Petition for Writ of Certiorari — National Association of Broadcasters, et al., Petitioners v. Prometheus Radio Project, et al.
Supreme Court briefApr 17, 2020
Ask Donna
What actually matters in this document.
Text
APPENDIX
1a
APPENDIX A
PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________________
Nos. 17-1107, 17-1109, 17-1110, 17-1111
_____________________
PROMETHEUS RADIO PROJECT
*National Association of Broadcasters
**Cox Media Group LLC,
Intervenors
v.
FEDERAL COMMUNICATIONS COMMISSION;
UNITED STATES OF AMERICA
Prometheus Radio Project and Media Mobilizing
Project,
Petitioners in No. 17-1107
Multicultural Media, Telecom and Internet Counsel
and National Association of Black Owned Broadcasters, Inc.,
Petitioners in 17-1109
The Scranton Times, L.P.,
Petitioners in 17-1110
Bonneville International Corporation,
Petitioners in 17-1111
2a
* Prometheus Radio Project, Media Mobilizing Project, Benton Foundation, Common Cause, Media Alliance, Media Council Hawaii, National Association
of Broadcasters Employees and Technicians Communications Workers of America, National Organization for Woman Foundation, Office of Communication of the United Church of Christ Inc.,
Intervenors
*(Pursuant to the Clerk’s Order date 1/18/17)
** (Pursuant to the Clerk’s Order dated 2/7/17)
_____________________
Nos. 18-1092, 18-1669, 18-1670, 18-1671,
18-2943 & 18-3335
_____________________
PROMETHEUS RADIO PROJECT; MEDIA
MOBILIZING PROJECT,
Petitioners (No. 18-1092, 18-2943)
INDEPENDENT TELEVISION GROUP,
Petitioners (No. 18-1669)
MULTICULTURAL MEDIA, TELECOM AND
INTERNET COUNCIL, INC.;
NATIONAL ASSOCIATION OF BLACK-OWNED
BROADCASTERS,
Petitioners (No. 18-1670, 18-3335)
3a
FREE PRESS;
OFFICE OF COMMUNICATION, INC. OF THE
UNITED CHURCH OF CHRIST; NATIONAL
ASSOCIATION OF BROADCAST EMPLOYEES
AND TECHNICIANS-COMMUNICATIONS
WORKERS OF AMERICA; COMMON CAUSE,
Petitioners (No. 18-1671)
v.
FEDERAL COMMUNICATIONS COMMISSION;
UNITED STATES OF AMERICA
_____________________
On Petition for Review of An Order of
the Federal Communications Commission
(FCC Nos. FCC-1: FCC-16-107; FCC-17-156;
FCC-18-114)
_____________________
Argued June 11, 2019
Before: AMBRO, SCIRICA, and FUENTES,
Circuit Judges
(Opinion filed September 23, 2019)
Angela J. Campbell
Andrew J. Schwartzman
James T. Graves
Institute for Public Representation
Georgetown Law
600 New Jersey Avenue, N.W., Suite 312
Washington, DC 20001
Counsel for Petitioners
Prometheus Radio Project,
Media Mobilizing Project
4a
Counsel for Intervenor Respondents
Benton Foundation, National Association of
Broadcast Employees and Technicians Communication Workers of America, National Organization for Women Foundation, Office of Communication Inc. of the Church of Christ,
Cheryl A. Leanza (Argued)
Best Best & Krieger
2000 Pennsylvania Avenue, Suite 5300
Washington, DC 20006
Counsel for Petitioners
Prometheus Radio Project, Media Mobilizing Project, Office of Communication Inc. of the United
Church of Christ, National Association of Broadcast Employees and Technicians Communications Workers of America, Common Cause
Dennis Lane (Argued)
David D’Alessandro
Stinson Leonard Street
1775 Pennsylvania Avenue, N.W., Suite 800
Washington, DC 20006
Counsel for Petitioner
Multicultural Media Telecom and Internet Council, National Association of Black Owned Broadcasters, Inc.
5a
Craig E. Gilmore
Kenneth E. Satten
Wilkinson Barker Knauer
1800 M Street, N.W., Suite 800N
Washington, DC 20036
Counsel for Petitioners
Scranton Times LP,
Bonneville International Corp.
Jack N. Goodman (Argued)
Law Offices of Jack N. Goodman
1200 New Hampshire Avenue, N.W., Suite 600
Washington, DC 20036
Counsel for Petitioner
Independent Television Group
Jessica J. Gonzalez
Free Press
1025 Connecticut Avenue, N.W., Suite 1110
Washington, DC 20036
Counsel for Petitioner
Free Press
Thomas M. Johnson, Jr.
General Counsel
David M. Gossett
Deputy General Counsel
Jacob M. Lewis (Argued)
Associate General Counsel
James M. Carr
Matthew J. Dunne (Argued)
6a
William Scher
Richard K. Welch
Federal Communications Commission
445 12th Street, S.W.
Washington, DC 20554
Counsel for Respondent
Federal Communications Commission
Makan Delrahim
Assistant Attorney General
Michael F. Murray
Deputy Assistant Attorney General
Nickolai Gilford Levin
Robert B. Nicholson
Robert J. Wiggers
United States Department of Justice
Antitrust Division/Appellate Section
950 Pennsylvania Avenue, N.W.
Washington, DC 20004
Counsel for Respondent
United States of America
Helgi C. Walker (Argued)
Andrew G. I. Kilberg
Gibson Dunn & Crutcher
1050 Connecticut Avenue, N.W.
Washington, DC 20036
Counsel for Intervenor Petitioner/Respondent
National Association of Broadcasters
7a
Yosef Getachew
Common Cause
805 15th Street, N.W., Suite 800
Washington, DC 20005
Counsel for Intervenor Respondent/Petitioner
Common Cause
David E. Mills
Cooley
1299 Pennsylvania Avenue, N.W., Suite 700
Washington, DC 20004
Counsel for Intervenor Petitioner
Cox Media Group LLC
Kevin F. King
Rafael Reyneri
Andrew Soukup
Covington & Burling
850 10th Street, N.W.
One City Center
Washington, DC 20001
Counsel for Intervenor Respondent
Fox Corp.
David D. Oxenford
Wilkinson Barker Knauer
1800 M Street, N.W., Suite 800N
Washington, DC 20036
Counsel for Intervenor Respondent
Connoisseur Media LLC
8a
Paul A. Cicelski
S. Jenell Trigg
Lerman Senter
2001 L Street, N.W., Suite 400
Washington, DC 20036
Counsel for Intervenor Respondent
New Corp.
Eve Klindera Reed
Jeremy J. Broggi
Wiley Rein
1776 K Street, N.W.
Washington, DC 20006
Counsel for Intervenor Respondent
Nextar Broadcasting Inc.
Jeetander T. Dulani
Pillsbury Winthrop Shaw Pittman
1200 17th Street, N.W.
Washington, DC 20036
Counsel for Intervenor Respondent
Sinclair Broadcast Group Inc.
9a
OPINION OF THE COURT
AMBRO, Circuit Judge
Here we are again. After our last encounter
with the periodic review by the Federal Communications Commission (the “FCC” or the “Commission”) of
its broadcast ownership rules and diversity initiatives, the Commission has taken a series of actions
that, cumulatively, have substantially changed its
approach to regulation of broadcast media ownership. First, it issued an order that retained almost
all of its existing rules in their current form, effectively abandoning its long-running efforts to change
those rules going back to the first round of this litigation. Then it changed course, granting petitions
for rehearing and repealing or otherwise scaling back
most of those same rules. It also created a new “incubator” program designed to help new entrants into
the broadcast industry. The Commission, in short,
has been busy. Its actions unsurprisingly aroused
opposition from many of the same groups that have
battled it over the past fifteen years, and that opposition has brought the parties back to us.
One of these petitioners argues that the FCC
did not go far enough, and that the same logic by
which it repealed the so-called “eight voices” test of
the local television ownership rule (which forbade
mergers that would leave fewer than eight independently-owned stations in the market) should also
have led it to abolish the “top-four” restriction in the
same rule (which forbids mergers among two or more
of the four largest stations in a market). We disagree; this was a reasonable exercise of the Commis-
10a
sion’s policy-making discretion, as we held in the
first round of this litigation.
Another group of petitioners argues that the
Commission’s new incubator program is badly designed, as its definition of “comparable markets” for
the reward waivers was unlawfully adopted and
would create perverse incentives. It also argues that
the Commission has unreasonably failed to act on a
proposal to extend the so-called “cable procurement
rules,” which promote diversity in the cable television industry, to broadcast media. We disagree: the
“comparable markets” definition for the incubator
program was also a reasonable exercise of discretion,
and the FCC’s failure to act on the procurement
rules proposal is not unreasonable so far.
We do, however, agree with the last group of
petitioners, who argue 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. Although it did ostensibly comply with our prior requirement to consider this issue on remand, its analysis is so insubstantial that we cannot say it provides a reliable
foundation for the Commission’s conclusions. Accordingly, we vacate and remand the bulk of its actions in this area over the last three years. In doing
so, we decline to grant the requested extraordinary
relief of appointing a special master to oversee the
FCC’s work on remand.
I.
Background
To avoid sounding like a broken record, we recount only in brief the history of this case up through
our most recent decision. The full account of the en-
11a
tire saga can be found in our earlier opinions. See
Prometheus Radio Project v. FCC, 373 F.3d 372, 382–
89 (3d Cir. 2004) (“Prometheus I”); Prometheus Radio
Project v. FCC, 652 F.3d 431, 438–44 (3d Cir. 2011)
(“Prometheus II”); and Prometheus Radio Project v.
FCC, 824 F.3d 33, 37–39 (3d Cir. 2016) (“Prometheus
III”).
Under the Communications Act of 1934, 47
U.S.C. § 151 et seq., Pub. L. No. 73-416, 48 Stat. 1064
(1934), the Federal Communications Commission
has long maintained a collection of rules governing
ownership of broadcast media. By preventing any
one entity from owning more than a certain amount
of broadcast media, these rules limit consolidation
and promote a number of interests, commonly stated
as “competition, diversity, and localism.” See, e.g.,
Report and Order and Notice of Proposed Rulemaking—2002 Biennial Regulatory Review, 18 F.C.C.R.
13620 ¶ 8 (July 2, 2003). By 1996, however, there
was growing sentiment that these rules were overly
restrictive, and so Congress passed the Telecommunications Act. Pub. L. No. 104–104, 110 Stat. 56
(1996). Section 202(h) of that Act requires the Commission to review the broadcast ownership rules on a
regular basis— initially biennial, later amended to
quadrennial, see Pub. L. No. 108–199, § 629, 118
Stat. 3, 99–100 (2004)—to “determine whether any of
such rules are necessary in the public interest as the
result of competition.” Telecommunications Act,
§ 202(h). The Commission “shall repeal or modify
any regulation it determines to be no longer in the
public interest.” Id.
