[Senate Report 110-461]
[From the U.S. Government Publishing Office]
110th Congress
2d Session SENATE Report
110-461
_______________________________________________________________________
Calendar No. 966
MEDIA OWNERSHIP ACT OF 2007
__________
R E P O R T
OF THE
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
on
S. 2332
September 15, 2008.--Ordered to be printed
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
one hundred tenth congress
second session
DANIEL K. INOUYE, Hawaii, Chairman
JOHN D. ROCKEFELLER IV, West KAY BAILEY HUTCHISON, Texas
Virginia TED STEVENS, Alaska
JOHN F. KERRY, Massachusetts JOHN McCAIN, Arizona
BYRON L. DORGAN, North Dakota OLYMPIA J. SNOWE, Maine
BARBARA BOXER, California GORDON H. SMITH, Oregon
BILL NELSON, Florida JOHN ENSIGN, Nevada
MARIA CANTWELL, Washington JOHN E. SUNUNU, New Hampshire
FRANK R. LAUTENBERG, New Jersey JIM DeMINT, South Carolina
MARK PRYOR, Arkansas DAVID VITTER, Louisiana
THOMAS CARPER, Delaware JOHN THUNE, South Dakota
CLAIRE McCASKILL, Missouri ROGER F. WICKER, Mississippi
AMY KLOBUCHAR, Minnesota
Margaret Cummisky, Staff Director and Chief Counsel
Lila Helms, Deputy Staff Director and Policy Director
Jean Toal Eisen, Senior Advisor and Deputy Policy Director
Christine Kurth, Republican Staff Director and General Counsel
Paul J. Nagle, Republican Chief Counsel
Mimi Braniff, Republican Deputy Chief Counsel
Calendar No. 966
110th Congress Report
SENATE
2d Session 110-461
======================================================================
MEDIA OWNERSHIP ACT OF 2007
_______
September 15, 2008.--Ordered to be printed
_______
Mr. Inouye, from the Committee on Commerce, Science, and
Transportation, submitted the following
REPORT
[To accompany S. 2332]
The Committee on Commerce, Science, and Transportation, to
which was referred the bill (S. 2332) to promote transparency
in the adoption of new media ownership rules by the Federal
Communications Commission, and to establish an independent
panel to make recommendations on how to increase the
representation of women and minorities in broadcast media
ownership, having considered the same, reports favorably
thereon with amendments, and recommends that the bill (as
amended) do pass.
Purpose of the Bill
The purpose of S. 2332 is to promote local programming and
content in media by requiring the Federal Communications
Commission (FCC) to seek public comment on any proposed changes
to media ownership rules, to conduct a rulemaking to examine
the impact of media ownership on local programming, and to
solicit expert recommendations on how to increase minority and
female ownership of broadcast media.
Background and Needs
For decades the FCC has sought to ensure that the allocation
of broadcast licenses serves the public interest and promotes
the core values of competition, diversity, and localism. As was
noted by the Supreme Court more than 50 years ago, the First
Amendment ``rests on the assumption that the widest possible
dissemination of information from diverse and antagonistic
sources is essential to the welfare of the public.'' Associated
Press v. United States, 326 U.S. 1 (1945).
The Communications Act of 1934 provides the FCC with the
authority to grant licenses for the use of broadcast
facilities, consistent with the ``public interest, convenience,
and necessity.'' The FCC views broadcasters as trustees of the
public airwaves and imposes restrictions and obligations on
broadcasters accordingly. The Supreme Court has upheld the
regulation of broadcasters pursuant to public trustee
constraints as constitutional since the Red Lion case was
decided (Red Lion Broadcasting Company v. FCC, 395 U.S. 367
(1969)). Pursuant to this authority, the FCC has policies
limiting both the national and local ownership of broadcast
licenses.
Initially, the FCC reviewed common ownership issues on a
case-by-case basis. As the industry developed, the FCC adopted
bright-line rules addressing license ownership in national and
local media markets, consistent with the public interest. Among
other things, FCC rules limit the number of television stations
and radio stations a single company can own in one market. In
addition, the FCC's newspaper/broadcast cross-ownership rule
prohibits the ownership of a television or radio station and
the daily newspaper in the same market.
