Fall 2009 issue of Horizons

Common ownership of two television stations is permitted if the stations are in separate Nielson Designated Market Areas or if eight independently owned, operational television stations remain post- merger, and one of the stations is not among the top four-ranked stations in the market (based on audience share as measured by Nielson or a comparable rating service). This second condition assumes that neither station in the merger is considered a failing station, in which case the duopoly rule can be waived by the commission. However, to prove that the station is in fact failing, applicants must first satisfy the requirement demonstrating that there is no out-of- market buyer willing to pay more than an artificially depressed price. Applicants must first make a serious effort to sell the station. The FCC also allows common ownership in the same DMA if the overlap is de minimis, meaning the area of overlap encompasses less than 1 percent of the area and population. Mixing and matching? The FCC permits ownership of a television station (or two if the restrictions noted above are met) and radio station in the same market. Multiple radio stations, along with the television station, may be owned if a certain number of independent voices remain post-merger; the more voices, the more radio stations that can be a part of the merger. Voice count tests may include other independently owned radio stations, daily newspapers and cable systems. Generally, an independent source of information and entertainment programming for the relevant market is considered a voice. Needless to say, a merger or acquisition takes more research than finding a broadcaster interested in selling; and once a target is identified, the seller will often remain the licensee holder for a substantial amount of time until the FCC has approved the sale.

a major change in 2009 — the switch from analog to digital. The digital switch is the end of one TV era, but broadcasters and device companies hope it’s opening up another. When the Telecommunications Act of 1996 granted broadcasters an additional six megahertz of spectrum to start making the transition from analog to digital TV, acquisitions became prominent in the marketplace as broadcast companies saw the opportunities for additional media distribution channels. The switch in 2009 opens up even more opportunities. Changing over to a digital format reduces the amount of signal spectrum used by the TV broadcasting systems, thereby freeing up extra capacity. This change enables first-responders such as local police and fire departments to enhance the way they react to emergencies, but both government and broadcast companies recognize additional opportunities for new and innovative services for consumers. With the switch to digital, 700 MHz of analog broadcast spectrum became available for sale, which was auctioned off by the FCC. While cellular giants purchased a significant portion of the spectrum, hundreds of licenses were sold to television providers as well. TV stations cannot only send clearer signals through the air but they can introduce new channels. The freed-up broadcast spectrum triggered by the switch also allows television to transmit live to cell phones and other portable devices. Having a new pathway through which to reach consumers is a major step toward increasing market share. Qualcomm Inc., a carrier with a proprietary advanced wireless broadband technology for mobile TV, reportedly looks to expand into 39 markets immediately and 100 by the end of 2009. Broadcast companies also have been pursuing market advantages by streaming radio on the internet. Others are using emerging technologies to further develop the reach, coverage and quality of radio and television wireless signals to gain market share.

New Technologies — Innovative Market Growth

Looking to expand market share without going through a traditional acquisition, some broadcasters are considering innovative ways of expanding their viewing and listening audience. Take into consideration

Expansion into new markets in a highly regulated industry is difficult, encouraging broadcast companies

39 u fall 2009 issue