NAB says the current local TV ownership rule doesn’t jive with the Telecommunications Act and is arbitrary and capricious; the broadcast trade lobby has urged the FCC to remove the eight-voices test which prohibits one entity from owning two TV stations in a market unless at least eight independently owned TV stations would remain.
The issue is key as current owners would like to increase their scale to compete more effectively with a changing media marketplace.
“Because the majority of local markets have eight or fewer independently owned TV stations, the rule prevents the combination of two stations in most DMAs,” writes NAB. “Although the Eight Voices Rule ignores current marketplace realities and lacks an evidentiary basis, the Commission continues 17 years later to maintain this rule unchanged.”
Further, the agency has consistently failed to undertake a basic economic analysis to determine whether drawing a line around where a potential owner can hold its TV assets is valid and whether such markets suffer from lack of competition, according to the broadcast trade lobby.
Two economists, Dr. Kevin Caves and Dr. Hal Singer of Economists Incorporated, analyzed the eight voices rule. They conclude the rule “imposes an economically arbitrary threshold, fails to advance the commission’s stated objective of promoting competition, and proscribes transactions that would likely be deemed procompetitive under conventional competition analysis.” Contrary to the assumptions underlying the rule, their econometric analysis shows that, holding other factors constant, local advertising rates are no higher in markets with fewer than eight independently owned TV stations than in markets with eight or more independent stations, according to NAB.
Their study finds that “a reduction in the number of independently owned TV stations in a local market is statistically associated with a decrease in local advertising prices.”
NAB submitted the analysis after the chairman recently released a synopsis of the agency’s next review of media ownership rules that leaves much of the restrictions intact, including the local TV ownership rule and eight-voices test.
