Washington Post 2004 Annual Report Download - page 22

earlier decision and thus declined to require cable television operators to simultaneously carry both the analog and digital
signals of television broadcast stations. In the same order, the FCC affirmed an earlier decision that only a single stream of
video (that is, a single channel of programming), rather than a television broadcast station's entire DTV signal, is eligible
for mandatory carriage by cable television operators. (In a pending proceeding, the FCC has sought comment on how it
should apply digital signal carriage rules to DBS providers.) Thus, at present, a television station wishing to insure that
cable operators carry both the analog and digital signals of the station, and all of the program streams that may be present
in the station's digital signal, can achieve those objectives only if it is able to negotiate appropriate retransmission consent
agreements with cable operators. Cable operators will be required to carry the portion of the DTV signal of any DTV
station eligible for mandatory carriage in the same format in which the signal was originally broadcast. Thus, an HDTV
video stream eligible for mandatory carriage must be carried in HDTV format by cable operators. However, it is still unclear
whether cable operators will be responsible for ensuring that their set-top boxes are capable of passing DTV signals in
their full definition to the consumer's DTV receiver. As noted previously, all of the Company's television stations are
transmitting both analog and digital broadcasting signals; most of those stations' digital signals are being carried on at
least some local cable systems pursuant to retransmission consent agreements.
The Communications Act requires the FCC to review its broadcast ownership rules periodically and to repeal or modify any
rule it determines is no longer in the public interest. In June 2003, following such a review, the FCC modified its national
television ownership limit to permit 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 45% of nationwide television households, an increase
from the previous limit of 35%. Subsequently, legislation was enacted that fixed the national ownership limit at 39% of
nationwide television households, removed the national ownership limit from the periodic FCC review process and changed
the frequency of such reviews from every two years to every four years.
In 1999 the FCC amended its local television ownership rule to permit one company to own two television stations in the
same market if there are at least eight 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. The FCC also decided to permit common ownership of stations in a
single market if their signals do not overlap, and to permit common ownership where one of the stations is failing or unbuilt.
These rule changes permitted increases in the concentration of station ownership in local markets, and all of the Company's
stations are now competing against two-station combinations in their respective markets.
In June 2003 the FCC issued an order that modified several of its broadcast ownership rules. In its decision, the FCC further
relaxed the local television ownership rule and also relaxed two FCC cross-ownership rules restricting common ownership
of television stations and newspapers and of television stations and radio stations in the same market. This decision was
appealed to the U.S. Court of Appeals for the Third Circuit, and that court stayed the effectiveness of the new rules
pending the outcome of the appeal. Subsequently, the Third Circuit held that the FCC did not adequately justify its revised
rules, remanded the case to the FCC for further proceedings, and held that the stay would remain in effect pending the
outcome of the remand. The FCC has not yet instituted remand proceedings, nor has it resolved long-pending petitions for
reconsideration of the revised rules. In the interim, the former local ownership and cross-ownership rules remain in effect.
The rule changes approved by the FCC in June 2003, would, if ultimately upheld or justified by the FCC on remand, allow
co-ownership of two television stations in a market as long as the two stations are not both ranked in the top four, and
would also allow co-ownership of three television stations if there are 18 or more television stations in the market. Waivers
of those limits would also be available where a station is failing and under certain other circumstances. In addition, the rule
changes would liberalize the FCC's restrictions on owning a combination of radio stations, television stations, and daily
newspapers in the same market, and would, for example, allow one entity to own a daily newspaper and a TV station in
the same market as long as there are four or more television stations in the market.
The Bipartisan Campaign Reform Act of 2002 imposed various restrictions both on contributions to political parties during
federal elections and also on 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.
The FCC is conducting proceedings dealing with various issues in addition to those described elsewhere in this section,
including proposals to modify its regulations relating to the operation of cable television systems (which regulations are
discussed below under ""Cable Television Operations Ì Regulation of Cable Television and Related Matters''), and
proposals that could affect the development of alternative video delivery systems that would compete in varying degrees
with both cable television and television broadcasting operations. Also, in July 2004 the FCC instituted an inquiry into its
rules and policies concerning broadcasters' service to their local communities.
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