To amend the Communications Act of 1934 to prevent excessive concentration of ownership of the nation's media outlets, to restore fairness in broadcasting, and to foster and promote localism, diversity, and competition in the media.

March 30, 2004

Mr. HINCHEY introduced the following bill; which was referred to the Committee on Energy and Commerce

To amend the Communications Act of 1934 to prevent excessive concentration of ownership of the nation's media outlets, to restore fairness in broadcasting, and to foster and promote localism, diversity, and competition in the media.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title- This Act may be cited as the `Media Ownership Reform Act of 2004'.

(b) Table of Contents-

Sec. 1. Short title; table of contents.

Sec. 2. Findings and purposes.

Sec. 3. Fairness in broadcasting.

Sec. 4. Broadcasting ownership limitations.

Sec. 5. Invalidation of media ownership deregulation.

Sec. 6. Review process for media ownership.

Sec. 7. Public interest reports.

Sec. 8. Prevention of programming vertical integration.

SEC. 2. FINDINGS AND PURPOSES.

(a) Findings- The Congress finds the following:

(1) The Communications Act of 1934 requires the Federal Communications Commission and broadcast licensees to promote the public interest. The Commission has long had rules in place to promote the goals of localism, diversity, and competition.

(2) The Supreme Court, on numerous occasions, has upheld the Commission's and Congress's right to establish media protections because a monopolization of ideas is antithetical to our democracy.

(3) In 1945, the Supreme Court declared, `the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public, that a free press is a condition of a free society'.

(4) In 1969, the Supreme Court declared, `it is the purpose of the First Amendment to preserve an uninhibited marketplace of ideas in which truth will ultimately prevail, rather than to countenance monopolization of that market, whether it be by the Government itself or a private licensee'.

(5) Over the past two decades there has been a gradual shift of control in the public's airwaves into the hands of fewer private entities.

(6) Private entities can exert control over the public's access to information as many of the rules designed to foster diversity, competition, localism, and production of independent news and entertainment have been weakened or repealed.

(7) The past two decades have produced technological advances. Approximately 80 percent of U.S. households subscribe to cable or satellite systems offering multiple channels of video programming. The rapid growth of the Internet added another source of information to traditional media outlets. Over 71 percent of Americans have some form of online access.

(8) These advances have dramatically increased the number of information pipelines into Americans' homes. Despite the increase in information outlets, ownership and control of those is shrinking. A handful of companies control a large portion of both programming and distribution. Five companies now own the broadcast networks, 90 percent of the top 50 cable networks, produce three-quarters of all prime time programming, and control 70 percent of the prime time television market share. The same companies that own the nation's most popular newspapers and networks also own over 85 percent of the top 20 Internet news sites.

(9) While the Internet has become a new source of information, the vast majority of Americans continue to rely on television, newspaper, and radio as their primary sources of news information. Ownership of traditional news sources has been consolidated over the past 25 years. Two-thirds of America's independent newspapers have been lost since 1975 and according to the Department of Justice's Merger Guidelines every local newspaper market in the U.S. is highly concentrated.

(10) One-third of America's independent TV stations have vanished since 1975 and there has been a 34 percent decline in the number of radio station owners since the Telecommunications Act of 1996. There has been a severe decline in the number of minority owned broadcast stations. At the end of the 1990's, minorities owned just 1.9 percent of the U.S. television stations and 4 percent of the nation's AM and FM radio stations.

(11) As the major networks have been allowed greater vertical integration, the percentage of independently produced pilots and new series on the four national broadcast networks has declined from 87.5 percent in 1990 to 22.5 percent in 2002.

(12) The media ownership rules adopted by the FCC on June 2, 2003 as part of its 2002 Biennial Regulatory Review will allow further consolidation of the media industry. Under the June 2, 2003, ruling--

(A) in the largest metropolitan areas one company is allowed to own three television stations, eight radio stations, the daily newspaper, even if it is the only daily newspaper, the cable system, the all-news channel on that cable system, and the Internet news sites associated with each of those enterprises;

(B) networks are able to purchase additional TV stations, further nationalizing broadcast TV and limiting local communities' ability to influence what programming it will see;

(C) over 80 percent of U.S. markets where TV mergers are permitted will qualify as highly concentrated, according to the anti-trust market definitions contained in the Department of Justice's merger guidelines;

(D) the cross-media ownership that is permitted would reduce the number of independent daily news sources in many markets to a level 20 times above the threshold used by the Department of Justice to trigger antitrust investigations in other industries; and

(E) in one-newspaper towns and cities, the new cross-media ownership regulations would permit one company to have a 90 percent market share of the newspaper circulation, one-third of the TV audience, and one-third of the radio audience.