Thrice before we have passed on the Commission’s performance of its duties under § 202(h), or the
12a
lack thereof. In Prometheus I we reviewed the results of the 2002 quadrennial review cycle. Then in
Prometheus II we reviewed the results of the 2006
review cycle, which included the FCC’s actions on
remand from Prometheus I, as well as a separate order adopting various policies designed to promote
broadcast media ownership by women and racial minorities.
After Prometheus II the Commission failed to
complete its 2010 review cycle prior to the start of
the 2014 cycle, and so in Prometheus III we reviewed
not final agency action pursuant to § 202(h) but rather, for the most part, agency inaction. Although
we found the FCC had unreasonably delayed action
on the 2010 and 2014 review cycles, we declined to
vacate the broadcast ownership rules in their entirety, but noted such a drastic remedy could become appropriate in the future if the Commission continued
dragging its feet. Id., 824 F.3d at 53–54. Relatedly,
we remanded a newly adopted rule governing the
treatment of joint sales agreements for purposes of
the television local ownership rule, reasoning that
the FCC could not have a valid basis for promulgating such a rule without first having determined, as
required by § 202(h), that the local ownership rule
itself should remain in place. Id. at 58–60.
We also held that the Commission had unreasonably delayed a determination on the definition of
“eligible entities.” These are given certain preferences under the ownership rules, see id. at 41, and
the purpose of these preferences was to encourage
ownership by women and minorities. The definition,
however, was drawn from the Small Business Administration’s definition of small businesses, and fo-
13a
cused solely on a company’s revenues. In Prometheus I we had suggested that, on remand, the FCC
should consider adopting a different definition based
on the criteria for “socially and economically disadvantaged businesses” (“SDBs”). See 373 F.3d at 428
n.70; see also 13 C.F.R. § 124.103 (defining socially
disadvantaged businesses). The Commission declined to adopt an SDB definition, and in Prometheus
II we held that the revenue-based definition was arbitrary and capricious because there was no evidence
it would advance the goals of increasing ownership
by women and minorities. 652 F.3d at 469–71.
But the Commission had not reached a determination one way or the other by Prometheus III.
Instead it had suggested—in various documents issued after Prometheus II, none of which constituted
final agency action on the matter—that it would reject a SDB definition, or the similar “overcoming disadvantage preference” (“ODP”) proposal, because it
did not believe those rules could survive constitutional scrutiny under the Equal Protection Clause of
the Fourteenth Amendment. See 824 F.3d at 45–48.
It therefore indicated its tentative plan to adopt the
same definition we held unlawful in Prometheus II,
even though it still lacked evidence that this would
promote ownership diversity, because promoting
ownership by small businesses would be in the public
interest regardless. Id. at 46.
We held that the Commission “had more than
enough time to reach a decision on the eligible entity
definition.” Id. at 48. This led to a remand and an
“order [to] the Commission . . . to act promptly to
bring the eligible entity definition to a close.” Id. at
50. It was to “make a final determination as to
14a
whether to adopt a new definition;” “[i]f it need[ed]
more data to do so, it must get it.” Id. Finally, we
pointed out that we did “not intend to prejudge the
outcome” of the FCC’s analysis, and that we would
review the merits of its eventual decision once that
decision had been made through a final order. Id. at
50–51.
Three months after we decided Prometheus
III, the Commission followed through on its promise
to take final action on the 2010 and 2014 review cycles. Its Second Report and Order, 2014 Quadrennial Regulatory Review, 31 F.C.C.R. 9864 (2016) (the
“2016 Report & Order”), retained all of the major
broadcast ownership rules—the newspaper/broadcast
cross-ownership rule, the radio/television crossownership rule, the local radio ownership rule, and
the local television ownership rule—in their existing
forms. It also adopted, again, a revenue-based definition for eligible entities. It concluded that an SDB
or any related race- or gender-conscious definition
could not withstand constitutional scrutiny because,
even though courts might accept viewpoint diversity
as a compelling governmental interest, the evidence
did not show a meaningful connection between female or minority ownership and viewpoint diversity.
Id. ¶ 297. The Commission also declined to adopt an
ODP standard, reasoning that it would require individualized assessment that is not compatible with
the smooth operation of the FCC’s rules, and that
such an individualized assessment could run afoul of
First Amendment principles. Id. ¶ 306. On a related
issue, the Commission declined to implement an “incubator program,” under which established broadcasters would be encouraged to assist new entrants
15a
to break into the industry, that would have employed
an ODP standard. Finally, the Commission reviewed
a number of other proposals to increase ownership
diversity, rejecting most but noting some merit in a
proposal to extend the cable procurement rules,
which require cable companies to encourage minority-owned businesses to work with them, to broadcast
media. The Commission did not adopt this idea, instead calling for further comment.
A number of industry groups filed a petition
for rehearing, and in November 2017 the Commission granted that petition in its Order on Reconsideration and Notice of Proposed Rulemaking, 32
F.C.C.R. 9802 (2017) (the “Reconsideration Order”).
This Order made sweeping changes to the ownership
rules.
It eliminated altogether the newspaper/broadcast and television/radio cross-ownership
rules. It modified the local television ownership rule,
rescinding the so-called “eight voices” test but retaining the rule against mergers between two of the top
four stations in a given market—albeit now subject
to a discretionary waiver provision. And it announced the Commission’s intention to adopt an incubator program, although it left the formal implementation of that program to a subsequent order. In
this context, the Reconsideration Order called for
comment on various aspects of the program, including how to define eligibility and how to encourage
participation by established broadcasters.
In August 2018 the Commission issued the
Report and Order—In the Matter of Rules and Policies to Promote New Entry and Ownership Diversity
in the Broadcasting Services, 33 F.C.C.R. 7911 (2018)
(the “Incubator Order”). That Order established a
16a
radio incubator program that would encourage established broadcasters to provide “training, financing,
and access to resources” for new entrants in the
market. Id. ¶ 6. Eligibility to receive this assistance
was defined using two criteria: an incubated entity
must (1) qualify as a small business under the Small
Business Administration’s rules, and (2) qualify as a
“new entrant,” meaning that it must own no television stations and no more than three radio stations.
Id. ¶ 8. The eligibility criteria make no overt reference to race, gender, or social disadvantage, but the
Commission concluded that using the “new entrant”
criterion would help boost ownership by women and
minorities, as a bidding preference for new entrants
in FCC auctions had that effect. Id. ¶ 21.
As an incentive for established broadcasters to
participate in the program, the Incubator Order
grants the incubating entity a reward waiver for the
local radio ownership rules. Among other options,
the waiver may be used in any market “comparable”
to the one in which incubation occurs. Id. ¶ 66–67.
This means that it must be in the same market tier
for purposes of the local radio rule, and these tiers
are defined by the number of stations in a market.
One tier runs from zero to 14 stations, another from
15 to 29, a third from 30 to 44, and finally the highest tier includes all markets with 45 or more stations.
Before us are 10 different petitions for review
challenging different aspects of the Commission’s actions since Prometheus III. After the 2016 Report &
Order issued in November of that year, Prometheus
Radio Project (“Prometheus”) and Media Mobilization Project (“MMP”) filed a petition for review in our
17a
Court. About the same time, three other petitions
for review of the 2016 Report & Order were filed in
the D.C. Circuit Court of Appeals: one by The Scranton Times, L.P. (“Scranton”); one by Bonneville International Corporation (“Bonneville”); and one jointly by the Multicultural Media, Telecom and Internet
Council, Inc. (“MMTC”) and the National Association
of Black-Owned Broadcasters (“NABOB”). The cases
before the D.C. Circuit were transferred here and the
four cases consolidated in January 2017; they were
then held in abeyance while the Commission considered the petitions for rehearing.
After the Reconsideration Order issued in November 2017, four additional petitions for review
were filed: one by Prometheus and MMP in our
Court as well as three in the D.C. Circuit from
(1) Independent Television Group (“ITG”), (2) MMTC
and NABOB, and (3) a coalition of groups including
Free Press, the Office of Communication, Inc. of the
United Church of Christ (“UCC”), the National Association of Broadcast Employees and Technicians—
Communications Workers of America (“NABETCWA”), and Common Cause. Once again the D.C.
Circuit transferred the petitions before it to our
Court, and we consolidated the new wave of cases
with the existing petitions.
In February 2018 we stayed all proceedings
pending the close of notice and comment on the Incubator Order. Once the final Order issued in August 2018, Prometheus and MMP filed a petition for
review in our Court, and MMTC and NABOB filed
another in the D.C. Circuit that was transferred here
and the cases consolidated.
18a
For purposes of briefing and oral argument,
the various petitioners divided into three groups.
The first included Prometheus, MMP, Free Press,
UCC, NABET-CWA, and Common Cause, who argue
that the Commission has not adequately considered
how its changes to the broadcast ownership rules
will affect ownership by women and racial minorities. We refer to this group as “Citizen Petitioners,”
consistent with our past practice. See Prometheus
III, 824 F.3d at 39. A second group, consisting of
MMTC and NABOB, argues that the Incubator Order’s definition of “comparable markets” is unlawful
and that the Commission has unreasonably withheld
action on a proposal to extend cable procurement
rules to broadcast media. To distinguish this group,
we refer to its members as “Diversity Petitioners.”
Finally, ITG—standing alone now as the only “Deregulatory Petitioner”—challenges the retention of
the “top-four” component of the local television rule
(which, to repeat, bans mergers between two or more
of the four largest stations in a given market).
The Commission defends its orders in their
entirety. Additionally, a group of Intervenors—
including both Scranton and Bonneville as well as
many of the Deregulatory Petitioners from prior
rounds of this litigation—defends the FCC’s actions
and argues further that Citizen and Diversity Petitioners lack standing.
II.
Jurisdiction and Standard of Review
We have jurisdiction to hear these petitions for
review of agency action under 47 U.S.C. § 402(a) and
28 U.S.C. § 2342(1). As noted above and covered in
§ III.A below, Intervenors argue, with the support of
19a
the Commission, that Citizen and Diversity Petitioners lack standing.
Per § 706(2) of the Administrative Procedure
Act (“APA”), we can set aside agency action that is
arbitrary or capricious. 5 U.S.C. § 706(2). “The
scope of review under the ‘arbitrary and capricious’
standard is narrow and a court is not to substitute
its judgment for that of the agency.” Motor Vehicle
Mfrs. Ass’n of U.S. v. State Farm Mut. Auto. Ins. Co.,
463 U.S. 29, 43 (1983). Despite this deference, we
require the agency to “examine the relevant data and
articulate a satisfactory explanation for its action[,]
including a rational connection between the facts
found and the choice made.” Id. (internal quotation
marks omitted).
When the FCC conducts a Quadrennial Review under § 202(h), that provision also affects our
standard of review, as it requires that “no matter
what the Commission decides to do to any particular
rule—retain, repeal, or modify (whether to make
more or less stringent)—it must do so in the public
interest and support its decision with a reasoned
analysis.” Prometheus I, 373 F.3d at 395. When
§ 202(h) refers to rules being “necessary,” that term
means “useful,” “convenient,” or “helpful.” Id. at 394.
