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Supreme Court Upholds FCC Bid to Loosen Media Ownership Rules

April 1, 2021 by Dan McCue
The U.S. Supreme Court building. (Photo by Dan McCue)

WASHINGTON – The Supreme Court on Thursday upheld a decision by the Federal Communication Commission to relax media ownership rules.

The unanimous ruling, written by Justice Brett Kavanaugh, is a major win for broadcasters.

The petitioners in the case, the Prometheus Radio Project, were seeking a reversal of the FCC’s rule change due to a concern that it will ultimately harm minority and women-owned stations.

The decision reversed a prior ruling by the 3rd U.S. Circuit Court of Appeals.

The dispute began in 2017, when the FCC concluded that three of its ownership rules no longer served the public interest.

It quickly moved to repeal two of those rules —the Newspaper/Broadcast Cross-Ownership Rule and the Radio/Television Cross-Ownership Rule — and to modify the third — the Local Television Ownership Rule. 

According to court documents, in conducting its public interest analysis, the FCC considered the effects of the rules on competition, localism, viewpoint diversity, and minority and female ownership of broadcast media outlets.

After doing so it concluded that the three rules were no longer necessary to promote competition, localism, and viewpoint diversity, and that changing the rules was not likely to harm minority and female ownership.

The Prometheus Radio Project, a non-profit, sued, arguing the commission’s assessment was flawed and that it ignored two studies submitted for its consideration that purported to show that past relaxations of the ownership rules had led to decreases in minority and female ownership levels.

The Justices held that the FCC’s decision to repeal or modify owner rules that limit the number of radio stations, television stations and newspapers a single entity may own in a given market was not arbitrary and capricious for the purposes of the Administrative Procedure Act.

Kavanaugh wrote that under the Administrative Procedure Act’s arbitrary-and-capricious standard, an agency’s action must be both reasonable and “reasonably explained.”

“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,” Kavanaugh said. “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.”

While the justice acknowledges that in assessing the effects of the rule change on minority and woman ownership, the FCC did not have perfect empirical or statistical data, he goes on to observe that this is not unusual in day-to-day agency decision-making within the executive branch. 

“The APA imposes no general obligation on agencies to conduct or commission their own empirical or statistical studies,” Kavanuagh noted.

He also said the record demonstrated the FCC considered the two studies brought to its attention by the petitioners, but simply interpreted them differently.

In a concurring opinion, Justice Clarence Thomas wrote that “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.’” Thomas continued. “The

3rd 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.”

The ruling had an almost instant effect on the stock market, where Sinclair Broadcast Group’s stock price jumped up 4.3% in early trading, while competitor Nexstar Media’s shares climbed 3%.

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