(13) The weakening of media protections, and subsequent consolidation of the media industry, has allowed companies to ignore their obligations to serve the public interest and severely reduce localism, diversity, and competition in today's media.

(14) The current state of today's media threatens the ability of our democracy to function because it does not allow for `the widest possible dissemination of information from diverse and antagonistic sources' and shrinks the marketplace of ideas.

(b) Purposes- The purposes of this Act are--

(1) to inform the public of the scope of media rules and regulations that have been weakened and lost over the past two decades;

(2) to restore fairness in broadcasting;

(3) to reduce media concentration;

(4) to ensure that broadcasters meet their public interest requirements; and

(5) to promote diversity, localism, and competition in American media

SEC. 3. FAIRNESS IN BROADCASTING.

Section 315 of the Communications Act of 1934 (47 U.S.C. 315) is amended--

(1) by redesignating subsections (a) through (d) as subsections (b) through (e), respectively; and

(2) by inserting before subsection (b) the following new subsection:

`(a) Public Interest Obligation to Cover Publicly Important Issues- A broadcast licensee shall afford reasonable opportunity for the discussion of conflicting views on issues of public importance. The enforcement and application of the requirement imposed by this subsection shall be consistent with the rules and policies of the Commission in effect on January 1, 1987.'.

SEC. 4. BROADCASTING OWNERSHIP LIMITATIONS.

(a) Establishment of Broadcasting Multiple Ownership Limitations- Part I of title III of the Communications Act of 1934 is amended by inserting after section 339 (47 U.S.C. 339) the following new section:

`SEC. 340. BROADCASTING MULTIPLE OWNERSHIP LIMITATIONS.

`(a) National Television Audience Reach Limitation- The Commission shall not permit any license for a commercial television broadcast station to be granted, transferred, or assigned to any party (including all parties under common control) if the grant, transfer, or assignment of such license would result in such party or any of its stockholders, partners, or members, officers, or directors, directly or indirectly, owning, operating or controlling, or having a cognizable interest in television stations which have an aggregate national audience reach exceeding 35 percent.

`(b) Radio Ownership Limitations-

`(1) National radio ownership limitations- The Commission shall modify section 73.3555 of its regulations (47 C.F.R. 73.3555) to establish provisions limiting the number of AM or FM broadcast stations which may be owned or controlled by one entity nationally. Such limitation shall not exceed 5 percent of the total number of AM and FM broadcast stations.

`(2) Local radio ownership limitations- The Commission shall revise section 73.3555(a) of its regulations (47 C.F.R. 73.3555) to provide that--

`(A) in a radio market with 45 or more commercial radio stations, a party may own, operate, or control up to 6 commercial radio stations, not more than 4 of which are in the same service (AM or FM);

`(B) in a radio market with between 30 and 44 (inclusive) commercial radio stations, a party may own, operate, or control up to 5 commercial radio stations, not more than 3 of which are in the same service (AM or FM);

`(C) in a radio market with between 15 and 29 (inclusive) commercial radio stations, a party may own, operate, or control up to 4 commercial radio stations, not more than 2 of which are in the same service (AM or FM), except that a party may not own, operate, or control more than 25 percent of the stations in such market; and

`(D) in a radio market with 14 or fewer commercial radio stations, a party may own, operate, or control up to 3 commercial radio stations, not more than 2 of which are in the same service (AM or FM), except that a party may not own, operate, or control more than 40 percent of the stations in such market.

