In the Matter of AMENDMENT OF PART
74, SUBPART K, OF THE COMMISSION'S RULES AND REGULATIONS RELATIVE TO
DIVERSIFICATION OF CONTROL OF COMMUNITY ANTENNA TELEVISION SYSTEMS; AND INQUIRY
WITH RESPECT THERETO TO FORMULATE REGULATORY POLICY AND RULEMAKING AND/OR
LEGISLATIVE PROPOSALS.
Docket
No. 18891
FEDERAL
COMMUNICATIONS COMMISSION
23 F.C.C.2d 833
RELEASE-NUMBER: FCC 70-674
July
1, 1970 Released;
Adopted
June 24, 1970
JUDGES:
BY THE
COMMISSION: COMMISSIONER ROBERT E. LEE DISSENTING AND ISSUING A STATEMENT;
COMMISSIONER COX CONCURRING IN THE RESULT; COMMISSIONER
JOHNSON CONCURRING AND ISSUING A STATEMENT; COMMISSIONER WELLS DISSENTING.
OPINION:
[*833]
1. In the Second Report and
Order in Docket 18397, released on July 1, 1970 (FCC 70-673), the Commission
stated that it would issue a further notice of proposed rule making and of
inquiry in which it would treat several matters, relating to diversification of
control of CATV and other media, which were not dealt with in that report and
order. Persons interested in commenting
on the matters discussed and rules proposed herein are referred to that Second
Report for discussion of some of the policies and background pertaining to this
notice. See, also, the First Report and
Order in Docket 18397, released on October 27, 1969 (FCC 69-1170, 24 Fed. Reg.
17651); and the Notice of Proposed Rule Making and Notice of Inquiry in that
docket, released on December 13, 1968 (15 FCC 2d 417, 33 Fed. Reg. 19028). All
Docket 18397 matters relating to diversification of control of CATV and other
media which were not disposed of in the aforementioned [**2] Second Report and Order are reassigned to
this new docket to facilitate Commission consideration of future comments. Interested parties filing comments regarding
that subject are directed to limit them to that subject, and to deal with other
CATV questions in comments separately filed for consideration in other dockets.
Cross-ownership
2. In the Second Report, the Commission adopted
rules prohibiting cross-ownership of CATV systems, and national television
networks [*834] or local television broadcast or translator
stations. n1 Some of the comments received by the Commission
advocated a cross-ownership prohibition extending to local radio stations as
well -- on the ground that in some respects radio stations are even more
competitive with CATV systems than are television stations. Unlike TV, it was argued, radio and CATV are
locally oriented, relatively low-cost advertising media; some added that
radio-CATV cross-ownership would "reduce the number of 'voices' having
proprietary control over the media facilities in the community." On the
other hand, several parties thought that local cross-ownership of CATV systems
and radio stations should be permitted on the ground that common use [**3] of studio facilities, equipment, and
personnel would facilitate CATV program origination. The Pennsylvania CATV Association reported that some of its
members thought association with a local radio station or newspaper might be
helpful, but cautioned against turning cablecasting over to either since they
might regard it as just an adjunct.
n1 Although the Commission is not at
this time favorably disposed toward exemption of noncommercial educational
television stations from these cross-ownership strictures, it invites, and will
fully consider, further comments concerning the desirability and possible
specific provisions of such an exemption.
The Commission is, of course, aware that operation of a local CATV
system might be financially beneficial to the ETV station. At the same time, however, it desires to
provide local television audiences with a multiplicity of separately controlled
"voices"; and notes that a CATV system in the same locality is not
the only potential source of funds needed to operate an ETV station.
3. The Commission recognizes the significance
of the contention that radio stations and CATV systems are directly competitive
in their emphasis on local programming [**4]
and as low-cost advertising outlets.
On the other hand, however, it notes that in many areas a multiplicity
of radio "voices" exists; and it is not certain that it would be
undesirable to permit program-origination working arrangements between CATV
systems and local radio stations. In
many cases, a local radio station may be the best available, most experienced
source of CATV local-programming assistance.
n2 Additional comments on this subject
would be welcomed. Thus, we request
comment on whether there should be a total proscription (e.g., within the 1
mV/m contour of the FM station or the primary service area of the AM station),
no ban, or one tailored to communities having only a small number of AM outlets
(e.g., five or less) assigned to them.
