Washington Post 2012 Annual Report Download - page 38

predict the net effect that changes to these regimes would have on the Company’s cable and broadcast operations, or on
the Company overall.
Ownership Limits. The Communications Act and the FCC’s rules limit the number and types of media outlets in which a
single person or entity may have an attributable interest. Among other restrictions, the FCC’s local television ownership
rule (also referred to as the “duopoly rule”) generally prohibits one company from owning two television stations in the
same market unless there would remain at least eight independently owned full-power television stations in that market
(including noncommercial stations and counting co-owned stations as one), and at least one of the commonly owned
stations is not among the top-four-ranked television stations in that market. In addition, by statute, a single person or entity
may have an attributable interest in an unlimited number of television stations nationwide, as long as the aggregate
audience reach of such stations does not exceed 39% of nationwide television households and as long as the interest
complies with the FCC’s other ownership restrictions.
The FCC also restricts so-called “cross-ownership” of newspapers and broadcast stations within a market. In its 2008
ownership rules review order, the FCC liberalized its daily newspaper/broadcast cross-ownership rule to presumptively
allow newspaper/broadcast combinations in the 20 largest markets, subject to several fairly rigorous economic hardship
and public interest criteria.
A number of media companies and public interest groups challenged the FCC’s modification of the daily newspaper/
broadcast cross-ownership rule and its retention of the other ownership rules. In July 2011, a court rejected a challenge to
the FCC’s retention of the local television ownership rule, but remanded the FCC’s relaxation of the newspaper/
broadcast rule back to the FCC for its failure to comply with statutory notice requirements.
In addition, the FCC has commenced another rulemaking proceeding regarding the media ownership rules. The
Communications Act requires the FCC to review its ownership rules periodically and to repeal or modify any rule that it
determines is no longer in the public interest. In December 2011, the FCC issued a notice of proposed rulemaking,
proposing to retain the local television ownership rule, seeking comment on a possible waiver standard for smaller
markets and proposing a modest relaxation of the newspaper/broadcast rule (similar to the rule that the FCC adopted
during the last ownership review that was rejected in court). The notice also addresses the FCC’s radio ownership and
radio/television cross-ownership rules, and it asks about shared services agreements and local news agreements,
including whether such arrangements should be attributable for purposes of the ownership rules. The proceeding is
pending, and it is not possible to predict its outcome, but changes to the FCC’s ownership rules could affect PNS’s
operations.
Programming. Five of PNS’s six stations are affiliated with one or more of the national television networks, which
provide a substantial amount of programming to their television station affiliates. The expiration dates of these affiliation
agreements are set forth at the beginning of the Television Broadcasting section. PNS’s Jacksonville station, WJXT, has
operated as an independent station since 2002. In addition, each of the Company’s stations receives programming from
syndicators and other third-party programming providers. PNS’s performance depends, in part, on the quality and
availability of third-party programming, and any substantial decline in the quality or availability of this programming could
materially affect PNS’s operations.
Public Interest Obligations. To satisfy FCC requirements, stations generally are expected to air a specified number of
hours of programming intended to serve the educational and informational needs of children and to complete reports on a
quarterly basis concerning children’s programming. In addition, the FCC requires stations to limit the amount of
advertising that appears during certain children’s programs. In October 2009, the FCC initiated a proceeding to
consider changes to its children’s programming rules in light of technological developments and changes in the video
marketplace, but no specific changes to the children’s programming requirements have yet been adopted.
In November 2011, the FCC started a proceeding to seek comment on proposals that would require television
broadcasters to make standardized disclosures regarding the programs they air and certain other matters. This
proceeding is pending, and it is not possible to predict its outcome, but changes to this rule could affect PNS’s operations
and regulatory compliance costs.
In April 2012, the FCC adopted a rule that requires television stations to submit electronically most of their public
inspection files to the FCC, for hosting on the FCC’s website. The FCC rejected a proposal, however, to expand the
categories of documents to be included in the public file, including joint operating agreements and sponsorship
identification information. The National Association of Broadcasters has challenged the rule in the U.S. Court of Appeals
for the D.C. Circuit. The D.C. Circuit has not yet ruled on the merits of the case, but in August 2012, it denied the NAB’s
emergency motion to stay the rules. The case remains pending. The changes went into effect in August 2012 and could
affect PNS’s operations and regulatory compliance costs.
26 THE WASHINGTON POST COMPANY