The Telecommunications Act of 1996 directed the Federal Communications Commission to undertake a biennial review of its broadcast ownership rules to determine "whether any of such rules are necessary in the public interest as the result of competition." Section 202(h) of the Telecom Act further instructed the Commission to "repeal or modify any regulation it determines to be no longer in the public interest." The FCC began that process in March 1998 by issuing a notice of inquiry that set forth three categories of rules within the scope of its biennial review. The first group included rules currently under review in pending Commission proceedings. The second consisted of rules that recently had been changed to implement provisions of the 1996 Telecom Act. Remaining ownership rules comprised the third category. The notice of inquiry sought comment only on ownership rules in categories two and three.

Summary of Rules

A number of the Commission's broadcast ownership rules are already the subject of pending proceedings and thus satisfy the biennial review requirement, the Commission said. These include:

• The television "duopoly" rule, which prohibits one party from owning, operating, or controlling two or more broadcast television stations with overlapping "Grade B" signal contours.
• The "one-to-a-market" rule, which prohibits one party from owning a television and radio station in the same market. In 1989 the Commission adopted a liberalized waiver policy for stations in the top 25 markets, and the Telecom Act extended that policy to the top 50 markets.
• The newspaper / radio cross ownership rule, which bars common ownership of a daily newspaper and radio station in the same community. This rule is part of the larger newspaper / broadcast cross ownership ban, but this proceeding deals only with liberalizing the waiver provisions for radio.    Rules modified by the Telecom Act include:
• The national television ownership rule, which eliminated the numerical cap on the number of TV stations one entity could own, and raised the cap on a single owner's national audience reach to 35 percent of television households.
• Local radio ownership rules, which were relaxed to allow one entity to own up to eight commercial radio stations in large markets and proportionately greater numbers in small and medium markets.
• The dual network rule, which had prohibited an entity "from affiliating with a network organization that maintained more than one network of television broadcast stations." The rule was modified to accommodate networks wishing to offer a dual stream of programming.    The remaining rules (category three) include:
• The newspaper / broadcast cross ownership rule, which prohibits one entity from owning a daily newspaper and a broadcast station (radio or television) in the same market.
• The cable / television cross ownership rule, which bars common ownership of a broadcast TV station and cable system in the same local community. The Telecom Act repealed a similar statutory ban.
• The UHF television discount, which gives UHF stations credit for 50 percent of the TV households in their markets for purposes of calculating national audience reach.
• An experimental broadcast station rule that prohibits one entity from controlling more than one such outlet.

First Amendment Concerns

   The Commission states that its review of ownership rules will be based on two familiar criteria - competition and diversity - even though the Telecom Act did not specifically charge it to consider diversity. The Commission identifies three types: viewpoint diversity, i.e., "a wide range of diverse and antagonistic opinions and interpretations"; outlet diversity, meaning a range of delivery services such as broadcast stations, newspapers, cable, and DBS; and source diversity, or a variety of program producers and owners.

   In its notice of inquiry the Commission states: "Promoting diversity in the number of separately owned outlets has contributed to our goal of viewpoint diversity by assuring that the programming and views available to the public are disseminated by a wide variety of speakers." The FCC relied on the U.S. Supreme Court's teaching in Associated Press, that the welfare of the public is served by "the widest possible dissemination of information from diverse and antagonistic sources." Associated Press v. United States, 326 U.S. 1, 20 (1945).

   However, the Commission's interest in promoting viewpoint diversity raises significant First Amendment concerns. To impose diversity on the media marketplace of ideas, the government must necessarily suppress the free expression of certain speakers by denying them an opportunity to own an additional media outlet of their choosing. Those who own a certain type of outlet or a certain number of outlets become, in effect, a disfavored class of speakers whose further speaking opportunities are proscribed by the FCC.

   If the rules were challenged on constitutional grounds today, they would be subject at least to the intermediate scrutiny of the four-part O'Brien test. The rules would appear likely to run afoul of O'Brien Part 3: "The governmental interest must be unrelated to the suppression of free expression." Part 4 might well prove problematic as well: "The incidental restriction on alleged First Amendment freedoms must be no greater than is essential to the furtherance of that interest." United States v. O'Brien, 391 U.S. 367, 377 (1968). Other less restrictive means could be found to promote diversity; for example, the government could ease market entry and take other steps to encourage a larger and more robust communications industry.

   As FCC Commissioner Harold W. Furchtgott-Roth wrote in a separate statement accompanying the notice of inquiry, "the First Amendment is no source of affirmative authority to regulate mass media ownership, as parts of this item might be construed to suggest.... Phrased entirely in the negative, [the First Amendment] is by its terms a limitation on - not an expansion of - governmental power" (emphasis in original).

FCC Actions

   The FCC had planned to resolve several pending ownership rule proceedings at its December 1998 meeting and to consider a staff report on other rules in early 1999. Broadcasters and Congress reacted quickly, however, when it became clear that the December agenda would include proposals to tighten rather than relax ownership restrictions. For example, the Commission was set to consider measures to eliminate local marketing agreements and to tighten the one-to-a-market rule, thereby forcing station divestitures. Under pressure from Sen. John McCain (R-Ariz.), Sen. Conrad Burns (R-Mont.), Rep. John D. Dingell (D-Mich.), and Rep. Billy Tauzin (R-La.), FCC Chairman William Kennard agreed to delay action and planned to hold a hearing in February 1999. "Any disruption of established combinations would be highly inequitable and counterproductive," Sens. McCain and Burns wrote to Kennard.

   Thus, in 1999 the Commission will face a number of formidable tasks regarding ownership rules: It will seek to resolve several highly contentious pending proceedings, adopt a report on other ownership rules, and initiate new proceedings to effect changes recommended by the report - all before the next biennial review is slated to begin in 2000.