A U.S. appeals court has thrown out one of the FCC’s TV ownership rules. But it left radio ownership rules in place.
The National Association of Broadcasters welcomed the decision by the U.S. Court of Appeals for the Eighth Circuit to vacate the “top-four” prohibition, which said a broadcaster cannot acquire two TV stations ranked in the top four in audience share in a market.
NAB President/CEO Curtis LeGeyt called this “a major step forward for local television broadcasters seeking to compete and thrive in a vastly transformed media marketplace.”
“At the same time,” LeGeyt said, “we are disappointed that the court stopped short of addressing the decades-old radio ownership restrictions that defy economic reality and weaken broadcasters’ ability to compete, invest in local journalism and serve their communities.”
LeGeyt expressed continued hope that new FCC Chairman Brendan Carr will help the FCC “modernize its local radio ownership rules.” And NAB has reason to be optimistic about that, with a 2–1 Republican majority now on the commission, and given comments from Carr earlier this year about how the FCC defines communication markets.
But for now, the rest of the media ownership rules remain.
The details
This legal case was about the outcome of the commission’s 2018 rule review, conducted under the previous Democratic administration. (Such reviews are supposed to be done every four years, though a 2022 one has not been completed.)
[Read: “The FCC Keeps Radio Market Caps in Place”]
The final order was issued by the Rosenworcel commission in 2023; it left the TV and radio limitations in place and tweaked the methodology used in the top-four prohibition.
The Local Radio Ownership Rule says that in each of the largest radio markets, a licensee can own up to eight commercial radio stations, but a subcap limits a licensee to owning no more than five on each band (FM/AM) in the market. The cap shrinks as market size decreases. Those numbers are unchanged since being set by Congress in 1996.
The Local Television Ownership Rule has two parts: A two-station limit prohibits an entity from owning more than two full-power TV stations in the same geographic market, while the top-four prohibition precludes any entity from owning more than one of the top four stations in the same geographic market.
NAB and several broadcasters challenged the 2023 order on several grounds, including how the FCC defines the broadcast marketplace; they want the commission to consider nonbroadcast sources as part of the competitive market in which broadcasters operate.
The Eighth Circuit now has agreed only to boot the top-four prohibition. It rejected the rest of the petitions.
On whether the commission should have included non-broadcast sources in its market definitions, the court found that the FCC did consider the growing prevalence of non-broadcast programming but that it had articulated a rational reason for declining to broaden the market definition.
“[T]he FCC’s approach to defining the markets is not illogical. While it may feel counterintuitive to disregard the significant marketplace changes in the audio and visual industries, the FCC articulated valid reasons for setting those changes aside for purposes of this review.”
Regarding the local radio rules, the court rejected arguments that the FCC had failed to justify the regulations, that it had discounted evidence showing the demise of radio, and that it had disregarded evidence showing the benefits consolidation could provide to broadcasters.
“Here, after reviewing conflicting evidence, the FCC considered and rejected the argument that economies of scale justify loosening the Local Radio Ownership Rule. Such a determination was not arbitrary and capricious,” it wrote. “[T]hese are the types of judgments courts have repeatedly left to agencies.”
In a reaction statement, FCC Chairman Brendan Carr focused on the court’s decision to toss the top-four rule.
“For decades, the FCC’s approach to regulating the broadcast industry has failed to promote the public interest,” Carr wrote.
“That has only made it harder for trusted and local sources of news and information to compete in today’s media environment. And that is why I dissented from the Biden-era FCC’s decision to retain a regulation that does not match marketplace realities. I am pleased to see that the court agrees and has vacated that regulation.”