With the enactment of the Telecommunications Act of 1996
(1996 Act), Congress significantly loosened media ownership
limits. The 1996 Act eliminated limits on national radio
ownership and raised the cap on national television audience
reach from 25 to 35 percent. The Act also eased local radio
ownership limits by creating a sliding scale limit that allowed
for as many as eight co-owned radio stations in the largest
markets. The 1996 Act also mandated that the FCC review its
media ownership rules every two years to ``determine whether
any of such rules are necessary in the public interest as the
result of competition.''
2002 BIENNIAL REVIEW
In 2002, the FCC released a Notice of Proposed Rulemaking
announcing that the agency would review its full range of
broadcast ownership rules. The public was asked to comment on
the continued viability of these rules, in light of changes in
the media marketplace and recent court decisions.\1\ On June 2,
2003, led by then-FCC Chairman Michael Powell, the agency
adopted its 2002 Biennial Review decision, relaxing many of the
FCC's media ownership rules.
---------------------------------------------------------------------------
\1\ See Sinclair Broad. Group, Inc. v. FCC, 284 F.3d 148 (D.C. Cir.
2002).
---------------------------------------------------------------------------
The revised rules included a national television audience
reach cap of 45 percent. With respect to local television
ownership, the revised rules permitted one company to own two
stations in markets with five or more television stations and
three stations in markets with 18 or more television stations.
With respect to local radio ownership, the revised rule
retained existing caps, but adjusted the way stations are
counted. The revised rules combined the radio/television and
newspaper/broadcast cross-ownership restrictions into a single
new media cross-ownership rule. Under this proposed rule, in
markets with three or fewer television stations, no cross-
ownership was permitted among television stations, radio
stations, and daily newspapers in the same market. In markets
with four to eight television stations, combinations were
limited to one of the following: (1) a daily newspaper, one
television station, and up to half of the radio station limit
for that market; (2) a daily newspaper and up to the radio
station limit for that market; or (3) two television stations
and up to the radio station limit for that market. In markets
with nine or more television stations, any combination that
otherwise complies with the local television and local radio
ownership rules was permitted. As a result, in a large market,
one company could theoretically own as many as eight radio
stations, three television stations, a daily newspaper, and the
cable company.
The revised rules faced significant public criticism. In
response to the 2002 Biennial Review decision, more than three
million individuals complained to the FCC. Congress also voiced
its opposition. On September 16, 2003, the Senate voted 55-40
to support a ``resolution of disapproval'' of the FCC decision,
pursuant to the Congressional Review Act. In addition, in
omnibus appropriations legislation in 2004, Congress rolled
back the FCC's new national television ownership cap from 45 to
39 percent.
Appeals of the FCC's 2002 Biennial Review decision were
consolidated in the Third Circuit. On June 24, 2004, the Third
Circuit affirmed the FCC's general authority ``to regulate
media ownership,'' but remanded to the FCC the bulk of its rule
changes in the 2002 Biennial Review decision for further
justification and record support.\2\ The court also largely
stayed the FCC's new rules from the 2002 Biennial Review
decision. As a result, the agency's previous rules continue to
govern media ownership in this country. On June 13, 2005, the
United States Supreme Court denied the petitions for the writ
of certiorari seeking review of Prometheus.
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\2\ See Prometheus Radio Project, et al. v. FCC, 373 F. 3d 372 (3rd
Cir. 2004) (Prometheus).
