FCC, Hartford and Tribune

For them what follow media ownership at the local level, the recent doings in Hartford offer an interesting opportunity for some tea-leaf reading about how the FCC will address these issues. I’ll preface by saying I haven’t actually talked to anyone at the FCC about the case, so all this is just my educated guesses. But what’s life without speculation in an ignorance of actual facts . . .

You can get the relevant background from the FCC’s newly minted decision here. Briefly, in 1999, the Tribune Company (a big media conglomerate), applied to the FCC to buy station WTXX in nearby Waterbury (which is part of the same television market, or “DMA” as Hartford) from a company called Counterpoint Communications. A little earlier, Tribune had purchased the Hartford Courant, the Hartford daily paper, as part of its acquisition of a newspaper company called Times-Mirror.

This combination, reviewed as part of the application to purchase WTXX, violated two FCC rules. First, in 1999, the FCC limited the number of TV stations in a given market any entity could own to 1 (altough it changed this to 2 later on) and prohibitted ownership of a TV station and a daily newspaper in the same market (a prohibition still in effect, thanks to our victory in the Prometheus Radio Case). The FCC did not review the purchase of the Courant despite Tribune’s ownership of WTIC in Hartford (a direct violation of its cross-ownership rule) because the FCC doesn’t review newspaper deals, only broadcast license transfers. It only enforces the newspaper-broadcast cross-ownership when a television license comes up for renewal or is transferred. So Tribune’s purchase of the TV station triggered review of the purchase of the newspaper, which had happened a year earlier. No, it doesn’t make sense, just nod.

Tribune asked the FCC for a waiver, on the grounds that Counterpoint was going bankrupt and without common ownership of both TV stations and the newspaper, WTXX would have to shut down. By long precedent, the Commission _hates_ it when a TV or radio station “goes dark.” This is just _awful_. Local viewers are better served by crappy imported programming and multiplying a single voice in the market, so the reasoning goes, than having one fewer TV stations in a local market.

So the FCC allowed Tribune to own both WTXX and WTIC, the Hartford Station it already owned. In legalese, it granted a “permanent waiver” under the “failing station” rule. But the FCC did not agree that Tribune needed to own the Courant as well as two stations in the same market, so it ordered Tribune to sell the Courant or WTXX within 18 months, and to give status reports every 45 days on its efforts to sell the paper.

This was also pretty SOP. The Commission hates to make licensees sell a property at “fire sale” prices, so it usually gives a temporary waiver, with stern language about this not being permanent. We at MAP have a good yuck over this, because it is really pretty stupid. First of all, its not like the purchaser didn’t know when it tried to buy the license that it would need to divest the station. So you are rewarding the Applicant for failing to make any effort whatsover to comply with the law until the FCC officially told them that, yes, the same law applies to you as to everyone else. I wish I could do that at tax time. “No, I’m not paying my taxes until the IRS tells me personally that I owe them. When it does, I’m gonna ask for two years to raise the money.”

The other problem is that these temporary waivers usually end up becoming permanent. Every 45-days, the licensee says that no one has tried to buy the station, despite clearly advertising it on its website and putting the license on Ebay. When the temproary waiver runs out, the FCC hems and haws and extends it another 6 months or so, until the company with the temporary waiver gets bought out by someone else. Repeat process.

Which is what happened here. When the cross-ownership waiver (and one extension) ran out in August 2002, Tribune filed a request for an extension. But the FCC, being the FCC, never actually got around to processing the request. In fairness to Media Bureau Chief Ken Ferree, he honestly thought the fix was in and all these pesky rules would be out the window. I mean, why bother to go through the tedious paperwork of complying with the law when you know the fix is in?

Of course, much to Ken’s surprise, the Third Circuit declined to go along with the joke. In September 2003, it issued an Order staying operation of the FCC’s new rules and keeping the old rules (like cross-ownership) in effect. In other words, Tribune found itself legally obligated to sell either WTXX or the Courant. But Ken Ferree, ever the thoughtful Chief of the Media Bureau, quickly rushed out a letter to reassure Tribune that it was in “full compliance” with the FCC’s rules.

