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Principal Editor: David O’Connor
Here are some of the regulatory developments in the last week of significance to broadcasters -and a few dates to watch in the week ahead – with links to where you can go to find more information as to how these actions may affect your operations.
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On Friday, the FCC (with the Department of Justice) and a group of interested media industry companies filed requests asking that the Supreme Court review the decision of the Third Circuit overturning the FCC’s 2017 decision on its ownership rules (the FCC petition for a writ of certiorari is available here). The FCC’s 2017 decision abolished the newspaper/broadcast and radio/television cross-ownership rules, and made changes to the local television rule and other ownership rules (see our post here on the 2017 decision). Last September, a three-judge panel of the Third Circuit overturned the rule changes, not necessarily disagreeing that times had changed and that the new media marketplace justified a relaxation in the ownership rules, but instead finding that the FCC had not done an adequate job in assessing the impact of the rule changes on minorities and other potential new entrants to the broadcast industry (see our article here on the court’s decision).
After the court’s decision, the FCC and the interested industry parties sought review by all of the judges on the Third Circuit of the decision made by the three-judge panel, a review that was denied last year (see our article here). That led to the FCC’s order immediately before Christmas, reinstating the pre-2017 rules and requiring that broadcasters comply with those rules when filing new applications (see our article here).
Continue Reading FCC and Industry Groups Ask for Supreme Court Review of Third Circuit Ownership Decision
While the trade press has been full of reports that the FCC has voted on an order addressing the issues raised in its Quadrennial Review of its multiple ownership rules, and that the decision largely left those rules unchanged (including the broad ban on the cross-ownership of daily newspapers and broadcast stations), no final decision on the review has yet been released. However, we did see on Friday that, in the FCC’s list of matters pending before the Commission for approval “on circulation” (i.e. to be voted on without being considered at an FCC open meeting) the ownership item was removed from the list of pending items, seemingly confirming that the decision has in fact been voted on and is thus no longer circulating for approval. If the press reports are to be believed, there has been no major change in the rules despite much last minute hope for some relaxation of the newspaper cross-interest rule. The rules are thus likely to be those indicated by the Chairman in his blog post in late June, which we summarized here. Even if the most significant rules (e.g. local ownership rules for radio and TV – the “duopoly” rules, and the newspaper-broadcast cross-ownership rules) remain unchanged, that does not mean that the broadcast community should ignore the upcoming decision, as there are bound to be other issues addressed in the order that may be of significance.
In connection with the newspaper cross-ownership rules, while the press reports indicate that the rules will remain in place, there are reports that there will be some sort of waiver allowed, seemingly where economics justify the combination. If this is akin to the “failing station” waiver used to justify the ownership of 2 TV stations in markets where such ownership would normally not be allowed, some have wondered, given the economic state of the newspaper industry, if such a waiver would ever be used as it will be a rare case where a last-minute broadcast combination will rescue a failing newspaper. But we will need to see what the details are of the waiver standard to be applied.
Continue Reading Preparing for the FCC’s Soon to be Released Decision on Changes to its Multiple Ownership Rules
The U.S. Supreme Court today denied certiorari (i.e. declined review) in two important FCC-related cases pending before it. First, following the Court’s recent decision in the Fox indecency case, which we described here, the Court not surprisingly refused to review the Third Circuit’s decision vacating the $550,000 FCC fine for the Janet Jackson "wardrobe malfunction" in the 2004 Super Bowl shown on CBS.
In the Fox case, the Supreme Court found that the FCC had not provided advance notice that it would prosecute cases of "fleeting" indecency. That decision essentially predetermined that the Supreme Court would deny review of the Super Bowl incident. While denying cert., however, Chief Justice Roberts issued an unusual separate opinion, noting that fleeting indecent images may have a more lasting impression than indecent words. Nevertheless, he noted that going forward, braodcasters are on notice that fleeting indecent words and images are both now subject to FCC sanctions.
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 FCC has released the agenda for its Workshop on the multiple ownership rules (about which we wrote here). The workshop will span three mornings (November 2-4), and will include live testimony from a different panel each morning. The first panel will include the academic perspective on ownership rules, the second the view from "public interest organizations", and the third from industry representatives, though the participants on that panel are, at this point, the most unsettled. The Commission also requests written comments from the public, which can be filed through November 20. As we wrote when this topic first came up last month, these workshops are the first step in the FCC’s consideration of the multiple ownership rules – a review that it is required to conduct once every 4 years – with 2010 being the year in which such review is required.
The Commission sets out a series of questions that it would like to have addressed. These questions include:
Yesterday, the Detroit Free Press and the Detroit Morning News, which operate their publication and distribution operations through a joint operating agreement, announced that they will cut back on the physical publication of their papers – publishing full editions delivered to homes only three days a week. On other days, the papers will publish an abbreviated version, available only on newsstands. The papers will not abandon news coverage the remainder of the week, but will instead concentrate on their on-line presence, showing the power of the Internet to disrupt traditional media. As we said years ago in one of our first posts on this blog – New Media Changes Everything, and it seems that this is just another indication of how true that is. The broadcast media, particularly radio, has often looked at the advertisers served by the daily paper as a ripe source of new business, and may well see the Detroit change as a major business opportunity. But does it also change the FCC’s consideration of the multiple ownership rules applicable to radio and television cross-ownership with newspapers?
The FCC’s multiple ownership rules prohibit the ownership of a broadcast station and a "daily" newspaper that serve the same area. The rules define a daily paper as one that is "published" at least four days each week, and is circulated "generally in the community." Here, the Detroit papers arguably will not meet that 4 day a week requirement – at least for a publication that is generally circulated throughout the community. Of course, some may argue that the abbreviated newsstand copy constitutes a daily publication but one would assume that, sooner or later, even that will disappear. Thus, while there has been so much controversy about the Commission’s decision of one year ago (summarized here) deciding that combinations of broadcast properties and newspapers in Top 20 markets were presumed to be permissible, while those in smaller markets were not, one questions whether this still makes any sense in today’s marketplace where seemingly few can profitably publish a daily paper in most markets, and no one seems to want to rescue the many papers that have fallen on hard times. Continue Reading Detroit Newspapers Cut Back on Publishing and Home Delivery – What’s the Impact on FCC Ownership Regulation?
