President Donald Trump’s feud with the major broadcast networks has thrust the Federal Communications Commission and its “public-interest standard” into the national spotlight. While the agency and the White House have largely been in lockstep, Trump made news recently when he vocally came out against an active FCC proposal to reform the agency’s broadcast-ownership rules.

Notably, it doesn’t appear that Trump’s objection had much to do with a desire to preserve the 39% national market cap imposed on independent broadcasters. Rather, he directed his ire at the possibility that changing the rules would allow what he calls “the fake news networks” to grow larger. But if the president wants to curtail the major networks’ power, the proposed broadcast-ownership reforms would go a long way toward that goal.

The major television networks do own and operate some of their affiliates, but the vast majority—roughly 93% of the nearly 1,000 nationwide—are owned by independent broadcast groups like Nexstar Media Group, Gray Media, Tegna and Sinclair. These independent broadcasters are limited in their reach because of the national market cap set by Congress, as well as various rules regarding multiple station ownership in smaller markets.

If the restrictions were removed, independent broadcast companies could increase their reach to more Americans. As the number of stations they own increases, so too would the efficiencies and cost savings per station. And more importantly, the broadcasters’ negotiating power would increase as well. If Sinclair or Nexstar could reach most markets in the country, the networks would have more incentive to negotiate better terms with them.

As FCC Chair Brendan Carr has made abundantly clear, broadcasters have a public-interest obligation that comes with their broadcast license. This requirement comes with rules that do not apply to other services, like cable television or online streaming applications. And while the First Amendment grounds for this type of regulation have been long debated, the pressure of regulation has seen some behavioral changes among the major networks.

When ABC late-night host Jimmy Kimmel made comments about the murder of Charlie Kirk, Carr gave a vague warning to affiliates: you are on the hook if the content the networks provide violate commission rules. And indeed, both Sinclair and Nexstar temporarily refused to air the “Jimmy Kimmel Live!” program.

Since then, the Trump administration has been exploring ways to shift power in the network-affiliate relationship. Carr released a public notice in November asking for comments about the current market dynamics of affiliate agreements and the need for updates to FCC rules that would give affiliates more power when negotiating with the networks.

But changes to the affiliate rules would do little to change the market dynamics. The television networks no longer need local affiliates to reach consumers. In today’s media landscape, they can reach consumers directly through streaming apps. And this trend will likely continue as more content—especially live sports—moves exclusively to apps like Peacock (owned by NBC parent Comcast), Disney+ (owned by ABC parent Disney) and Paramount+ (owned by CBS parent Paramount).

But broadcasting probably isn’t going away entirely, either. Broadcast is free and over-the-air, so for those few Americans who don’t have broadband and the many Americans who don’t want to pay for myriad streaming services, it remains a viable option. Broadcast stations are also inherently local, meaning much of independent broadcasters’ non-network content is locally targeted, which also gives local advertisers a direct line to the community.

If the president wants to empower the independent broadcasters, the answer isn’t with changes to the network-affiliation rules. Instead, it is to allow independent broadcasters to increase their value and compete on fair terms. The best way to allow them to compete is to support the FCC’s media-ownership reforms.

The president’s feud with the broadcast networks will likely continue. But if he really wants to hit the Big Four where it hurts, he needs to get the government out of the broadcast business. By allowing the market to work, independent broadcasters will have more control over the content they choose to air, providing the check to the major networks he desires.

In less than two weeks during late September and early October, the Federal Communications Commission acted on two proposed rulemakings that could have an enormous impact on the future of broadcast television and radio in the United States for decades to come.

On Sept. 30, the commission voted unanimously to seek public comment on whether to retain, modify or eliminate several long-standing broadcast ownership regulations in light of the dramatic shifts in the modern media landscape. The notice of proposed rulemaking (NPRM) will look at local television and radio rules that limit the number of stations a single entity can own in a specific market, as well as the dual-network rule that prohibits a merger between any of the top four national broadcast TV networks (ABC, CBS, Fox and NBC).

TV broadcast ownership rules currently restrict one station group from owning TV stations that reach more than 39% of U.S. TV households (the so-called “UHF discount” and duopoly rules allow for higher thresholds).

Free Live Sports and Trusted Journalism
For years, these restrictions have been under fire from broadcasters, who claim they prevent them from effectively competing with high-tech companies, particularly those that have launched streaming services now bidding for lucrative professional sports rights. In addition, groups like the National Association of Broadcasters have said outdated ownership rules threaten the integrity of local journalism.

A major catalyst for the review’s current direction was a July decision by the 8th U.S. Circuit Court of Appeals. In that ruling, the court vacated the FCC’s “Top-Four Prohibition,” which had barred a single company from owning two of the top four television stations in the same market. Crucially, the court also asserted that the statutory mandate for the quadrennial review is inherently deregulatory in nature, a legal interpretation that will heavily influence the current proceeding.

The NPRM approved does not propose specific rule changes, but instead poses a broad range of questions to the public and industry stakeholders. The commission is seeking extensive input on how the proliferation of streaming services, online video platforms and other digital media should affect its analysis of competition, localism and viewpoint diversity—the traditional pillars of its ownership regulations.

