(By Bob Silverman and Gracie Kreth) In the 9-0 ruling that many broadcast interests have been awaiting for 18 years, the Supreme Court affirmed a 2017 FCC decision to relax its media ownership rules as part of the agency’s Congressionally-mandated Quadrennial Review to decide every four years whether any Commission rules are obsolete and no longer in the public interest.
Companies such as News Corp., Sinclair Broadcast Group Inc., Fox Corp. and Nexstar Media Group Inc. had been advocating for the FCC to relax its media ownership rules. Led by former Chairman Ajit Pai, the FCC repealed its newspaper-broadcast cross-ownership rule and radio-television cross-ownership rule and modified its local television ownership rule to eliminate the “eight-voices” test for mergers.
Those rules, adopted in 2002 and remaining largely unchanged ever since, were aimed at promoting competition, localism and diversity. Problematically, however, the FCC never collected solid data to justify the effectiveness of those rules, particularly pertaining to minority and female ownership. Based on the limited data it did have, the FCC decided that repealing its media ownership regulations would not diminish competition, diversity of viewpoint or localism, especially given the rise in internet and cable.
Public interest groups including petitioner Prometheus Radio Project, who have opposed consolidation of the media market, argued that the FCC’s decisions to eliminate and modify its rules was arbitrary and capricious because the FCC relied on flawed data, the Supreme Court disagreed. “Prometheus insists that the FCC’s numerical comparison was overly simplistic and that the data sets were materially incomplete,” wrote Justice Brett Kavanaugh on behalf of the court. “But the FCC acknowledged the gaps in the data. And despite repeatedly asking for data on the issue, the Commission received no other data on minority ownership and no data at all on female ownership levels.” The high court essentially was satisfied that the Commission reasonably relied on the data that it had at the time of the Quadrennial Review, despite characterizing some of the data as a “sparse record on minority and female ownership.”
Acting Chairwoman Jessica Rosenworcel, who in 2017 opposed striking the media ownership rules, expressed her disappointment by the decision in a brief statement. Rosenworcel stated that “the values that have long upheld our media policies—competition, localism, and diversity—remain strong” and she is “committed to ensuring that these principles guide this agency as we move forward.” It is unclear exactly what moving forward may mean.
Given the Supreme Court’s unified deference toward the agency scrapping the old rules, however, it is clear that any steps the agency may wish to take to restore or adopt new media ownership restrictions will need to be driven by a more thorough data collection.
One possible first step could be soliciting public comment specifically on how future media consolidation would affect female and/or minority ownership levels, which could get the ball rolling on collecting data until President Joe Biden installs a new Commission chair, giving the agency a 3-2 Democratic majority.
Until then, the floodgates allowing further media consolidation by Sinclair, Nexstar, and others, remain wide open.
Bob Silverman is a communications attorney at Womble Bond Dickinson and can be reached at (202) 857-4532 or [email protected].