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110th Congress 
 2d Session                      SENATE                          Report
                                                                110-334
_______________________________________________________________________

                                     

                                                       Calendar No. 731
 
    JOINT RESOLUTION DISAPPROVING THE RULE SUBMITTED BY THE FEDERAL 
  COMMUNICATIONS COMMISSION WITH RESPECT TO BROADCAST MEDIA OWNERSHIP

                               __________

                              R E P O R T

                                 OF THE

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                              S.J. Res. 28



                                     

                  May 8, 2008.--Ordered to be printed
       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
                       one hundred tenth congress
                             second session

                   DANIEL K. INOUYE, Hawaii, Chairman
                   TED STEVENS, Alaska, Vice-Chairman
JOHN D. ROCKEFELLER IV, West         JOHN McCAIN, Arizona
    Virginia                         KAY BAILEY HUTCHISON, Texas
JOHN F. KERRY, Massachusetts         OLYMPIA J. SNOWE, Maine
BYRON L. DORGAN, North Dakota        GORDON H. SMITH, Oregon
BARBARA BOXER, California            JOHN ENSIGN, Nevada
BILL NELSON, Florida                 JOHN E. SUNUNU, New Hampshire
MARIA CANTWELL, Washington           JIM DeMINT, South Carolina
FRANK R. LAUTENBERG, New Jersey      DAVID VITTER, Louisiana
MARK PRYOR, Arkansas                 JOHN THUNE, South Dakota
THOMAS CARPER, Delaware              ROGER F. WICKER, Mississippi
CLAIRE McCASKILL, Missouri
AMY KLOBUCHAR, Minnesota
          Margaret Cummisky, Staff Director and Chief Counsel
         Lila Helms, Deputy Staff Director and Policy Director
       Jean Toal Eisen, Senior Advisor and Deputy Policy Director
     Christine Kurth, Republican Staff Director and General Counsel
                Paul J. Nagle, Republican Chief Counsel
             Mimi Braniff, Republican Deputy Chief Counsel


                                                       Calendar No. 731
110th Congress                                                   Report
                                 SENATE
 2d Session                                                     110-334

======================================================================




    JOINT RESOLUTION DISAPPROVING THE RULE SUBMITTED BY THE FEDERAL 
  COMMUNICATIONS COMMISSION WITH RESPECT TO BROADCAST MEDIA OWNERSHIP

                                _______
                                

                  May 8, 2008.--Ordered to be printed

                                _______
                                

       Mr. Inouye, from the Committee on Commerce, Science, and 
                Transportation, submitted the following

                                 REPORT

                      [To accompany S.J. Res. 28]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the joint resolution (S.J. Res. 28), 
disapproving the rule submitted by the Federal Communications 
Commission with respect to broadcast media ownership, having 
considered the same, reports favorably thereon without 
amendment, and recommends that the joint resolution do pass.

                       Purpose of the Resolution

  The purpose of S.J. Res. 28 is to disapprove, pursuant to the 
Congressional Review Act (Public Law 104-121), a recently 
adopted Federal Communications Commission (FCC) rule relaxing 
the agency's prior prohibition on the cross-ownership of 
newspapers and broadcast television and radio stations.

                          Background and Needs

  For decades the FCC has sought to ensure that the allocation 
of broadcast licenses serves the public interest and promotes 
the core values of competition, diversity, and localism. As was 
noted by the Supreme Court more than 50 years ago, the First 
Amendment ``rests on the assumption that the widest possible 
dissemination of information from diverse and antagonistic 
sources is essential to the welfare of the public.'' Associated 
Press v. United States, 326 U.S. 1 (1945).
  The Communications Act of 1934 provides the FCC with the 
authority to grant licenses for the use of broadcast 
facilities, consistent with the ``public interest, convenience, 
and necessity.'' The FCC views broadcasters as trustees of the 
public airwaves and imposes restrictions and obligations on 
broadcasters accordingly. The Supreme Court has upheld the 
regulation of broadcasters pursuant to public trustee 
constraints as constitutional since the Red Lion case was 
decided (Red Lion Broadcasting Company v. FCC, 395 U.S. 367 
(1969)). Pursuant to this authority, the FCC has policies 
limiting both the national and local ownership of broadcast 
licenses.
  Initially, the FCC reviewed common ownership issues on a 
case-by-case basis. As the industry developed, the FCC adopted 
bright line rules addressing license ownership in national and 
local media markets, consistent with the public interest. Among 
other things, FCC rules limit the number of television stations 
and radio stations a single company can own in one market. In 
addition, the FCC's newspaper/broadcast cross-ownership rule 
prohibits the ownership of a television or radio station and 
the daily newspaper in the same market.
  With the enactment of the Telecommunications Act of 1996 
(1996 Act), Congress significantly loosened media ownership 
limits. The 1996 Act eliminated limits on national radio 
ownership and raised the cap on national television audience 
reach from 25 to 35 percent. The 1996 Act also eased local 
radio ownership limits by creating a sliding scale limit that 
allowed for as many as eight co-owned radio stations in the 
largest markets. The 1996 Act also mandated that the FCC review 
its media ownership rules every two years to ``determine 
whether any of such rules are necessary in the public interest 
as the result of competition.''

