WASHINGTON—In a big victory for broadcasters and the Republican FCC under Ajit Pai, the Supreme Court has reversed the Third Circuit's decision throwing out the FCC's broadcast deregulation under former FCC Chairman Ajit Pai. Current acting chairwoman Jessica Rosenworcel had voted against the deregulatory move.

In 2017, the FCC had unanimously voted along party lines to eliminate two broadcast ownership rules and adjust a third. Prometheus Radio Project, which has long challenged FCC dereg, challenged again and the Third Circuit vacated the FCC decision, saying it had failed to justify the conclusion that the rule changes would not adversely affect minority or female ownership, so the decision was illegal because it was arbitrary and capricious.

The Supreme court held that the decision was not arbitrary and capricious and the FCC's conclusion that the rules were no longer in the public interest was reasonable.

The opinion was delivered by Justice Brett Kavanaugh, formerly of the U.S. Court of Appeals for the D.C. Circuit, which has principal jurisdiction over FCC decisions.

"In assessing the effects of the rule changes on minority and female ownership, the FCC did not have perfect empirical or statistical data," said the court. "But that is not unusual in day-to-day agency decisionmaking within the Executive Branch. The APA imposes no general obligation on agencies to conduct or commission their own empirical or statistical studies. And nothing in the Telecommunications Act requires the FCC to conduct such studies before exercising its discretion ...

"In light of the sparse record on minority and female ownership and the FCC’s findings with respect to competition, localism and viewpoint diversity, we cannot say that the agency’s decision to repeal or modify the ownership rules fell outside the zone of reasonableness," the court ruled in a brief—12-page—decision.

It was a fast turnaround for the decision. The case was argued Jan. 19.

"[T]he FCC determined that none of its policy objectives for ownership rules—viewpoint diversity, competition and localism—justified retaining its rules, the FCC was free to modify or repeal them without considering ownership diversity. Indeed, the FCC has long been clear that 'it would be inappropriate to retain multiple ownership regulations for the sole purpose of promoting minority ownership.' The Third Circuit had no authority to require the FCC to consider minority and female ownership. So in future reviews, the FCC is under no obligation to do so," said Justice Thomas in a concurring opinion.

In November 2017, a politically divided FCC voted to eliminate the newspaper-broadcast and the radio-TV cross-ownership rules; allow dual station ownership in markets with fewer than eight independent voices after the duopoly, creating an opportunity for ownership of two of the top four stations in a market on a case-by-case basis (the FCC did not call it a waiver); eliminate attribution of joint sales agreements as ownership; and create an incubator program.

The FCC is under a congressional directive in the 1996 Telecommunications Act to periodically review its regulations—first biennially, then changed to quadrennially—and repeal or modify any it concludes are not in the public interest. 

"We lost, and that is unfortunate," said attorney Andrew J. Schwartzman.  "However, the Court rejected the NAB's efforts to obtain a ruling that would have essentially removed the FCC's power to impose limits on broadcast ownership. This will enable our clients to enforce and improve ownership limits in the future."

UPDATED:

NAB President and CEO Gordon Smith gave the following statement on the decision:

“NAB commends today’s unanimous decision by the Supreme Court that the FCC’s recent and long-overdue modernization of its broadcast ownership regulations was lawful and appropriate. It is critical that the Commission continue to examine its media ownership rules to ensure that America’s broadcasters are able to compete and meet the needs of local communities across the nation in today’s media landscape. We look forward to working with the Commission on this effort given the essential role radio and television broadcasters play for all Americans."

WASHINGTON—If the FCC wants to enact the deregulation efforts it originally proposed in 2017, it will have to go to the Supreme Court as the U.S. Court of Appeals for the Third Circuit has denied a full court rehearing of the three-judge panel decision that went against the FCC in September.

The Third Circuit did not go into detail about why it denied the commission’s appeal, simply writing in its one paragraph explanation that the majority of judges did not vote to rehear the case.

The deregulation efforts that were at the center of the hearing dealt with newspaper-broadcast and the radio-TV cross ownership rules; dual station ownership in markets with fewer than eight independent voices; the elimination of attribution of joint sales agreements as ownership; the creation of a diversity incubator program and other diversity mechanisms. Prometheus et al. was the group that challenged the FCC in court.

In its original decision, the Third Circuit vacated most of the order, but also sent back a few elements to the FCC to be reworked.

If the FCC wishes to pursue their case further, the next step would be filing an appeal to the U.S. Supreme Court.

WASHINGTON—The FCC is seeking full-court review of a three-judge panel decision vacating its broadcast media ownership deregulation decision.

The commission filed a petition for review Thursday (Nov. 7), arguing that the three-judge panel decision of appeals court imposed burdens beyond those allowed in the Administrative Procedures Act, second-guessed the FCC to the point that it undermined congressional intent and breaks with higher-court and sister-court precedents.

In September, that panel of the U.S. Court of Appeals for the Third Circuit vacated most of the FCC's deregulatory order, saying the agency "did not adequately consider the effect its sweeping rule changes will have on ownership of broadcast media by women and racial minorities."