In this connection, we also request comments on what regulations, if
any, would be appropriate with respect to a shared use of technical facilities
and personnel between the system and a local radio station.
n2 There is also the possibility
that local broadcast stations might be among those eligible to make use of common
carrier channels on CATV systems to supplement their local broadcast
originations.
4. Numerous comments were [**5] received concerning cross-ownership of local
daily newspapers and CATV systems. In
view of the fact, however, that the related question of cross-ownership of
newspapers and local broadcast stations is currently under study in another
rulemaking proceeding, the Commission deems it appropriate to defer
consideration of this question temporarily to permit it to weigh both of these
newspaper cross-ownership matters at the same time. n3 In the [*835] meantime, the
Commission would welcome additional comments regarding relations between CATV
systems and neighborhood and small-community weekly newspapers in their service
areas.
n3 Some of the parties who filed
comments in favor of daily newspaper-local CATV system cross-ownership argued
that newspaper ownership of CATV facilities would be essential in the event of
a conversion to facsimile delivery of newspapers. This is a matter regarding which immediate Commission comment is
appropriate. The Commission is of the
view that whatever decisions may be reached regarding newspaper-catv/
crossownership, CATV operators should not be permitted to deal unfairly with
newspapers seeking use of cable facilities for facsimile delivery.
Multiple [**6]
Owership
5. In paragraph 24 of the December 1968 Notice,
the Commission proposed rule making in the area of multiple ownership of CATV
systems. Those opposed to such rules,
aside from challenging our jurisdiction, asserted principally that there is no
need for multiple ownership rules since all existing CATV systems taken
together do not serve nearly as many homes as are served by television stations
under common ownership. NCTA, pointing
out that the largest multiple CATV owner serves only 231,385 subscribers, urged
that rule making be deferred until the largest CATV operator reaches as many
homes as are covered by the stations owned and operated by the ABC
network. Others asserted that the
Commission should not "so perpetuate the shibboleth of localism" as
to prevent inter-connection on a national basis or prejudice the CATV
industry's ability to compete with the telephone company in the provisions of
other services via cable.
6. We are not persuaded by the argument that
multiple ownership rules should be postponed until large-scale CATV operations
under common ownership have come into being.
While the remedy of divestiture is available, it is far easier and much
less disruptive [**7] to all concerned
to prevent vast chains in the first place rather than to attempt to break them
up after they have become established.
The comparatively small number of CATV subscribers now served by
commonly owned systems may be attributable to the circumstance that CATV
operations have in the past been centered in smaller and more remote
communities rather than in the nation's larger metropolises -- perhaps in part
because of the top 100 market provisions of Section 74.1107 of the rules. We are now seeking to encourage CATV
operations in the larger markets on a basis consistent with the public interest
(e.g., with program origination, local signals, and perhaps other services),
and are hopeful that such entry will soon become common. We have adopted rules to facilitate CATV
construction in major cities and to expand CATV service areas through the use
of microwave radio. Report and Order in
Docket No. 18452, FCC 69-1241 (released November 14, 1969). Since large-scale CATV operations may well
be imminent, we think that the ground rules on multiple ownership should be
established now, when little or no divestiture may be necessary.
7. The contention that multiple ownership [**8]
rules might prevent national inter-connection of CATV systems for network
operations or prejudice the provision of other services via cable also seems to
lack merit. As previously emphasized,
we are against any restrictions that might preclude inter-connection of CATV
systems on a national or regional basis or CATV network operations. Moreover, we are exploring in Part V of this
proceeding the possibility that the cable technology might be utilized to
provide other services to the public on an inter-connected basis, either in
competition with or supplementary to
[*836] services that may be
provided by the telephone companies, including the question of how best to
achieve diversity of ownership and/or control.
However, we see no reason to conclude that common ownership of all the facilities
is essential to such operations. The
broadcast networks do not own all or even a major portion of the broadcast and
common carrier facilities used in their network operations. Nor is there any apparent reason why any
common carrier services that might be provided via interconnected CATV cable
would necessitate common ownership of the facilities and/or carrier in each
locality. In the event that some
[**9] good reason should appear when
such common carrier operations materialize, the Commission could reexamine the
appropriateness of the multiple ownership rules. The only CATV activity (apart from carriage of broadcast signals)
presently facing us is program origination, and for that purpose we think that
limitations on multiple ownership would serve the public interest.