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On June 21, 2006, the FCC adopted a notice of proposed
rulemaking seeking comment on the issues raised by the
Prometheus remand, pursuant to its duty under section 202(h) of
the 1996 Act which now requires the agency to review its media
ownership rules on a quadrennial basis.\3\ As part of its
efforts to seek public comment, the FCC held six public field
hearings across the United States. On November 13, 2007, FCC
Chairman Kevin Martin published an editorial in The New York
Times calling for the FCC to roll back its media ownership
rules in order to permit newspaper/broadcast cross-ownership in
the top 20 markets. Subsequently, on December 13, 2007, the
Committee held a hearing on FCC oversight during which several
members requested the FCC take additional time to solicit
comment and consider its proposed changes to its media
ownership rules. Just a month after the Martin editorial, on
December 18, 2007, the FCC concluded its rulemaking by
approving a revised set of ownership rules under which
newspaper/broadcast cross-ownership is presumptively
permissible in the top 20 markets. For other markets, the
Commission determined that it would review transactions on a
case-by-case basis, subject to a negative presumption, which
may be overcome through evaluating: the level of concentration
in the market; whether or not the combined entity will
significantly increase the amount of local news in the market;
whether or not the combined newspaper and broadcast outlets
will continue to employ their own editorial staff; and the
financial condition of the newspaper or broadcast station in
the proposed combination, or if the newspaper or broadcast
station is in financial distress, the proposed owner's
commitment to invest significantly in newsroom operations.
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\3\ 2006 Quadrennial Regulatory Review--Review of the Commission's
Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section
202 of the Telecommunications Act of 1996, Further Notice of Proposed
Rule Making, 21 FCC Rcd 8834 (2006); see also 2006 Quadrennial
Regulatory Review--Review of the Commission's Broadcast Ownership Rules
and Other Rules Adopted Pursuant to Section 202 of the
Telecommunications Act of 1996, Second Further Notice of Proposed Rule
Making, 22 FCC Rcd 14215 (2007).
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INDUSTRY CONSOLIDATION
The decade leading up to the 2002 Biennial Review decision
was a period of significant change in the media marketplace. In
the broadcast television industry, the number of television
station owners decreased by approximately 40 percent between
1995 and 2003. According to studies recently conducted by the
FCC, these trends have continued albeit at slower pace. Between
2002 and 2005, the number of commercial television station
owners decreased about four percent and the number of
commercial radio station owners decreased by eight percent.\3\
During the same period the number of television/radio
combinations increased by more than 20 percent.\4\ As a result
of this increase in concentration, there are fewer local owners
of radio and television broadcast stations. Studies suggest
that local owners of broadcast media provide more local news
programming.\5\
---------------------------------------------------------------------------
\4\ Media Ownership Study Two: Ownership Structure and Robustness
of Media by Kiran Duwadi, Scott Roberts, and Andrew Wise revised
September 5, 2007 at 5-6.
\5\ Id. at 5.
\6\ See, e.g., Alexander, Peter J. and Brown, Keith. ``Do Local
Owners Deliver More Localism? Some Evidence from Local Broadcast
News.'' FCC Working Paper (2004).
---------------------------------------------------------------------------
Consolidation in the media marketplace has left women and
minorities with only a limited ownership interest. According to
a recent Government Accountability Office (GAO) investigation
``[w]hile there are no reliable government data on ownership by
women and minorities, ownership of broadcast outlets by these
groups appears limited. According to the industry stakeholders
and experts we interviewed, the level is limited, and recent
studies generally support this conclusion.''\6\ In testimony
before the Committee on November 8, 2007, Alex Nogales,
President of the National Hispanic Media Coalition, stated
``[m]ore than a third of Americans are people of color. Yet
they own less than 3% of television stations and less than 8%
of radio stations--and these numbers are going down, not up.''
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\7\ Letter from JayEtta Z. Hecker, GAO, to the Honorable Edward J.
Markey, dated December 14, 2007, at 9.
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Legislative History
On November 8, 2007, the Committee held a hearing to examine
the effects of media ownership consolidation on localism and
diversity in news and entertainment. Senator Dorgan introduced
S. 2332 on the same day with Senators Lott, Kerry, Bill Nelson,
Cantwell, Snowe, Biden, Clinton, Feinstein, and Obama as
original cosponsors.
On December 4, 2007, the Committee held an executive session
at which S. 2332 was considered. The bill was approved by voice
vote, as modified by a managers' amendment offered by Senator
Dorgan.
On December 13, 2007, the Committee held a hearing on FCC
oversight during which several members spoke at length
aboutChairman Martin's proposed role changes, as described in his
editorial in The New York Times. On December 14, 2007, twenty-six
Senators signed a letter to Chairman Martin urging a further period of
comment on the Chairman's proposed rule changes. On December 18, 2007,
the FCC approved a revised set of ownership rules under which
newspaper/broadcast cross-ownership is permissible in the top 20
markets.