This case also involves challenges to agency
inaction. Section 706(1) of the APA allows us to
“compel agency action unlawfully withheld or unreasonably delayed.” 5 U.S.C. § 706(1). Under this provision, our “polestar is reasonableness.” Public Citizen Health Research Grp. v. Chao, 314 F.3d 143, 151
(3d Cir. 2002). We must “balance the importance of
the subject matter being regulated with the regulat-
20a
ing agency’s need to discharge all of its statutory responsibilities under a reasonable timetable.” Oil,
Chem. & Atomic Workers Union v. Occupational
Safety & Health Admin., 145 F.3d 120, 123 (3d Cir.
1998).
With this balance in mind, unreasonable delay should be measured by the following factors: First, the court should ascertain the
length of time that has elapsed since the
agency came under a duty to act. Second, the
reasonableness of the delay should be judged
in the context of the statute authorizing the
agency’s action. Third, the court should assess the consequences of the agency’s delay.
Fourth, [it] should consider any plea of administrative error, administrative inconvenience, practical difficulty in carrying out a
legislative mandate, or need to prioritize in
the face of limited resources.
Id. (internal quotation marks omitted).
III.
Analysis
A.
Standing
As a threshold matter, Intervenors argue that
Citizen and Diversity Petitioners (called “Regulatory
Petitioners” for ease of reference in this section) lack
standing, and the FCC concurs in that argument. To
have standing to sue in federal court under Article
III of the Constitution, a plaintiff must have (1) an
“injury in fact,” meaning “an invasion of a legally
protected interest which is (a) concrete and particularized[,] and (b) actual or imminent, not conjectural
or hypothetical,” that is (2) “fairly traceable to the
21a
challenged action of the defendant,” and it must
(3) be “likely, as opposed to merely speculative, that
the injury will be redressed by a favorable decision.”
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61
(1992) (internal citations and quotation marks omitted).
There are two separate disputes regarding
Regulatory Petitioners’ standing. First is a procedural question. After Intervenors raised the issue in
their merits brief, Regulatory Petitioners submitted
declarations to establish standing along with their
reply briefs. Intervenors now argue that we should
not consider those declarations or the facts asserted
within them because materials to establish standing
must be submitted instead with Regulatory Petitioners’ opening briefs. Even accepting the declarations,
Intervenors still dispute standing.
We disagree on both counts. It is well established that petitioners challenging agency action
may supplement the administrative record for the
purpose of establishing Article III standing, even
though judicial review of agency action is usually
limited to the administrative record. As the Tenth
Circuit observed in US Magnesium, LLC v. EPA, 690
F.3d 1157, 1164 (10th Cir. 2012), the Article III
standing requirements do not apply to agency proceedings, and thus there is no reason for the facts
supporting standing to be a part of the administrative record. It is, moreover, the practice in most of
the Circuits that have considered the matter to accept these materials at any stage of the litigation. In
US Magnesium itself, for example, the Tenth Circuit
accepted supplemental materials that were attached
to a petitioner’s reply brief. Id. (Its discussion did
22a
not squarely address the timing issue, only whether
a court could properly go beyond the administrative
record to ascertain standing at all.) The Seventh
Circuit has accepted supplemental submissions filed
after oral argument. Texas Indep. Producers and
Royalty Owners Ass’n v. EPA, 410 F.3d 964, 971 (7th
Cir. 2005). And the Ninth Circuit has expressly held
that standing need not be established in an opening
brief in cases like this. Nw. Envtl. Def. Ctr. v.
Bonneville Power Admin., 117 F.3d 1520, 1528 (9th
Cir. 1997).
Against this, Intervenors marshal two sources
of contradictory authority. First is the Supreme
Court’s statement, in a footnote in Lujan itself, that
“standing is to be determined at the commencement
of suit.” 504 U.S. at 570 n.5 (emphasis added). This
is not on point. That footnote sought only to rebut an
argument from Justice Stevens’s dissenting opinion
that, although the agencies whose actions would
harm the petitioners there were not technically parties to the lawsuit, those agencies would not ignore a
decision from the Supreme Court interpreting the
relevant legal provisions, and thus such a decision
would actually redress the petitioners’ injuries. The
majority rejected this argument because it depended
entirely on the contingent fact that the Supreme
Court ended up taking the case, which could not
have been known at the start of suit. Hence “commencement of suit” indicates only that standing
must exist at the beginning of litigation, not that the
materials establishing standing must be submitted
at that time.
The other authorities cited by Intervenors are
cases from the D.C. Circuit. See, e.g., Sierra Club v.
23a
EPA, 292 F.3d 895, 900 (D.C. Cir. 2002). But that
Circuit has a provision of its local rules expressly requiring the petitioners in any “cases involving direct
review . . . of administrative actions” to file materials
establishing standing along with their opening brief.
See D.C. Cir. Rule 28(a)(7). The cases cited by Intervenors all simply applied this rule, which does not
apply to proceedings in our court.
It appears that this is a question of first impression in our Circuit. To resolve it, we adopt the
view held overtly by the Ninth Circuit and implicitly
by the Tenth and Seventh: parties may submit materials to establish standing at any time in the litigation.1 This is especially so here, where the same parties have been litigating before us for a decade and a
half. It was not unreasonable for Regulatory Petitioners to assume that their qualification to continue
in the case was readily apparent. Cf. Del. Dep’t. of
Nat’l Res. & Envtl. Control v. EPA, 785 F.3d 1, 8–9
(D.C. Cir. 2015) (permitting petitioners to submit
standing materials with their reply brief despite the
contrary requirement of the D.C. Circuit’s local rules
when they reasonably believed that standing was
self-evident).
1 As noted, other courts have gone so far as to accept standing materials submitted after oral argument. See Texas Indep.
Producers and Royalty Owners Ass’n, 410 F.3d at 971. This
could be appropriate where the issue of standing is not raised
until oral argument. Although we do not set out a comprehensive rule for all cases, in general materials to establish standing
should be submitted promptly once standing is called into question.
24a
Turning to the substance of standing, Intervenors argue that Regulatory Petitioners’ alleged harm
is not sufficiently imminent to establish standing because any mergers under the new rules would require FCC approval and would be subject to judicial
review; in effect, Regulatory Petitioners have not
produced evidence that the rule changes will lead to
additional consolidation. In addition, Intervenors
continue, Regulatory Petitioners lack standing because their objections to the rule changes pertain to
ownership diversity and not to the § 202(h) purpose
of promoting competition. We find none of these arguments persuasive.
The first two arguments share a common
theme: although Regulatory Petitioners will be
harmed by consolidation within the industry (a fact
Intervenors do not appear to contest), it is speculative that the new rules will actually lead to consolidation. The problem is that encouraging consolidation is a primary purpose of the new rules. This is
made clear throughout the Reconsideration Order,
see, e.g., 32 F.C.C.R. at 9811, 9836. The Government
cannot adopt a policy expressly designed to have a
certain effect and then, when the policy is challenged
in court by those who would be harmed by that effect, respond that the policy’s consequences are entirely speculative. Intervenors cite Rainbow/PUSH
Coalition v. FCC, 330 F.3d 539, 542–44 (D.C. Cir.
2003), but that case only held that petitioners there,
who sought to assert standing simply as audiencemembers, had to demonstrate that a proposed merger would have some specific baleful effect(s) on the
viewing audience, i.e., some degradation of the programming available to that audience. Here Interve-
25a
nors do not contest that consolidation, if it occurs,
will harm the Regulatory Petitioners.
Nor is it material that any future mergers
would require FCC approval. The point is that, under the new rules, it will approve mergers that it
would have rejected previously, with the rule changes in the Reconsideration Order the key factor causing those grants of approval. See Sara Fischer, The
local TV consolidation race is here, Axios (Aug. 10,
2018), available at https://www.axios.com/the-localtv-consolidation-war-is-here-7c65f3fb-eaab-43c4-9a00
-81303867dbee.html (“Many local broadcasters cite
one key reason for their consolidation—[t]he FCC’s
landmark decision last year to roll back old regulations that limited the ability of TV companies to own
properties in the same market.”). Intervenors’ citation to Clapper v. Amnesty International, USA, 568
U.S. 398, 410–11 (2013), is not to the contrary. It involved a “highly attenuated chain of possibilities”
that, among other things, would make it difficult to
discern whether the challenged law was even the
cause-in-fact of the plaintiffs’ alleged injuries.2 The
causal chain here is anything but attenuated.
2 Clapper involved a challenge to Section 702 of the Foreign
Intelligence Surveillance Act, 50 U.S.C. § 1881a, part of the
2008 FISA Amendments. Pub. L. No. 110-261, 122 Stat. 2436
(2008). The chain of possibilities the Court identified ran as
follows: “(1) the Government will decide to target the communications of non-U.S. persons with whom they communicate;
(2) in doing so, the Government will choose to invoke its authority under [§ 702] rather than utilizing another method of surveillance; (3) the Article III judges who serve on the Foreign
Intelligence Surveillance Court will conclude that the Govern-
26a
Intervenors’ third argument fails for multiple
reasons. First, they identify incorrectly the goals of
§ 202(h) as limited to promoting competition. Instead, as its text makes plain, review under that
provision is intended to determine whether each of
the ownership rules serves the public interest, broadly conceived, in light of ongoing competitive developments within the industry. See Prometheus I, 373
F.3d at 390–95.
In addition, there is no requirement that the
harm alleged be closely tied to a challenger’s legal
argument in order to have Article III standing. Intervenors invoke a second Rainbow/PUSH Coalition
v. FCC case, 396 F.3d 1235, 1242–43 (D.C. Cir.
2005), there involving an objection to renewal of a
radio station’s license because it had allegedly engaged in employment discrimination.
Audience
members, the D.C. Circuit held, lacked standing to
object because the alleged violative conduct at issue
had not harmed them at all. This does not support
the notion that a party may lack standing, even
though it will suffer a concrete and particularized
injury, simply because it is the wrong “kind” of injury. That argument sounds not in the requirements
of Article III but of “prudential standing,” a nowdiscredited doctrine under which courts would decline to hear cases within their jurisdiction if the
ment’s proposed surveillance procedures satisfy [§ 702]’s many
safeguards and are consistent with the Fourth Amendment;
(4) the Government will succeed in intercepting the communications of respondents’ contacts; and (5) respondents will be
parties to the particular communications that the Government
intercepts.”
27a
plaintiffs’ complaint did not fall within the “zone of
interests” protected by the law they invoked. In
Lexmark Int’l, Inc. v. Static Control Components,
Inc., 572 U.S. 118 (2014), the Supreme Court held
that this should be understood solely as a matter of
statutory construction, i.e., of determining whether a
given statutory cause of action extended to a particular plaintiff. Intervenors do not argue, and could not
seriously contend, that Regulatory Petitioners do not
qualify as “aggrieved parties” for purposes of the
APA’s general cause of action. See 5 U.S.C. § 702.
We emerge from the bramble to hold that
Regulatory Petitioners have standing. Thus we proceed to the merits issues before us.
B.
