In 1941, the Federal Communications Commission established the Chain Broadcasting Regulations to try to break up a radio landscape that had become dominated by just four major national players. The regulations were challenged by NBC, with the company taking the case to the Supreme Court, which upheld the rules.
A direct effect of that decision? NBC divested one of its networks, which ultimately became ABC.
In a new proceeding announced Wednesday, FCC Chairman Brendan Carr cited the Chain Broadcasting Report in a bid to have the agency scrutinize the increasingly tense relationship between national TV networks (of which there are four, just as with the big radio players in 1941) and their affiliates across the country, with the intent of empowering local broadcasters. One of the recommendations from that report was front and center.
“In the early 1940s, radio broadcasting in the United States was almost exclusively provided by four national AM radio networks, similar to today’s television broadcast market, which is dominated by the four large networks that are now horizontally integrated, owning multiple service platforms and stations, including cable, broadcasting, and streaming services,” the new FCC notice reads. “In the Chain Broadcasting Report, the Commission found that certain regulations were necessary to address unfair practices in negotiations between the radio networks and local affiliate stations.”
One regulation floated by the commission to address what it called “anticompetitive leverage and behavior by large networks”: Allowing affiliates to broadcast other networks’ programs and schedule their own.
Of course, the notice is much broader than just that. The relationship between affiliates and national networks has been deteriorating for years, driven by anger over reverse compensation fees (the fees affiliates pay networks out of the deals they cut with pay-TV providers) as well as a loophole that lets national networks negotiate deals with streaming multichannel video providers like YouTube TV and Fubo, as well as with network-affiliated streamers like Peacock and Paramount+ (affiliate groups negotiate their own deals with cable and satellite companies).
In Wednesday’s filing, the FCC asserts authority on that dynamic under its powers to ensure that public airwaves operate in the public interest. It says it’s concerned that national TV networks are “exerting undue influence or control” over affiliate stations in a way that undermines the “needs of their local communities.”
This nods to the Jimmy Kimmel factor. Kimmel’s brief suspension was sparked in part by Nexstar and Sinclair announcing plans to preempt the show. They continued to preempt it after he returned, though that was short-lived. The FCC notice raises the possibility of giving affiliates more power to preempt or replace national programming, while also exploring the perceived power imbalance between national network and their station partners.
Among the information the commission seeks: how bargaining positions between national TV networks and local broadcast stations have changed in recent years; how affiliation agreements may be impeding affiliates’ ability to maintain control over programming decisions; and the preemption of national programming by affiliates. On that issue, the FCC stresses it’s determined that “affiliation agreements should not include provisions that limit right-to-reject preemptions for ‘greater local or national importance’ to breaking news events or any other specific type of programming.”
The inquiry comes as station owners seek to consolidate (Nexstar is trying to complete a mega-deal for TEGNA, while Sinclair is pursuing a deal with Scripps) in a bid to garner scale that can compete with Big Tech and traditional media companies, lest they be left in the lurch. Even national networks like Fox and CBS appear interested in buying more stations.
“Internet media companies and Big Media Conglomerates from the East and West Coasts have been permitted to gain massive scale and scope at the expense of local broadcasters, all while the government has prohibited broadcasters from achieving the same,” a consortium of network affiliates told the FCC earlier this year. “They have no interest in serving local communities or becoming a vital part of the fabric of America’s cities and towns.”
Stay tuned.
