Washington Post 2007 Annual Report Download - page 29

In July 2006 the FCC initiated a broad remand proceeding to reconsider the revised rules and asked for public
comment on whether to revise, among other things, the numerical limits governing local television and cross-ownership.
Asaresultofthatproceeding,inDecember2007theFCCannounced a liberalization of its newspaper/broadcast
cross-ownership rule. Under the new rule, the Commission will assess proposed newspaper/broadcast combinations
on a case-by-case basis, but will presumptively consent to a newspaper’s ownership of one television station or one
radio station in the 20 largest markets, under limited circumstances, and will presumptively not consent to such
ownership outside the 20 largest markets. Despite these presumptions, the FCC stated that it would consider permitting
newspaper/broadcast cross-ownership in smaller markets if the newspaper can show either that the broadcast
property is “failed” or “failing” or that the transaction will result in a new source of news in the market, that is, at least
seven new hours of local news per week on an acquired broadcast station that previously has not aired local news.
Because the U.S. Court of Appeals for the Third Circuit stayed the effectiveness of any modifications to the ownership
rules until it reviews the FCC’s compliance with its order, the new newspaper/broadcast cross-ownership rule will not
go into effect until after it survives judicial review.
In its 2006 order, the FCC declined to modify other ownership rules, including the local television station ownership
rule,whichpermitsonecompanytoowntwotelevisionstationsinthesamemarketonlyifthereareatleasteight
independently owned full-power television stations in that market (including non-commercial stations and counting the
co-owned stations as one), and if at least one of the co-owned stations is not among the top four ranked television
stations in that market. This rule includes an exception allowing common ownership of stations in a single market where
one of the stations is failing or unbuilt.
By legislation, Congress removed the national limit on broadcast ownership from the FCC’s consideration in its
ongoing ownership proceeding and instead permitted a broadcast company to own an unlimited number of television
stations, as long as the combined service areas of such stations do not include more than 39% of nationwide television
households, and as long as the holdings comply with the FCC’s other ownership restrictions.
Political Advertising. The Bipartisan Campaign Reform Act of 2002 imposed various restrictions on both contri-
butions to political parties during federal elections and certain broadcast, cable television and DBS advertisements
that refer to a candidate for federal office. Those restrictions may have the effect of reducing the advertising revenues of
the Company’s television stations during campaigns for federal office below the levels that otherwise would be
realized in the absence of such restrictions. However, the U.S. Supreme Court’s June 2007 decision in Federal Election
Commission v. Wisconsin Right to Life, Inc. limited the act’s restrictions by allowing corporations and labor unions to
financemoreadvocacycommunicationsthanwerepreviouslypermitted.Althoughthefulleffectofthisdecisionisnot
yet clear, it may provide the Company with limited relief from any adverse effects of the act.
Commercial broadcast stations sell advertising time through a number of methods, and some stations use third-party
brokers to sell otherwise unused inventory at below-market prices. The FCC is currently considering a request that it
declare that such sales, when made through Internet brokers, do not affect a broadcast station’s lowest unit charge for
advertising, which such stations must offer to candidates for public office during pre-election periods. It is unclear what
effect this matter will have on the Company’s operations because it is still pending at the FCC, but an adverse result
could limit the Company’s ability to obtain revenue from certain types of broadcast advertising.
Broadcast Indecency. During 2007, the FCC amended its rules, in response to the enactment of the Broadcast
Decency Enforcement Act of 2005, to increase the maximum monetary forfeiture for the broadcast of indecent
programming from $32,500 per occurrence to $325,000 per occurrence. In June 2007, the U.S. Court of Appeals
for the Second Circuit issued a decision vacating certain of the FCC’s proposed forfeitures for the broadcast of so-
called “fleeting expletives,” which the FCC found were indecent. The court concluded that the FCC had failed to
articulate a reasoned basis for its decisions and remanded the relevant cases to the FCC for further consideration. The
FCC responded by requesting that the U.S. Supreme Court review the matter, and that request remains pending. In
addition, the U.S. Court of Appeals for the Third Circuit is considering a challenge to the FCC’s proposal to impose
monetaryforfeituresinconnectionwithCBS’s2004broadcastofamusicalperformanceduringtheSuperBowl
halftime show, which the FCC also found to be indecent. Particularly in light of the increase in maximum forfeitures, the
resolution of this litigation could affect the risks associated with operation of the Company’s broadcast television
stations.
It is not generally the FCC’s policy to notify licensees when it receives indecency complaints regarding their broadcasts
before it issues a formal Letter of Inquiry or takes other enforcement action. As a result, the FCC may have received
complaints of which the Company is not aware alleging that one or more of the Company’s stations broadcast indecent
material. The Company was, however, notified by Letters of Inquiry during 2007 that the FCC had received complaints
from viewers alleging that a program broadcast by Company station WPLG and a program broadcast by Company
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