FCC Establishes Standards for Noncommercial Broadcast Applicants Seeking Commercial Stations
In a Second Report and Order released late last week, the FCC determined that noncommercial entities can apply for commercial station licenses, but their applications will be dismissed if any mutually exclusive applications are filed by commercial entities. The remaining commercial entities would then compete for the license in the auction process. A noncommercial entity could obtain the station license only if no commercial entity applied for the same license.
Since 1997, the Federal Communications Commission (“FCC” or “Commission”) has been awarding commercial broadcast licenses through competitive bidding (i.e., auctions), rather than through comparative hearings, as was its prior practice. Several noncommercial entities that would otherwise qualify for noncommercial educational stations applied for some of the commercial licenses available. The Commission decided that all those applying for commercial broadcast licenses would be subject to competitive bidding, regardless of whether the applicant was commercial or noncommercial.
In 2001, following an appeal by National Public Radio and others, the U.S. Court of Appeals for the District of Columbia Circuit reversed the Commission’s decision, holding that noncommercial entities could not be forced to compete for commercial broadcast stations through the auction process. However, the Court remanded the matter to the FCC to determine how to award licenses for commercial stations when there are both commercial and noncommercial applicants.
Although the new rules generally prohibit noncommercial applicants from competing with commercial applicants for commercial station licenses, the Commission created a few exceptions. First, a noncommercial applicant can choose to apply for a commercial station as a commercial applicant, and would then be able to compete for the station through the competitive bidding process if other applications are filed for that license. However, the choice of whether to file as a commercial or noncommercial applicant must be made at the time of filing the application, before it is known whether any mutually exclusive applications will be filed. Changing from noncommercial to commercial status or vice versa would be considered a “major” amendment that would result in dismissal of a mutually exclusive application.
Second, if a noncommercial entity applies for an AM or low power license, the Commission will allow an opportunity to settle by way of a technical amendment that, for example, would create two new stations instead of one. This can be done because low power and AM stations can be located wherever they are technically feasible, unlike FM and full power TV stations that are allotted to specific communities and channels by FCC rule. This limited settlement opportunity would be an exception to the general anti-collusion rule that prohibits mutually exclusive applicants from discussing settlement.
Because the primary effect of this Order is to bar noncommercial applicants from competing with commercial applicants for commercial stations, the Commission stated that it would allow noncommercial entities to seek additional noncommercial allotments (i.e., stations that would be available only to noncommercial entities) based on a somewhat relaxed showing of need and technical feasibility.
Following comments filed on behalf of one of our clients, the Commission refused to create noncommercial low power TV licenses, concluding that only municipalities that transmit noncommercial programs for educational purposes would be considered noncommercial entities for low power TV purposes. A municipality applying for a low power TV station in that capacity would not be subject to auction. Its application would be subject to dismissal, however, if mutually exclusive applications were filed by other entities, absent a settlement in the form of a technical amendment.
Please contact us or use this link if you would like a copy of the Commission’s Second Report and Order or if you have any questions concerning this matter.