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Court Sends FCC Back to Drawing Board on Media Ownership

Move to loosen broadcast ownership rules stymied after appeals court says changes fail to consider effect on women and minorities

The issue of media ownership is back in the headlines after a federal appeals court ruled that the Federal Communications Commission “overstepped” in its recent media ownership rule changes, failing adequately to consider the effect on women and racial minorities.

The decision by the Third Circuit Court of Appeals comes after a review of the FCC’s 2016 quadrennial review order on broadcast ownership rules.

Back in 2017, the commission voted along party lines to eliminate the ban on cross-ownership of newspaper and TV stations in major markets, to ease the process for media companies to buy additional TV stations in a market, to allow local stations to jointly sell advertising time, and to let companies buy additional radio stations in some markets.

But in a ruling Monday, the appeals said it would vacate and remand the bulk of the FCC’s actions, sending it back to the commission for further consideration.

Democratic FCC Commissioner Jessica Rosenworcel said the court was right to reject Republican-led attempts to loosen restrictions. “Media ownership matters because what we see on our screens says so much about who we are as individuals, as communities and as a nation,” she said. “But over my objection, the FCC has been busy dismantling the values embedded in its ownership policies. Today, the Third Circuit Court of Appeals agreed.”

The National Association of Broadcasters called the decision disappointing.

“The media marketplace has undergone massive changes over the past few decades, let alone since 2004,” said NAB Executive Vice President of Communications Dennis Wharton. “It’s shocking that the same panel of judges has supplanted Congress’ and an expert federal agency’s views with its own for more than 15 years.”

Commissioner Michael O’Rielly was of a similar mind and urged Chairman Pai and the Trump administration to take the case to the Supreme Court. “For too long, the U.S. Court of Appeals for the Third Circuit has abused the statute and defied common sense as it pertains to media ownership limitations. It is clear that no argument, formula or well-reasoned reform can satisfy the majority’s wrong-headed demands, guaranteeing the complete preservation of the broken and outdated status quo,” O’Rielly said in a statement. He called it “a classic case of judicial activism and legislating from the bench that further justifies the ongoing fight for reforming the judiciary.”

The ruling is the latest in a long-running series of skirmishes between the court and the commission.

FCC Chairman Ajit Pai today accused the court of blocking attempts to modernize 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,” he said in a statement, adding that the commission nevertheless plans to appeal.

Pai also noted dissenting views expressed by Judge Anthony Joseph Scirica.

Scirica said that while he joined his colleagues in their rejection of part of the order that relates to the FCC’s incubator program as well as parts that deal with the Local TV Rule, he does not share the conclusion that the current FCC orders are arbitrary and capricious.

“In my view, the FCC balanced competing policy goals and reasonably predicted the regulatory changes dictated by the broadcast markets’ competitive dynamics will be unlikely to harm ownership diversity,” Scirica said. “I would allow the rules to take effect and direct the FCC to evaluate their effects on women- and minority-broadcast ownership in its 2018 quadrennial review.”

That leaves the commission with a decision on how to proceed. The 2018 Quadrennial Review is underway, and that process relies upon much of the same analysis as the orders vacated by the court, said Commissioner Geoffrey Starks in a statement.

“The court here suggests that ‘new empirical research’ may be required to fully satisfy our rulemaking requirements,” he said. “I wholeheartedly agree. Needless to say, today’s decision will require us to go back to the drawing board.”

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