FCC Reviewing Rule Prohibiting Mergers Among Big Four Broadcast Networks

Ajit Pai Stop Sign - Getty - H 2018
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Could CBS merge with NBC? Or ABC? Or Fox?

Not right now, because the FCC prohibits such a merger under the "Dual Network Rule," but on Wednesday, the agency voted to move ahead with a review of media ownership rules, including the one that prevents dual ownership of two or more of these broadcast giants.

Under a 1996 law, media ownership rules get reviewed every four years, but in the past, the consideration has sometimes been argued to have been pro forma, leading to court challenges from media giants. Additionally, the Trump administration has appointed commissioners with a fervor for deregulation, perhaps adding to the prospect that a merger among broadcast networks could eventually be allowed.

The vote to move ahead with the review of media ownership rules and take comments wasn't unanimous.

"I’m disappointed that we were unable to secure a unanimous vote for it," chairman Ajit Pai stated after an open meeting on Wednesday. "But unfortunately, our dissenting colleague requested edits that did not comply with the law. Specifically, we were urged to delete any discussion of the Dual Network Rule from the Notice. But the Dual Network Rule is one of our media ownership rules that we are required by statute to review every four years. Whatever one’s opinion of it, refusing to include it in our quadrennial review would have violated the law."

Now that the "Dual Network Rule" is up for discussion, expect CBS to argue for a repeal. The company may be on the verge of its own ownership change as controlling stakeholder Sumner Redstone is now 95 years old and has just lost its powerful leader, Leslie Moonves. But even more to the point, CBS has frequently argued in the past that the "Dual Network Rule" has outlived its usefulness.

The rule was adopted in the 1940s to ensure diversity of viewpoints in public airwaves and has survived previous quadrennial reviews, although it was modified at the beginning of the century to allow the owners of major networks to hold big stakes in emerging networks like The WB and The CW. 

But six years ago, CBS said the time had come to end the rule.

"Although the FCC states that it believes the rule remains necessary because the four largest broadcast networks are 'unique,' the distinctions upon which its analysis rests fail to justify retention of the rule and have been significantly undermined by factual developments," wrote CBS lawyers at the time. "Specifically, in recent years cable networks have shifted their lineups to include far more entertainment programs of the sort that previously would have aired mainly on broadcast networks. In fact, some, such as the USA Network and TNT, borrow heavily from the broadcast network model."

CBS added there was no factual basis for singling out broadcast networks for disparate treatment.

"Under the FCC’s regulatory scheme, one entity can own an unlimited number of these cable networks — be they the most-watched or not in their universe — but cannot own even two of the four broadcast networks named in the dual network rule, even if those networks are not the most-watched."

Opposing this viewpoint were the owners of local CBS-affiliated stations.

In their own comment, those CBS affiliates argued, "The dual network rule supports the Commission's localism goal because it helps maintain a balance between national networks and local affiliates. The networks make available high quality national programming that is an essential component of the public's broadcast service. Elimination of the dual network rule would lead to a less competitive marketplace and could, for example, discourage networks from bidding and investing to bring more regional and national sports programming to free, over-the-air broadcasting."

A similar set of contentions appears to be coming.