                          2002 BIENNIAL REVIEW

  In 2002, the FCC released a notice of proposed rulemaking 
announcing that the agency would review its full range of 
broadcast ownership rules. The public was asked to comment on 
the continued viability of these rules, in light of changes in 
the media marketplace and recent court decisions.\1\ On June 2, 
2003, led by then-FCC Chairman Michael Powell, the agency 
adopted its 2002 Biennial Review decision, relaxing many of the 
FCC's media ownership rules.
---------------------------------------------------------------------------
    \1\ See Sinclair Broad. Group, Inc. v. FCC, 284 F.3d 148 (D.C. Cir. 
2002).
---------------------------------------------------------------------------
  The revised rules included a national television audience 
reach cap of 45 percent. With respect to local television 
ownership, the revised rules permitted one company to own two 
stations in markets with five or more television stations and 
three stations in markets with 18 or more television stations. 
With respect to local radio ownership, the revised rule 
retained existing caps, but adjusted the way stations are 
counted. The revised rules combined the radio/television and 
newspaper/broadcast cross-ownership restrictions into a single 
new media cross-ownership rule. Under this proposed rule, in 
markets with three or fewer television stations, no cross-
ownership was permitted among television stations, radio 
stations, and daily newspapers in the same market. In markets 
with four to eight television stations, combinations were 
limited to one of the following: (1) a daily newspaper, one 
television station, and up to half of the radio station limit 
for that market; (2) a daily newspaper and up to the radio 
station limit for that market; or (3) two television stations 
and up to the radio station limit for that market. In markets 
with nine or more television stations, any combination that 
otherwise complies with the local television and local radio 
ownership rules was permitted. As a result, in a large market, 
one company could theoretically own as many as eight radio 
stations, three television stations, a daily newspaper, and the 
cable company.
  The revised rules faced significant public criticism. In 
response to the 2002 Biennial Review decision, more than three 
million individuals complained to the FCC. Congress also voiced 
its opposition. On September 16, 2003, the Senate voted 55-40 
to support a ``resolution of disapproval'' of the FCC decision, 
pursuant to the Congressional Review Act. In addition, in 
omnibus appropriations legislation in 2004, Congress rolled 
back the FCC's new national television ownership cap from 45 to 
39 percent.
  Appeals of the FCC's 2002 Biennial Review decision were 
consolidated in the Third Circuit. On June 24, 2004, the Third 
Circuit affirmed the FCC's general authority ``to regulate 
media ownership'' but remanded to the FCC the bulk of its rule 
changes in the 2002 Biennial Review decision for further 
justification and record support.\2\ The court also largely 
stayed the FCC's new rules from the 2002 Biennial Review 
decision. As a result, the agency's previous rules continue to 
govern media ownership in this country. On June 13, 2005, the 
Supreme Court denied the petitions for the writ of certiorari 
seeking review of Prometheus.
---------------------------------------------------------------------------
    \2\ See Prometheus Radio Project, et al. v. FCC, 373 F.3d 372 (3rd 
Cir. 2004) (Prometheus).
---------------------------------------------------------------------------
  On June 21, 2006, the FCC adopted a notice of proposed 
rulemaking seeking comment on the issues raised by the 
Prometheus remand, pursuant to its duty under section 202(h) of 
the 1996 Act which now requires the agency to review its media 
ownership rules on a quadrennial basis.\3\ As part of its 
efforts to seek public comment, the FCC held six public field 
hearings across the United States. On November 13, 2007, FCC 
Chairman Kevin Martin published an editorial in The New York 
Times calling for the FCC to revise its media ownership rules 
in order to permit newspaper/broadcast cross-ownership in the 
top 20 markets. Subsequently, on December 13, 2007, the 
Committee held a hearing on FCC oversight during which several 
members requested the FCC take additional time to solicit 
comment and consider its proposed changes to its media 
ownership rules. Just a month after the Martin editorial, on 
December 18, 2007, the FCC concluded its rulemaking by 
approving revised ownership rules under which newspaper/
broadcast cross-ownership is presumptively permissible in the 
top 20 markets. For other markets, the Commission determined 
that it would review transactions on a case-by-case basis, 
subject to a negative presumption, which may be overcome 
through evaluating: the level of concentration in the market; 
whether or not the combined entity will significantly increase 
the amount of local news in the market; whether or not the 
combined newspaper and broadcast outlets will continue to 
employ their own editorial staff; and the financial condition 
of the newspaper or broadcast station in the proposed 
combination, or if the newspaper or broadcast station is in 
financial distress, the proposed owner's commitment to invest 
significantly in newsroom operations.
---------------------------------------------------------------------------
    \3\ 2006 Quadrennial Regulatory Review--Review of the Commission's 
Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 
202 of the Telecommunications Act of 1996, Further Notice of Proposed 
Rule Making, 21 FCC Rcd 8834 (2006); see also 2006 Quadrennial 
Regulatory Review--Review of the Commission's Broadcast Ownership Rules 
and Other Rules Adopted Pursuant to Section 202 of the 
Telecommunications Act of 1996, Second Further Notice of Proposed Rule 
Making, 22 FCC Rcd 14215 (2007).
---------------------------------------------------------------------------

