Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) 2006 Quadrennial Regulatory Review – Review ) MB Docket No. 06-121 of the Commission’s Broadcast Ownership ) Rules and Other Rules Adopted Pursuant to ) Section 202 of the Telecommunications Act of ) 1996 ) ) 2002 Biennial Regulatory Review – Review of ) MB Docket No. 02-277 the Commission’s Broadcast Ownership Rules ) and Other Rules Adopted Pursuant to Section ) 202 of the Telecommunications Act of 1996 ) ) Cross-Ownership of Broadcast Stations and ) MM Docket No. 01-235 Newspapers ) ) Rules and Policies Concerning Multiple ) MM Docket No. 01-317 Ownership of Radio Broadcast Stations in ) Local Markets ) ) Definition of Radio Markets ) MM Docket No. 00-244 ) COMMENTS OF CLEAR CHANNEL COMMUNICATIONS, INC. Andrew W. Levin Executive Vice President, Chief Legal Officer, and Secretary Clear Channel Communications, Inc. 200 East Basse Road San Antonio, Texas 75201 (210) 822-2828 October 23, 2006 SUMMARY Clear Channel Communications, Inc. (“Clear Channel”) is one of the world’s leading media and entertainment companies and is the licensee of locally-programmed and locally- oriented radio and television stations that are dedicated to serving communities across the United States. Clear Channel has been able to expand its ability to deliver superior service to the public in part as a result of the deregulatory changes to the local radio ownership rule that Congress mandated in the Telecommunications Act of 1996 (“1996 Act”). These changes were a result of Congress’ recognition of the growing rivalry that terrestrial broadcasters faced at the time of the 1996 Act’s passage, and the fact that regulatory relief would aid the industry in its quest to remain competitive. At the same time, Congress directed – in Section 202(h) of the 1996 Act – that the FCC periodically review its media ownership rules, including the local radio ownership rule, to determine whether those rules remain necessary in the public interest as the result of competition. If not, Congress directed that the media ownership rules be repealed or modified. The current state of the media marketplace – in which Americans are overwhelmed by choice and, if anything, have an overabundance of options for information, news, local programming, and entertainment – renders the local radio ownership caps entirely unnecessary and subject to repeal or, at the very least, relaxation. Today, ten years after Congress directed increases in the local radio ownership caps, local radio markets of all sizes across the nation are vibrantly competitive, and the radio industry is far less concentrated than nearly every other communications industry segment. More significantly, free, over-the-air radio also now faces substantial and ever-increasing competition from a dizzying array of alternative platforms. A decade ago, Congress could not even have imagined the emergence of many of these platforms, several of which were only on the horizon in 2003, and none of which ever have been or are today subject to any form of government-imposed limitations on the number of outlets that can be owned in a local market. The country’s two satellite radio operators – XM and Sirius – can therefore provide listeners with more than 270 channels of programming in every local market across the country. In 1996, it was not at all clear that satellite radio would ever become a real competitor to terrestrial radio broadcasting, and the technology had less than a million subscribers when the FCC issued the 2003 Order. Today, in stark contrast, satellite radio boasts over eleven million subscribers, having experienced a staggering increase of over 1000% in subscribership in just three years. Congress could not even have imagined in 1996 that nearly sixty-seven million Americans would own iPods and other MP3 players that can be used to listen to music programming, or that twenty-seven million would listen to “podcasts” on those devices, because those devices did not even exist a decade ago. They, like satellite radio, also were in their infancy the last time the FCC visited the question of whether the local radio ownership rule should be relaxed in 2003. Moreover, while Congress may have been able to envision the day when people might listen to music over the Internet, or through music channels on subscription-based cable, DBS or IPTV platforms, the popularity of these services has far surpassed the level that anyone would have expected them to achieve either when Congress first directed relaxation of the local radio ownership limits in 1996, or when the FCC last considered whether those limits remained necessary in their current form in 2003. Congress in 1996 also could not have foreseen that Wi- Max technology would eventually allow people to listen to Internet-delivered audio programming on the go, and Wi-Max was only beginning to emerge in 2003. And there is, of course, no limit on the number of sources of downloadable audio programming – for MP3 players, direct listening over the Internet, or mobile listening via Wi-Max – that a single entity ii may own, nor is there any limit on the number of subscription-based cable or DBS music channels that a single entity may program. Terrestrial radio broadcasters, by contrast, remain shackled by restrictions on the number of radio stations that they can own in a local market that have not kept pace with the competitive changes that the marketplace has undergone. At the same time, there is abundant evidence that the increased levels of common ownership made possible by Congress’s deregulatory action in the 1996 Act have produced real benefits for American listeners. Clear Channel itself delivers these benefits to listeners every day in the form of vastly increased program choices, including a greater overall number of radio program formats, larger variety in the number of unique songs and artists played on stations regardless of format, and increased outlets for new and emerging artists. Clear Channel also offers its listeners benefits in the form of increases in the quality and content of local news and public affairs programming, expanded emergency preparedness capabilities, and higher levels of participation in events affecting the local communities that Clear Channel stations serve. The benefits provided by these types of programming and community involvement – as Clear Channel’s own experience demonstrates – flow directly from the incentives, efficiencies, and economies of scale that are made possible by increased levels of common ownership. What is more, and as the record before the FCC in 2003 clearly established and as further shown in these comments, the manner in which local radio advertising markets function renders the risk of anticompetitive behavior virtually nonexistent, and any such behavior that nevertheless might occur could easily be remedied by a wide variety of federal and state antitrust enforcement mechanisms. Thus, is it clear that marketplace developments have rendered the current local radio ownership caps entirely unnecessary in light of competition, and that allowing higher levels of common ownership will not cause any competitive harm, but will actually iii produce net benefits for American consumers. At the very least, the substantial changes in the media marketplace that have occurred in the last decade, the benefits that have been shown to flow from increased levels of common ownership, and the absence of any risk of competitive harm, warrant relaxation of the local radio ownership caps. If nothing else, the FCC should raise the current caps to allow a single entity to own at least ten stations in the nine markets with between sixty and seventy-four stations, and at least twelve stations in the eight markets with seventy-five or more stations. These proposed modifications to the current rule are exceedingly modest, and are needed in order to ensure that terrestrial radio broadcasters can remain meaningful competitors in today’s ever-expanding and increasingly fragmented media marketplace. They are also needed in order to ensure that free, over-the-air radio remains available as a choice to those who can afford to obtain audio programming from other sources – and as a vital lifeline for those who cannot – in times of crisis such as the natural disasters and homeland security threats that have increasingly faced our nation in the recent years. Any local limits that the FCC does retain should, moreover, be based on the number of outlets owned rather than market or revenue share – as Congress made clear in the 1996 Act and as the realities of the radio broadcasting industry require – and should not include separate caps on the ownership of AM and FM properties. For the reasons that Clear Channel has explained previously, the Commission should also revisit its decision in the 2003 Order to restrict the sale of grandfathered radio station combinations. In addition, because the limited “exception” to this restriction for entities with less than six million dollars in annual revenue has proven to be completely ineffective at achieving its posited goal of increasing participation in the broadcasting industry by new entrants and businesses owned by women and minorities, the FCC should revise that definition to allow iv more entities to qualify as purchasers of grandfathered combinations, if any restriction on such sales is retained. Finally, to the extent that the Commission chooses to retain limits on cross- ownership of media properties, there should be no