_How_ Ken came to that conclusion is something of a mystery. By September 2003, Tribune had neither a waiver in place nor was it in compliance with the rules. But Ken was just a guy who hated to say no, well, hated to say no to big media companies. And by gosh, no little thing like a stupid Federal court or his complete lack of authority to issue any such ruling (especially when no one had _asked_ for such a ruling) was gonna stop Ken Ferree!
[For those who wonder what ever happened to good old Ken, he is now running the Corporation for Public Broadcasting. You gotta wonder how soon before product placement starts showing up. “Hey look Big Bird, it’s Tony the Tiger! I’m so glad he moved to Sesame Street. He’s greeeaaat! I think I’ll have him join me for a complete nutritious breakfast.”]

Anyway, time plods on. We win the Prometheus case [go us!] and Tribune still doesn’t have a waiver. Since Tribune’s license doesn’t expire until 2007, no one really notices at the Commission until a fella competing in the same market brought a case in federal court in CN to force Tribune to obey the law and divest WTXX. On March 21, 2005, much to everyone’s surprise, that’s just what the federal court did.

So Tribune had to scramble back to the FCC and ask it for a permanent waiver or, at least, an extension of its temporary (but now lapsed) waiver. On April 13, the FCC granted a temporary waiver to run until the FCC completes review of the WTXX and WTIC licenses, which will take place in 2007. (Licenses are reviewed by state, so all CN licenses will be reviewed in 2007.)

At first glance, this looks like the FCC rolling over for big media, and you might expect to see me blasting the FCC — particularly since Kevin Martin is said to favor dropping the ownership cap completely. But something funny is going on here, and this bears closer examination. For one thing both Democrats, Adelstien and Copps, concurred in the Order. Copps and Adelstien vigoursly oppose relaxation of the rules. They would never roll over for big media and they fully support maintaining newspaper cross-ownership limits. So what’s up? Alien mind control?

First, institutionally, the FCC hates having its hand forced by a federal district court. So the urge to reassert control over the situation is pretty strong.

Second, and perhaps more importantly, is the fact that the FCC has sent some subtle signals here about how it plans to conduct business in the future. Since there are a number of these combinations out there, reading the tea leaves is a full time job for everyone in the industry.

The FCC made it clear that the old rules were in force as a consequence of the Prometheus case and that it was going to hold Tribune to the traditional standard of review rather than something even more lenient. This may sound obvious, but there has been considerable speculation that the FCC would apply a looser standard in its case-by-case analysis. But instead the FCC went through the standard check list of reasons why a temporary, but not a permanent, waiver was warranted in an analysis that reads like any other (i.e., as wussy as ever, but not wussier).

The FCC also tied the waiver to the license renewal review, rather than to conclusion of the rulemaking process and subsequent judicial review. This is potentially very significant, since it appears to signal that the FCC will actually take review of these combinations in license renewals seriously rather than simply grant blanket waivers until they can try to relax the rules again.

Also, the Order states, and the concurrences reiterate, that the FCC is not going to allow waivers to continue indefinitely through inaction and that there will be no more funny letters coming out of the Bureau. _That_, if enforced, would make a very significant change. The Media Bureau, even before it was under Ken Ferree’s management, often regarded the broadcasters as “clients” to be serviced rather than licensees subject to rigorous oversight.

It is also consistent with my impression of Kevin Martin. Whether Martin ultimately tries to get rid of the cross-ownership rule or not, he is (at least so far) showing he is going to enforce the laws that are actually on the books, by the numbers, and get things moving in a timely manner. That too would be a major change for the better.

Only time will tell if this is true tea-leaf reading or a legal Rorschrach Test on which I project my own hopes and interpretations. As usual,

Stay tuned . . . .