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High Court Reinstates FCC Changes Said to Ignore Ownership Diversity

The justices determined that the agency studied decades of changes in the media landscape before concluding that there would be little harm allowing radio stations to buy newspapers.

WASHINGTON (CN) — Settling a regulatory spat that dates back decades, the Supreme Court ruled Thursday that the Federal Communications Commission did not turn a blind eye to women and minority ownership when it changed merger rules.

“In light of the sparse record on minority and female ownership and the FCC’s findings with respect to competition, localism, and viewpoint diversity, we cannot say that the agency’s decision to repeal or modify the ownership rules fell outside the zone of reasonableness,” Justice Brett Kavanaugh wrote for the unanimous court.

The case stems from various rules that the commission adopted at a time when radio and television were king, to promote more independent outlets. One rule from 1964 restricts how many local television stations a single entity may own in one market. In 1970, the FCC also set a limit on the total number of radio stations and television stations an entity may own in a single market. And in 1975, it banned cross-ownership, saying a
single entity could not own a radio or television broadcast station and a daily print newspaper in the same media market.

But today, with cable and the internet, the government says there is no need for regulations like this to bring viewpoint diversity. The FCC has been trying for years to deregulate, but the Third Circuit has consistently ruled the agency's changes unlawful under the Administrative Procedure Act.

The Prometheus Radio Project initiated the challenge at hand when the commission repealed the two rules from the '70s and revised the local ownership rule from 1964. Relying on a 1990s-era “Free Press” study that showed a 40% drop in minority ownership of full-power television stations following a previous FCC relaxation, Prometheus warned the Supreme Court that this latest rollback would likewise harm ownership diversity.

Again the Third Circuit ruled against the FCC, setting the stage for January oral arguments. Agreeing with Prometheus, the court said that the agency had eliminated the rule without considering how the change would affect broadcast ownership by women and people of color.

But Kavanaugh said the FCC did consider what evidence it had on how the rules affect competition, localism, viewpoint diversity, and minority and female ownership — then it concluded that they no longer served public interest.

“The FCC reasoned that the historical justifications for those ownership rules no longer apply in today’s media market, and that permitting efficient combinations among radio stations, television stations, and newspapers would benefit consumers,” Kavanaugh wrote. “The commission further explained that its best estimate, based on the sparse record evidence, was that repealing or modifying the three rules at issue here was not likely to harm minority and female ownership.”

Kavanaugh acknowledged that there was not much data available to either support or refute the Radio Project’s claims of injury.

“To be sure, in assessing the effects on minority and female ownership, the FCC did not have perfect empirical or statistical data. Far from it,” the justice wrote. “But that is not unusual in day-to-day agency decision making within the Executive Branch.” 

Ultimately, however, the FCC isn’t obligated to conduct such studies under either the Administrative Procedure Act, the Telecommunications Act “or any other statute.”

Cheryl Leanza at Best Best & Krieger, who represents Prometheus, said on a call Thursday that the court’s decision was disappointing but nevertheless extremely narrow.

“The court did not pick up any of the broadcast industry arguments,” Leanza said, "and it [the opinion] leaves a fair amount of discretion for the FCC to proceed going forward to protect ownership diversity."

Leanza added that the Prometheus Radio Project has been asking the FCC to improve its data collection for decades and intends to continue to press on this issue.

Helgi Walker, an attorney at Gibson Dunn representing the National Association of Broadcasters, meanwhile applauded Thursday's reversal. 

“By allowing the FCC to finally reform its long-outdated media-ownership rules, the court’s decision gives broadcasters the freedom to innovate and compete in today’s highly competitive media marketplace,” Walker said. “That will benefit not only the broadcast and newspaper industry, but the American public that depends on and enjoys these important sources of news, information, and entertainment.”

A representative for the U.S. Department of Justice did not return a request for comment.

Issuing a five-page concurring opinion, Justice Clarence Thomas went so far as to argue Thursday that the Third Circuit had acted outside its jurisdiction in forcing the FCC to consider ownership diversity when changing rules.

“The FCC had no obligation to consider minority and female ownership. Nothing in the Telecommunications Act of 1996 directs the FCC to consider rates of minority and female ownership. Nor could any court force the FCC to consider ownership diversity,” Thomas wrote. “Courts have no authority to impose ‘judge-made procedur[es] on agencies.’” 

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