Appeals Court Vacates FCC Ownership Dereg

The federal court in Philadelphia said the FCC, in eliminating the newspaper-broadcast crossownership rule and relaxing the local TV duopoly rule, failed to ascertain the impact of the action on station ownership by women and minorities. FCC Chairman Ajit Pai blasted the ruling and the court, which has repeatedly blocked ownership dereg: “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."

The U.S. Court of Appeals in Philadelphia today vacated the FCC’s 2017 order eliminating the broadcast-newspaper crossownership rule, the TV-radio crossownership rule and the small-market “eight voice” TV duopoly rule, saying the FCC failed to adequately ascertain the impact the moves would have on ownership of stations by women and minorities.

By a 2-1 vote, the three-judge panel remanded the rules to the FCC, giving the agency another chance to relax its rules, but not without fully considering women and minority ownership.

“The commission might well be within its rights to adopt a new deregulatory framework (even if the rule changes would have some adverse effect on ownership diversity) if it gave a meaningful evaluation of that effect and then explained why it believed the trade-off was justified for other policy reasons,” said Judge Thomas Ambro, writing for the majority.

“But it has not done so. Instead it has proceeded on the basis that consolidation will not harm ownership diversity. This may be so; perhaps a more sophisticated analysis would strengthen, not weaken, the FCC’s position. But based on the evidence and reasoning the commission has given us, we simply cannot say one way or the other.”

What impact the ruling will have on TV station trading remains to be seen. The only immediate effect on the market may be the restoration of the local duopoly rule, which prohibits common ownership of two full power stations in small markets — that is, markets with eight or fewer different TV licensees.

The ruling is a setback for FCC Chairman Ajit Pai’s deregulatory agenda and he is not happy about it.

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“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,” he said in a statement.

“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 and are optimistic that the views set forth today in Judge [Anthony] Scirica’s well-reasoned opinion ultimately will carry the day.”

Andrew Schwartzman, of the Benton Institute for Broadband and Society, who was among the challengers of the FCC action, said the ruling, at first glance, looked like a “huge victory for the listening and viewing public.

“The Court of Appeals has found that the FCC has yet again failed to assess how changing its ownership limits affect people of color and women. Diverse ownership benefits everyone, and rejection of the FCC’s deregulation is a small step in restoring a system that promotes such diversity.”

NAB EVP of Communications Dennis Wharton commented: “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.

“The media marketplace has undergone massive changes over the past few decades, let alone since 2004. We strongly encourage the FCC to appeal this misguided decision so that broadcasters can compete on an even playing field with tech giants and pay TV conglomerates.”


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