Appeals Court Vacates, Remands FCC’s 2017 Broadcast Ownership Rule Changes

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Rule Changes Vacated

In a 2-1 decision, the Third U.S. Circuit Court of Appeals has vacated the FCC’s 2017 broadcast ownership rule changes that loosened cross-ownership and duopoly prohibitiions and remanded them to the Commission for further consideration of how the changes affect ownership diversity.

Chairman AJIT PAI, who championed the changes, issued a statement ripping the panel for its rulings on ownership issues, saying, “For more than twenty years, Congress has instructed the FEDERAL COMMUNICATIONS COMMISSION to review its media ownership regulations and revise or repeal those rules that are no longer necessary.  But for the last fifteen years, a majority of the same Third Circuit panel has taken that authority for themselves, blocking any attempt to modernize these 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.  We intend to seek further review of today’s decision and are optimistic that the views set forth today in Judge SCIRICA’s well-reasoned (dissenting) opinion ultimately will carry the day.”

But Commissioner JESSICA ROSENWORCEL, who opposed PAI’s rule changes, said, “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.   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 court rightly sent the FCC’s handiwork back to the agency because the FCC’s analysis was so ‘insubstantial.’  The FCC shouldn’t be in the business of cutting corners when it comes to honoring our long-held values when updating media ownership policies.”

Commissioner MIKE O’RIELLY, a PAI ally, took on not only the ruling but the makeup of the bench, writing, “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reform can satisfy the majority’s wrong-headed demands, guaranteeing the complete preservation of the broken and outdated status quo.  This is a classic case of judicial activism and legislating from the bench that further justifies the ongoing fight for reforming the judiciary.  Despite the market wreaking havoc on traditional business models, we have a court nonetheless trying to preserve 1970s regulations.  I implore the Chairman and the Administration to take this decision to the U.S. Supreme Court.”

Agreeing with the court’s decision, Commissioner GEOFFREY STARKS said, “As Judge AMBRO wrote in today’s opinion: ‘Here we are again.’  I share the Court’s exasperation and frustration.  Four times they’ve told us that we need to do better on our analysis with regard to diversity – and it is time to do so now.  For nearly all of the 21st century, the FCC has ignored its statutory obligation to promote diversity in broadcasting.  Instead, inexplicably, time and again its efforts seem designed to support greater media consolidation – a goal that is not present in our statute.  Today, the Third Circuit rejected the agency’s deregulatory efforts because of a failure to consider the impact of these policy changes on station ownership by women and people of color.  Unfortunately, the miniscule number of diverse owners in this country speaks for itself.

“Today’s opinion is clear:  the FCC’s approach to setting our media ownership rules needs a dramatic overhaul.  We must recommit to our goals of promoting competition, localism, and diversity.  We can no longer get by with the bad data and shoddy analysis – problems that have been highlighted far too often by courts and interested observers in recent years.  The Court here suggests that ‘new empirical research’ may be required to fully satisfy our rulemaking requirements.  I wholeheartedly agree.  Needless to say, today’s decision will require us to go back to the drawing board on our underway 2018 Quadrennial Review, which relies upon much of the same analysis as the orders vacated by the Court today.”

On the other hand, Commissioner BRENDAN CARR said, “Newsrooms are shuttering in communities around the country.  Journalists that have worked for decades to bring truth to light are being laid off by the dozen.  This decline in local news gathering is part of a broader and disruptive trend in media.  The Internet and digital platforms fundamentally reshaped the business of collecting and disseminating news and information.  Yet, for decades, the FCC took no action—it refused to heed Congress’s call for the Commission to update its media regulations and ensure that they continue to serve the public interest.  In the meantime, our outdated rules only made it harder to invest in local news gathering. 

“In 2017, the FCC finally acted.  We did so by modernizing our media ownership rules and incentivizing greater investment in journalism and additional resources for local reporting in the face of dramatic new competition from digital platforms.  The benefits of a modern approach to media regulation are worth fighting for, and I look forward to additional court review or FCC action.”

And NAB EVP of Communications DENNIS WHARTON issued a statement for the organization saying, “NAB is disappointed with the appellate court’s 2-1 decision vacating the FCC’s measured decision reforming outdated media ownership rules. It’s shocking that the same panel of judges has supplanted Congress’s and an expert federal agency’s views with its own for more than 15 years.

“The media marketplace has undergone massive changes over the past few decades, let alone since 2004. We strongly encourage the FCC to appeal this misguided decision so that broadcasters can compete on an even playing field with tech giants and pay TV conglomerates.”

The challenges to the rules were brought by PROMETHEUS MEDIA PROJECT and MEDIA MOBILIZING PROJECT with additional cases brought by INDEPENDENT TELEVISION GROUP, MMTC and NABOB, and a group composed of FREE PRESS, OFFICE OF COMMUNICATION, INC. OF THE UNITED CHURCH OF CHRIST, NATIONAL ASSOCIATION OF BROADCAST EMPLOYEES AND TECHNICIANS-COMMUNICATIONS WORKERS OF AMERICA, and COMMON CAUSE.

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