Supreme Court Broadcast Ownership Decision a Simple Matter

Turns out, some things are simpler than you think.

Few rules in the Code of Federal Regulations have as tortured a history as 47 CFR § 73.3555—the broadcast multiple ownership rules. The subject of court decisions too numerous to count, a brief review of FCC decisions revising (or deciding not to revise) these rules reveals a twisted mass of logic and rationales where parties fiercely argue even as to the very reason for their existence. In the midst of these debates, the regulatory pendulum swings steadily back and forth between ownership deregulation and added regulation as FCC commissioners come and go.

For the past twenty years, the FCC has sought to modify its broadcast ownership rules in recognition that the media world no longer looks anything like it did when the Local Television Ownership Rule, Radio/Television Cross-Ownership Rule, and Newspaper/Broadcast Cross-Ownership Rule were adopted in 1964, 1970, and 1975, respectively. Steadfastly blocking these changes has been the U.S. Court of Appeals for the Third Circuit, which has doggedly refused to release jurisdiction over the FCC’s broadcast ownership rule proceedings for the past 17 years.

As a result, the FCC’s efforts to modernize its ownership rules have made little progress in the face of persistent findings by the Third Circuit that the FCC failed to adequately study and determine the impact of these rule changes on minority and female station ownership. In other words, the Third Circuit had no qualms with the FCC’s finding that these three ownership rules “no longer promoted the agency’s public interest goals of competition, localism, and viewpoint diversity,” but would not allow their elimination or modification until the FCC could satisfy the court that it had thoroughly studied the impact of those changes on minority and female station ownership, effectively suggesting that the FCC could not eliminate rules that were outdated in every regard if retaining them promoted minority and female station ownership. The result of this stalemate, in the Supreme Court’s words, was that “those three ownership rules exist in substantially the same form today as they did in 2002.”

Having been stymied for seventeen years, the FCC finally gave up trying to satisfy the Third Circuit and appealed that court’s most recent decision to the U.S. Supreme Court. Broadcasters, who have struggled to compete in a rapidly changing world while locked down by ownership limits from the 1960s and 1970s, were heartened when the Court agreed to hear the case. However, given the legally dense and twisted past of these rules and the continuing debate as to what they are even meant to accomplish at this point, broadcasters could be forgiven for being concerned about what legal theory would jump to the fore in the Court’s ultimate decision. As a result, they joined the FCC in presenting numerous reasons for reversing the Third Circuit and upholding the FCC’s changes to the rules. In a nuanced world where every aspect of these rules has been painted and repainted in various shades of gray, nothing could be assumed, and most expected a potentially complex decision that wouldn’t arrive until this summer, potentially delving into every corner of this tangled history.

As it turns out, they needn’t have worried. This morning, the Court released a unanimous decision reversing the Third Circuit, noting simply that the FCC’s approach had been reasonable, and the fact that it made its decision based on the record before it rather than the record the Third Circuit wished for, was just the way government must function:

To be sure, in assessing the effects on minority and female ownership, the FCC did not have perfect empirical or statistical data. Far from it. But that is not unusual in day-to-day agency decisionmaking within the Executive Branch. The [Administrative Procedure Act] imposes no general obligation on agencies to conduct or commission their own empirical or statistical studies. And nothing in the Telecommunications Act (or any other statute) requires the FCC to conduct its own empirical or statistical studies before exercising its discretion under Section 202(h). Here, the FCC repeatedly asked commenters to submit empirical or statistical studies on the relationship between the ownership rules and minority and female ownership. Despite those requests, no commenter produced such evidence indicating that changing the rules was likely to harm minority and female ownership. In the absence of additional data from commenters, the FCC made a reasonable predictive judgment based on the evidence it had.

In the Court’s view, this was a relatively routine case where the Third Circuit’s finding that the FCC’s decision had been “arbitrary and capricious” was simply wrong. As a result, the Court noted that:

Because we hold that the Third Circuit’s judgment must be reversed under ordinary principles of arbitrary-and-capricious review, we need not reach the industry petitioners’ alternative argument that the text of Section 202(h) does not authorize (or at least does not require) the FCC to consider minority and female ownership when the Commission conducts its quadrennial reviews. We also need not consider the industry petitioners’ related argument that the FCC, in its Section 202(h) review of an ownership rule, may not consider minority and female ownership unless promoting minority and female ownership was part of the FCC’s original basis for that ownership rule.

So broadcasters have a unanimous Supreme Court decision that brings to an end the Third Circuit’s dominion over the broadcast ownership rules. Further, it was a decision not only decided on the simplest of grounds, but which threw no shade on broadcasters’ other arguments, preserving them for possible use on a future regulatory rainy day. And if that weren’t enough, Justice Thomas added that, while the Court as a whole didn’t find the need to proceed beyond its ruling that the FCC had acted reasonably, he would have reversed the Third Circuit on an additional ground:

Here, as in 2003, once the FCC determined that none of its policy objectives for ownership rules—viewpoint diversity, competition, and localism—justified retaining its rules, the FCC was free to modify or repeal them without considering ownership diversity. Indeed, the FCC has long been clear that “it would be inappropriate to retain multiple ownership regulations for the sole purpose of promoting minority ownership.” 100 F. C. C. 2d 74, 94, ¶45 (1985). The Third Circuit had no authority to require the FCC to consider minority and female ownership. So in future reviews, the FCC is under no obligation to do so.

For broadcasters that have watched the FCC struggle to modernize its rules over the past two decades, today’s decision by the Court is a satisfying one. It will not end the debate over the FCC’s various broadcast ownership rules, but will certainly change the nature of that debate, and open the door to a different debate—whether broadcast ownership rules are needed at all.