Staff assigned to this legislation are Jessica Rosenworcel,
Democratic Senior Communications Counsel, Alex Hoehn-Saric,
Democratic Communications Counsel, Paul Nagle, Republican Chief
Counsel, and Michael Engel, Detailee.
Estimated Costs
In accordance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate and section 403 of the
Congressional Budget Act of 1974, the Committee provides the
following cost estimate, prepared by the Congressional Budget
Office:
January 16, 2008.
Hon. Daniel K. Inouye,
Chairman, Committee on Commerce, Science, and Transportation,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 2332, the Media
Ownership Act of 2007.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susan Willie.
Sincerely,
Peter R. Orszag.
Enclosure.
S. 2332--Media Ownership Act of 2007
S. 2332 would require the Federal Communications Commission
(FCC) to follow certain schedules for notice and public comment
periods when changing any of its regulations related to the
ownership of broadcast organizations. The bill would require
the FCC to provide a 90-day period when notice of such change
is offered and a 60-day period for public comment on the
proposed regulations. The bill also would require the FCC to
respond within 30 days to public comments received during the
period set aside for such comments.
Before voting on any changes in rules governing the
ownership of broadcast and newspaper organizations, the bill
would require the FCC to study the effect of such cross-
ownership (broadcast and newspaper organizations owned by one
entity) on the availability and quality of local programming by
radio and television stations and newspapers. The bill also
would establish an independent panel that would make
recommendations to increase the number of broadcast
organizations that are owned by women and minorities.
Based on information from the FCC, CBO estimates that
implementing S. 2332 would cost less than $500,000, subject to
the availability of appropriated funds, to provide a report on
media concentration to the independent panel. Enacting the bill
would not affect direct spending or revenues.
S. 2332 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
The CBO staff contact for this estimate is Susan Willie.
This estimate was approved by Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
Regulatory Impact Statement
In accordance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee provides the
following evaluation of the regulatory impact of the
legislation, as reported:
NUMBER OF PERSONS COVERED
The number of persons covered by this legislation would be
consistent with current levels of individuals affected.
ECONOMIC IMPACT
S. 2332 would have a positive impact on the nation's economy
by encouraging female and minority ownership of media outlets.
PRIVACY
S. 2332 is not expected to have an adverse effect on the
personal privacy of any individuals that will be impacted by
this legislation.
PAPERWORK
S. 2332 would have minimal impact on current paperwork
levels.
Congressionally Directed Spending
In compliance with paragraph 4(b) of rule XLIV of the
Standing Rules of the Senate, the Committee provides that no
provisions contained in the bill, as reported, meet the
definition of congressionally directed spending items under the
rule.
Section-by-Section Analysis
Section 1 would establish the Act as the Media Ownership Act
of 2007.
Section 2 would amend section 202 of the Telecommunications
Act of 1996 to require the FCC to: (1) publish any proposed
modifications to its broadcast ownership regulations at least
90 days prior to a vote and provide at least 60 days for public
comment; (2) complete a separate rulemaking on localism before
voting on changes to broadcast ownership regulations, including
a study to determine the impact of station duopolies and
newspaper/broadcast cross-ownership on the quantity and quality
of local news, public affairs, local news media jobs, and local
cultural programming; and (3) convene an independent panel to
make recommendations to the FCC regarding specific rules to
increase women and minority ownership of broadcast media,
conduct an accurate census of the state of women and minority
ownership of broadcast media, and have the FCC act on the
panel's recommendations before voting on changes to broadcast
ownership regulations.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the Standing
Rules of the Senate, changes in existing law made by the bill,
as reported, are shown as follows (existing law proposed to be
omitted is enclosed in black brackets, new material is printed
in italic, existing law in which no change is proposed is shown
in roman):
TELECOMMUNICATIONS ACT OF 1996
SEC. 202. BROADCAST OWNERSHIP.