Retention of the Top-Four Rule
Deregulatory Petitioner ITG argues that the
FCC’s decision to retain its “top-four” local television
rule, prohibiting the merger of any two of the top
four stations in a given market, while rescinding the
“eight voices” rule, was arbitrary and capricious.
This is an issue we dealt with before, in Prometheus
I, when we upheld the top-four restriction against
deregulatory challenges. We noted that “we must
uphold an agency’s line-drawing decision when it is
supported by the evidence in the record.” Prometheus I, 373 F.3d at 417 (citing Sinclair Broadcast
Group, Inc. v. FCC, 284 F.3d 148, 162 (D.C. Cir.
2002); AT&T Corp. v. FCC, 220 F.3d 607, 627 (D.C.
Cir. 2000)). And the Commission had ample record
evidence supporting its decision to draw the line at
four: it saw a “cushion” of audience share between
the fourth- and fifth-ranked stations, reflecting that
the top four would be the affiliates of the four major
28a
national networks (ABC, CBS, NBC, and Fox); the
same cushion was apparent in national viewership
figures for the networks themselves; mergers between the third- and fourth-largest stations in each
of the ten largest markets would produce a new largest station; and mergers among top-four stations
would generally increase the statistical consolidation
of the local market by a substantial amount. Id. at
418.
Now ITG argues that the FCC “failed to recognize that the same reasons it found supported repeal of the Eight-Voice test also required it to repeal
or modify the Top-Four Prohibition.” ITG Br. at 20.
It first takes issue with the notion of a ratings “cushion” between the top-four and other stations, in part
questioning whether the cushion exists and in part
asking why it should matter. Id. at 28–29. It further
contests the FCC’s reliance on its conclusion, from
the 2002 review cycle, that mergers among top-four
stations would generally result in a new largest station, noting that the evidence shows that mergers
between the third- and fourth-largest stations would
not result in a new largest entity in roughly half of
the markets with at least four stations. Id. at 29–30.
Finally, it argues that the new waiver provision cannot excuse that, as it sees things, the rule as a whole
is not rationally related to the facts. Id. at 31–32.
We disagree. None of ITG’s arguments meaningfully distinguish our holding in Prometheus I.
Just as in that case, ITG simply takes issue with the
way in which the Commission chose to draw the
lines. The basic logic of the top-four rule, as we recognized in 2004, is that while consolidation may offer
efficiency gains in general, mergers between the
29a
largest stations in a market pose a unique threat to
competition. See Prometheus I, 373 F.3d at 416.
Although there might be other more tailored, and
more complex, ways to identify those problematic
mergers, the simplest is to declare, as the Commission has done, that mergers between two or more of
the largest X stations in a market are not permitted.
The choice of X must be somewhat arbitrary: each
market’s contours will be slightly different, and no
single bright-line rule can capture all this complexity. But the television industry does generally feature a distinct top-four, corresponding to the four
major national networks, and four is therefore a sensible number to pick. And this is exactly the kind of
line-drawing, where any line drawn may not be perfect, to which courts are the most deferential. See id.
at 417. ITG has much to say about everything this
simple rule misses, but that is beside the point. The
Commission has the discretion to adopt a blunt instrument such as the top-four rule if it chooses. Indeed we confronted, and rejected, this exact argument—that treating all top-four stations the same
wrongly ignored the variation in market structures—
in Prometheus I. Id. at 417–18.
Nor is it improper that the FCC’s justification
for this rule is the same as it was in the 2002 review
cycle. Section 202(h) requires only that the Commission think about whether its rules remain necessary
every four years. It does not imply that the policy
justifications for each regulation have a shelf-life of
only four years, after which they expire and must be
replaced. Nor does § 202(h), or any other authority
cited by ITG, require that the Commission always
base its decisions on perfectly up-to-date data. In
30a
any event, ITG itself cites more recent data presented to the Commission through the administrative
process, and this information paints a picture materially identical to what the Commission saw in 2002.
In this context, we reaffirm our conclusion
from Prometheus I that retention of the top-four rule
is amply supported by record evidence and thus is
not arbitrary or capricious.3
C.
“Comparable Markets” Definition
Diversity Petitioners challenge the Incubator
Order’s definition of comparable markets for radio
stations, arguing that it was not properly noticed and
in any event was arbitrary and capricious.
Their argument devolves to this. The basic
concept of the incubator program uses a waiver of
the rules governing local radio ownership as a reward to induce participation by established broadcasters.
The Notice of Proposed Rulemaking
(“NPRM”) sought comment on the following questions about these reward waivers: “How should the
Commission structure the waiver program? For example, should the waiver be limited to the market in
which the incubating activity is occurring? Alternatively, should waiver be permissible in any similarly
sized market? How would the Commission deter-
3 Accordingly, we need not address ITG’s argument that the
newly added waiver provision, which allows the Commission to
permit a merger that would otherwise be barred by the top-four
rule if “the reduction in competition is minimal and is outweighed by public interest benefits,” Reconsideration Order
¶ 82, cannot save an otherwise irrational rule.
31a
mine which markets are similar in size?” Reconsideration Order ¶ 137. Diversity Petitioners take this
to indicate only that the Commission was considering two possibilities: either that the waiver could only be used in the same market where the incubating
activity occurred or that it could be used in other
markets of similar population. They contend that
“size” in this context is most naturally read as referring to population, or some other indicator of market
size (such as audience or listenership numbers), as
opposed to the number of radio stations in the market. The two responsive comments on this issue,
they contend, seem to have reflected this assumption. See Diversity Petitioners’ Br. at 16–17.
Instead, as noted, the Incubator Order adopted a system of reward waivers that can be used in
any “comparable” market, meaning not a market of
similar population but one with a similar number of
radio stations. This proposal was first described in
detail in the draft of the Incubator Order made
available before the final order was promulgated. In
response, Diversity Petitioners made several ex parte
communications with the Commission expressing
their concern over this definition of “comparable”
markets. Id. at 21–22. Their letters expressed concern that the proposed rule would allow a broadcaster to incubate in a small rural market and then use
its reward waiver in a much larger market, such as
New York City, thus getting an outsized return for
its investment. Thus Diversity Petitioners suggested
that the rule should disallow using a waiver in another top-tier “comparable” market that is not within
five spots of the incubating market in the Nielsen
population-based rankings, but the Commission de-
32a
clined to adopt this proposal. See Incubator Order
¶ 68.
Diversity Petitioners argue that this was not
adequate notice. We have addressed similar claims
in both Prometheus I, 373 F.3d at 411–412, and Prometheus II, 652 F.3d at 449–50. Essentially, “the adequacy of the notice must be tested by determining
whether it would fairly apprise interested persons of
the ‘subjects and issues’ before the agency.” Prometheus I, 373 F.3d at 411 (quoting Am. Iron & Steel
Inst. v. EPA, 568 F.3d 284, 293 (3d Cir. 1977)). The
strongest fact supporting Diversity Petitioners’ claim
is the swift response by commenters expressing surprise once the eventual definition of comparable
markets was made public. Courts will consider the
behavior of commenters in assessing whether notice
was adequate. See, e.g., Sprint Corp. v. FCC, 315
F.3d 369, 376 (D.C. Cir. 2003).
But parsing the language of the Notice of Proposed Rulemaking itself suffices to show that it did
provide adequate notice. Specifically, after asking
whether the waiver should be applicable in any similarly sized market, the NPRM asked how the Commission would determine which markets are similarly sized. This strongly suggests that the Commission
was considering a range of different ways to measure
market size, and it undercuts Diversity Petitioners’
assertion that the word “size” could only be read to
mean population. See Diversity Petitioners’ Br. at 16
(“The reference to ‘size’ in the NPRM is generally
understood in the broadcast industry to mean markets that have similar populations.”).
33a
Turning to the substance of the comparable
markets definition, Diversity Petitioners assert that
the FCC’s definition will create a perverse incentive
for established broadcasters to incubate in markets
with low populations but many radio stations (using
the example of Wilkes-Barre, Pennsylvania) and
then use their waivers in “comparable” markets with
much greater populations (e.g., New York City). The
Incubator Order responded to this concern by noting
that some markets with similar populations have
vastly different numbers of stations, and stated that
“[i]n crafting our standard, we focused primarily on
preventing the potential for ownership consolidation
in a market with fewer stations and independent
owners than the market in which the incubation relationship added a new entrant.” Incubator Order
¶ 68. It expected that incubating entities will not
necessarily use their waivers only in the largest
markets, but rather wherever they face ownership
restrictions under the FCC’s rules. Id. And it noted
that some incubating entities might not have relevant ownership interests in other markets of similar
population size, such that they would have no flexibility under Diversity Petitioners’ proposed rules.
Id.
Diversity Petitioners posit this as an inadequate response, but we disagree. They are correct
that the Commission did not rebut the suggestion
that waivers might be used in markets with much
higher populations than the ones where incubation is
occurring. It explained instead why it did not think
this prospect overly frightening. Diversity Petitioners suggest that this dynamic could reduce the positive influence of the incubator program on ownership
34a
diversity, as (they claim) smaller markets like
Wilkes-Barre are less diverse. This is not supported
by the record: as Intervenors note, many smaller
markets are quite racially diverse, see Intervenors’
Br. at 50, and Diversity Petitioners’ rejoinder that
these markets contain fewer total people of color
than big cities like New York or Los Angeles, Diversity Petitioners’ Reply Br. at 17 n.7, is essentially
tautological. And we cannot say that the Commission’s focus on the potential anti-competitive effects
of the waiver program is unreasonable, for the waivers relate specifically to rules designed to promote
competition.
We therefore hold that the definition of “comparable markets” in the Incubator Order was adequately noticed and is not arbitrary and capricious.
D.
Effect of Rule Changes on Ownership Diversity
Citizen Petitioners argue that the Commission
did not adequately consider the effect its new rules
would have on ownership of broadcast media by
women and racial minorities. We agree. In Prometheus III we stated that the ongoing attempt to bring
the 2010 and 2014 review cycles to a close must “include a determination about the effect of the rules on
minority and female ownership.” 824 F.3d at 54 n.13
(internal quotation marks omitted). Both the 2016
Report & Order and the Reconsideration Order ostensibly included such a determination, and each
concluded that the broadcast ownership rules have
minimal effect on female and minority ownership.
But these conclusions were not adequately supported
35a
by the record, and thus they were arbitrary and capricious.
The 2016 Report & Order retained all of the
existing ownership rules, but it also addressed a proposal to tighten the local television and radio ownership rules as a means of promoting ownership diversity. The Commission rejected this proposal because
it found no evidence that reducing consolidation
would have that effect based on the following evidence. The National Telecommunications and Information Administration (“NTIA”) had collected data regarding the number of minority-owned stations
in the late 1990s. About a decade later, the FCC itself began collecting this data through a survey using
what is called “Form 323.” See Prometheus III, 824
F.3d at 44 (discussing the use of Form 323 to gather
data about minority ownership). It did so with the
express purpose of generating better data about
ways to increase ownership by women and minorities. Id.
