The future of broadcast media ownership rules in the U.S. may come down to a question of whether federal regulators must consider minority and female ownership as part of any rule change.
On Jan. 19, the U.S. Supreme Court heard oral arguments over the Federal Communications Commission's effort to loosen media ownership rules. Specifically, the commission is seeking to eliminate a prohibition on any single broadcast station group owning more than one top-four-rated station in a single market. It is also seeking to eliminate the local TV ownership rule's eight-voices test, which required that at least eight independently owned-and-operated full-power broadcast TV stations remain in a market following any merger of stations; and eliminate the newspaper/broadcast cross-ownership rule and the radio/television cross-ownership rule, which prohibited the cross-ownership of a full-service TV or radio broadcast station and a daily newspaper in the same market.
In September 2019, a panel of judges from the U.S. Court of Appeals for the Third Circuit overturned an FCC order that loosened the local television ownership rule. In the majority opinion, the appeals court found that the commission did not adequately consider "the effect its sweeping rule changes will have on ownership of broadcast media by women and racial minorities."
The FCC appealed the decision, a move that was also supported by the National Association of Broadcasters, a group that represents broadcast station owners like Nexstar Media Group Inc., Sinclair Broadcast Group Inc., TEGNA Inc. and others.
But on Jan. 19, Malcolm Stewart, deputy solicitor general at the Department of Justice in Washington, D.C., argued that the Telecommunications Act of 1996 only requires the FCC to reassess its media ownership rules every four years to determine whether they are in the public interest. And the agency has repeatedly found that the rules no longer serve the public.
The FCC "determined in 2017 that its newspaper, broadcast, and radio television rules should be repealed entirely and that its local television rules should be relaxed," Stewart said.
The agency "further found that the rules disserved the public interest by preventing economically efficient combinations that would provide consumers better broadcast service," he said.
When the appeals court rejected these rule changes, Stewart argued, it did not find fault with this analysis; rather, he says it vacated the rule changes because it believed the agency "had not adequately assessed the changes' likely effect on minority and female ownership levels."
This decision, Stewart argued, has "no basis in the governing statute, and the court failed to show adequate respect for the agency's predictive judgments and its balancing of competing policy objectives."
A number of questions from conservative justices on the court tried to clarify whether the FCC is required under the law to consider the impact on minority and female ownership levels when changing media ownership rules.
After Chief Justice John Roberts asked Stewart about whether the FCC was required to consider this, Stewart responded by saying he does not think the statute requires the FCC to consider that factor.
Seizing on this point, Justice Samuel Alito asked Stewart if the Supreme Court could reverse the appeals court decision "on the ground that the commission simply wasn't required to consider this factor at all."
In response, Stewart said that if the court concluded that the statute barred the FCC from considering that factor altogether, it could reverse the court of appeals on that factor.
Conservatives hold a 6-3 majority on the court.
However, Justice Sonia Sotomayor, a liberal justice, was more critical of Stewart's argument.
"It seems to me that the FCC for decades has been saying that minority and women ownership ... consideration of it is in the public interest," she said.
In response, Stewart said that while the agency has considered enhanced female and minority ownership as a goal, it "it has not historically looked at that criteria as a basis for its cross-ownership restrictions."
Attorney Ruthanne Deutsch — who argued on behalf of respondents led by Prometheus Radio Project, a media advocacy group — argued that the case boils down to whether the FCC engaged in "reasoned decision-making" and complied with the Administrative Procedure Act, a federal statute that governs how federal agencies create regulations.
In this case, she says, the FCC used "zero information about female ownership and a nonsensical analysis of badly flawed data on minority ownership."
Still, she says, the agency "repeatedly assured the public that consolidation would do no harm to either."
Deutsch also argued that if the FCC ultimately wanted to give less weight to ownership diversity, the Third Circuit's ruling would not have stopped them. "But what the Commission cannot do under time-honored principles of administrative law is mask important policy changes behind such unreasoned analysis," she argued.
Conservative justices on the court appeared to try to poke holes in Deutsch's argument.
Roberts asked Deutsch whether the FCC could merely announce it was switching priorities in its rulemakings, because they think a different factor is more important.
In response, Deutsch said that that would not be sufficient and that the commission would have to say why the new priority was more important.
"Well, how do you do that?" asked Roberts. "Life is short. They only have so much time," he said.