`(c) Cable/Broadcasting Ownership Restrictions- The Commission shall not permit any license for a commercial television broadcast station to be granted, transferred, or assigned to any party (including all parties under common control) if the grant, transfer, or assignment of such license would result in such party or any of its stockholders, partners, or members, officers, or directors, directly or indirectly, owning, operating or controlling, or having a cognizable interest in such station and directly or indirectly owning or controlling a cable television system whose service area overlaps in whole or in part with such television broadcast station's predicted Grade B contour, computed in accordance with section 73.684 of the Commission's regulations (47 C.F.R. 73.684).

`(d) No Grandfathering- The Commission shall require any party (including all parties under common control) that holds licenses for commercial broadcast stations in excess of the limitations contained in subsection (a), (b), or (c) to divest itself of such licenses as may be necessary to come into compliance with such limitation within one year after the date of enactment of this section.

`(e) Section not Subject to Forbearance- Section 10 of this Act shall not apply to the requirements of this section.

`(f) Definitions-

`(1) National audience reach- The term `national audience reach' means--

`(A) the total number of television households in the Nielsen Designated Market Area (DMA) markets in which the relevant stations are located, or as determined under a successor measure adopted by the Commission to delineate television markets for purposes of this section; divided by

`(B) the total national television households as measured by such DMA data (or such successor measure) at the time of a grant, transfer, or assignment of a license.

No market shall be counted more than once in making this calculation. The Commission shall not provide any discount in the measurement of national audience reach for UHF stations, or on the basis of any other class or category of television station.

`(2) Cognizable interest- Except as may otherwise be provided by regulation by the Commission, the term `cognizable interest' means any partnership or direct ownership interest and any voting stock interest amounting to 5 percent or more of the outstanding voting stock of a licensee.'.

(b) Conforming Amendments-

(1) Section 629 of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 2004, is repealed. Subject to the amendments made by this subsection, section 202 of the Telecommunications Act of 1996 shall be applied as if such section 629 had not been enacted. This paragraph shall be effective as if enacted on the day after the date of enactment of Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 2004.

(2) Subsections (a) and (b) of section 202 of the Telecommunications Act of 1996 (Public Law 104-104; 110 Stat. 110) are repealed

(3) Section 202(c)(1) of such Act is amended--

(A) by striking `its regulations' and all that follows through `by eliminating' and inserting `its regulations (47 C.F.R. 73.3555) by eliminating';

(B) by striking `; and' at the end of subparagraph (A) and inserting a period; and

(C) by striking subparagraph (B).

SEC. 5. INVALIDATION OF MEDIA OWNERSHIP DEREGULATION.

(a) Definition- For purposes of this section, the term `media ownership proceeding' means the Federal Communications Commission proceeding on broadcast media ownership rules (MB Docket No. 02-277, MM Docket No. 01-235, MM Docket No. 01-317, and MM Docket No. 00-244).

(b) New Rules Invalidated- Except as provided in subsection (d), the final rules adopted by the Federal Communications Commission pursuant to its media ownership proceeding, and announced by the Commission on June 2, 2003, shall be invalid and without legal effect.

(c) Reinstatement of Previous Rules- Except as provided in subsection (d), any rule of the Federal Communications Commission that was in effect on June 1, 2003, and that was amended, repealed, or otherwise modified by the Commission pursuant to the media ownership proceeding is hereby reinstated as it was in effect on June 1, 2003. Any such rule shall be applied and enforced both prospectively after the date of enactment of this Act and retroactively to June 2, 2003, as if the media ownership proceeding had not occurred.

(d) Exception- This section shall not apply to the limitations required by section 340 of the Communications Act of 1934, as added by section 4 of this Act.

(e) Use of Biennial Review Prohibited- The Federal Communications Commission shall not apply section 202(h) of the Telecommunications Act of 1996 or section 11(b) of the Communications Act of 1934 (47 U.S.C. 161(b)) to any review of broadcast media ownership rules after the date of enactment of this Act.

SEC. 6. REVIEW PROCESS FOR MEDIA OWNERSHIP.

(a) Five-Year Review Process- The Commission shall, once each 5 years beginning in 2006, conduct a review of--

(1) how the Commission's regulations concerning media ownership promote and protect localism, competition, diversity of voices in the media, diversity in broadcast ownership, children's programming, small and local broadcasters, technological advancement; and

(2) what regulations should be strengthened, added, eliminated, or altered, consistent with the priorities described in paragraph (1).