                         INDUSTRY CONSOLIDATION

  The decade leading up to the 2002 Biennial Review decision 
was a period of significant change in the media marketplace. In 
the broadcast television industry, the number of television 
station owners decreased by approximately 40 percent between 
1995 and 2003. According to studies recently conducted by the 
FCC, these trends have continued, albeit at a slower pace. 
Between 2002 and 2005, the number of commercial television 
station owners decreased by about four percent and the number 
of commercial radio station owners decreased by eight 
percent.\4\ During the same period the number of television/
radio combinations increased by more than 20 percent.\5\ As a 
result of this increase in concentration, there are fewer local 
owners of radio and television broadcast stations. Studies 
suggest that local owners of broadcast media provide more local 
news programming.\6\
---------------------------------------------------------------------------
    \4\Media Ownership Study Two: Ownership Structure and Robustness of 
Media by Kiran Duwadi, Scott Roberts, and Andrew Wise revised September 
5, 2007 at 5-6.
    \5\ Id. at 5.
    \6\ See e.g. Alexander, Peter J. and Brown, Keith. ``Do Local 
Owners Deliver More Localism? Some Evidence from Local Broadcast News'' 
FCC Working Paper (2004).
---------------------------------------------------------------------------
  Consolidation in the media marketplace has left women and 
minorities with only limited ownership interest. According to a 
recent Government Accountability Office (GAO) investigation, 
``[w]hile there are no reliable government data on ownership by 
women and minorities, ownership of broadcast outlets by these 
groups appears limited. According to the industry stakeholders 
and experts we interviewed, the level is limited, and recent 
studies generally support this conclusion.\7\
---------------------------------------------------------------------------
    \7\ Letter from JayEtta Z. Hecker, GAO, to the Honorable Edward J. 
Markey, dated December 14, 2007, at 9.
---------------------------------------------------------------------------
   In testimony before the Committee on November 8, 2007, Alex 
Nogales, President of the National Hispanic Media Coalition, 
stated ``[m]ore than a third of Americans are people of color. 
Yet they own less than 3% of television stations and less than 
8% of radio stations--and these numbers are going down, not 
up.''

              CONGRESSIONAL REVIEW OF FEDERAL AGENCY RULES

  Pursuant to the Congressional Review Act (CRA), Congress may 
review and disapprove virtually all federal agency rules. For 
any rule, Congress may enact a joint resolution of disapproval, 
in which case the rule is deemed not to have had any effect. 
The resolution of disapproval on the 2003 FCC media ownership 
rule changes is one of only three times that the Senate voted 
to disapprove an agency rule. Only one joint resolution of 
disapproval under the CRA has been passed by both the Senate 
and the House and become law, Public Law 107-5, which dealt 
with a rule submitted by the Department of Labor relating to 
ergonomics.

                          Legislative History

  On November 8, 2007, the Committee held a FCC oversight 
hearing titled ``Localism, Diversity, and Media Ownership.'' 
Senator Dorgan introduced S. 2332 on the same day with Senators 
Lott, Kerry, Bill Nelson, Cantwell, Snowe, Biden, Clinton, 
Feinstein, and Obama as original cosponsors. The bill would 
require the FCC to seek public comment on any proposed changes 
to media ownership rules, to conduct a rulemaking to examine 
the impact of media ownership on local programming, and to 
solicit expert recommendations on how to increase minority and 
female ownership of broadcast media. The bill, as modified by a 
manager's amendment offered by Senator Dorgan, was approved by 
voice vote at an executive session on December 4, 2007.
  On December 13, 2007, the Committee held a hearing on FCC 
oversight, during which several members spoke at length about 
Chairman Martin's proposed rule changes, as described in his 
editorial in The New York Times. On December 14, 2007, twenty-
six Senators signed a letter to Chairman Martin urging a 
further period of comment on the Chairman's proposed rule 
changes. On December 18, 2007, the FCC approved a revised set 
of ownership rules under which newspaper/broadcast cross-
ownership is permissible in the top 20 markets.
  On March 5, 2008, Senator Dorgan introduced S.J. Res. 28, a 
joint resolution disapproving the FCC rule. On April 24, 2008, 
the Committee held an executive session at which S.J. Res. 28 
was considered. The resolution was approved by voice vote.