(a) National Radio Station Ownership Rule Changes Required.--
The Commission shall modify section 73.3555 of its regulations
(47 C.F.R. 73.3555) by eliminating any provisions limiting the
number of AM or FM broadcast stations which may be owned or
controlled by one entity nationally.
(b) Local Radio Diversity.--
(1) Applicable caps.--The Commission shall revise
section 73.3555(a) of its regulations (47 C.F.R.
73.3555) to provide that--
(A) in a radio market with 45 or more
commercial radio stations, a party may own,
operate, or control up to 8 commercial radio
stations, not more than 5 of which are in the
same service (AM or FM);
(B) in a radio market with between 30 and 44
(inclusive) commercial radio stations, a party
may own, operate, or control up to 7 commercial
radio stations, not more than 4 of which are in
the same service (AM or FM);
(C) in a radio market with between 15 and 29
(inclusive) commercial radio stations, a party
may own, operate, or control up to 6 commercial
radio stations, not more than 4 of which are in
the same service (AM or FM); and
(D) in a radio market with 14 or fewer
commercial radio stations, a party may own,
operate, or control up to 5 commercial radio
stations, not more than 3 of which are in the
same service (AM or FM), except that a party
may not own, operate, or control more than 50
percent of the stations in such market.
(2) Exception.--Notwithstanding any limitation
authorized by this subsection, the Commission may
permit a person or entity to own, operate, or control,
or have a cognizable interest in, radio broadcast
stations if the Commission determines that such
ownership, operation, control, or interest will] result
in an increase in the number of radio broadcast
stations in operation.
(c) Television Ownership Limitations.--
(1) National ownership limitations.--The Commission
shall modify its rules for multiple ownership set forth
in section 73.3555 of its regulations (47 C.F.R.
73.3555)--
(A) by eliminating the restrictions on the
number of television stations that a person or
entity may directly or indirectly own, operate,
or control, or have a cognizable interest in,
nationwide; and
(B) by increasing the national audience reach
limitation for television stations to 35
percent.
(2) Local ownership limitations.--The Commission
shall conduct a rulemaking proceeding to determine
whether to retain, modify, or eliminate its limitations
on the number of television stations that a person or
entity may own, operate, or control, or have a
cognizable interest in, within the same television
market.
(d) Relaxation of One-To-A-Market.--With respect to its
enforcement of its one-to-a-market ownership rules under
section 73.3555 of its regulations, the Commission shall extend
its waiver policy to any of the top 50 markets, consistent with
the public interest, convenience, and necessity.
(e) Dual Network Changes.--The Commission shall revise
section 73.658(g) of its regulations (47 C.F.R. 658(g)) to
permit a television broadcast station to affiliate with a
person or entity that maintains 2 or more networks of
television broadcast stations unless such dual or multiple
networks are composed of--
(1) two or more persons or entities that, on the date
of enactment of the Telecommunications Act of 1996, are
``networks'' as defined in section 73.3613(a)(1) of the
Commission's regulations (47 C.F.R. 73.3613(a)(1)); or
(2) any network described in paragraph (1) and an
English- language program distribution service that, on
such date, provides 4 or more hours of programming per
week on a national basis pursuant to network
affiliation arrangements with local television
broadcast stations in markets reaching more than 75
percent of television homes (as measured by a national
ratings service).
(f) Cable Cross Ownership.--
(1) Elimination of restrictions.--The Commission
shall revise section 76.501 of its regulations (47
C.F.R. 76.501) to permit a person or entity to own or
control a network of broadcast stations and a cable
system.
(2) Safeguards against discrimination.--The
Commission shall revise such regulations if necessary
to ensure carriage, channel positioning, and
nondiscriminatory treatment of nonaffiliated broadcast
stations by a cable system described in paragraph (1).
(g) Local Marketing Agreements.--Nothing in this section
shall be construed to prohibit the origination, continuation,
or renewal of any television local marketing agreement that is
in compliance with the regulations of the Commission.
(h) Further Commission Review.--The Commission shall review
its rules adopted pursuant to this section and all of its
ownership rules biennially as part of its regulatory reform
review under section 11 of the Communications Act of 1934 and
shall] determine whether any of such rules are necessary in the
public interest as the result of competition. The Commission
shall repeal or modify any regulation it determines to be no
longer in the public interest. This subsection does not apply
to any rules relating to the 39 percent national audience reach
limitation in subsection (c)(1)(B).