“We intend to take a fresh approach to competition by examining the broader media marketplace, rather than treating broadcast radio and television as isolated markets,” FCC Chair Brendan Carr said. “Our primary goal is to promote investment in local broadcasters who provide trusted news and information vital to the communities they serve. We will also consider whether public safety, national security and other public interest goals should be part of this review process. If we determine that any rule no longer serves the public interest, we will fulfill our statutory duty to modify or eliminate those rules.”

FCC Commissioner Anna Gomez acknowledged the challenges currently facing the broadcast industry but criticized the motives behind the industry’s calls for changes.

“The commission requires locally licensed broadcasters to serve their communities of license in the public interest,” said Gomez, the only FCC Democrat. “The key principles underlying this statement remain localism, viewpoint diversity and competition. Financial gains for corporate giants is not a basis to abandon our and broadcasters’ obligations to serve the public interest.”

Is This the End for ATSC 1.0?
One week later, the commission announced it would vote on a NPRM to consider sunsetting the ATSC 1.0 broadcast standard by 2030, based on a proposal made by the NAB earlier this year. The proposal would allow TV stations in the top 55 DMAs to terminate ATSC 1.0 by February 2028, with the entire industry transitioning two years later.

Even though its draft of the NPRM, released in advance of the Oct. 28 monthly meeting, raises more questions than answers about how the agency might act on key issues related to NextGen TV, it does provide some hints on how Carr is thinking about the subject.

The draft noted that the FCC has “tentatively” concluded that stations should be allowed to choose when to stop broadcasting via the ATSC 1.0 standard and begin broadcasting exclusively in 3.0. It also has “tentatively” concluded stations should be allowed to broadcast in both 1.0 and 3.0, as many are today, but with fewer restrictions and requirements on the 1.0 version of their signal. This would free up more spectrum for advanced ATSC 3.0 services.

The NAB, Pearl TV, state broadcasting associations and larger groups like Sinclair want the FCC to set a firm date for the shutoff of ATSC 1.0. Smaller broadcasters and many LPTV stations have opposed the sunset of 1.0 broadcasts starting in February of 2028.

The draft takes a more neutral approach to many other key issues, raising a series of questions about key topics like the creation of new rules mandating ATSC 3.0 tuners in all new TVs.

More specifically, the draft NPRM seeks comment on many issues and proposals closely related to these tentative conclusions about the transition, including: the use of encryption or digital rights management (DRM) on broadcast signals; a requirement that new televisions be able to receive and display 3.0 signals; and a requirement that traditional pay TV providers carry 3.0 signals to their subscribers.

The NAB, Pearl TV and larger broadcasters have argued that 3.0 tuner mandates are necessary for a successful NextGen TV transition so that a large number of consumers can be able to access the broadcasts. Consumer electronics firms and the CTA have consistently opposed a tuner mandate, arguing it would increase the cost of TV sets and is generally unnecessary because most viewers watch video content over streaming and pay TV services, rather than over-the-air antennas.

Initial reaction from broadcasters to the draft NPRM was positive, with Pearl TV and the ATSC applauding the FCC for working to find ways to accelerate the transition to ATSC 3.0 broadcasts. It was also generally vague, given that the draft does not take a strong position on some key issues like a mandatory sunset or 3.0 tuner mandates.

“Pearl TV and the local broadcasters commend FCC Chairman Carr for launching a new proceeding on NextGen TV that signals to the consumer technology industry, broadcasters, and consumers that the final transition to next-generation broadcasting is underway and that the technology provides an unparalleled opportunity to enhance and improve television service to millions of viewers each day,” Anne Schelle, managing director of Pearl TV, said in a statement sent to TV Tech.

The Link
Tying ownership rules to the end of ATSC 1.0 is not new; the NAB argued that the two issues were linked in the proposal it submitted to the FCC in February. “Due to the Commission’s ownership restrictions which have fragmented the industry by design, no broadcaster is in a position to shut down ATSC 1.0 by themselves while other stations in the same market remain on the older standard,” the association said.

In her statement, Gomez also acknowledged the tie, but expressed concern about how consolidation could impact broadcast technology.

“The benefits of NextGen TV to broadcasters increase if the national ownership cap is raised or eliminated,” she said. “A station group with a nationwide footprint and data about their audiences will be able to compete for national targeted advertising campaigns. They also plan to sell datacasting services using the broadcast spectrum made available by the more efficient standard to, for example, broadly and efficiently transmit technical updates to devices such as phones and cars outside traditional broadband connections.

“This may well be a great use of spectrum but we should certainly consider the policy implications of allowing this before it happens,” Gomez concluded.

WASHINGTON, D.C.—The FCC’s Media Bureau has commenced the 2022 Quadrennial Review of the Commission’s media ownership rules and is seeking comment, as required by the Telecommunications Act of 1996, on whether the media ownership rules remain “necessary in the public interest as the result of competition.”   

FCC noted that the Commission has not yet adopted final rules in the 2018 Quadrennial Review, which has been delayed by extensive litigation, but stressed that the agency remains “cognizant of the statutory obligation to review the broadcast ownership rules every four years. Just as the previous (2018) quadrennial review was initiated in December of 2018, we seek to commence this subsequent (2022) review before the end of the 2022 calendar year….Accordingly, the Media Bureau finds that initiating the 2022 Quadrennial Review despite the pendency of the 2018 Quadrennial Review is appropriate in this instance.”