                            Estimated Costs

  In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:

                                                       May 6, 2008.
Hon. Daniel K. Inouye,
Chairman, Committee on Commerce, Science, and Transportation,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S.J. Res. 28, a joint 
resolution disapproving the rule submitted by the Federal 
Communications Commission with respect to broadcast media 
ownership.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                                   Peter R. Orszag.
    Enclosure.

S.J. Res. 28--A joint resolution disapproving the rule submitted by the 
        Federal Communications Commission with respect to broadcast 
        media ownership

    S.J. Res. 28 would disapprove the rule adopted by the 
Federal Communications Commission (FCC) on December 18, 2007, 
ending a ban on common ownership of newspaper and broadcast 
outlets in the same market (also known as cross-ownership). The 
new rule generally allows a newspaper in any of the nation's 20 
largest media markets to own one television station or one 
radio station.
    S.J. Res. 28 would invoke a legislative process established 
by the Congressional Review Act (Public Law 104-121) to 
disapprove the cross-ownership rule. If S.J. Res. 28 is 
enacted, the published rule would have no force or effect. 
Based on information from the FCC, CBO estimates that voiding 
this rule would have no effect on the federal budget.
    S.J. Res. 28 contains no intergovernmental mandates as 
defined in the Unfunded Mandates Reform Act (UMRA) and would 
not affect the budgets of state, local, or tribal governments.
    By voiding the FCC's cross-ownership rule and reinstating 
the ban on common ownership of newspaper and broadcast outlets, 
the bill would impose a private-sector mandate on companies 
that wish to own a newspaper and a television or radio station 
in a single market area. By law, the FCC bases each decision to 
grant a broadcast license on the determination of whether those 
actions will serve the ``public interest'' among other 
criteria. The cross-ownership rule changes the approval process 
for obtaining broadcast licenses in some cases because it would 
allow the FCC to presume that such mergers, under the 
circumstances specified in the rule, are in the public 
interest.
    Under the ban of cross-media mergers that the legislation 
would reinstate, companies could apply for a license for such a 
merger as long as they make the case that waiving the ban was 
in the public interest. According to some industry experts, 
however, fewer such mergers are likely to occur under the ban 
than would occur under the cross-ownership rule. The cost to 
the private sector of the mandate would be the incremental cost 
of applying for a license (because the waiver process is more 
costly), plus any forgone net profit attributable to the cross-
media ban. CBO has no basis for estimating those costs. CBO, 
therefore, cannot determine whether the cost of the mandate 
would exceed the annual threshold established in UMRA for 
private-sector mandates ($136 million in 2008, adjusted 
annually for inflation).
    The CBO staff contacts for this estimate are Susan Willie 
(for federal costs), and Jacob Kuipers (for the private-sector 
impact). This estimate was approved by Peter H. Fontaine, 
Assistant Director for Budget Analysis.

                      Regulatory Impact Statement

  In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

                       NUMBER OF PERSONS COVERED

  The number of persons covered by this legislation would be 
consistent with current levels of individuals affected.

                            ECONOMIC IMPACT

  S.J. Res. 28 would have a positive impact on the nation's 
economy by overturning rules to allow consolidation in 
ownership of media outlets. Thus, the bill could encourage more 
diverse ownership of these outlets.

                                PRIVACY

  S.J. Res. 28 is not expected to have an adverse effect on the 
personal privacy of any individuals that will be impacted by 
this legislation.

                               PAPERWORK

  S.J. Res. 28 would have minimal impact on current paperwork 
levels.

                   Congressionally Directed Spending

  In compliance with paragraph 4(b) of rule XLIV of the 
Standing Rules of the Senate, the Committee provides that no 
provisions contained in the bill, as reported, meet the 
definition of congressionally directed spending items under the 
rule.

                      Section-by-Section Analysis

  S.J. Res. 28 would disapprove the rule submitted by the FCC 
relaxing the agency's media ownership rules with respect to 
newspaper/broadcast cross-ownership.

                        Changes in Existing Law

  In compliance with paragraph 12 of rule XXVI of the Standing 
Rules of the Senate, the Committee states that the bill as 
reported would make no change to existing law.