(b) Report to Congress- The Commission shall, promptly after the conclusion of each review under subsection (a), submit a report thereon to Congress.

(c) Publication of Final Rules Prior to Comment; Hearings- Before issuing any final rule concerning limitations on media ownership, the Commission shall--

(1) publish such rule in the Federal Register;

(2) conduct not less than 5 public hearings in various regions of the country to afford the public a reasonable opportunity to comment on such rule; and

(3) widely advertise the time and place of such hearings in advance.

SEC. 7. PUBLIC INTEREST REPORTS.

Section 309(k) of the Communications Act of 1934 (47 U.S.C. 309(k)) is amended by adding at the end the following new paragraph:

`(5) Public interest service reports required- For the purposes of enabling the Commission to render the determinations required by paragraph (1)(A), each broadcast licensee, at least one every 2 years, shall submit to the Commission and publish, or otherwise make broadly available to the public at no cost, a report on how the broadcast station is meeting the requirement to serve the public interest. The information in such report shall include--

`(A) the broadcaster's attempts to ascertain and satisfy local community needs;

`(B) the broadcaster's use of public service announcements;

`(C) the level and variety of the broadcaster's children's programming and the extent of the broadcaster's restraint from improper commercial advertising during children's programming; and

`(D) the level and variety of the broadcaster's nonentertainment programming, particularly public affairs programming; and

`(E) the broadcaster's proposals for future programming.'.

SEC. 8. PREVENTION OF PROGRAMMING VERTICAL INTEGRATION.

Part I of title III of the Communications Act of 1934 is amended by inserting after section 340 (as added by section 3) the following new section:

`SEC. 341. PREVENTION OF PROGRAMMING VERTICAL INTEGRATION.

`(a) Limitations on Vertical Integration in the Acquisition of Programming- The Commission shall, in accordance with subsection (b), prescribe rules to prevent the persons controlling the distribution of video programming over network distribution systems from acquiring unreasonable proportions of such programming from subsidiaries or affiliates contrary to the public interest in the goals of diversity and competition in the media marketplace.

`(b) Minimum Standards- The rules required by subsection (a) shall, at a minimum--

`(1) for any of the four largest national television networks, prohibit such network from distributing network produced programming over such network in an amount that exceeds, for any month, more than 60 percent of their primetime programming;

`(2) for any other national television network, other than a network described in paragraph (3), prohibit such network from distributing network produced programming over such network in an amount that exceeds, for any month, more than 70 percent of their primetime programming;

`(3) for a national television network that has been in operation for less than 3 years, prohibit such network from distributing network produced programming over such network in an amount that exceeds, for any month, more than 90 percent of their primetime programming;

`(4) for a cable network that is owned or controlled by a large cable operator or by a national television network, prohibit such network from distributing network produced programming over such networks in an amount that exceeds, for any month, more than 65 percent of their primetime programming; and

`(5) for any other cable networks, prohibit such network from distributing network produced programming over such network in an amount that exceeds, for any month, more than 75 percent of their primetime programming.

`(c) Definitions- As used in this section:

`(1) Network produced programming- The term `network produced programming' means programming that is owned or produced by an entity controlled by or affiliated with the same entity owning or controlling the network, or one over which the network has sole or joint creative control, acts as the distributor, or has a financial interest, but does not include programming that is owned or produced, or under the sole creative control, by an affiliated television broadcast station that is not owned or controlled by such network.

`(2) Primetime programming- The term `primetime programming' means programming broadcast during the hours of 8 p.m. to 11 p.m., Monday through Sunday, but does not include newscasts, sports programs, or telecasts of feature films.

`(3) Cable network- The term `cable network' means a cable channel that broadcasts video programming which is primarily intended for the direct receipt by a cable operator or a satellite operator for their retransmission to cable or satellite subscribers, but does not include a cable channel that reaches less than 16 million cable households.

`(4) Large cable operator- The term `large cable operator' means a cable operator, as such term is defined in section 602, that has 3,000,000 or more subscribers in the aggregate nationwide.'.

END