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Third Circuit Won’t Block FCC Broadcast Dereg

Says Prometheus did not meet standard for directed action

Reprinted from Broadcasting & Cable.

The U.S. Court of Appeals for the Third Circuit has denied a petition from Prometheus Radio Project that it effectively stay the FCC’s November vote to deregulate local broadcast ownership. The court suggested the jury was still out on the FCC’s response to the court’s direction on ownership diversity and that Prometheus did not make a case for direct action from the court.

That court denial of the writ request means the FCC’s decision to eliminate crossownership rules and loosen other local ownership restrictions goes into effect and could mean that Sinclair Broadcasting can keep more stations in the Tribune deal than under the old rules or if the court had granted the writ of mandamus Prometheus sought.

“The 3rd Circuit’s decision gives the green light to M&A in the broadcast sector and has been seen as a good sign by Wall Street,” said Adonis Hoffman, chairman of Business in the Public Interest.

The Justice Department currently has a Feb. 11 deadline for either blocking the deal of signing off on it, though that could be extended. Sinclair had signaled it was adjusting the stations it would try to keep in the deal based on the loosened regulations, and the court decision paves the way for such an adjustment.

“The emergency petition for writ of mandamus is denied as petitioners have not satisfied the exacting standard for obtaining such relief,” the court said (observing that a writ of mandamus “may issue only if the petitioner shows (1) a clear and indisputable abuse of discretion or error of law, (2) a lack of an alternate avenue for adequate relief, and (3) a likelihood of irreparable injury.”

Prometheus had argued the FCC’s deregulatory moves were undertaken without the vetting of their impact on media ownership diversity the court had required. The FCC said it had vetted that impact, including proposing an incubator program as part of the decision.

“The court notes that the exact design of the FCC’s new incubator program is subject to public comment through April 9, 2018,” the Third Circuit said.

It directed the FCC to “file a report on or before August 6, 2018 regarding the status of the incubator program.”

“We’re grateful that the court rejected the mandamus request and that meaningful reform of outdated broadcast ownership rules can go forward,” said National Association of Broadcasters EVP Dennis Wharton. NAB had petitioned the court to let it back the FCC’s opposition to the Prometheus writ.

Longstanding opponents of the FCC’s broadcast ownership rule decisions — under both Democratic and Republican administrations — Prometheus asked the U.S. Court of Appeals for the Third Circuit to force the current FCC to address diversity issues that court has long told the commission to address, and delay any deregulation of local ownership rules until that happens.

That came in the emergency request for a writ of mandamus filed by both Prometheus Radio Project and Media Mobilizing Project.

They also wanted the court to stop the FCC from approving any license transfers that would not comply with the FCC’s previous ownership rules, which could potentially affect the Sinclair-Tribune deal.

The FCC under chairman Ajit Pai changed course from the commission of his predecessor, Tom Wheeler, and eliminated some local ownership rules — the newspaper/broadcast and radio/TV crossownership rules — and modified others.

But both the Wheeler and Pai approaches needed to be responsive to a remand of the Third Circuit to take the impact of diversity into account when making those decisions, say the groups, and neither did so.

Prometheus and Media Mobilizing Project, which challenged the Wheeler reg review as insufficiently regulatory and the Pai review as really insufficiently regulatory, says neither FCC based their decisions on sufficient diversity impact information, and so filed the emergency request for the writ of mandamus, which would be the court demanding that the FCC follow its mandate.

They wanted the Third Circuit to stay implementation of the Pai media ownership deregulatory changes.

On Nov. 17, as part of the congressionally mandated Quadrennial media ownership reg review, the Republican FCC majority, under Pai assailed by FCC Dems who strongly dissented, eliminated some decades-old broadcast regulations and tweaked others in what broadcasters have argued is necessary to allow them to remain relevant in a sea of less-regulated competitors.

The order eliminated the newspaper-broadcast and the radio-TV cross-ownership rules; allowed dual station ownership in markets with fewer than eight independent voices after the duopoly, creating an opportunity for ownership of two of the top four stations in a market on a case-by-case basis (the FCC is not calling it a waiver); eliminates attribution of joint sales agreements as ownership; and creates an incubator program.

In doing so, the FCC reversed a decision by the previous FCC Democratic majority to leave most of the rules in place. Prometheus had challenged that decision, too, not because it had left most of the rules in place, but because Prometheus said it, again, did not sufficiently take diversity into account, which would have led to imposing more regulations, not simply leaving most in place. That earlier challenge has yet to be resolved and Prometheus also asked the court this week to consolidate this challenge with that one.

Prometheus argued that the Pai FCC also failed to respond to the Third Circuit’s direction, in remanding a previous attempt to deregulate, that it get better data on ownership diversity before deregulating.

The recent FCC decision under Pai did also initiate a rulemaking on creating a diversity incubator program and to consider the definition of eligible entity, but that did not cut it with Prometheus.