The FCC noted that it would examine the media ownership rules in light of the media landscape of 2022 and beyond. Although these rules remain subject to the ongoing 2018 Quadrennial Review proceeding, the FCC noted that “the three rules currently in place and subject to this review are the Local Radio Ownership Rule and the Local Television Ownership Rule—which limit ownership by a single entity of broadcast radio or television stations in local markets respectively—and the Dual Network Rule, which effectively prohibits mergers among the Big Four broadcast television networks (ABC, CBS, Fox, and NBC).”

In its examination of these rules, the FCC said it was seeking “information regarding the media marketplace, including ongoing trends or developments (e.g., consolidation, technological innovation, or the emergence of new video or audio options for consumers), that commenters find relevant to the Commission’s review of its media ownership rules.”     

“In addition, we note that the statutory directive of section 202(h) is explicitly tied to the public interest standard, in that it requires the Commission to determine whether the rules remain `necessary in the public interest as the result of competition,’” the FCC continued. “Accordingly, we seek comment on the impact of the rules on the American public as consumers of media and the function and objectives of the rules as they relate to broadcasters’ public interest obligations.  Have the rules served, and do they continue to serve, consumers, particularly with respect to the Commission’s longstanding policy goals of competition, localism, and diversity?  If so, in what ways?  Are there ways in which the rules have fallen short?  Has the marketplace under our current rules delivered sufficient “returns” for consumers with respect to competition, localism, and diversity?  How can the Commission measure or evaluate any “returns” that consumers have received as a result of those rules?  Should the Commission adjust its analysis of the audio and video programming marketplace to account for fundamental changes in consumer behavior (e.g., use of streaming alternatives)?  Are there areas in which consumers rely uniquely on broadcast media?  More generally, how should the Commission define or redefine the policy goals for the rules?  Are there other policy goals, besides competition, localism, and diversity, that the Commission should consider in relation to the rules?”

The FCC also explained that it would “evaluate the effects of its rules on the ownership of broadcast stations by minorities and women. To this end, we seek comment on barriers to minority and female ownership of broadcast stations and areas in which commenters believe those barriers relate to, intersect with, or could be addressed by changes to the three ownership rules that are the subject of this proceeding.  Specifically, we encourage commenters to identify concrete changes the Commission could or should make with respect to these or any additional ownership rules.  We ask commenters to explain in detail or to demonstrate with legal analysis and empirical evidence how any such changes or additions would address concerns regarding minority and female ownership and how they could withstand legal scrutiny.”

The FCC noted that commenters may provide any additional information regarding legal or economic factors, changes, or issues that the Commission should consider, evaluate, and/or address in the context of the 2022 Quadrennial Review.

“In this regard, we reiterate the request from previous quadrennial reviews that commenters submit empirical evidence, data, and studies in support of their claims and positions wherever possible,” the FCC said. “We encourage commenters to draw any conclusions or connections between data and potential policy or rule changes as tightly and as explicitly as possible.  In addition to identifying, analyzing, and submitting existing data, commenters are encouraged to compile new data or to conduct further research that can be submitted to the Commission as part of the 2022 proceeding.”

The FCC explained that all filings must be submitted in MB Docket No. 22-459. 

Interested parties may file comments on or before 45 days after publication in the Federal Register and replies 60 days after publication in the Federal Register.

Comments may be filed using the Commission’s Electronic Comment Filing System (ECFS).  

• Electronic Filers:  Comments may be filed electronically using the Internet by accessing the ECFS:  http://apps.fcc.gov/ecfs/.  

• Paper Filers:  Parties who choose to file by paper must file an original and one copy of each filing.

• Filings can be sent by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail.  All filings must be addressed to the Commission’s Secretary, Office of the Secretary, Federal Communications Commission.

• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9050 Junction Drive, Annapolis Junction, MD 20701.  U.S. Postal Service first-class, Express, and Priority mail must be addressed to 45 L Street NE Washington, DC 20554.

• Effective March 19, 2020, and until further notice, the Commission no longer accepts any hand or messenger delivered filings. This is a temporary measure taken to help protect the health and safety of individuals, and to mitigate the transmission of COVID-19.  See FCC Announces Closure of FCC Headquarters Open Window and Change in Hand-Delivery Policy, Public Notice, DA 20-304 (March 19, 2020).  

Additional information is available here.  

WASHINGTON, D.C.—In a filing with the FCC, the National Association of Broadcasters is arguing that the regulatory framework governing ownership of broadcast radio and television stations harms broadcasters’ ability to compete in the marketplace, impedes localism and fails to promote diversity in ownership. 

"In assessing competition, the FCC can no longer maintain the fiction that broadcast stations compete only against other broadcast stations,” said NAB in its comments. “Given the record evidence…the FCC must conclude that its local ownership rules are no longer necessary in the public interest as the result of competition.”

NAB made the comments as part of the FCC’s 2018 quadrennial review of broadcast ownership rules and reiterated its longstanding view that local radio and television stations operate under outdated media ownership restrictions dating back decades to the analog era.  

