diversification of ownership

The Third Circuit Court of Appeals has once again questioned the FCC’s determinations on broadcast ownership issues. In a decision just published, Prometheus Radio Project v FCC, the Court reviewed the FCC’s 2007 actions relaxing the newspaper-broadcast cross-ownership rules and adopting policies to increase diversity in broadcast ownership.  These FCC decisions had followed a prior decision of the Third Circuit determining that the FCC’s 2003 Ownership Order, relaxing many FCC ownership rules, was not adequately justified.  The FCC’s subsequent actions on cross ownership were set out in its 2007 order, relaxed the newspaper broadcast cross ownership rules in larger markets through a policy based on certain presumptions that, when met, justified the common ownership of newspapers and radio and television stations in larger markets (and, in some cases, in smaller markets too)( see our summary of this order here and here).  The diversity order, released in 2008 (summarized here and here), adopted a number of rules and policies meant to encourage diversity in media ownership.  In this new decision, the Court found that both the decision as to the newspaper cross ownership rules and the one dealing with diversity policies were wanting, and sent these matters back to the FCC for further consideration. At the same time, the Court upheld the FCC’s decisions not to change the local television ownership rules (allowing common ownership of 2 TV stations only when there are at least 8 independently owned stations in a market, and where the combined stations are not both among the Top 4 in their markets) and to retain the sub-caps for radio ownership (the rules that allow one entity to own up to 8 stations in a single market, as long as there are no more than 5 in any single service, i.e. AM or FM).

The discussion of the newspaper-broadcast cross-ownership rules was entirely procedural.  While certain public interest groups had argued that the 2007 revision to the cross ownership rules allowed too many broadcast-newspaper combinations, a number of media companies argued that it allowed too few.  The Court didn’t address either contention, instead focusing on the process by which the FCC adopted the rules.  When the Court addressed the 2003 rule changes, it sent that decision back to the Commission questioning the basis for the "diversity index" that the FCC had adopted to measure when transactions resulted in too much concentration in a market, and specifically instructed the FCC to give the public notice and an opportunity to comment on the specifics of any new proposal that was adopted.  The Court felt that there were too many obvious flaws in the diversity index which could have been discovered if the public had been given a chance to review its details before it was adopted.  In asking for comments following the Court’s remand, the recent decision concluded that the FCC had given the public only a cursory description of the issues that it would consider on remand with respect to the cross-ownership issue when the FCC issued its request for public comment.  The substance of the Commission’s policies which were adopted, setting out presumptions in favor of cross-ownership in larger markets and against it in smaller markets, was not suggested in the request for public comment, but instead was first floated in a newspaper Op-Ed by then FCC Chair Kevin Martin.  While the FCC asked for comment on that proposal, parties were given less than a month to file comments, and a draft decision embodying the proposal was already circulating at the FCC before the comment period had even ended. This process prompted much outcry at the contentious FCC meeting at which these rules were adopted (see our summary here).  The Court looked at this process, and determined that the public had not been given an adequate opportunity to address the specifics of the FCC proposal, and had given the appearance of having pre-judged the outcome of the case.  Thus, this week’s decision sent the FCC’s 2007 order back to the FCC to seek more public comment, and to develop rules based on those comments. 


Continue Reading Court Tells FCC to Give More Consideration to Newspaper-Broadcast Cross Ownership Rules and to Policies to Promote Broadcast Ownership By Minorities

The Commission today published notice in the Federal Register revising the dates for submitting comments in its rule making "In the Matter of Promoting Diversification of Ownership in the Broadcasting Services."  If you will recall, this is the rule making proceeding that seeks comment on a number of new proposals, including whether to