What the 2016 Report & Order did was to
compare the NTIA data from the late 1990s, around
the time that the local ownership rules were first relaxed, with the subsequent Form 323 data. It saw
the same pattern for television and for radio: an initial decrease in minority-owned stations after the
rules became more flexible to permit more consolidation, followed by a long-term increase. The NTIA
showed 312 minority-owned radio stations in 1995,
just before the local radio rule was relaxed, followed
by 284 in 1996–97, 305 in 1998, and 426 in 1999–
2000. Form 323 data, meanwhile, showed 644 such
stations in 2009, 756 in 2011, and 768 in 2013. See
2016 Report & Order ¶ 126–28. Turning to televi-
36a
sion, NTIA data showed 32 minority-owned stations
in 1998—just before the local television rule was relaxed—and 23 stations in 1999–2000, while Form
323 data showed 60 stations in 2009, 70 in 2011, and
83 in 2013. Id. ¶ 77.
Because the trendlines did not show that relaxing these rules had played a major role in restricting ownership diversity, the Commission thought
that reversing the process (that is, tightening local
radio and television ownership rules) would also be
unlikely to have a major effect. Id. ¶ 126. At the
same time it did not think that further loosening the
rules would be an effective means of promoting diversity, as the data did not suggest that the increase
from the late 1990s through the 2009–13 period had
been caused by the relaxed rules. See id. ¶ 78, 128.
The Order stated that the Commission remained
“mindful of the potential impact of consolidation . . .
on ownership opportunities for . . . minority- and
women-owned businesses, and we will continue to
consider the implications in the context of future
quadrennial reviews.” Id. ¶ 128. The 2016 Report &
Order also cited this same data to suggest that its
modest revisions to the cross-ownership rules would
not be likely to have a major influence on ownership
diversity. Id. ¶ 196 n.586.
The Reconsideration Order, by contrast, did
make major changes to the ownership rules, and it
invoked the same evidence as the 2016 Report & Order to conclude that this would not meaningfully affect ownership diversity. Thus it stated, as to the
cross-ownership rules, that “record evidence demonstrates that previous relaxations of other ownership
rules have not resulted in an overall decline in mi-
37a
nority and female ownership of broadcast stations,
and we see no evidence to suggest that eliminating
the [Newspaper/Broadcast Cross- Ownership] Rule
will produce a different result and precipitate such a
decline.” Reconsideration Order, ¶ 46. As to the local television rule, the Order concluded that “the record does not support a causal connection between
modifications to the Local Television Ownership Rule
and minority and female ownership levels;” thus the
modifications “are not likely to harm minority and
female ownership.” Id. ¶ 83.
Problems abound with the FCC’s analysis.
Most glaring is that, although we instructed it to
consider the effect of any rule changes on female as
well as minority ownership, the Commission cited no
evidence whatsoever regarding gender diversity. It
does not contest this. See Respondent’s Br. at 40
n.14. Instead it notes that “no data on female ownership was available” and argues that it “reasonably
relied on the data that was available and was not required to fund new studies.” Id. Elsewhere, however, the Commission purports to have complied with
our instructions to consider both racial and gender
diversity, repeatedly framing its conclusion in terms
that encompass both areas. See, e.g., id. at 33–36.
The trouble is that any ostensible conclusion as to
female ownership was not based on any record evidence we can discern. Courts will find agency action
arbitrary and capricious where the agency “entirely
fail[s] to consider an important aspect of the problem,” State Farm, 463 U.S. at 43, and that is effectively what happened here. The only “consideration”
the FCC gave to the question of how its rules would
affect female ownership was the conclusion there
38a
would be no effect. That was not sufficient, and this
alone is enough to justify remand.
Even just focusing on the evidence with regard
to ownership by racial minorities, however, the
FCC’s analysis is so insubstantial that it would receive a failing grade in any introductory statistics
class. One basic problem is the way the Commission
treats the NTIA and Form 323 data as comparable,
even though these two data sets were created using
entirely different methodologies. For example, we do
not know how many minority-owned stations the
Form 323 survey would have found in 1999, or how
many the NTIA’s methods would have found in 2009.
Indeed the NTIA data is known to be substantially
incomplete, and the large increase in minorityowned radio stations it showed between 1998 and
1999–2000 is thought to have been caused by largely
improved methodology rather than an actual increase in the number of minority-owned stations.
2016 Report & Order ¶ 126. Attempting to draw a
trendline between the NTIA data and the Form 323
data is plainly an exercise in comparing apples to oranges, and the Commission does not seem to have
recognized that problem or taken any effort to fix it.
Even if we could treat the use of these two data sets as reliable, the FCC’s statistical conclusions
are woefully simplistic. They compare only the absolute number of minority-owned stations at different
times, and make no effort to control for possible confounding variables. The simplest of these would be
the total number of stations in existence. We do not
know, for example, whether the percentage of stations that are minority-owned went up or down from
1999 to 2009.
39a
And even if we only look at the total number of
minority-owned stations, the FCC did not actually
make any estimate of the effect of deregulation in the
1990s. Instead it noted only that, whatever this effect was, deregulation was not enough to prevent an
overall increase during the following decade. The
Commission made no attempt to assess the counterfactual scenario: how many minority-owned stations
there would have been in 2009 had there been no deregulation.
An analogy helps illustrate this point: if an
economy that has been growing at an annual 2% rate
suffers a serious depression in which it shrinks by
10%, and then resumes growing at the same 2% rate,
a decade later it will likely be bigger than it was on
the eve of the depression. But this does not mean
that the depression had no effect on the size of the
economy. Nothing in the FCC’s analysis rules out, or
even addresses, the possibility that the 1990s deregulation caused such a one-time “depression” of minority ownership even if it did not reverse the longterm increase in minority-owned stations.
The Commission does not really contest any of
these deficiencies in its data or its analysis. Instead
it argues that they are irrelevant. It notes, first of
all, that ownership diversity is just one of many
competing policy goals it must balance when adjusting its regulations. Respondent’s Br. at 32–33.
Thus, the Reconsideration Order noted that the
Commission should not retain a rule that unduly
burdened the competitive practices of all broadcasters “based on the unsubstantiated hope that these
restrictions will promote minority and female ownership.” Reconsideration Order ¶ 65. It cites to broad
40a
support for eliminating the newspaper/broadcast
cross-ownership rules, including from minority media owners, as evidence that doing so would not have
an adverse effect on minority ownership. Respondent’s Br. at 34. And it asserts that, while the data
used was not perfect, it was the only evidence available as to the effects of earlier rounds of deregulation
on ownership diversity. Id. at 40. The Commission
solicited evidence on this issue during the noticeand-comment period, and it did not receive any information of higher quality than the NTIA/Form 323
data. Thus it argues it had no affirmative burden to
produce additional evidence or to fund new studies
itself. Id. at 47 (citing Stilwell v. Office of Thrift Supervision, 569 F.3d 514, 519 (D.C. Cir. 2009)).
We are not persuaded. It is true that “[t]he
APA imposes no general obligation on agencies to
produce empirical evidence,” only to “justify its rule
with a reasoned explanation.” Stilwell, 569 F.3d at
519. But in this case the reasoned explanation given
by the Commission rested on faulty and insubstantial data. In Stilwell the agency had proceeded based
on its “long experience” supervising the regulated industry and had support from the commenters. Id.
Here, the Commission has not relied on its general
expertise, and, outside of the modifications to the
newspaper/broadcast cross-ownership rule, it does
not rely on support from commenters. It has not offered any theoretical models or analysis of what the
likely effect of consolidation on ownership diversity
would be. Instead it has confined its reasoning to an
insubstantial statistical analysis of unreliable data—
and, again, has not offered even that much as to the
effect of its rules on female ownership.
41a
Finally, it is true that promoting ownership
diversity is but one of the policy goals the FCC must
consider. But this only highlights that it is something the Commission must consider. It is, as State
Farm says, “an important aspect of the problem.”
463 U.S. at 43. The Commission might well be within its rights to adopt a new deregulatory framework
(even if the rule changes would have some adverse
effect on ownership diversity) if it gave a meaningful
evaluation of that effect and then explained why it
believed the trade-off was justified for other policy
reasons. But it has not done so. Instead it has proceeded on the basis that consolidation will not harm
ownership diversity. This may be so; perhaps a more
sophisticated analysis would strengthen, not weaken, the FCC’s position. But based on the evidence
and reasoning the Commission has given us, we
simply cannot say one way or the other. This violated the Commission’s obligations under the APA and
our remand instructions, and we “may not supply a
reasoned basis for the agency’s action that the agency itself has not given.” Id. (citing SEC v. Chenery
Corp., 332 U.S. 194, 196 (1947)).
Accordingly, we vacate the Reconsideration
Order and the Incubator Order in their entirety, as
well as the “eligible entity” definition from the 2016
Report & Order. On remand the Commission must
ascertain on record evidence the likely effect of any
rule changes it proposes and whatever “eligible entity” definition it adopts on ownership by women and
minorities, whether through new empirical research
or an in-depth theoretical analysis. If it finds that a
proposed rule change would likely have an adverse
effect on ownership diversity but nonetheless be-
42a
lieves that rule in the public interest all things considered, it must say so and explain its reasoning. If
it finds that its proposed definition for eligible entities will not meaningfully advance ownership diversity, it must explain why it could not adopt an alternate definition that would do so. Once again we do
not prejudge the outcome of any of this, but the
Commission must provide a substantial basis and
justification for its actions whatever it ultimately decides.
E.
Delay
Rules
in
Adopting
Procurement
Finally, Diversity Petitioners argue that the
Commission has unreasonably delayed action on
their proposal to extend the cable procurement rules
to broadcast media. These rules require cable companies to encourage minority- and female-owned
businesses to do business with them. See 47 C.F.R.
§ 76.75(e). A proposal to apply similar rules to
broadcast media companies was one of the proposals
we instructed the Commission to consider on remand
all the way back in Prometheus I. See 373 F.3d at
421 n.59. In Prometheus III, the same Diversity Petitioners argued the FCC had unlawfully refused to
address these proposals. We declined to pass on this
challenge, noting that the Chairman of the FCC had
committed to addressing these proposals in what
eventually became the 2016 Report & Order, and
thus the challenge was premature. See 824 F.3d at
50 n.11. At the same time we “note[d] our expectation that the Commission will meet its proffered
deadline.” The 2016 Report & Order ultimately
found that there was “merit in exploring” whether to
adopt this proposal, and stated that it would “evalu-
43a
ate the feasibility” of doing so. 2016 Report & Order
¶ 330. [J.A. at 169] The Notice of Proposed Rulemaking for the 2018 cycle sought comment on a
number of aspects of this proposal, including its constitutionality. See 2018 Quadrennial Regulatory Review—Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Notice of Proposed Rulemaking, 84 F.R. 6741, 6752
(Feb. 28, 2019)
As set out at length in Prometheus III, when
reviewing a claim of unreasonable agency delay we
evaluate four factors: first, the length of time since
the agency came under a duty to act; second, the context of the statute authorizing the agency’s action;
third, the consequences of the agency’s delay; and,
finally, any claim of administrative error, inconvenience, or practical difficulty carrying out the obligation, especially in light of limited resources. See 824
F.3d at 39–40 (quoting Oil, Chem. & Atomic Workers
Union, 145 F.3d at 123).