The outdated rules, which have failed to account for changes in the marketplace, no longer enable broadcasters to effectively operate in a competitive market or effectively serve the public interest, are in urgent need of reform, NAB said.

Those rules also hurt localism and diversity, the NAB maintained. 

With the decline in the newspaper industry, broadcast radio and television stations are among the few entities still capable of producing local news, weather, sports and emergency journalism, the NAB noted. 

These newsgathering ventures require high capital and operating costs, but the outdated rules prevent broadcasters from achieving the scale necessary to sustainably provide local journalism to their communities, NAB said. 

In addition, the FCC’s rules have failed to account for increased competition from giant technology platforms for advertising revenue. 

“[E]ven if capital were more accessible, the FCC’s continued insistence on heavily regulating broadcasters – including through outdated ownership rules – is a clear disincentive to investment and new entry,” said NAB in its comments. “In a world where investors and new entrants have countless other media and communications options, the Commission itself is a major impediment to increased diversity in the broadcast industry.”

In its comments, NAB urged the FCC to adopt proposed media ownership reforms offered by NAB in 2019. 

Those proposals ask the FCC to get rid of per se restrictions that ban combinations among top-four rated TV stations, regardless of their audience or advertising shares, and that prevent ownership of more than two stations in all markets, regardless of their competitive positions.

The FCC is also recommending that the Commission eliminate caps on AM ownership in all markets; permit a single entity to own up to eight commercial FM stations in Nielsen Audio 1-75 markets, with the opportunity to own two more FM stations through successful participation in the FCC’s incubator program; and remove restrictions on FM station ownership in Nielsen markets 76 and lower and in unrated areas. 

“The FCC should act now to fulfill both [its] deregulatory mandate, and Congress’s even longer-standing goal of a competitively viable broadcast service capable of serving local communities, by modernizing its local radio and TV ownership limits,” said NAB. “The American public cannot afford for the FCC to remain asleep at the regulatory wheel.”

WASHINGTON—As the Supreme Court prepares to hear the case between the FCC and the Third Circuit U.S. Court of Appeals over the commission’s media ownership modernization rules, the NAB is once again giving its support to the FCC’s effort.

NAB has filed a reply brief to the Supreme Court where it argues that the FCC’s updated rules for media ownership were precisely in line with what it was directed to do by Congress, and that the Third Circuit’s decision to deny the new rules based on potential diversity issues is not consistent with Congress’ order.

In 2017, the FCC crafted a set of new media ownership rules with the goal of updating what it believed were outdated ones. The new rules would eliminate newspaper-broadcast and the radio-TV cross-ownership rules; allow dual station ownership in markets with fewer than eight independent voices after the duopoly; eliminate attribution of joint sales agreements as ownership; and create an incubator program.

The Third Circuit Court rejected and sent back the FCC’s proposed regulations, primarily citing that the FCC did not take into account the impact that these rules would have on minority and female ownership.

After previously providing a brief to SCOTUS on the case, NAB’s latest brief attempts to make the case that Sec. 202(h), the Congressional order to the FCC, directed the commission to review whether its rules “were ‘necessary in the public interest as the result of competition.’”

NAB says that the Third Circuit never challenged the conclusion that the previously decades-old rules no longer made sense competitively and should be repealed, but rather they made a judgement call to deny the order based on the potential impact on diversity.

“The Third Circuit imposed that obligation on its own say-so …” NAB’s brief reads. “[T]he commission historically has not addressed minority and female ownership through structural ownership limits but targeted measures in separate proceedings.”

“Even assuming that minority and female ownership is a permissible factor in Section 202(h) reviews, that atextual policy goal, standing alone, cannot justify retaining rules that are otherwise no longer necessary in light of competition,” the NAB’s brief continues.

The Supreme Court will hear the case between the FCC and the Third Circuit Court on Jan. 19. NAB’s full reply brief can be read online. 

WASHINGTON—The FCC’s Media Bureau is keeping the status quo for WWOR/New York Post while it awaits a court decision on new media ownership rules, granting a temporary waiver for continued cross-ownership.

Fox Corp has been seeking a permanent waiver for its common ownership of WWOR-TV and the New York Post. Under the current media ownership rules, without a waiver, common ownership of a daily newspaper and a broadcast station serving the same geographic market—New York City in this case—is prohibited.

Whether or not this newspaper-broadcast ownership rule is still needed has been a point of debate with the FCC for some time now. The commission previously extended a temporary waiver for the WWOR/New York Post combination in 2001, 2006 and 2014. 

In 2017, the FCC eliminated the newspaper-broadcast cross-ownership rule, which would make the WWOR/New York Post combination legal. However, because of a ruling by the U.S. Court of Appeals for the Third Circuit, the new media ownership rules were reversed, including the newspapers-broadcast ownership rule. This is why a waiver is still needed for WWOR/New York Post.

PLUS: Pai Urges Media Ownership Reforms

The FCC is challenging the Third Circuit Court ruling, taking the case before the Supreme Court on Jan. 19, 2021.

