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Third Circuit Halts FCC Plan to Deregulate Broadcast Ownership Rules

Close up of TV control room switchboard
By Joseph Fawbush, Esq. on September 24, 2019

Netflix just bought the global streaming rights to Seinfeld for $500 million, proving that there is value in re-runs. That’s not necessarily the case for the Federal Communications Commission, however, for whom the fourth time wasn’t the charm for updating certain rules regarding ownership of broadcast stations.

The FCC’s position under Ajit Pai is that the promulgation of internet companies has rendered existing rules opposing the consolidation of radio and broadcasting stations obsolete. It therefore chose to loosen cross-ownership restrictions. The FCC also added an “incubator” program to address the Third Circuit’s long-standing concern with the FCC’s proposed changes.

On September 23, however, Judge Thomas Ambro sent the FCC back to the drawing board. This was the fourth time the Third Circuit has reviewed proposed FCC changes and found them wanting. Judge Ambro also wrote the first in this series of cases in 2004.

FCC Has Struggled to Change Ownership Rules for Decades

In 1996, Congress passed the Telecommunications Act, giving the FCC authority to review and make changes to broadcast ownership rules in Section 202(h). The FCC reviews these regulations every four years and may revoke or amend rules based on how they affect competition, localism, and diversity. However, many current regulations have largely remained static since the mid-90s. This is in part because proposed changes keep being challenged successfully. The FCC’s position has also waffled, most recently favoring less restriction.

Third Circuit: FCC Uses Faulty Data, Badly

In an earlier case, the Third Circuit had held that the FCC must include in any rules change a determination on how those rules may or may not impact female and minority ownership. While the FCC did so nominally, Judge Ambro wrote that the agency’s conclusions were not supported, and therefore arbitrary and capricious. The FCC failed to cite any data regarding the rule’s impact on female ownership, for example, which the majority found to be enough on its own to be enough to vacate the FCC’s rules. What studies the FCC did cite were comparing “apples to oranges” and would “fail any entry-level statistics class.” The majority did note that it wasn’t specifically disputing the FCC’s conclusion. There simply wasn’t enough data in support.

Judge Anthony Scirica dissented, writing that the FCC here deserved Chevron deference, and that its conclusion that nothing supported a negative impact means the Third Circuit should allow the FCC’s orders to take effect.

To Be Continued . . .

It is quite possible further litigation will ensue when the FCC returns with new rules, or with new data in support of its existing plan. If it does, Judge Ambro wrote, the same panel retains jurisdiction. Until then, however, the restrictions on co-ownership in local markets will still be in effect.

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