8. In view of the absence of helpful
suggestions in the record before it as to the precise nature of the limitations
that might be appropriate, the Commission has undertaken to formulate specific
proposed standards in the first instance.
The proposed standards set forth below are tentative only, and, indeed,
are stated in alternative forms, so as to stimulate comment. It is hoped that they will lead to
constructive counterproposals and helpful suggestions from the public as to appropriate
modifications or refinements. Since we
anticipate that the record as supplemented pursuant to this further notice will
afford a basis for the adoption of definitive rules, parties are advised to
give full treatment to any counterproposals in their reply comments.
9. The Commission's first proposal as to
multiple ownership [**10] of CATV systems is as follows:
(a) For the
purposes of this proposal --
(1) Where a CATV
system (including all parties under common control) directly or indirectly
owns, operates, controls, or has an interest in other CATV systems within the
same SMSA (Standard Metropolitan Statistical Area, as defined by the U.S.
Census Bureau), all of the related CATV systems within the same SMSA shall be
collectively viewed as one system; and
(2) Systems with
fewer than 1000 subscribers need not be counted. n4
n4 We note that the record in this
proceeding reflects that almost 70 percent of all existing CATV systems had
fewer than 1,000 subscribers in 1969.
However, we raise the question of whether the exemption for systems to
be counted should not be 3,500 -- the number selected for mandatory
origination.
(b) No CATV
system (including all parties under common control) shall be permitted to carry
the signal of any television broadcast station if such system directly or indirectly
owns, operates, controls, or has an interest in more than 50 CATV systems, of
which --
(1) No more than
1 may be located within the top 3 SMSA's;
(2) No more than
2 may be located within the top 10 SMSA's;
[**11]
(3) No more than
3 may be located within the top 25 SMSA's;
(4) No more than
4 may be located within the top 50 SMSA's;
(5) No more than
7 may be located within the top 100 SMSA's;
(6) No more than
10 may be located within adjoining States; and
[*837]
(7) No more than 5 may be located within the same State, only 1 of which
may be located within a top-100 SMSA.
(c) Where the
CATV system (including all parties under common control) owns, operates,
controls, or has an interest in more than 1 television broadcast station or
more than 2 AM or FM stations or more than 2 newspapers, the maximum number of
CATV shall not exceed 25, and the maximums within SMSA's and States are --
(1) No more than
1 within the top 10 SMSA's;
(2) No more than
2 within the top 50 SMSA's;
(3) No more than
4 within the top 100 SMSA's;
(4) No more than
5 within the same State or adjoining States; and
(5) No more than
1 within a top-100 SMSA in the same State.
10. In the alternative (or as a companion
provision), the Commission proposes that --
(a) No CATV
system (including all parties under common control) shall be permitted to carry
the signal of any television broadcast station if such system alone, or
[**12] together with other CATV systems
which it directly or indirectly owns, operates, controls, or has an interest
in, serves more than 2,000,000 subscribers: Provided, however, That --
(b) Where such a
system, or group of systems, has acquired that number of subscribers, it may
increase its roster of subscribers up to an additional 10 percent -- but only
within the communities which it already serves. (The purpose of this proviso is to avoid a situation in which a
group of systems, having reached an arbitrary limit nationwide, would be
prevented from extending service to residents of a community in which it
already is operating. The additional
leeway of 200,000 should give ample opportunity to avoid such a situation --
and to provide time for voluntary divestiture of systems and their subscribers
in certain communities in order to permit further expansion in others.)
11. We stress again that the foregoing proposals
are put forth as a starting point to stimulate concrete suggestions as to a
specific standard, and may be modified in light of information submitted as to
existing ownership patterns -- information which we now lack in large
part. Thus, in the first alternative
proposal, [**13] the number might be 75 or 100 instead of 50. It is contemplated that notes similar to
those contained in the local cross-ownership rules adopted in the Second Report
would be appended, defining the terms "control,"
"interest," and the kind of stock ownership that must be considered
in corporations with more than 50 stockholders. We raise again the question of whether there should be
divestiture of systems to achieve compliance with any rules adopted and, if so,
what kind of grace period should be afforded.