“The media marketplace has changed significantly since the adoption of the newspaper-broadcast cross-ownership rule in 1975, resulting in repeated commission efforts to modernize the rule,” the FCC said in its statement granting the waiver. “Given the pending Supreme Court review of this rule, and the commission’s 2017 determination, which was unchallenged in the Third Circuit litigation, that the newspaper-broadcast cross-ownership rule is no longer necessary to preserve competition or viewpoint diversity, the commission determined that it was appropriate to grant a temporary waiver as opposed to a permanent one, until the status of the rule has been resolved.”

If the FCC’s new newspaper-broadcast cross-ownership rule is affirmed by the Supreme Court, the temporary waiver will remain in place for 180 days until the FCC reaffirms its updated rule, making the cross-ownership between WWOR and the New York Post permanent. 

WASHINGTON—Common Cause is backing the U.S. Third Circuit Court in its upcoming court case against the FCC regarding media ownership rules set to be heard by the Supreme Court, arguing that the FCC’s efforts will do more to harm media ownership diversity than help.

Common Cause joined Prometheus Radio Project, Movement Alliance Project, Free Press, Office of Communication Inc. of the United Church of Christ and National Association Broadcast Employees and Technicians-Communications Workers in a brief filed to the Supreme Court. 

The brief argues that SCOTUS should affirm the Third Circuit’s decision that the FCC was “arbitrary and capricious in deregulating media ownership rules without considering what effect it would have one broadcast ownership by women and people of color.”

The FCC has fought this ruling, claiming that its proposal not only updates media ownership rules that it calls out-of-date, but also creates an incubator program to promote diversity in media. After a number of appeal attempts, the commission ultimately brought the case before SCOTUS. 

PLUS: Pai Urges Media Ownership Reforms

The brief submitted by Common Cause and the other organizations believe, however, that the Third Circuit correctly identified flawed data in the FCC’s proposal that does adequately consider the impact of its rules change on diverse media ownership.

Former FCC Commissioner and Common Cause Special Adviser Michael Copps made the following statement regarding the case:

“The Third Circuit rejected bad FCC media ownership rule changes four times because each time the agency ignored the Court’s demand for evidence and a reasoned explanation of how rule changes would impact broadcast ownership diversity. Rather than do its job, the FCC is now seeking a bail out from the Supreme Court to push for greater media consolidation at the expense of ownership diversity. Based on existing data, we know the number of broadcast stations owned by women and people of color is abysmally low as media conglomerates continue to consolidate. Women and people of color have struggled to acquire broadcast stations in an industry that’s been consolidated for far too long.

“Our democracy suffers when just a few entities own the majority of our media and there is no diversity in ownership. The FCC’s media ownership rules are intended to prevent that from happening. We urge the Supreme Court to uphold the Third Circuit’s decision and require the FCC to once and for all fulfill its statutory mandate to promote race and gender diversity in media ownership.”

The full brief is available online. 

WASHINGTON—Turns out Jan. 19 will be an inauguration day of sorts—inaugurating the Supreme Court's first consideration of an appeal of the FCC's media ownership rule deregulation.

It will be the fourth oral argument of the January session, with one hour of argument scheduled, though that could spill over depending on the how the arguments and Justices' questioning goes.

The FCC and the National Association of Broadcasters both challenged the U.S. Court of Appeals for the Third Circuit.

In September 2019, a three-judge panel of the Third Circuit threw out, or at least threw back to the FCC, Chairman Ajit Pai's effort to deregulate broadcast ownership and address a lack of diversity. The court said the agency "did not adequately consider the effect its sweeping rule changes will have on ownership of broadcast media by women and racial minorities," something the court had said in a previous media ownership ruling that the FCC had to do next time around. 

The court vacated the FCC's elimination of the newspaper-broadcast and the radio-TV cross-ownership rules; its decision to 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); and its elimination of attribution of joint sales agreements as ownership, as well as its creation of a diversity incubator program. 

In April 2020, broadcasters and newspaper publishers petitioned the Supreme Court to review the Third Circuit decision.

Echoing the FCC's petition for review also filed in April, media petitioners said that outdated ownership rules remain in force because a divided panel of the court has prevented the FCC from implementing "necessary adjustments to its ownership rules" that the FCC concluded would serve the public interest.

The FCC said that it has been trying to grant the ownership dereg for 17 years, thwarted by a series of decisions by a divided panel of the Third Circuit. It said the most recent decision to vacate "a host of significant rule changes" was based "solely on the ground that the agency had not adequately analyzed the rules’ likely effect on female and minority ownership of broadcast stations." 

The FCC argues that for those 17 years the court has blocked it from exercising its mandate by Congress to repeal or modify any ownership rule it determines is no longer in the public interest. 

ATLANTA—Gray Television has thrown its support behind the FCC in its case for reinstating its proposed media ownership rule updates, filing an amicus brief with the Supreme Court for the commission’s case where it seeks to overturn the ruling of the U.S. Court of Appeals for the Third Circuit.

In 2017, the FCC voted on deregulation efforts that would eliminate newspaper-broadcast and the radio-TV cross-ownership rules; allow dual station ownership in markets with fewer than eight independent voices 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 mechanism.

This was ultimately denied by the Third Circuit and sent back to the FCC on the grounds that it “did not adequately consider the effect its sweeping rule change will have on ownership of broadcast media by women and racial minorities.”

