Here in the Hollywood bubble, it’s easy to get wrapped up in our own tales of heartbreak, victory and scandal and forget that events outside of LA can also impact the entertainment business. One of these is that the FCC is now Republican-controlled. The new FCC chair Ajit Pai has already signaled that we can expect significant policy shifts. Here are two to watch.
Net Neutrality: This blog has been following the net neutrality saga, most recently here in an article posted after the Presidential election. Net neutrality is the principle that internet service providers (ISPs) must treat all content in their pipes equally, without speeding or slowing transmission for favored or disfavored providers. In 2015, the FCC reclassified ISPs as a common carrier equivalent to telephone companies in order to impose strict neutrality rules. FCC chair Pai has expressed his opposition to the rules, but the issue is not on the FCC’s published November docket. There is no reason to assume, however, that Pai’s stance has altered, only that he is deferring for the present what will be a very hotly contested change.
Ownership Rules: For decades, the FCC has maintained rules governing ownership of broadcast stations in order to encourage local news coverage and diversity in programming. That may be about to change. On October 25, Pai announced proposed rulemaking that would radically overhaul this regulatory scheme. The proposals under discussion include:
- Permitting one company to own a daily newspaper and a radio or TV station in the same market.
- Eliminating a rule that requires at least eight independently owned TV stations to remain in a market after two stations combine ownership.
- Loosening restrictions on the number of television and radio stations that can be owned by a single entity in a market.
These moves have received the support of trade groups representing both broadcast stations and newspaper groups, who argue that they need economies of scale to compete in the 21st century marketplace with giant digital media outlets such as YouTube and Facebook.
These steps follow an FCC action earlier this year lifting the cap on the total number of stations that a single company can own. This opened the door for Sinclair Broadcast Group to pursue its intended purchase of Tribune Media, which would result in Sinclair’s ownership of stations covering 70% of all US television viewers.
The FCC also plans to eliminate a rule that required broadcast stations to have a physical studio in or near the communities they serve. While not a change in ownership rules, it will make it easier for large station groups to centralize their operations.
After eight years of a Democratic administration, it’s not surprising to see the regulatory pendulum swing back to favor free market forces. There is also no doubt that FCC commissioners of all political stripes must address the radical changes in the media landscape brought on by the explosion of the internet. Time will tell whether Chairman Pai’s approach is the right one.