(i) Notice and Public Comment Requirement.--
(1) In general.--In modifying, revising, or amending
any of its regulations related to broadcast ownership,
including any ownership rule or limitation set forth
under sections 73.3555, 73.658(g), or 76.501 of its
regulations (47 C.F.R. 73.3555, 73.658(g), 76.501), the
Commission shall--
(A) not later than 90 days prior to any vote
by the Commission on the adoption of such
modification, revision, or amendment publish
such prospective modification, revision, or
amendment in the Federal Register;
(B) after such publication provide the public
at least 60 days on which to comment on the
prospective modification, revision, or
amendment; and
(C) upon the expiration of the 60-day comment
period described under paragraph (2), have not
less than 30 days in which to reply to any such
comments.
(2) Effective date.--
(A) In general.--The notice and public
comment requirements under paragraph (1) shall
apply to any attempt by the Commission to
modify, revise, or amend its regulations
related to broadcast and newspaper ownership
made after October 1, 2007.
(B) Failure to comply.--If the Commission
fails to comply with the notice and public
requirements under paragraph (1) with respect
to any modification, revision, or amendment to
which such requirements apply, then such
modification, revision, or amendment shall be
vitiated and shall be of no force and effect.
(j) Promotion of Local Content in Media.--Before voting on
any change in the broadcast and newspaper ownership rules in a
proceeding made necessary by the decision of the U.S. Court of
Appeals in Prometheus v. Federal Communications Commission,
United States of America, (No. 03-3388) 2003 U.S. App. LEXIS
18390), the Commission shall initiate, conduct, and complete a
separate rulemaking proceeding to promote the broadcast of
local programming and content by broadcasters, including radio
and television broadcast stations, and newspapers. Before
publishing a modification, revision, or amendment of its
broadcast ownership rules under subsection (i), the Commission
shall--
(1) complete a study to determine the overall impact
of television station duopolies and newspaper-broadcast
cross-ownership on the quantity and quality of local
news, public affairs, local news media jobs, and local
cultural programming at the market level;
(2) publish a proposed final rule in the Federal
Register not later than 90 days prior to any vote by
the Commission on the adoption of the rule;
(3) after such publication provide the public at
least 60 days on which to comment on the prospective
rule; and
(4) upon the expiration of the 60-day comment period
described in paragraph (3), have not less than 30 days
in which to reply to any such comments.
(k) Independent Panel on Women and Minority Ownership of
Broadcast Media.--
(1) Establishment.--The Commission shall establish
and convene an independent panel on women and minority
ownership of broadcast media to make recommendations to
the Commission for specific Commission rules to
increase the representation of women and minorities in
the ownership of broadcast media.
(2) Census.--The Commission shall--
(A) conduct a full and accurate census of the
race and gender of individuals holding a
controlling interest in broadcast station
licensee;
(B) provide the results of the census to the
panel for its consideration before it makes any
recommendation to the Commission; and
(C) study the impact of media market
concentration on the representation of women
and minorities in the ownership of broadcast
media that takes into account the data in the
census and report the results of that study to
the panel for its consideration before it makes
any recommendation to the Commission.
(3) Consideration of panel's recommendations.--The
Commission shall act on the panel's recommendations
before voting on any changes to its broadcast and
newspaper ownership rules.
[(i)] (l) Elimination of Statutory Restriction.--Section
613(a) (47 U.S.C. 533(a)) is amended--
(1) by striking paragraph (1);
(2) by redesignating paragraph (2) as subsection (a);
(3) by redesignating subparagraphs (A) and (B) as
paragraphs (1) and (2), respectively;
(4) by striking ``and'' at the end of paragraph (1)
(as so redesignated);
(5) by striking the period at the end of paragraph
(2) (as so redesignated) and inserting ``; and''; and
(6) by adding at the end the following new paragraph:
``(3) shall not apply the requirements of this
subsection to any cable operator in any franchise area
in which a cable operator is subject to effective
competition as determined under section 623(l).''.