Gray TV argues that the FCC was in full compliance with its obligations under the Telecommunications Act of 1996. According to Gray, the law requires the FCC to, first and foremost, consider the effects of marketplace “competition” when modernizing its rules. The Third Circuit ruling, Gray TV writes, “is incorrect because it requires the agency to elevate other policy considerations over the effects of ‘competition.’”

In terms of competition, Gray TV specifically points to the impact low-cost digital media sources have on local news and journalism. The denial of these updated rules subsequently harms small and mid-sized communities who rely on local news.

“Over the last 15 years, the FCC has attempted repeatedly to update its regulations in light of today’s competitive media marketplace, as directed to do so by statute,” Gray TV says. “The FCC, however, has been stymied consistently by the U.S. Court of Appeals for the Third Circuit, which effectively has frozen the regulatory landscape as it existed in 1941 when the FCC first adopted a ‘one-to-market’ rule and when the media marketplace was enormously different than it is today.”

Gray TV joins the NAB in filing amicus briefs in support of the FCC in its case before the Supreme Court. According to Gray TV, a decision on the case is expected by June 2021. 

WASHINGTON—The FCC wants a full reversal from the Supreme Court on the U.S. Third Circuit Court of Appeal’s ruling on its deregulation of local broadcast ownership rules, which invalidated the order and sent it back to the commission.

The FCC voted in 2017 on deregulation efforts that would eliminate newspaper-broadcast and the radio-TV cross-ownership rules; allow dual station ownership in markets with fewer than eight independent voices 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 mechanism.

A three-judge panel for the Third Circuit Court, however, denied these proposals, saying that the FCC “did not adequately consider the effect its sweeping rule change will have on ownership of broadcast media by women and racial minorities.”

In its official filing with the Supreme Court, the FCC’s main argument is that the Third Circuit has long been blocking the FCC’s efforts to repeal or modify rules that it believes were no longer in the public interest.

The FCC says Congress has directed the commission to review ownership rules every four years to determine whether they are still relevant and if any need to be modified. However, the filing claims that the Third Circuit has “thwarted’ such efforts over the last 17 years.

In regards to this latest proposal, the FCC says “the panel majority did not question the agency’s findings that the restrictions’ original competition and viewpoint-diversity rationales no longer justified their retention. It nevertheless vacated the revised rules solely on the ground that the agency had not adequately analyzed the rules’ likely effect on minority and female ownership of broadcast stations.”

This goes against the established principles of judicial deference, according to the FCC, and as a result keeps these outdated regulations in place against the best interests of broadcast markets.

The NAB filed its own comments with the Supreme Court this week in support of the FCC’s case.

Ultimately, the FCC simply concluded that the Supreme Court should reverse the Third Circuit Court’s order.

The full FCC filing is available online. 

WASHINGTON—The U.S. Supreme Court has announced that the FCC’s legal battle over their ability to loosen media ownership rules will get its day with the highest court in the land. Efforts to overhaul the ownership rules date back to 2003.

With a vote in 2017, the FCC proposed deregulation efforts that would eliminate newspaper-broadcast and the radio-TV cross-ownership rules; allow dual station ownership in markets with fewer than eight independent voices 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 mechanism.

In 2019, however, a three-judge panel of the U.S. Third Circuit Court of Appeals denied these proposals and sent them back to the FCC on the basis that they “did not adequately consider the effect its sweeping rule change will have on ownership of broadcast media by women and racial minorities.”

The FCC attempted to have the entire Third Circuit Court hear its case, but it was rejected. As a result, in April, the Solicitor General of the U.S. officially asked the Supreme Court to hear the case.

FCC Chairman Ajit Pai tweeted in response to the announcement:

The NAB President and CEO Gordon Smith provided a statement on the news, as the NAB has long been in support of the FCC's efforts:

"NAB looks forward to presenting our case before the Supreme Court this term. For almost two decades, the Third Circuit Court of Appeals has blocked common-sense change to outdated broadcast ownership regulations to the detriment of local journalism. This time has come to allow the FCC to modernize its rules." 

It is not clear at this time when the case will go before the Supreme Court.

WASHINGTON—NAB is adding its voice in support of the FCC to have the U.S. Third Circuit Court of Appeals’ decision regarding media ownership deregulation effort heard by the Supreme Court.

The FCC’s efforts to modernize media ownership rules, which were first proposed in 2017, was stayed by a three-judge panel from the Third Circuit, citing that the proposed changes did not sufficiently consider the impact that the changes could have on minority and female ownership.

Specifically, the FCC’s proposals sought 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; eliminate attribution of joint sales agreements as ownership; and create an incubator program.

In its brief, however, the NAB says that there is one key to this case: “Whether under Section 202(h) of the Telecommunications Act of 1996 the Federal Communications Commission may repeal or modify media ownership rules that it determines are no longer ‘necessary in the public interest as the result of competition’ without statistical evidence about the prospective effect of its rules changes on minority and female ownership.” To which the NAB believes the answer is yes.

NAB has said that the Third Circuit Court’s decision is part of a repeated practice to elevate its own policy concerns over the statutory text.