The Commission argues it has not unreasonably delayed action because the record as of the 2016
Report & Order did not support adopting the proposal—largely because the commenters did not offer
any substantial supporting materials for it. See Respondent’s Br. at 89. We agree. This is not like the
eligible entity issue in Prometheus III, where the
FCC had failed to act for well over a decade. At
most, the agency’s failure to act began with the 2016
Report & Order three years ago. And the consequence of the Commission’s failure to act at that
time was evidently to keep the proposal alive, rather
than rejecting it outright for lack of support. Given
44a
all of this, not to mention that the NPRM for the
2018 cycle has sought further comment on this proposal, we do not at this time find unreasonable delay
by the Commission.
That being said, we do anticipate that the
Commission will take final action on this proposal
one way or another when it resolves the 2018 review
cycle, at which time its decision will be subject to judicial review. If it does not do so, we may reach a different conclusion as to the reasonableness of that
additional delay.
F.
Conclusion
Citizens and Diversity Petitioners have standing to press their claims. On the merits, we hold
that the FCC’s retention of the “top-four” prong of its
local television ownership rule was not arbitrary and
capricious. We also hold that the Incubator Order’s
definition of “comparable markets” was adequately
noticed and was not arbitrary and capricious. And
we decline to hold that the FCC has unreasonably
delayed action on the proposal to adopt procurement
rules for the broadcasting industry. We do conclude,
however, that the Commission has not shown yet
that it adequately considered the effect its actions
since Prometheus III will have on diversity in broadcast media ownership. We therefore vacate and remand the Reconsideration and Incubator Orders in
their entirety, as well as the “eligible entity” definition from the 2016 Report & Order.
Citizen Petitioners ask us to appoint a mediator or master to “ensure timely compliance” with our
decision. Citizen Petitioners’ Br. at 43. Courts will
sometimes appoint a special master to oversee com-
45a
pliance with remedial decrees, but these cases typically involve institutions such as prisons where the
Court could not otherwise easily ascertain whether
the defendant is complying, and the master’s job is
limited only to observing and reporting. See, e.g.,
Ruiz v. Estelle, 679 F.2d 1115 (5th Cir. 1982),
amended in part and vacated in part on other
grounds, 688 F.2d 266 (5th Cir. 1982) (per curiam).
There is no need for such an observational special
master here, where the Commission’s actions on remand will be published in the Federal Register and
readily available for subsequent judicial review.
Moreover, we would decline in any event to appoint a
special master with any powers beyond the simply
observational, as doing so would raise grave constitutional concerns, see e.g. Cobell v. Norton, 334 F.3d
1128, 1141–42 (D.C. Cir. 2003), and we do not doubt
the Commission’s good faith in its efforts to comply
with our requests.
Because yet further litigation is, at this point,
sadly foreseeable, this panel again retains jurisdiction over the remanded issues.
46a
Prometheus Radio Project et al. v. Federal Communications Commission, Nos. 17-1107, 17-1109, 171110, 17-1111, 18-1092, 18-1669, 18-1670, 18-1671,
18-2943 & 18-3335,
SCIRICA, Circuit Judge, concurring in part and dissenting in part
The Telecommunications Act of 1996 mandates that the Federal Communications Commission
(FCC) regularly review its broadcast media ownership rules to ensure they remain in step with the
demands of a rapidly evolving marketplace. Yet
some of these rules date back to the 1990s and early
2000s, and one all the way to 1975, before the Internet revolutionized American media consumption.
Americans today increasingly rely on online sources
for local news and information. Studies in the record
reinforce what most people old enough to recall the
days before WiFi and iPads understand instinctively:
the explosion of Internet sources has accompanied
the decline of reliance on traditional media. The realities of operating a viable broadcasting enterprise
today look little like they did when the FCC enacted
the current ownership rules. Despite all of this, the
FCC’s broadcast ownership rules remained largely
static for fifteen years.
The FCC’s most recent review of its ownership
rules culminated in an order that accounted for these
changes. The FCC evaluated the current market dynamics, concluded the existing rules built for a preInternet marketplace no longer serve the public interest, and repealed or modified the rules accordingly. The FCC weighed the rules’ effects on competi-
47a
tion, localism, and diversity to determine what
changes would advance the public interest.
I join several parts of my colleagues’ decision,
including their rejection of the challenges to the incubator program’s “comparable markets” definition
and the Reconsideration Order’s retention of a modified “top-four” restriction in the Local TV Rule. But I
do not share their conclusion that the Reconsideration Order and Incubator Order are arbitrary and
capricious. In my view, the FCC balanced competing
policy goals and reasonably predicted the regulatory
changes dictated by the broadcast markets’ competitive dynamics will be unlikely to harm ownership diversity. I would not delay the FCC’s actions. I would
allow the rules to take effect and direct the FCC to
evaluate their effects on women- and minoritybroadcast ownership in its 2018 quadrennial review.
I.
The parties are intimately familiar with the
FCC’s quadrennial review of the broadcast ownership rules. See Prometheus Radio Project v. FCC,
824 F.3d 33 (3d Cir. 2016) (Prometheus III); Prometheus Radio Project v. FCC, 652 F.3d 431 (3d Cir.
2011) (Prometheus II); Prometheus Radio Project v.
FCC, 373 F.3d 372 (3d Cir. 2004) (Prometheus I). I
summarize the relevant history and principles that
guide this process before briefly reviewing the FCC’s
most recent action.
A.
The orders at issue stem from the FCC’s review of its broadcast ownership rules. Through these
rules the FCC advances its statutory mandate to
48a
regulate broadcast media as “public convenience, interest, or necessity requires.” 47 U.S.C. § 303; see
Nat’l Broad. Co. v. United States, 319 U.S. 190, 214
(1943). Early versions of the ownership rules cabined common ownership within and across broadcast
media to promote the public interest. See FCC v.
Nat’l Citizens Comm. for Broad., 436 U.S. 775, 780
(1978) (NCCB). The FCC adopted broadcast ownership rules with the objective to “promot[e] competition among the mass media” and to “maximiz[e] diversification of services sources and viewpoints.” Id.
at 784 (internal quotation marks and citation omitted). These in turn would benefit the public through
higher quality programming and broader options.
The FCC determines the appropriate amount of
common ownership by weighing the harms of excessive concentration—diminished programming diversity, stifled competition, and the like—against the
competitive realities of running viable broadcast enterprises.
A need for regulatory reform became palpable
as the Internet emerged, transforming how Americans receive news and entertainment. Rapid technological change had left the framework regulating
media ownership ill-suited to the marketplace’s
needs. The public interest analysis at the heart of
the FCC’s ownership rules is as dynamic as the media landscape. A static set of ownership regulations
could not serve the public interest for all time. See
Prometheus I, 373 F.3d at 437 (Scirica, C.J., dissenting in part and concurring in part).
With continued change all but certain, Congress retooled the approach to regulating affected
markets. It enacted the Telecommunications Act of
49a
1996, Pub. L. No. 104-104, 110 Stat. 56, which directs the FCC to review the broadcast ownership
rules periodically. The relevant provision, Section
202(h), instructs:
The Commission shall review . . . all of its
ownership rules [quadrennially] as part of its
regulatory reform review . . . and shall determine whether any of [its] rules are necessary in the public interest as the result of
competition. The Commission shall repeal or
modify any regulation it determines to be no
longer in the public interest.
Telecommunications Act of 1996, § 202(h), as amended by Pub. L. No. 108-199, § 629, 118 Stat. 3, 99–100
(2004). “[C]ompetition, localism, and diversity” are
the values that guide the FCC’s “public interest”
analysis under Section 202(h). Prometheus I, 373
F.3d at 400; see also id. at 446 (Scirica, C.J., dissenting in part and concurring in part). The FCC considers five types of diversity: viewpoint, outlet, program,
source, and minority and women ownership. See id.
at 446 (Scirica, C.J. dissenting in part and concurring in part) (summarizing the FCC’s analysis in its
2002 biennial review order).
Embodied in Section 202(h) is the imperative
that the broadcast ownership rules stay in sync with
the media marketplace. See id. at 391. What is in
the “public interest” changes over time as the marketplace evolves, so the FCC must reassess competitive conditions to set appropriate regulations. The
provision’s language and the accompanying legislative history reveal a belief that “opening all telecommunications markets to competition” will best
50a
suit a marketplace comprised of diverse media platforms and shaped by technological advancement.
See H.R. Rep. No. 104-458, at 113 (1996) (Conf.
Rep.). Section 202(h) directs the FCC to assess the
harms of consolidation and abandon restrictions that
deprive the public of competitive benefits associated
with some levels of common ownership.1
B.
The FCC concluded its 2010/14 quadrennial
review by largely retaining the rules restricting
common ownership. See Second Report & Order,
2014 Quadrennial Regulatory Review, 31 FCC Rcd.
9864 (2016) (2016 Report & Order). The rules, according to the FCC, “promote[d] competition and a
diversity of viewpoints in local markets, thereby enriching local communities through the promotion of
distinct and antagonistic voices.” Id. ¶ 3.
On petitions for reconsideration, the FCC repealed or loosened most of these ownership rules.
See Order on Reconsideration and Notice of Proposed
Rulemaking, 32 FCC Rcd. 9802 (2017) (Reconsideration Order). The thrust of the FCC’s analysis is that
technological innovation and fundamental changes to
the media marketplace have eroded many of the assumptions underlying the ownership rules. See, e.g.,
id. ¶¶ 1, 19, 22, 43, 60, 71–73. The rules have thus
ceased serving the public interest. The Internet
boom has ushered in rivals that enjoy competitive
1 Although framed in deregulatory terms, we have understood the provision to allow modifications making the rules
“more or less stringent.” Prometheus I, 372 F.3d at 395.
51a
advantages vis-à-vis broadcasters. The ownership
rules impede broadcasters’ ability to engage in procompetitive transactions without offering compensating benefits to the public.
The FCC’s repeal of the Newspaper/Broadcast
Cross-Ownership (NBCO) Rule illustrates the Reconsideration Order’s public interest balancing. The
NBCO Rule barred combinations between broadcast
stations and local newspapers to preserve “strong local voices.” Id. ¶ 9. When the rule was adopted in
1975, daily print newspapers constituted a predominant voice in local news. The rule thus promoted
viewpoint diversity and localism by ensuring independent sources of local content. But the FCC’s careful study and informed judgment show this reasoning no longer holds. Traditional media compete with
“digital-only news outlets with no print or broadcast
affiliation.” Id. ¶ 19. The FCC determined that the
burst of Internet sources means local newspapers’
independence from broadcast is no longer essential to
promote viewpoint diversity. See id. ¶¶ 18–22. The
flipside of this growth is the dwindling significance of
print newspapers. Repealing the NBCO Rule, the
FCC determined, lifts a barrier to combinations that
may enhance localism. See id. ¶ 26. Transactions
between broadcasters and local newspapers could
enable “collaboration and cost-sharing” that improve
program quality. Id. ¶ 27. These efficiencies could
“attract new investment in order to preserve and expand” local programming. Id. ¶ 42. The FCC predicted repeal of the NBCO Rule “is unlikely to have a
significant effect on minority and female ownership
in” broadcast markets in part because broadcasters
would be better positioned to acquire newspapers
52a
than the reverse. Id. ¶ 46. So ownership diversity,
like competition and localism, did not justify keeping
the rule. See id. ¶ 48.
