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The U.S. Supreme Court has paved the way for the FCC to relax some of its media ownership rules, reversing a lower court ruling that the commission did not take sufficient steps to study the effect of changes on women and minority owners.
The nation’s high court unanimously agreed to reverse the 2017 decision by the Third Circuit court of appeals. Justice Brett Kavanaugh penned the opinion issued Thursday. Public interest groups challenged the FCC’s move in 2017 on the grounds that the process of changing three existing rules violated the federal Administrative Procedures Act. The petitioners led by Prometheus Radio Project argued that the commission relied on flawed data to make its rule revisions.
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“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 for purposes of the APA,” Kavanaugh wrote.
“In short, the FCC’s analysis was reasonable and reasonably explained for purposes of the APA’s deferential arbitrary-and-capricious standard. The FCC considered the record evidence on competition, localism, viewpoint diversity, and minority and female ownership, and reasonably concluded that the three ownership rules no longer serve the public interest,” he wrote. “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. 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. The APA requires no more.”
The court’s decision will surely be a boon to broadcast groups including Nexstar Media, Sinclair Broadcast Group and Hearst. The rules in question govern the number of TV stations that a single entity can own in a single market.
The FCC moved to make it easier for companies to own more than one station in a market. Previously the rules barred any company from owning two stations in a market if there were less than eight other independently operated stations in the Nielsen-designated DMA.
Kavanaugh’s opinion sided strongly with the FCC in questioning the need for ownership rules designed for a very different media landscape as it operated decades ago.
“In analyzing whether to repeal or modify its existing ownership rules, the FCC considered the record evidence and reasonably concluded that the three ownership rules at issue were no longer necessary to serve the agency’s public interest goals of competition, localism, and viewpoint diversity, and that the rule changes were not likely to harm minority and female ownership,” he wrote.
Sinclair Broadcast Group’s stock price shot up 4.3% in early trading Thursday, buoyed by the news that should allow the company to buy more stations. Nexstar shares climbed 3%.
The National Association of Broadcasters applauded the high court’s decision.
“NAB commends today’s unanimous decision by the Supreme Court that the FCC’s recent and long-overdue modernization of its broadcast ownership regulations was lawful and appropriate,” NAB president Gordon Smith said. “It is critical that the Commission continue to examine its media ownership rules to ensure that America’s broadcasters are able to compete and meet the needs of local communities across the nation in today’s media landscape.”
Common Cause, one of the consumer watchdog groups that supported the Prometheus case, said the technicalities of the ruling leaves the door open for future changes to media ownership rules. By law, the FCC has to review those rules every four years.
Michael Copps, former FCC commissioner, expressed hope that the Biden administration would set a new regulatory tone for the FCC.
“We are confident that the FCC under the current administration will act quickly to develop strong media ownership rules in the public interest, collect, study, and analyze accurate ownership data, and promote ownership diversity,” Copps said. “Unlike the FCC under the Trump administration, this FCC will not ignore the rule of law and its own policy objectives to appease media conglomerates pushing for more consolidation.”
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