“Due to the same Third Circuit panel’s repeated decisions, ownership rules from decades ago are frozen in place, even as technology ‘has transformed the American people’s consumption of news and information,’” the NAB brief reads. “Those decisions have blocked the ‘iterative process’ designed by Congress to enable the commission to ‘gain experience with its policies so it may assess how its rules function in the marketplace.’ … And, absent this Court’s intervention, the commission will have no choice but to comply with the Third Circuit’s atextual commands in future reviews and will never be able to ‘move on and get it right.’”

NAB concludes that the FCC’s petition to have the decision be reviewed by the Supreme Court should be granted.

The full brief is available online. 

WASHINGTON—The FCC wants to take their case regarding new media ownership deregulations all the way to the Supreme Court as the Solicitor General of the U.S. has officially asked the court to review the decision of the U.S. Third Circuit Court of Appeals that rejected many of the commission’s efforts.

The media deregulation efforts on the table would eliminate newspaper-broadcast and the radio-TV cross-ownership rules; allow dual station ownership in markets with fewer than eight independent voices 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, per the FCC.

In September 2019, a Third Circuit Court panel denied these proposals and sent them back to the FCC to be modified, saying they “did not adequately consider the effect its sweeping rule changes will have on ownership of broadcast media by women and racial minorities.” The FCC attempted to have the entire Third Circuit Court hear its case, but that was rejected by the court as well.

The FCC argues that these decisions are not allowing it to fulfill the mandate it has from Congress to repeal or modify any rules that are no longer in the public interest. Going to the Supreme Court is the last legal option available to the FCC.

“The Supreme Court’s intervention is necessary to restore the commission’s discretion to regulate in the public interest and modernize media ownership regulation for the digital age, as Congress intended,” said FCC Chairman Ajit Pai in a statement.

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.”

WASHINGTON—When it comes to those that are opposing modifications to the FCC’s media ownership rules, the National Association of Broadcasters is not holding back in its most recent comments. The organization wrote that comments submitted in opposition to reform are “fundamentally backward” in this new media marketplace.

Arguments that highlight this type of backward thinking, per NAB, include the critiques of stressing economic viability over the role of local TV stations to provide news and information. The broadcast “industry’s ability to function in the ‘public interest, convenience and necessity’ is fundamentally premised on its economic viability,” reads the NAB’s statement.

The NAB also makes the case that the opposition is either omitting or misinterpreting Section 202(h), saying that they are leaving out the word “competition.”

“Looking at Section 202(h) the correct way, the FCC’s primary focus in this proceeding should be on the intense and growing competition radio and TV stations face for audiences and advertising revenue in a broad marketplace with myriad content sources and advertising options,” NAB’s comments read. “Due to these profound changes, the current local radio and TV ownership rules are no longer ‘necessary in the public interest as the result of competition,’ and Section 202(h) requires the Commission to ‘repeal or modify’ them.”

As a result of this growing competition, the NAB is proposing that the FCC eliminate such ownership restrictions as the banning of combinations of top-four rated stations and that prevent ownership of more than two stations in all markets. The NAB argues that those opposing these changes present no legal, factual or logical arguments, nor any analyses and minimal relevant data.

It also says that maintaining the rules will not promote diversity for station ownership or programming, saying it has not done so in the past, so there is little reason to believe it will in the future.

The leaders of the opposition to modifying the ownership rules, according to NAB’s statement, is pay TV industry leaders. “Rather than ensuring that the viewing public is served by strong local TV stations, pay TV providers’ proposals are designed to weaken their competition for viewers and advertising dollars and gain an even greater advantage in retransmission consent negotiations,” the comments read.

“Hyperbolic claims that broadcast deregulation will eliminate all diversity and all local news, or generalized complaints about media consolidation, provide no basis for retaining analog-era ownership rules,” NAB writes. “The FCC should discount the unsupported opinion and rhetoric submitted by parties wedded to a backward-looking approach to regulating radio and TV stations, and adopt rules reflecting competitive conditions in the 21st century.”

NAB’s full comments can be read here.

The author is an attorney with Fletcher, Heald & Hildreth, on whose blog this article originally appeared.

On Dec. 12, 2018, the Federal Communications Commission issued a Notice of Proposed Rulemaking commencing the 2018 Quadrennial Review of the commission’s media ownership rules.

The FCC is required under Section 202(h) of the Communications Act to review most of its broadcast ownership rules every four years to determine whether the rules continue to be in the public interest (and to repeal any rules that no longer serve the public interest) because they ensure a competitive broadcast marketplace. (Importantly, the national television ownership cap is excluded from the quadrennial review process).

These proceedings usually involve court challenges and typically take years to complete — as demonstrated by the fact that the commission did not complete the 2010 and 2014 quadrennial reviews until 2017.

In the NPRM, the commission is specifically reviewing its local radio and television ownership rules, as well as the “dual network” rule. The FCC is also considering the adoption of several diversity-related ownership proposals proffered by the Multicultural Media, Telecom and Internet Council.

Each of these items under the commission’s consideration are reviewed below. Despite its name, the NPRM does not in fact propose any specific rules, but rather requests comment broadly on any changes that should be made to these ownership rules. Instead, Chairman Ajit Pai requested an “intellectually honest conversation” about the current state of the media marketplace, and that any changes to the rules would “follow where the facts take us.”

