The FCC's Media Ownership Rules and the Implications for the Network-Affiliate Relation

Abstract

On June 20, 2003 the Federal Communications Commission (FCC; 2003b) released a Report and Order that completed its 2002 Biennial Regulatory Review of 4 broadcast ownership rules. The increase in the station ownership cap from 35% to 45% of U.S. television households raises questions about the impact of the FCC's action on the network-affiliate relation. This study uses February 2002 Nielsen ratings to identify the stations and ownership conditions under which an affiliate is likely to have bargaining power in its dealings with its network.

The deregulatory effects of the Telecommunications Act of 1996 on the broadcasting industry: Expectations vs. reality

“…To summarize, the Act is expected to benefit the broadcasting groups by enabling them to improve profitability and operating efficiency through achieving economies of scale, enjoying more market power and less competition, and attaining better positioning in their competition with other media (Hazlett, 1999;Bates and Chambers, 1999;Barrett, 2005).…”

“…It was theorized that consolidations and concentration prompted by the Act may allow broadcasting firms to achieve economies of scale, to improve market power, and to better compete with other media (Albrran and Pitts, 2001;Ekelund et al, 2000;Leeper, 2000;Barrett, 2005). Achieving economies of scale should reduce costs and expenses per dollar of revenues as well as improve the efficiency of broadcasters' facilities and employees to produce revenues.…”