Media Ownership Rule Changes Are Again Heading For June Courtroom Fight.

Story by Inside Radio

Even as the Federal Communications Commission moves forward with a fresh quadrennial review, the court battle over earlier media ownership decisions is also advancing. The U.S. Court of Appeals for the Third Circuit in Philadelphia has scheduled oral arguments in the challenge brought by coalition of public interest groups, led by Prometheus Radio Project and Free Press, for June 11 at 1pm.

The public interest groups have asked a federal appeals court to review a Nov. 2017 decision by the Commission in favor of repealing the 42 year-old newspaper-broadcast cross-ownership ban as well as the radio-television cross-ownership ban. The FCC order also delivered a number of ownership rule changes to the television industry, including eliminating the so-called eight voices test and overturning a decision to make TV joint sales agreements attributable toward local ownership caps. Unhappy with the steps taken, the groups filed suit in March 2018 challenging the decisions. In their petition, the public interest groups said the agency failed to “consider the impact of its decisions on ownership diversity” contending its moves were “not supported as a matter of fact or law.”

The Commission disputes that however, saying in court briefs that the groups too narrowly focused their appeal on female and minority ownership data collections. The FCC says it used its “reasonable judgment” that supported making rule changes that would have “no material impact” on minority and female ownership.

The FCC laid out its case for why media ownership rule revisions should be upheld by the court in a brief filed with a federal appeals court in March. The FCC noted the Third Circuit had earlier recognized that keeping outdated rules in place might prevent broadcasters from forming “profitable combinations” and that might result in a “significant expense” for those companies. The FCC told the court it also took steps to ensure the changes it adopted didn’t adversely impact competition, localism or diversity in broadcasting.

The scope of the legal fight expanded in October 2018 to also include the new radio incubator program. The Multicultural Media, Telecom and Internet Council (MMTC) and National Association of Black Owned Broadcasters (NABOB) appealed the incubator rules adopted. MMTC and NABOB have asked the court to review the mechanism dictating how established broadcasters can use the waivers they receive as a reward for participating in the incubator program. The two organizations say the market comparability standard adopted by the FCC is “arbitrary and capricious” and the decision was “an abuse of discretion” not supported by the law.

As part of the program adopted by the Commission, the incubator program will pair existing radio station owners with new entrants or small and struggling broadcasters. As an incentive to get established broadcasters to take part in the program and potentially help a new competitor get on their feet, the FCC would give the established company a waiver to the local radio ownership limits, including the AM/FM subcap restrictions. Broadcasters will be able to use the waiver in the market where the incubator relationship is located, or in a comparably sized metro area.

The FCC has told the court that it has been using the same tiers since the 1996 Telecom Act was adopted, and MMTC and NABOB should have anticipated that the FCC might resort to familiar tiers. And while the two groups have said the new incubator program won’t do enough to bolster minority and female ownership levels, the FCC has argued that isn’t accurate. It has also pushed back against attempts to get it to use a system that was more conscious of race and gender. The FCC said that would be “legally unsustainable” in the wake of earlier Supreme Court decisions.

Senior FCC officials have told Inside Radio the Commission is unlikely to take any votes on the latest quadrennial review until the appeals court rules on the challenges going to court next month. Officials say the goal would be for the Commission to use the next court decision to help guide the latest quadrennial proposals. The hope is that would help the FCC when it inevitably ends up back in court defending what are sure to be future legal challenges to the next round of decision-making.