Duopolies: The Losing Local News Board Game
Narrative/Issue
The topic of this policy paper will be about A not so well-known secret: duopolies within the local news industry. Duopoly in the broadcast term is when “two or more stations in the same city or community share common ownership” (Dbpedia, n.d.). Keep in mind that this does not reflect the actual definition of “Duopoly” It’s a shared and common term within the news industry. The current FCC rule states that a company is “permitted to own up to two television stations in the same Designated Market Area (DMA)” with requirements (Federal Communications Commission, 2020). All these rules should restrict large corporations like Nexstar, Sinclair, Tegna, and other major media corporations, but loopholes have been found and exploited for these companies to use multiple major affiliates in the same market. We will discuss the pros and cons of this situation, how it affects the consumers, and what should be done to make this fairer for viewers.
Rules/background:
There are a couple of laws/ rules that will help give some clarity to this topic. One of them is the FCC Broadcast ownership rule. Specifically, the Local Television Multiple Ownership section which states: “An entity is permitted to own up to two television stations in the same Designated Market Area (DMA) if either: The service areas – known as the digital noise limited-service contour – of the stations do not overlap; or at least one of the stations is not ranked among the top-four rated stations in the DMA based on audience share. However, an applicant may seek to make a showing, based on the particular facts and circumstances, that a top-four combination would nonetheless serve the public interest despite the prohibition” (Federal Communications Commission, 2020). This section makes it particularly difficult for news companies to have multiple ownerships of affiliates. Yet despite this rule, stations have found a way to bypass it while staying out of legal trouble, which we will get into shortly. Additionally, regarding national television ownership, the FCC states “There is no limit on the number of television stations a single entity may own nationwide as long as the station group collectively reaches no more than 39 percent of all U.S. TV households” (Federal Communications Commission, 2020). This makes news companies such as Nexstar stay in check to only occupy a certain amount of TV households without over dominating the states. However, as writing this paper, Nexstar, the largest Local television and media company, boast that they have 68% household reach, due to being part of the newest national news network, “NewsNation” (Nexstar, n.d.-a). This far exceeds the FCC rules. Comcast has called this out toward the FCC saying in part “influence’ standard underlying the broadcast attribution rules, and thus violates the national television ownership rule’s national audience reach limit.” (Winslow, 2021).
Another rule that needs to be considered is the FCC elimination of the Broadcast Station Cross-ownership rule, which encapsulates the newspaper-broadcast cross-ownership and radio-television cross-ownership rules. Previously, Newspapers, radio, and television stations respectively could not be owned by the same company. In 2017, The FCC said these “were eliminated due in part to the growth in the number and variety of sources of entertainment, news, and information in the modern media marketplace.” (Federal Communications Commission, 2020). Additionally, The Supreme Court upheld this after reviewing the Third Circuit Court of Appeals decision on FCC v Prometheus Radio Project (SUPREME COURT OF THE UNITED STATES, 2020.
Background analysis/negative
So how many duopolies are there? Well, if we continue to look at Nexstar, as of this writing they have a staggering number of 37 markets duopolies that are two or more of the top 4 affiliates (Nexstar, n.d.-b). This is collectively nearly 18 percent of the total number of markets in America (Out of Home Advising Association of America, n.d.). With the legal rulings that the FCC has with owning more than one major affiliate per market, how is this possible? Because they don't technically own the additional news station. Let's take for example the Nexstar station in Tyler TX, KETK NBC, and FOX 51. KETK is own Nexstar directly while FOX51 is owned by White knight broadcasting and operated by Nexstar. This agreement allows next door to operate both news stations while staying clear of any FCC violations. While this seems like a great agreement for Nexstar, It’s hardly the case. White Knight broadcasting is essentially Nexstar. As someone who has worked at that News station for eight years, I know that only 2 people work under the white knight’s name, the owner and one employee. That said one employee does work for both KETK and FOX51, blurring the lines between the two stations that already shared local news content with each affiliate brand. If this news station is like this, it stands to reason that other Nexstar duopoly stations could be like this as well.
