Supreme Court Overturns Third Circuit Smackdown of Broadcast Dereg

Supreme Court
(Image credit: United States Supreme Court)

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."


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."

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio WorldTV TechTV FaxThis Week in Consumer ElectronicsVariety and the Encyclopedia Britannica.