Third Circuit Orders FCC to Re-Justify Media Ownership Changes

Kind of a big day for “the public interest” – in a 2-1 decision yesterday the Philadelphia-based Third Circuit Court of Appeals vacated the implementation of several media ownership rule changes made by the Federal Communications Commission last year. However, it did not do so because the court thought they were necessarily bad rules.
Judgment (12 K)                                                                              Opinion (632 K)
Citizen Petitioners” (a plethora of public interest groups) and “Deregulatory Petitioners” (the FCC, media companies, and their trade organizations) can both find something to like. The primary criticism of the decision falls in the citizens’ favor: Mikey Powell and his FCC are taken to task for a skewed interpretation of their mission under the Telecommunications Act.
The Act requires the FCC to review its rules (now every four years) and either retain, repeal, or modify them to suit “the public interest.” Powell and crew have been ignoring the “retain” and “modify” parts with claims that the Telecom Act “forces” the FCC to toss out various ownership restrictions. The Third Circuit’s not buying it:
“[W]e do not accept that the “repeal or modify in the public interest” instruction must…operate only as a one-way ratchet, i.e., the Commission can use the review process only to eliminate then-extant regulations….What if the Commission reasonably determines that the public interest calls for a more stringent regulation? Did Congress strip it of the power to implement that determination? The obvious answer is no, and it will continue to be so absent clear congressional direction otherwise.”
As for the court’s opinions on specific rule changes, the decision is less celebratory. Generally speaking, the majority of the Third Circuit was actually okay with the nature of relaxing or eliminating various ownership rules. Where the FCC primarily failed was in providing adequate justification to satisfy judicial review.
First off, the tossing of cross-ownership limits is attacked: “the Commission [did] not provide a reasoned analysis to support the limits that it chose.” In the court’s humble opinion, the agency’s well-sauteed studies showing mostly positive benefits from the elimination of cross-ownership restrictions didn’t make much sense.
On the FCC’s expansion of allowable consolidation in television: congressional action earlier this year raised the maximum national audience reach of a single network (through its own stations) from 35 to 39%; the court can’t do anything about that. But the rest of the FCC’s (upward) revisions in this department must be reworked because of “flawed rationale” behind the studies that supported the changes.
Things appear to be the worst on the radio front. Again, the court believed the general outline of the FCC’s revisions have merit, but it could not accept the rules as written. The court specifically calls into question the numerical caps on how many stations one company can own in any given market – and asks the FCC to provide a “reasoned analysis” as to why they should even stay in place. Mikey and the broadcasters might read this as potential to remove these caps from radio completely – a bad thing for a medium already too far gone.
Chief Judge Anthony J. Scirica dissented from the ruling: he believed the court overstepped its authority, delving too deeply into complicated policymaking at a level he thought dangerously close to judicial micromanagement.
To recap: contrary to popular belief, the FCC’s wholesale revisions to the media ownership landscape have not been defeated, but delayed for a longer term. The agency’s been ordered to review and revise its decisions, but for the most part it has not been told that any of its proposed changes – in and of themselves – are unacceptable. “Back the changes up with more than shuck and jive,” said the Third Circuit to the FCC, “and then perhaps we can talk business again.”
Barring an appeal to the Supreme Court (which could conceivably happen, given the number of players now consolidated in the case), this decision will touch off several new rounds of rulemaking at the FCC level. Early on the majority made note of the fact that some two million people provided public comment on the first go-round. There will now be a second; can “the public interest” up the ante?
Given the generally sluggish pace of legislation this session, Big Media may not be able to do a congressional end-run to get the FCC’s revisions implemented piecemeal, but I’m sure it will certainly try. Otherwise conditions are primed for another slugout via study…