para. 82.

Moreover, in the Order deregulating local broadcast markets, the Commission expressly recognized the dramatic shifts in the competitive position of the industry as a general matter. See Review of the Commission’s Regulations Governing Television Broadcasting, Television Satellite Stations Review of Policy and Rules, 14 FCC Rcd 12,903 at para. 1 (1999) ("The new rules we adopt today reflect a recognition of the growth in the number of and variety of media outlets in local markets, as well as the significant efficiencies and public service benefits that can be obtained from joint ownership."). But here the Commission refuses even to engage in that analysis. Having found enough evidence of increased competition and market changes in the industry to warrant deregulation of local broadcast markets, the Commission will be hard pressed to explain why those findings do not carry over to the national context. This differing approach is especially hard to justify when, as the Commission has found, diversity and competition concerns are foremost in the local, not the national, context.

These flat inconsistencies with respect to the Commission’s assessment of nationally applicable broadcast ownership rules and the competitive nature of the broadcast industry leave us open to legitimate charges of arbitrary decisionmaking. See generally Sangre de Cristo Communications, Inc., v. FCC, 139 F.3d 953, 958 (D.C.Cir. 1998) (agency cannot inexplicably act inconsistently with prior decisions). Although the Commission has a duty to explain this disparate treatment, cf. Radio and Television News Directors Association v. FCC, 184 F.3d 872, 886 (1999) (where there is "agency precedent for declining to use the FCC’s power to redress a[n] [alleged] market failure in provision of [broadcast services]. . . the agency must offer clear, cogent explanations for treating the two cases differently"), it has not even attempted to do so.

There is a final reason to be wary of these rules: they impose a direct and substantial burden on speech and thus run the risk of violating the First Amendment.

To be sure, the Supreme Court in the past has affirmed the constitutionality of some of these rules. See, e.g, FCC v. National Citizens Committee for Broadcasting, 436 U.S. 775 (1978)(rejecting First Amendment challenge to newspaper/broadcast crossownership rule). At the same time, however, the Court has observed that balancing First Amendment interests in the broadcast context is not a static enterprise: "[B]ecause the [] industry is dynamic in terms of technological change; solutions adequate a decade ago are not necessarily so now, and those acceptable today may well be outmoded 10 years hence." Columbia Broad. Sys., Inc. v. Democratic National Comm’n, 412 U.S. 94, 102 (1972).

I believe that the ownership limits now have become constitutionally "outmoded," as the Court itself suggested might happen. If rules restricting ownership of broadcast stations were ever a justifiable infringement of speech, it was because of the relative dominance of that medium in the communications industry. See, e.g., FCC v. Pottsville Broadcasting Co., 309 U.S. 134, 137 (1940) (ownership rules justified by "a widespread fear that in the absence of governmental control the public interest might be subordinated to monopolistic domination"); see also Red Lion Broadcasting Co. v. FCC, 395 U.S. 367 (1969) (justifying "less rigorous standard of First Amendment scrutiny" on basis of "spectrum scarcity").

The facts underlying this justification are simply no longer true, however, as the Commission has repeatedly recognized. See 1985 Fairness Report, 102 FCC 2d 145, 198-221 (1985); Syracuse Peace Council, 2 FCC Rcd 5043, 5053 (1985). Today, broadcasters face such a fierce array of competitors – from cable operators, cable overbuilders, cable networks, internet service providers, wireless video systems, and direct satellite systems – that their previously supposed ability to influence the content and control the flow of information is greatly diffused. See Joint Statement of Commissioners Powell and Furchtgott-Roth, In re Personal Attack and Political Editorial Rules, FCC Gen. Docket No. 83-484, at 5 and n. 15 (citing statistics on boom in communications outlets). Moreover, the number of broadcasters alone has grown exponentially since the time the rule was adopted.⁸ In sum, over time, as alternative means of communication and even other broadcasters have proliferated in the marketplace, the burdens imposed on broadcasters by these restrictions have increased dramatically relative to the benefits that they produce.

For these reasons, I think that the lenient standard of review for regulation of broadcast speech formally announced in Red Lion rests today on a shaky empirical foundation. As I noted in the Notice of Inquiry, such an assertion is not only an appropriate one for this Commission to make, but in fact has been affirmatively invited by the Supreme Court:

Separate Statement of Commissioner Harold W. Furchtgott-Roth, Notice of Inquiry, 1998 Biennial Regulatory Review, 13 FCC Rcd 11,276 (1998) (footnote omitted); see also RTNDA v. FCC, 184 F.3d at 887 n. 19 (noting that Supreme Court in Red Lion "recognized that changed circumstances might be salient in future cases" and that "since Red Lion" the Court has "increasingly focused on the editorial discretion of broadcasters indicating that while the Red Lion framework may still be good law, its application . . . may require updating").

While I personally have come to the conclusion that technology has advanced to the point where revision of broadcast regulation is now warranted, if not overdue, I note that the Commission itself has already come to this conclusion. Specifically, the Commission has found that "[t]he scarcity rationale developed in the Red Lion decision and successive cases no longer justifies a different standard of First Amendment review for the electronic press." Syracuse Peace Council, 2 FCC Rcd. 5043 at para. 65. In my view, the administrative basis for challenging this constitutional framework has been well laid, and the issue is ripe for review.

In this first biennial review of broadcast ownership regulations, many of which are over fifty years old, this Commission can ultimately find only one, obscure rule to be repealed. To my mind, however, it is simply untenable to assert, in the face of the record before us on competitive change since the adoption of ownership regulations, that retention of the vast majority is warranted. This Report, which regrettably turns section 202(h) on its head by asking how the rules promote diversity and competition instead of asking how the forces of competition itself produce those results and thus obviate the need for the rules, disserves the concept of regulatory reform embodied in section 202(h). This is not an effort at meaningful reform, but agency retrenchment in the face of a deregulatory provision. I therefore concur only in part and dissent in part.