While the FCC’s public interest analysis balances competition, localism, and diversity, the last
consideration has attracted most of the attention in
this litigation. Neither the 2016 Report & Order nor
Reconsideration Order found evidence that showed
keeping or changing the rules would affect ownership
diversity. “[E]mpirical study of the relationship between cross-ownership restrictions” and ownership
diversity is complicated by “obstacles that make such
study impractical and unreliable,” the FCC observed,
yet it invited comment on both study design and the
likely connection. Quadrennial Regulatory Review—
Review of The Commission’s Broadcast Ownership
Rules and Other Rules Adopted Pursuant to Section
202 of the Telecommunications Act of 1996, et al.,
Further Notice of Proposed Rulemaking and Report
and Order, 29 FCC Rcd. 4371 ¶ 198 n.595 (2014)
(2014 FNPRM). The 2016 Report & Order rejected
arguments that making the rules more restrictive
“will promote increased opportunities for minority
and female ownership” because the record lacked evidence supporting such a causal connection. ¶ 77 (Local TV Rule); see id. ¶ 127 (Local Radio Rule). The
Reconsideration Order considered the consequences
of relaxing the rules on ownership diversity and determined the record did not support arguments that
minority and women broadcasters would be harmed
by the changes. See, e.g., ¶ 15 (NBCO Rule) (“[W]e
find that eliminating the rule will have no material
effect on minority and female broadcast ownership.”).
No commenter introduced evidence that contradicted
53a
the FCC’s prediction that changing the rules would
unlikely affect ownership diversity. The Reconsideration Order announced the FCC’s intention to pursue
an incubator program, to facilitate entry and bolster
ownership diversity. See ¶¶ 121–25.
II.
Citizen Petitioners contend the FCC’s orders
are arbitrary and capricious because they do not adequately analyze the new rules’ likely effects on minority and women broadcast ownership. The APA’s
“arbitrary and capricious” standard together with
Section 202(h) guide our review.
We must “hold unlawful and set aside agency
action, findings, and conclusions” that are “arbitrary
[or] capricious.” 5 U.S.C. § 706(2)(A). Under this
deferential review, we uphold the FCC’s decision
provided it “examine[d] the relevant data and articulate[d] a satisfactory explanation for its action including a ‘rational connection between the facts
found and the choice made.’” Motor Vehicles Mfrs.
Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29,
43 (1983) (quoting Burlington Truck Lines v. United
States, 371 U.S. 156, 168 (1962)). Where, as here,
the FCC makes predictions about the likely consequences of its decisions, “complete factual support in
the record for [its] judgment or prediction is not possible or required.” NCCB, 436 U.S. at 814; Rural
Cellular Ass’n v. FCC, 588 F.3d 1095, 1105 (D.C. Cir.
2009) (“Where . . . the FCC must make predictive
judgments about the effects of [its regulations], certainty is impossible.”). These predictions are “less
amenable to rigid proof”; they “are more in the nature of policy decisions entitled to substantial deference.” NAACP v. FCC, 682 F.2d 993, 1001 (D.C. Cir.
54a
1982), rev’d on other grounds, FCC v. Fox Telev. Stations, Inc., 556 U.S. 502 (2009).
As this Court has emphasized and notes again
here, Section 202(h) “also affects our standard of review.” Prometheus III, 824 F.3d at 40; see Maj. Op.
18. To the extent the meaning of Section 202(h) is
disputed, the question would ordinarily “implicat[e]
an agency’s construction of the statute which it administers,” thus triggering “the principles of deference described in” Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842
(1984). INS v. Aguirre-Aguirre, 526 U.S. 415, 424
(1999); see also Sinclair Broad. Grp. v. FCC, 284
F.3d 148, 165 (D.C. Cir. 2004) (deferring to FCC’s
reasonable interpretation of another provision of the
Telecommunications Act of 1996 under Chevron).
III.
My colleagues find, “based on the evidence and
reasoning the Commission has given us,” it has not
satisfied its obligation to show changes in the ownership rules “will not harm ownership diversity.” Maj.
Op. 39. But the FCC enjoys a measure of deference
when it balances policy objectives based on predictions of the consequences of its rules. This key disagreement leads me to depart from my colleagues in
three respects. First, because the FCC’s consideration of the interplay between its ownership rules and
ownership diversity satisfies the APA and Section
202(h), I would deny the challenges to the Reconsideration Order and allow the new rules to take effect.
Second, I believe the substance of the FCC’s eligible
entity definition and the process by which it was
adopted accords with the APA. Third, I do not be-
55a
lieve the FCC acted arbitrarily or capriciously when
it adopted the Incubator Order. Accordingly, I would
deny the petitions and allow the FCC’s orders to take
effect.
A.
Citizen Petitioners leave untouched the FCC’s
core determination that the ownership rules have
ceased to serve the “public interest.” The Reconsideration Order chronicles significant changes
throughout media markets and explains why maintaining the rules no longer serves that public interest
goal. No party identifies any reason to question the
FCC’s key competitive findings and judgments. Citizen Petitioners argue instead that all the rule
changes that make up the Reconsideration Order
should be vacated because the FCC did not adequately consider the new rules’ likely effects on womenand minority-broadcast ownership. But neither Section 202(h) nor the APA requires the FCC to quantify
the future effects of its new rules as a prerequisite to
regulatory action. Congress prescribed an iterative
process; the FCC must take a fresh look at its rules
every four years. This process assumes the FCC can
gain experience with its policies so it may assess how
its rules function in the marketplace. The FCC has
sufficiently explained its decision and deserves an
opportunity to implement its policies.
Citizen Petitioners overlook “that the Commission’s judgment regarding how the public interest
is best served is entitled to substantial judicial deference.” FCC v. WNCN Listeners Guild, 450 U.S. 582,
596 (1981). The FCC’s Section 202(h) review typifies
agency policymaking entitled to deference, subject to
56a
the APA. Section 202(h) directs the FCC to balance
competing goals—competition, localism, and diversity—to guarantee that its “regulatory framework
[keeps] pace with the competitive changes in the
marketplace.” Prometheus I, 373 F.3d at 391. The
FCC enjoys a “considerable amount of discretion”
when it weighs objectives to reach policy decisions.
Rural Cellular, 588 F.3d 1095, 1103 (D.C. Cir. 2009)
(internal quotation marks and citation omitted). The
record confirms the FCC analyzed the relevant considerations and properly exercised its discretion.
See, e.g., Reconsideration Order ¶ 63 (Radio/TV
Cross-Ownership Rule) (concluding the rule “no
longer strikes an appropriate balance between the
protection of viewpoint diversity and the potential
public interest benefits that could result from the efficiencies gained by common ownership of radio and
television stations in a local market”); see also id.
¶¶ 55–58 (rule no longer contributes substantially to
viewpoint diversity); id. ¶ 59 (rule is out of step with
“realities of the digital media marketplace”); id. ¶ 62
(“rule already permits significant cross-ownership in
local markets”); id. ¶ 64 (“no evidence that any additional common ownership” resulting from repeal
“would disproportionately or negatively impact minority- and female-owned stations”).
Traditional principles of deference are particularly apt here. Not every decision the FCC makes is
susceptible to precise analysis; some “rest on judgment and prediction rather than pure factual determinations.” WNCN Listeners Guild, 450 U.S. at 594.
Predictions about the future effects of rules not yet in
being are “inherently speculative.” Council Tree
57a
Inv’rs, Inc. v. FCC, 863 F.3d 237, 243 (3d Cir. 2017)
(Council Tree IV) (internal quotation marks omitted).
The FCC reasonably predicted on the record
before it that the new rules would not diminish or
harm minority and women ownership. The question
whether the rules and ownership diversity are interconnected was aired over the course of the 2010/14
quadrennial review. The FCC invited comment and
data that might shed light on this connection. See,
e.g., 2014 FNPRM ¶ 222. It concluded—based on its
understanding of the broadcast markets, the evidence in the record, and the only data submitted—
that repeal of the rules was unlikely to harm ownership diversity. See, e.g., Reconsideration Order ¶ 83
(Local TV Rule) (“In this lengthy proceeding, no party has presented contrary evidence or a compelling
argument demonstrating why relaxing this rule will”
harm ownership diversity.); id. ¶ 69 (adopting revised rule based on understanding of changed competitive dynamics); id. ¶ 71 (observing changes in
marketplace but noting “broadcast television stations
still play a unique and important role in their local
communities”); see also 2014 FNPRM ¶ 224 (Radio/TV Cross-Ownership Rule) (noting no commenter
has shown “low levels of [women and minority] ownership are a result of existing radio/television crossownership rule”).2 The effect the new rules will have
2 To the extent my colleagues require the FCC to conduct
empirical analysis on remand, they risk impermissibly adding
requirements beyond the APA. See Perez v. Mortgage Bankers
Ass’n, 135 S. Ct. 1199, 1207 (2015). They quote Stilwell v. Office of Thrift Supervision’s instruction that the “APA imposes no
general obligation on agencies to produce empirical evidence.”
58a
on women- and minority-broadcast ownership may
remain difficult to uncover until the FCC gains experience with the new rules. See NCCB, 436 U.S. at
796–97; Council Tree Inv’rs, Inc. v. FCC, 619 F.3d
235, 252–53 (3d Cir. 2010). Faced with such a question, “complete factual support in the record for the
Commission’s judgment or prediction is not possible
or required.” NCCB, 436 U.S. at 814. Under these
circumstances settled principles of administrative
law counsel deference to the FCC’s prediction.3
Citizen Petitioners emphasize that the FCC
acted on faulty minority-ownership data and no
women-ownership data. See, e.g., Citizen Petitioners’
Br. 26–30. This data, which the FCC acknowledged
as imperfect, measured minority ownership before
and after two prior regulatory changes—in 1996 and
Maj. Op. 38 (quoting 569 F.3d 514, 519 (D.C. Cir. 2009)). But
they argue Stilwell is distinguishable because there the agency
relied on its “long experience” supervising the industry and did
not act on “faulty and insubstantial data” like the FCC did
here. Id. Setting aside the FCC’s eight decades regulating
broadcast media, the basic principle that the APA “imposes no
general obligation on agencies to produce empirical evidence”
applies regardless of the quality of the data in the record. Stilwell, 569 F.3d at 519; see Council Tree IV, 863 F.3d at 244
(“[W]e review only for the use of relevant, not perfect, data.”).