LOCAL RADIO OWNERSHIP RULE

The Local Radio Ownership Rule limits both the total number of radio stations an entity may own within a local market and the number of radio stations an entity may own in that market within the same service (AM or FM). Currently, the FCC divides markets into four tiers based on their size, allowing an entity to own more stations in larger markets. The rule currently permits entities to own up to five commercial radio stations in the smallest of markets (14 stations or less) — no more than three of which may be in the same service — and up to eight commercial radio stations in the largest of markets (45 stations or more) — no more than five of which may be in the same service.

The FCC requested comment on whether the Local Radio Ownership Rule should be eliminated, modified or remain the same in light of any changes to the broadcast marketplace. As in past quadrennial reviews, the commission seeks comment on whether it should modify or eliminate any, all, or none of: the relevant market definitions, market size tiers, numerical limits and AM/FM subcaps.

The commission also requested comment on the National Association of Broadcasters’ proposal that the commission relax its radio ownership limits due to increased competition for listeners and advertisers posed by other services including streaming services, satellite radio, podcasts, Facebook and YouTube.

Specifically, NAB proposes that entities in the top 75 Nielsen Audio Metro markets be permitted to own up to eight commercial FM stations and an unlimited number of AM stations. NAB proposes that all ownership limits on radio stations be eliminated in all other markets.

The FCC is also seeking comment on:

• whether the interim contour-overlap methodology should be made permanent;
• the issue of embedded market transactions;
• the impact that eliminating or modifying the rule would have on minority and female broadcast ownership; and
• whether the relevant markets should be defined as to encompass the increasing competition broadcasters face from satellite radio and online audio sources.

LOCAL TELEVISION OWNERSHIP RULE

The Local Television Ownership Rule limits the number of full-power television stations an entity may own within the same local market. The rule permits entities to own up to two television stations in the same market so long as no more than one of those stations is a “top-four” station within that market. As of last year, however, entities may request waiver of the “top-four” rule under certain circumstances.

The commission in the NPRM requested comment on whether changes in the television marketplace and the video programming distribution industry necessitate elimination, modification or retention of the current rule. Notably, in light of the evolving video marketplace, the FCC requested comment on whether:

• the local television market definition should be expanded to include non-broadcast sources of video programming such as multichannel video programming distributors and online video distributors; as well as social media platforms and Internet websites; and
• if the rule were to be maintained, the numerical limit and the “top-four” rule could be adjusted or eliminated to ensure continued competition in the television marketplace.

DUAL NETWORK RULE

The Dual Network Rule prohibits ownership of multiple television stations affiliated with two or more of the Big Four broadcast networks (ABC, CBS, Fox and NBC). A version of this rule, which effectively prohibits a merger between or among the Big Four Networks, has existed since the 1940s.

The commission requested comment on whether current competition in the television and advertising marketplace mandates the elimination, modification, or retention of this rule. Specific focus was placed on whether increased competition from OVDs necessitated changes to the rule given the commission’s previous findings regarding the promotion of broadcast localism.

MMTC PROPOSALS

The commission requested comment on MMTC’s three diversity-related proposed amendments to the media ownership rules:

1. the extension of cable procurement requirements to broadcasters;
2. the development of a model for market-based “diversity credits” to serve as an alternative to prescribed ownership limits; and
3. the adoption of formulas creating media ownership limits that promote diversity.

Under the cable procurement requirement, cable systems must encourage minority and female entrepreneurs to conduct business with all aspects of a cable system’s operations. Cable systems may accomplish this obligation by recruiting qualified entrepreneurs from a pool of sources likely to representative of female and minority interests. Specifically, the FCC requested comment on whether the Communications Act permitted the adoption of such a rule for broadcasters, and if so, whether the rule would aid in increasing broadcast ownership diversity.

MMTC also proposed that the FCC should adopt a system of “diversity credits” which could be traded between broadcasters and “redeemed” by station buyers to offset increased ownership concentrations resulting from a station acquisition.

The proposal centers on the idea that a transaction deemed to promote diversity — for example the breakup of a local radio ownership cluster or the sale of station to a socially and economically disadvantaged business — could provide the seller with “diversity credits.” These credits could then be used by the seller to have a greater concentration of media ownership than otherwise permitted by the commission’s rules. Comment was sought on whether the Communications Act provided the FCC with authority to implement such a system, and if so, whether such a system would be feasible in increasing diversity in the broadcast industry.

MMTC’s third diversity-related proposal concerned the adoption of either a “Tipping Point Formula” or “Source Diversity Formula” to be used in establishing media ownership limits and promoting broadcast ownership diversity.

The Tipping Point Formula is a methodology for determining whether a transaction would result in the reduction of the amount of available revenue for supporting independent operators in a given radio market to an unsustainable level. If so, the transaction would be barred for having a negative impact on ownership diversity in that market. In contrast, the Source Diversity Formula is not limited to the radio service. The formula, however, relies on a complicated set of variables to assess whether a market manifests strong, moderate, or only slight diversity, which would then be used to assess the permissibility of a given transaction. The FCC requested comment on the feasibility of these proposals, and whether their adoption would aid in encouraging broadcast ownership diversity.

Comment deadlines had not yet been published at press time. File comments in MB Docket No. 18-349 atwww.fcc.gov/ecfs/.