12. The rules adopted in the Second Report
prohibited television broadcast networks from having cross-ownership interests
in any CATV system, no matter where located within the United States. However, the Commission would be willing to
explore in these further proceedings the question of whether successful CATV
network cablecasting operations would hinge on ownership and operations of CATV
systems, particularly in the nation's largest cities. It is our tentative
[*838] belief that such
ownership and operation is not fundamentally necessary to network operations,
which may be conducted through affiliation with independently owned
systems. To the extent that it is
claimed that CATV [**14] system
ownership would facilitate experimentation and innovation in program
production, it would appear that CATV networks could accomplish this within the
framework of the proposed multiple ownership provisions set forth in paragraphs
9 and/or 10 above. We are proposing to
make such provisions applicable across-the-board to CATV networks as well as
others. Interested parties urging a
more lenient standard for CATV network owners should support their position by
a substantial showing of need.
Conclusions
13. We have, in part, characterized this
document as a notice of inquiry because, aside from the specific rule-making
proposals herein, we seek to elicit from all interested persons information and
suggestions as to whether other CATV-ownership patterns warrant consideration
under the public interest standard (e.g., ownership of CATV systems by
microwave carriers, CATV-equipment manufacturers, national news magazines,
advertising agencies). Persons submitting
comments in this respect should set forth all pertinent information which they
have in support of their views. Since
we have here reached no conclusions, even of a tentative nature, we are
advancing no rulemaking proposals [**15]
but rather are facilitating a broad-ranging inquiry to determine whether
there are further problems.
14. Authority for the rule making proposed
herein is contained in Sections 2, 3, 4(i) and (j), 301, 303, 308, 309, and 403
of the Communications Act. All
interested parties are invited to file written comments on such proposals on or
before October 7, 1970, and reply comments on or before October 28, 1970. In reaching its decisions in this matter,
the Commission may also take into account any other relevant information before
it, in addition to the comments invited by this Further Notice.
15. In accordance with the provisions of Section
1.419 of the Commission's Rules and Regulations, an original and 14 copies of
all comments, replies, pleadings, briefs, or other documents filed in this
proceeding shall be furnished to the Commission.
FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE,
Secretary.
CONCUR:
[*839]
CONCURRING STATEMENT OF COMMISSIONER NICHOLAS JOHNSON
In this Notice
of Rule Making the Commission proposes to get further comments on the ownership
of cable systems in this country.
Specifically, we are asking for information on the cross-ownership in
the same market of a [**16] cable
system and either a newspaper or a radio station, and information on multiple
ownership of cable systems nationally.
I concur in this action; I think that these are areas in which the FCC
must take action. I believe, however, that
the present docket contains sufficient comments upon which to base our cross-ownership
action, and there appears to me to be no good reason to wait.
While the
Commission puts off making this decision, the concentration of the media in
this country gets worse. In 1968,225
newspapers owned cable television interests.
In the few short years of the industry's existence, the competing print
media have begun to exercise significant control over this new medium of
communication. And during this time,
newspaper ownership also became more concentrated. In 1945 there were 117 cities with separately-owned dailies, but
in 1966 only 43 remained.
Of course, no
one, to my knowledge, has ever questioned the desirability of providing (even
insuring) the nondiscriminatory access of newspapers to cable systems for the
distribution of their product -- if and when that alternative becomes
economically viable. Ownership of such
systems by newspapers, however,
[**17] raises altogether
different issues.
In conclusion,
then, I support the Commission majority in their effort to gain more
information about the problem of media concentration in the United States. These are tough issues, my mind is open, and
I welcome all the information we can get.
I especially support this first effort into the area of multiple
ownership. But I cannot support these actions
if they are merely efforts at delay with the hope that political events will
dictate a different result when the issues are eventually considered. The resulting uncertainty serves no one's
interests. I would have preferred to
have acted so that the industry and the public would have known the future of
the growth of cable television.
DISSENTBY: LEE
DISSENT:
DISSENTING
STATEMENT OF COMMISSIONER ROBERT E. LEE
I do not find
that consideration of divestiture of newspapers at this time to be in the
public interest. There is no more
reason to single out newspapers for such special adverse treatment than any
other business in the same city as a CATV system. The single-industry city or substantial employer or advertiser in
the area is in a position to exact as much, or more, control over CATV
programming. I believe [**18] that such
matters are better considered on a case-by-case basis and we should not
consider barring a class of owners, such as newspapers, from CATV ownership in
the same city.