The 2017 deregulatory changes to the FCC’s ownership rules have been on hold since December 2019, when the decision of the US Court of Appeals for the Third Circuit, overturning those rule changes, became effective (see our post here). The court’s decision has put any broadcast ownership changes on hold (including potential changes in the radio ownership rules which were not part of the 2017 FCC decision) while the FCC contemplated how to deal with the fallout from the Third Circuit’s decision. The potential for another way forward arose last week when the Supreme Court decided to hear the appeal of the Third Circuit decision – granting a petition for “cert” (a petition asking the Court to hear the appeal) – the announcement of that grant coming out on Friday.
As we wrote here, the Third Circuit rejected the FCC’s 2017 ownership rule changes, finding that the FCC had done an inadequate job of assessing how prior ownership relaxations had affected the ability of minorities and other potential new entrants to break into the ranks of broadcast ownership. Despite arguments from the FCC that it had already analyzed the impact of changes on new entrants and taken steps to mitigate any adverse impact, the Court seemed to be directing the FCC to do a more searching analysis of the historical impact of the relaxation of ownership restrictions on new entrants. Because this analysis would affect any ownership rule change, including those proposed for radio (see our article here), the decision effectively froze further FCC consideration of all broadcast ownership rule changes.
The 2017 changes that were undone in December included the abolition of the newspaper-broadcast and the radio-television cross-ownership rules, as well as the rule that prohibited the acquisition of a second television station in a market unless there would remain after the acquisition at least 8 independently owned and programmed stations in the market. We detailed other changes made in the 2017 FCC ruling in our article here.
The acceptance of the case does not in and of itself have any substantive meaning, other than that the Court is at least interested in the arguments that the Third Circuit rejection of the FCC’s changes was wrongly decided. The appealing parties (the FCC and industry groups) will file briefs in support of their arguments later this year, with the opposing parties filing a response. Oral arguments will follow early next year. A decision would likely come before the Court adjourns this year’s term in June or early July.
There are still a number of twists and turns that may come up. Most notably, the November election could have an impact on the Commissioners at the FCC. That could affect the willingness of the FCC to aggressively advocate for the 2017 decision (although the industry groups could still pursue the appeal before the Supreme Court). But even a Court decision overturning the Third Circuit opinion could have its impact mitigated by a new FCC as there is a new Quadrennial Review of the ownership rules that is already open. One would doubt that even a new FCC would reinstate the newspaper-broadcast cross-ownership rule, as there seems little argument that it retains any real basis in today’s world, but one never knows (as we have speculated before – for instance, here, here, and here – that policy seems to have a life of its own and may well outlive the daily newspaper itself).
So, FCC ownership reform is still on hold, but there appears to be some prospect that over the next nine months, things could change. Watch this case as it proceeds before the Supreme Court.