The court was hearing an appeal by Prometheus et al. of the FCC's fall 2017 decision under chairman Ajit Pai to eliminate the newspaper-broadcast and the radio-TV cross-ownership rules; allow dual station ownership in markets with fewer than eight independent voices after that duopoly created an opportunity for ownership of two of the top four stations in a market on a case-by-case basis (the FCC was not calling it a waiver); eliminate attribution of joint sales agreements as ownership; and created a diversity incubator program. The FCC also said it created some diversity mechanisms to address the court's long-standing concern.

Pai signaled back in September that the FCC would challenge the decision and made it clear what he thought of the court's persistent remands of FCC deregulatory decisions.

“For more than 20 years, Congress has instructed the Federal Communications Commission to review its media ownership regulations and revise or repeal those rules that are no longer necessary," said Pai at the time. "But for the last 15 years, a majority of the same Third Circuit panel has taken that authority for themselves, blocking any attempt to modernize these regulations to match the obvious realities of the modern media marketplace. It’s become quite clear that there is no evidence or reasoning—newspapers going out of business, broadcast radio struggling, broadcast TV facing stiffer competition than ever—that will persuade them to change their minds. We intend to seek further review of today's decision..."

An FCC spokesperson was echoing that Thursday (Nov. 7), saying “Over the last 15 years, while the media marketplace has changed dramatically, the same Third Circuit panel has repeatedly prevented the FCC from modernizing its ownership rules, including the newspaper-broadcast cross-ownership rule that dates back to 1975. We hope that the full Third Circuit will agree to hear this case and finally allow the FCC to update these rules for the digital age.” 

UPDATE: The NAB is joining the FCC in filing a petition seeking a full court hearing from the third circuit. The NAB had backed the FCC's deregulatory efforts, and says that the three-judge panel was wrong to reject the commission's proposed rules.

This story was originally published on TVT's sister publication B&C.

WASHINGTON—The FCC’s attempts to deregulate broadcast ownership have hit a setback, as the U.S. Third Circuit Court of Appeals has made a decision saying that the commission “did not adequately consider the effect its sweeping rule changes will have on ownership of broadcast media by women and racial minorities,” according to a report from TVT’s sister publication B&C.

The deregulation efforts that were approved by FCC Chairman Ajit Pai and appealed to the Third Circuit would eliminate newspaper-broadcast and the radio-TV cross-ownership rules; allow dual station ownership in markets with fewer than eight independent voices after that duopoly an opportunity for ownership of two of the top four stations in a market on a case-by-case basis; eliminate attribution of joint sales agreement as ownership; and create a diversity incubator program, as well as other diversity mechanisms.

The decision, 2-1, was made by three judges of the Third Circuit and can now be appealed again to be heard either to the full court or directly to the Supreme Court.

“For more than 20 years, Congress has instructed the Federal Communications Commission to review its media ownership regulations and revise or repeal those rules that are no longer necessary,” said Chairman Pai in a statement following the decision. “But for the last 15 years, a majority of the same Third Circuit panel has taken that authority for themselves, blocking any attempt to modernize these regulations to match the obvious realities of the modern media marketplace. It’s become quite clear that there is no evidence or reasoning—newspapers going out of business, broadcast radio struggling, broadcast TV facing stiffer competition than ever—that will persuade them to change their minds.”

Citing a partial dissent given by Third Circuit Judge Anthony Scirica, Pai said that they will seek further review of the court’s decision.

The NAB’s Dennis Wharton, executive vice president of communications, gave another statement on the decision, backing up Chairman Pai’s efforts:

“NAB is disappointed with the appellate court’s 2-1 decision vacating the FCC’s measured decision reforming outdated media ownership rules. It’s shocking that the same panel of judges has supplanted Congress’s and an expert federal agency’s views with its own for more than 15 years.”

FCC Commissioner Jessica Rosenworcel, who opposed the deregulations—calling them a “dismantling” of the values imposed by the rules—also commented on the court’s decision:

“The court rightly sent the FCC’s handiwork back to the agency because the FCC’s analysis was so ‘insubstantial.’ The FCC shouldn’t be in the business of cutting corners when it comes to honoring our long-held values when updating media ownership policies.”

PHILADELPHIA—The case between the Prometheus Radio Project and the FCC over the proposed deregulation of newspaper-broadcast cross ownership rules will continue in June, as oral arguments in the U.S. Court of Appeals Third Circuit have been scheduled for June 11 at 1 p.m.

Current FCC Chairman Ajit Pai said that he intended to eliminate the current media ownership rules, and the eight-voices test for local market duopolies, as well as loosen other broadcast regulations, in the fall of 2017. Prometheus Radio Project filed suit shortly after. Prometheus has been battling media deregulation for the last decade and a half.

The Third Circuit has instructed both parties to provide a summary of their arguments within five days to be posted on the Court website to give the public more information on the case.

For more information, read the full story on TVT’s sister publication B&C.