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In The Matter of Amendment of Section 73.658(g)--The Commission's Dual Network Rule for Emerging Networks, MM Docket No. 00-1081

In this Report and Order the Commission amends 47 C.F.R. §73.658(g) (dual network rule) to permit one of the four major television networks – ABC, CBS, Fox and NBC - to own, operate, maintain or control the UPN and/or the WB television network.2 Because I believe elimination of the Commission’s rule barring a major network from owning an emerging network is not supported by the record and does not protect the public’s interest in maintaining a wide diversity of viewpoints on our airwaves, I dissent. Despite the lengths to which the majority goes to show viewers benefit from further consolidation in the broadcast industry, the decision will only further erode the already tenuous level of viewpoint diversity available to the public.

Following the Biennial Review Report the Commission issued a Notice of Proposed Rule Making utilizing transaction cost economics ("TCE") literature to suggest that horizontal consolidation between a major and an emerging network and vertical integration between program suppliers and major networks would produce economic efficiencies that benefit advertisers and viewers. No effort was made to describe how the Commission could measure whether these purported benefits reach viewers or advertisers.

Read closely, the Order states a result that is in search of a rationale. Commenters supporting the modification of this rule said: "A duopolized UPN is better than a dead UPN."3 This, by itself, may be true. But the majority dresses up the same point with extensive, and pointless, reference to economic literature and ample parroting of Viacom’s filings to conclude complete elimination of this portion of the rule, "suggests" economic efficiencies "may" arise that "might benefit" consumers.4 I hope rather than believe the majority is correct.

As much as I might be concerned about the rule’s impact on UPN, the question I have to answer is not whether the financial difficulties of a party subject to a rule justify eliminating the rule. I can only vote to change the rule if the public interest is served and when the grounds advanced support the change.5 Here the most favorable construction of the record stated a case for a waiver of the rule rather than its elimination. With a waiver request the Commission would have been in a position to:

  1. Obtain the necessary detailed financial data to ensure the financial woes of the network are in fact caused by the rule’s application;

  2. Determine on a complete record whether the financial woes are solved by removal of the rule’s constraints;

  3. Develop explicit conditions that ensure compliance with the terms of the waiver, and,

  4. Protect the public interest by insisting that the alleged efficiencies achieved through the consolidation authorized by the waiver, actually flow through to the public in the form of better programming and greater viewpoint diversity.

Wholesale abandonment of well-settled rules is not the way to save a struggling network or promote the public interest. Decreasing the number of owners of broadcast networks is simply not a means to achieve greater viewpoint diversity.6 Sadly, the train of consolidation continues to run on time.

1 Notice of Proposed Rule Making in MM Docket No. 00-108, 15 FCC Rcd 11253(2000)("Notice").

2 See Telecommunications Act of 1996 (Pub. L. No. 104-104, 110 Stat. 56 (1996)).

3 See Comments of Minority Media and Telecommunications Council at 1 (hereinafter "MMTC"); see also Report and Order at para. 33 (citing MMTC comments); Id. at para. 37 (same ).

4 See e.g. Report and Order at para. 7.

5 See Telecommunications Act of 1996 (Pub. L. No. 104-104, 110 Stat. 56 (1996) at §202(h); 47 U.S.C. §310(d).

6 The U.S. Supreme Court has recognized diverse broadcasting viewpoints as a legitimate basis for the FCC, acting pursuant to its "public interest" statutory mandate, to adopt measures to increase the number of competing licensees and to encourage licensees to present varied views on issues of public concern. See, e.g., FCC v. National Citizens Committee for Broadcasting, 436 U.S. 775 (1978); Red Lion Broadcasting Co. v. FCC, 395 U.S. 367 (1969); United States v. Storer Broadcasting Co., 351 U.S. 192 (1956); Associated Press v. United States, 326 U.S. 1 (1945); National Broadcasting Co. v. United States, 319 U.S. 190 (1943).