The U.S. Supreme Court heard arguments in late January in two disputes over whether rules requiring diversity in the ownership of television and radio stations and newspapers must be maintained. The cases raise questions both about the Federal Communications Commission’s discretion to effectively deregulate local news media and about the role of federal courts in supervising the nation’s premiere telecommunications agency.
At issue before the justices on Jan. 20 were a set of 2017 regulations that eliminated the FCC’s long-standing newspaper-broadcast cross-ownership rule, which banned ownership of both a radio or TV station and a daily newspaper in the same media market by one entity, and the radio-television cross-ownership rules that constrain entities from owning combinations of radio and TV stations in the same market.
According to David Oxenford, a Washington-based telecommunications lawyer who publishes the Broadcast Law Blog, the rules change also included elimination of a requirement that each market include a minimum number of independent TV station owners in each market. The FCC first imposed the newspaper cross-ownership rule in 1975, while the agency’s other limits on ownership of multiple broadcast outlets have been in place, in one form or another, since 1941.
The 2017 rollback by a 3-2, Republican-led, commission was an unexpected reversal from a contrary August 2016 agency decision by a Democratic-controlled FCC that capped the four-year review cycle that began in 2014. It followed the installation of two Republican members onto the commission by former President Donald Trump earlier that year. The agency said in a November 2017 news release announcing the change that it had concluded the time to eliminate those rules was overdue.
“For too long, the Commission has failed to acknowledge the pace of change in the media marketplace by maintaining analog broadcast ownership rules that do not reflect today’s digital age,” the agency said. “By modernizing these outdated rules, broadcast stations and local newspapers will be able to more easily invest in local news and content and improve service to their local communities for the benefit of consumers.” Commissioners were interpreting language in federal law that requires the FCC to periodically decide whether regulations “are necessary in the public interest as the result of competition” and eliminate or change any that are “no longer in the public interest.”
Christopher Murray, a partner at Brownstein Hyatt Farber Schreck’s Denver office, said the goal of promoting competition, and specifically of providing investment opportunities for media companies, is a crucial goal. “If you’re an investor in traditional legacy media over the last, let’s say, five to 10 years — and Sinclair and Fox unquestionably are — [then], if you believe in that model, this is the time to buy cheap and a lot of people are doing it,” Murray said. “The more that you’re able to buy right now, the bigger empire you can create. I think they want the freedom to do that.”
Prometheus Radio Project and its allies, on the other hand, argue for more community-based ownership of media and emphasizes the importance of diversity in outlet ownership. The Philadelphia-based nonprofit claims that the FCC’s 2017 move violates a statutory mandate to promote diversity in media. That Congressional command, they say, is a “public-interest mandate” that “plainly authorizes consideration of the ownership-diversity goal” previously given priority. The diversity goal is linked to competition.
“We measure the public interest by how competitive the market is, and you could certainly argue it’s less competitive if there are fewer women and minority stations because of the tendency for the big mainstream corporate ownership to dominate,” said John Francis, a University of Colorado Law School instructor who specializes in telecommunications law. “That really reduces the diversity of voices and that is a dangerous trend.”
Whether the statute “authorizes” FCC to promote diversity among radio and TV station owners and newspaper publishers is a different question than whether it must do so. Francis explained that the real issue is how much a federal court must defer to the agency’s conclusions about what its statutory mandate requires. “That’s been delegated to the FCC to decide,” he said, clarifying that the general federal law that guides agency decision-making means that “unless their decision is arbitrary, capricious, or contrary to the evidence,” the court will uphold changes to regulations. “Here the agency has interpreted ‘public interest,’ really more along the lines of competition than getting more women and minority stations, which is a worthy cause,” Francis said. “I’m with [Prometheus], policy-wise,” he continued, “It’s tough, legally, though, to argue that the FCC has to consider that as part of the public interest.”
That point was central to the government both before the 3rd U.S. Circuit Court of Appeals, which rejected the 2017 rules, and in its Jan. 19 argument at the Supreme Court. U.S. deputy solicitor general Malcolm Stewart argued that the language of the Telecommunications Act of 1996, the federal law that governs FCC’s quadrennial look at its regulations, requires the agency to consider whether a rule promotes more media ownership by people of color or women and that the FCC had correctly concluded, on the basis of an administrative record, that the 2017 regulatory changes would not cause a “substantial effect” on diversity in ownership.
Prometheus’ counsel Ruthanne Deutsch, a partner at Washington, D.C.-based Deutsch Hunt, used a “have your cake and eat it too” argument in response. “Based on zero information about female ownership and a nonsensical analysis of badly flawed data on minority ownership, the agency repeatedly assured the public that consolidation would do no harm to either people of color or women,” Deutsch said. “Because the no-harm findings here were wholly arbitrary, to defer on this record would only encourage agencies to do sloppy work to avoid making tough choices.”
