(CN) -A federal appeals court in Philadelphia has upheld Federal Communications Commission rules limiting ownership of multiple media outlets in the same local market, but vacated rules that would have allowed ownership of a newspaper and a broadcast outlet in the same market.
In a wide ranging decision, the 3rd Circuit also vacated sections of FCC’s Diversity Order, rules ostensibly designed to increase ownership of broadcast media outlets by women and minorities, but which the court said lacked “sufficient analytical connection to the primary issue that [they] intended to address.”
Groups on both sides of the media deregulation issue challenged the FCC’s 2008 Order revising its rules on media ownership in a series of lawsuits that were grouped together as Prometheus Radio Project v. Federal Communications Commission.
The combined cases are sometimes referred to as Prometheus II to distinguish from a set of cases with some many of the same petitioners challenging the FCC’s 2003 Order on ownership rules which were combined under the same name.
While a three-judge panel upheld most of the rules in the 2008 Order and Diversity Order, the panel split 2-1 over the procedure the FCC used to develop the Newspaper Broadcast Cross Ownership Rule (NBCO) where the majority found that the FCC had failed to meet its “obligation” under the Administrative Procedures Act “to make its views known to the public in a concrete and focused form so as to make criticism or formulation of alternatives possible.”
According to groups opposing cross media ownership, it is unclear when, or even if, the FCC ever notified the public of its intentions to relax the NBCO rule.
The FCC argues it notified the public of its position in June 2006 in a Notice of Public Rule Making launching its quadrennial review of media ownership rules when it asked the public two questions in two sentences: “Should limits [on cross media ownership] vary depending upon the characteristics of local markets? If so, what characteristics should be considered, and how should they be factored into any limits?”
Then, in November 2007 near the end of original comment period, then-FCC Chairman Kevin J. Martin published an Op-Ed in The New York Times unveiling his own proposal for a new NBCO rule, and simultaneously put out a press release that set a 28-day deadline for the public to comment on his proposal.
The FCC maintained that the two sentences in the 2006 notice of public rule making were sufficient for interested parties to properly participate in the rule making process.
The majority disagreed noting that comments made after that initial notice were strictly limited to the question asked and did not contemplate any relaxation of the ban on cross ownership.
It was only after former Chairman Martin’s opinion was published that public comments reflected the understanding that the FCC was considering a major change in policy.
This did not provide the public adequate time to respond, nor did it give the FCC time to fairly consider those responses.
“The timeline reveals… that the Commission could not have done so. Two weeks before the Chairman’s response period closed, and before most of the responses were received, a draft of the order was circulated internally. The final vote occurred within a week of the response deadline. This is not the agency engagement the APA contemplates,” the court said.
In his brief dissent from the court’s remand of the NBCO rule, Judge Anthony Scirica said the majority’s decision “preserves an outdated and twice-abandoned ban.”
Scirica was referring by previous attempts by the FCC – also remanded by the 3rd Circuit but for different reasons – in 2001 and 2003 to allow ownership of a newspaper and a television or radio station in the same local market if the station was not one ranked one of the top four in the area.
Scirica rejoined the majority in finding that the FCC had “punted yet again” on developing a definition of entities eligible for waivers under the Diversity Rule that would actually result in increased ownership of media outlets by women and minorities.
In vacating that definition the court agreed with petitioners who argued the FCC failed to demonstrate that the definition was based on “reasoned analysis supported by the evidence before the Commission.”
Thus, the court concluded the definition was “arbitrary and capricious” and “lacks a sufficient analytical connection to the primary issue that Order intended to address.”
In response to the court’s ruling, FCC Commissioner Copps, who was frequently cited by the court as a dissenter to FCC procedures and the actions of former Chairman Martin said, “The Third Circuit has brought into clear focus the shortfalls of two previous FCCs on media ownership and their lackluster performances in encouraging more minority and female ownership of our broadcast outlets. I am pleased that the 2008 newspaper-broadcast cross-ownership rule, which would have opened the door to more consolidation and less news, has now been returned to the Commission. The rule and the process that brought it forth were highly inimical to media democracy.”
The attorney who argued the case for Prometheus, Andrew Schwartzman of the Media Access Project said “We won on almost every point. This decision is a vindication of the public’s right to have a diverse media environment.”
Austin Schlick, FCC General Counsel implied that the agency’s current quadrennial review will address the two areas where the court found the FCC’s 2008 Orders wanting.
“The 3rd Circuit’s approval of the 2008 ownership rules for broadcast stations affirms the FCC’s authority to promote competition, localism, and diversity in the modern media marketplace,” Schlick said. “The Commission is currently engaged in a statutorily mandated further review of its media ownership rules. With an updated record and this supportive decision, the agency should be able to take appropriate steps to ensure that the nation’s media marketplace remains healthy and vibrant.”