Background analysis/positive
While Nexstar may be the worst-case scenario for operating multiple news affiliates, others are more of a positive experience for other DMA’s. For example, let’s look at Victoria Texas. A media group called The Victoria Television Group (owned by Morgan Murphy Media) contains all four major affiliates in that area, with the ABC affiliate (KAVU owned by Morgan Murphy Media) and Fox affiliate (KVCT owned SagamoreHill Broadcasting LLC) being used for news sources (Crossroads Today, n.d.) Like Nexstar, Morgan Murphy Media operates both news stations while SagamoreHill Broadcasting owns the fox station preventing an FCC headache. However, unlike Nexstar's “agreement” with White Knight, SagamoreHill Broadcasting is a legitimate company, not just a scapegoat to have more than one station. But how is it possible that they have all for affiliates, effectively having a monopoly in one DMA when the FCC does not allow more than two affiliates? A couple of reasons. For one, the NBC and CBS affiliates are not operated as new stations. They are low-power affiliates that only broadcast their affiliate programming (Crossroads Today, n.d.). Meaning they aren’t competing for local news coverage and are simply not needed. Additionally, Victoria is one of the smallest sized DMA in Texas, coming in at a Neilson market size rating of 204 out of 210 (Out of Home Advising Association of America, n.d.). Victoria’s DMA is also nestled in between the Houston DMA (Neilson Rating 8), Corpus Christi DMA (Neilson rating 130), and San Antonio’s DMA (Neilson rating 31) Out of Home Advising Association of America, n.d.). With Victoria’s total reach of households only half of the total population of Victoria (Census, 2021), it is possible that a showing was given to the FCC that allowed it based on the second half of the Local Television Multiple Ownership Rule: “based on the particular facts and circumstances, that a top-four combination would nonetheless serve the public interest despite the prohibition.” (Federal Communications Commission, 2020).
Action
In the broadcast world, duopolies and on rare occasion monopolies of the top four affiliates is not a bad thing. The ones like in Victoria TX help provide a small community with local news they would otherwise have to get in areas they don't live in. The issue is that is the manner in the loophole. If large corporations like Nexstar, Sinclair, and Tegna can operate multiple feeling it's in one market, that only serves to further their profit and reach while causing viewers the delusion that the affiliates in question are separate from each other. I propose at the FCC change its rule to that the company could only own and or operate one tv station market but can only operate two with the already established rules and exceptions. This would help cut down the powerhouse news company's reach to the FCC’s 39% level, especially in Nexstar’s case local network affiliates, and their national news channel. It would give communities more options to watch local news and competition in their market. If a news company was struggling in a market, they could team up and or buy a newspaper or radio station that was in the market to compete with market competition and boost local reputation thanks to the radio/newspaper rule that was discontinued. This simple yet effective rule change serves to help strengthen the amount of local news content within local communities while keeping media giants in check.
Additionally, I’d propose that media companies and their subsidiaries who have a nationwide network channel cannot hold affiliates of other major networks in local markets, much like how the top 4 affiliates (Fox, ABC, NBC, CBS) do not own their competitions affiliates.
If you would like to join me in sharing my voice and concerns, please contact the FCC and your local U.S. Congressional or house representative about these proposals. The voice of many can persuade the few in power.
References
Census. (2021, July 1). U.S. Census Bureau QuickFacts: Victoria city, Texas. Retrieved May 8, 2022, from www.census.gov website: https://www.census.gov/quickfacts/victoriacitytexas
Crossroads Today. (n.d.). About Us. Retrieved May 8, 2022, from Crossroads Today website: https://www.crossroadstoday.com/about/
Dbpedia. (n.d.). About: Duopoly (broadcasting). Retrieved May 8, 2022, from dbpedia.org website: https://dbpedia.org/page/Duopoly_(broadcasting)
Federal Communications Commission. (2020, January 17). FCC Broadcast Ownership Rules. Retrieved May 8, 2022, from Federal Communications Commission website: https://www.fcc.gov/consumers/guides/fccs-review-broadcast-ownership-rules
Nexstar. (n.d.-a). Nexstar Media Group, Inc. Retrieved May 8, 2022, from Nexstar Media Group, Inc. website: https://www.nexstar.tv
Nexstar. (n.d.-b). Nexstar Media Group, Inc. | Stations. Retrieved May 8, 2022, from Nexstar Media Group, Inc. website: https://www.nexstar.tv/stations/
Out of Home Advising Association of America. (n.d.). Page Not Found. Retrieved May 8, 2022, from oaaa.org website: https://oaaa.org/Portals/0/Public%20PDFs/OAAA%202021%20NIELSEN%20DMA%20Rankings%20Report.pdf
SUPREME COURT OF THE UNITED STATES. (2020). SUPREME COURT OF THE UNITED STATES. Retrieved from https://www.supremecourt.gov/opinions/20pdf/19-1231_i425.pdf
Winslow, G. (2021, July 7). Comcast Tells FCC That Nexstar Is Violating Ownership Cap. Retrieved May 8, 2022, from TVTechnology website: https://www.tvtechnology.com/news/comcast-tells-fcc-that-nextstar-is-violating-ownership-cap