The broadcast industry’s big players disagreed with both of those perspectives. Helgi Walker, a partner at Gibson Dunn & Crutcher’s Washington, D.C., office who argued for the National Association of Broadcasters, urged the justices to reject any notion that regulatory impacts on women or people of color by FCC rules have to be taken into account. “The statute does not say one word about that issue,” Walker said. She later said, in response to a question from Justice Elena Kagan, that NAB thinks federal telecommunications law forbids the FCC from considering questions of ownership diversity. “I draw your attention to our statutory theory, which is that the public interest here has to be cabined in some way,” Walker said.
Most of the justices seemed to agree with this perspective. At least five of the justices indicated some reluctance to second-guess the agency’s rationale that the rise of digital media and decline of print newspapers indicates less need for cross-ownership restrictions and other limits on ownership across format. Chief Justice John Roberts immediately homed in on whether the Telecommunications Act specifically requires FCC to consider regulatory impacts on people of color and women. “So it could have said nothing about that at all in changing the focus of its regulations?” he asked Stewart. The Department of Justice lawyer responded that no such obligation exists in the law. “Historically, when the Commission has adopted cross-ownership rules of various sorts, it has been to promote viewpoint diversity and localism, to ensure that there is as much of a plethora as possible of distinct voices within the local community,” Stewart said.
The three justices appointed by former President Donald Trump seemed most willing to uphold the 2017 rules. Justice Neil Gorsuch claimed that the nation’s media industry and the FCC were, before the 2017 renovation of them, “stuck with rules from the 1970s that, 20 years ago, 25 years ago, Congress said were outdated.” He cited an unused “deregulatory impulse” in the telecommunications statutory framework and asked why, If the agency concludes, “in its best considered judgment, after multiple rounds of remands and multiple rounds of data collection and public comment, that it earnestly believes that these rules aren’t going to negatively impact anyone, it might actually benefit most people,” the rules should not be allowed to go into effect.”
Justice Brett Kavanaugh reminded counsel that federal courts are not supposed to make policy, in an apparent swipe at the federal appeals court that heard the cases. “We defer to agency policy judgments within the constraints imposed by Congress,” he said, and asserted that the statutory “public interest” provision is “the broadest possible language” and “not much of a constraint at all” on the FCC. Justice Amy Coney Barrett, who took the bench in October, cast doubt on Prometheus’ attempt to use a study focused on the impacts on diverse ownership by past FCC rules, noting that she thought it “backward-looking.”
The members of the court’s three-member progressive bloc did challenge the government’s defense of the FCC rules, but not with much vigor. Justice Stephen Breyer suggested a concern with the impact of greater consolidation among broadcast outlets, which he said the 2017 rules might promote, on the diversity of voices available to news consumers. “What the FCC has now chosen is they want to move, or allow to be moved, towards more concentration. So what’s the theory that that wouldn’t hurt the minorities and women or smaller businesses?” he asked Stewart.
The government’s lawyer, in a later response to Kavanaugh, replied that ending the prohibition against cross-ownership of newspapers and radio or TV stations would be that “broadcast stations will buy newspapers rather than the reverse because the newspaper industry is in such trouble. And if a broadcast station buys a newspaper, that doesn’t affect any form of centralization or consolidation of ownership within the broadcast industry. The existing broadcast owners remain the same.” Justice Sonia Sotomayor hinted that she was concerned the FCC had not given the goal of increased minority and female ownership “adequate consideration.” Justice Elena Kagan, on the other hand, seemed to be more forgiving of the paucity of evidence before the agency.
Less clear was whether the court is more likely to issue a ruling tightly focused on whether the FCC had enough factual justification for its rules or whether, instead, a majority would seek to more precisely define what the “public interest competition” command that provides the guardrail for the quadrennial regulatory review means. Justice Samuel Alito seemed most interested in a larger-scale ruling, bluntly asking Stewart whether federal communications law allows the FCC to ignore considerations of whether a rule will advance goals of diverse media ownership. Kavanaugh picked up Alito’s thread, asking Stewart whether the statutory public interest standard compels the FCC to “consider the effect of relaxing the rules on women and minority ownership.”
Gorsuch seemed to be less enthusiastic about the idea. “You play by the sword, you die by the sword,” he said, referring to the “public interest” text in the Telecommunications Act. “And if you adopt and permit a statute as broad as public interest, you can’t be surprised when it winds up including nothing or everything or something in between.”
FCC media ownership rules must be revisited every four years under the command of the Telecommunications Act of 1996. The resignation of former commission chairman Ajit Pai on January 21 will give President Joe Biden an opportunity to reestablish a Democratic majority among the commissioners ahead of the completion of the next rules review that began in 2018.
The cases are Federal Communications Commission v. Prometheus Radio Project, No. 19-1231, and National Association of Broadcasters v. Prometheus Radio Project, No. 19-1241.
— Hank Lacey