Were it otherwise, the principle would be meaningless.
3 This is true despite Citizen Petitioners’ criticism of the FCC’s
methodology and data. Not only does the FCC have policymaking discretion, subject to the APA it also has discretion “to proceed on the basis of imperfect scientific information, rather
than to invest the resources to conduct the perfect study.” Cablevision Sys. Corp. v. FCC, 649 F.3d 695, 717 (D.C. Cir. 2011)
(quoting Sierra Club v. EPA, 167 F.3d 658, 662 (D.C. Cir.
1999)).
59a
1999. Such data weaknesses are not fatal to the
FCC’s regulations—not only because, as noted, data
gaps are inherent to predictive regulation, but also
because it is not certain the data demanded would
alter the FCC’s analysis. First, Citizen Petitioners
assume that the experience of these earlier changes
will speak directly to the effects of the Reconsideration Order. Even if the FCC could obtain improved
data on these decades-old regulatory changes, that
information offers only modest predictive value for
the consequences of the FCC’s current rules regarding modernization. Second, as noted the FCC considers five types of diversity, not to mention competition and localism. The FCC’s lack of some data relevant to one of these considerations should not outweigh its reasonable predictive judgments, particularly in the absence of any contrary information,
such that its entire policy update is held up.
The FCC must “repeal or modify” rules that
cease to serve the public interest even when it lacks
optimal data. Telecommunications Act of 1996,
§ 202(h). The FCC has revised its Form 323 and
conducted outreach programs to ease compliance
with its reporting requirements. 2016 Report & Order ¶ 265. These are encouraging measures that
could make the FCC’s data more reliable, benefiting
future quadrennial reviews. The FCC intends to
take up a variety of diversity- related proposals in its
2018 quadrennial review. See 2018 Quadrennial
Regulatory Review—Review of the Commission’s
Broadcast Ownership Rules and Other Rules Adopted
Pursuant to Section 202 of the Telecommunications
Act of 1996, Notice of Proposed Rulemaking, 33 FCC
Rcd. 12111 ¶¶ 93–121 (2018). I would direct it to fol-
60a
low through on its announcement as well as study
the effects of the latest rules on ownership diversity.
I would not, however, delay the Reconsideration Order based on the analytical shortcomings Citizen Petitioners emphasize.
In short, I believe the FCC has explained its
decision. I would deny the petitions and allow the
Reconsideration Order’s rule changes to take effect.
B.
My colleagues remand the 2016 Report & Order’s eligible entity definition for the FCC to ascertain what effect the revenue-based definition will
have on women and minority ownership. But the
FCC adopted the eligible entity definition to “serve
the public interest by promoting small business participation in the broadcast industry and potential entry by new entrepreneurs.” See 2016 Report & Order
¶ 279; see id. ¶¶ 280–86. It thoroughly explained its
policy choice. The record indicated that the revenuebased eligible entity definition will promote the
FCC’s “traditional policy objectives . . . by enhancing
opportunities for small business[es].” Id. ¶ 281. The
FCC’s brief experience with this definition confirmed
“a significant number of broadcast licensees and
permittees availed themselves of policies based on
the revenue-based eligible entity standard.” Id.
¶ 283 (observing widespread use of the policy allowing certain eligible entities generous construction
permits). No commenters argued the revenue-based
eligible entity definition does not serve the public interest according to the FCC’s analysis. Id. ¶ 276.
This stands in contrast to the last time the
FCC employed this definition. During its 2006 quad-
61a
rennial review the FCC adopted a revenue-based eligibility entity definition to promote ownership diversity. The approach failed because the FCC provided
no support for why its definition would “be effective
in creating new opportunities for broadcast ownership by . . . women and minorities.” Prometheus II,
652 F.3d at 470 (internal quotation marks and citation omitted). The key distinction, of course, is the
FCC’s policy decision to reorient its eligible entity
definition. As revised, it is intended to “encourage
innovation and enhance viewpoint diversity” by
“promoting small business participation in the
broadcast industry.” 2016 Report & Order ¶ 235.
Because the FCC pursued the revenue-based definition in past efforts to promote ownership diversity, it
evidently believed the definition would not harm
ownership diversity. Nothing in the present record
suggests otherwise. In my view the FCC properly
complied with its obligations under the APA.
C.
Under today’s outcome, I regret that the FCC’s
incubator program will not have an opportunity to
stand or fall on its own merit. See Rules and Policies
to Promote New Entry and Ownership Diversity in
the Broadcasting Services, 33 FCC Rcd. 7911 (2018)
(Incubator Order). Citizen Petitioners take issue
with the program’s criteria for who is eligible to realize its benefits. The FCC adopted a two-prong eligible entity definition: participants must be both “new
entrants” based on the number of stations owned and
“small businesses” based on revenue. See id. ¶ 16.
The FCC designed these criteria “to encourage new
entry into” an “extremely capital-intensive” industry.
Id. ¶ 18. The program’s benefits will not exclusively
62a
accrue to minority and women broadcasters as the
eligibility criteria sweep in all emerging radio broadcasters. This breadth is consistent with the incubator program’s stated goal. Yet based on its review of
data from incentive auctions, the FCC predicts that
the “new entrant” prong will likely benefit prospective women and minority applicants. Id. ¶¶ 21–24.
The incubator program is a reasonable policy
designed to “support the entry of new and diverse
voices into the broadcast industry.” Id. ¶ 1. The
FCC “has long contemplated the potential for” a program that pairs emerging and experienced broadcasters to ease entry into radio broadcasting. Id. ¶ 2.
The Incubator Order established the first program to
convert these ideas into a concrete policy. See ¶ 3.
Before adopting the program, the FCC considered
alternative eligibility criteria and invited “comment
on how to determine eligibility for participation in
the incubator program.” Id ¶ 17; see id. ¶¶ 28–30
(declining to adopt competing proposals that might
prove “administratively inefficient,” and committing
to “conduct outreach to help encourage participation
in the incubator program by mission-based entities
and Native American Nations” that are eligible). It
then provided comprehensive reasoning to justify the
path it chose. See id. ¶ 20 (“The record reflects that
individuals seeking to purchase their first or second
broadcast station are the ones that often face the
most challenging financial hurdles.”); id. ¶ 21 (citing
incentive auction data showing definition could modestly benefit women and minorities); id. ¶ 22 (citing
comments suggesting the same); id. ¶ 25 & n.53 (noting that revenue cap narrows band of eligible entities); id. ¶ 27 (“Use of an objective standard has the
63a
advantage of being straightforward and transparent
for potential applicants, as well as administrable for
the Commission without application of significant
additional processing resources.”). The FCC complied with the APA in determining its “eligible entity” definition. Its choice, in my view, is an aspect of
program design largely left to the agency’s policy discretion, subject to the APA, Telecommunications Act
of 1996, and other relevant statutes. The FCC’s order draws a rational line between the record and decision made, and I would allow the incubator program to take effect.
IV.
For the reasons provided, I would deny the petitions for review and allow the FCC’s orders to take
effect.
64a
APPENDIX B
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
2014 Quadrennial Regulatory
Review – Review of the Commission’s Broadcast Ownership
Rules and Other Rules Adopted
Pursuant to Section 202 of the
Telecommunications Act of 1996
2010 Quadrennial Regulatory
Review – Review of the Commission’s Broadcast Ownership
Rules and Other Rules Adopted
Pursuant to Section 202 of the
Telecommunications Act of 1996
Promoting Diversification of
Ownership In the Broadcasting
Services
)
)
) MB Docket No.
14-50
)
)
)
)
)
)
MB Docket No.
09-182
)
)
) MB Docket No.
07-294
)
Rules and Policies Concerning
Attribution of Joint Sales
Agreements in Local Television
Markets
)
Rules and Policies to Promote
New Entry and Ownership Diversity in the Broadcasting Services
)
)
MB Docket No.
04-256
)
) MB Docket No.
17-289
)
)
65a
ORDER ON RECONSIDERATION AND
NOTICE OF PROPOSED RULEMAKING
Adopted: November
16, 2017
Released: November
20, 2017
Comment Date: (60 days after publication in
the Federal Register)
Reply Comment Date: (90 days after publication in the Federal Register)
By the Commission: Chairman Pai and Commissioners O’Rielly and Carr issuing separate statements; Commissioners Clyburn and Rosenworcel
dissenting and issuing separate statements.
TABLE OF CONTENTS
Heading
I.
II.
III.
Paragraph #
INTRODUCTION .............................................4
BACKGROUND ................................................6
MEDIA OWNERSHIP RULES ...................... 13
A. Newspaper/Broadcast CrossOwnership Rule .........................................13
B. Radio/Television CrossOwnership Rule .........................................58
C. Local Television Ownership
Rule ............................................................75
D. Local Radio Ownership Rule ....................99
IV.
TELEVISION JOINT SALES
AGREEMENTS ............................................113
V.
SHARED SERVICE AGREEMENTS ..........134
VI.
DIVERSITY/INCUBATOR PROGRAM.......141
VII. NOTICE OF PROPOSED
RULEMAKING.............................................145
VIII. PROCEDURAL MATTERS ..........................159
66a
IX.
ORDERING CLAUSES ................................164
APPENDIX A – Final Rule Changes
APPENDIX B – Supplemental Final Regulatory
Flexibility Analysis
APPENDIX C – Initial Regulatory Flexibility Analysis
67a
I.
INTRODUCTION
1.
Today we end the 2010/2014 Quadrennial Review proceeding. In doing so, the Commission
not only acknowledges the dynamic nature of the
media marketplace, but takes concrete steps to update its broadcast ownership rules to reflect reality.
Indeed, the Commission plainly stated in its 2010
NOI initiating this proceeding that the broadcast
ownership rules required a fresh look in light of
“[d]ramatic changes in the marketplace,”1 yet the resulting Second Report and Order issued in August
2016 manifestly failed to adopt any meaningful
changes to these rules—and effectively tightened the
Local Television Ownership Rule.2 In this Order on
Reconsideration, we refuse to ignore the changed
landscape and the mandates of Section 202(h), and
we deliver on the Commission’s promise to adopt
broadcast ownership rules that reflect the present,
not the past. Because of our actions today to relax
and eliminate outdated rules, broadcasters and local
newspapers will at last be given a greater opportunity to compete and thrive in the vibrant and fastchanging media marketplace. And in the end, it is
consumers that will benefit, as broadcast stations
1 2010 Quadrennial Regulatory Review – Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted
Pursuant to Section 202 of the Telecommunications Act of 1996,
Notice of Inquiry, 25 FCC Rcd 6086, 6087, para. 1 (2010) (NOI).
2 See generally 2014 Quadrennial Regulatory Review – Review of the Commission’s Broadcast Ownership Rules and Other
Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996 et al., Second Report and Order, 31 FCC Rcd
9864 (2016) (Second Report and Order).
68a
and newspapers—those media outlets most committed to serving their local communities—will be better
able to invest in local news and public interest programming and improve their overall service to those
communities.
2.
Accordingly, in today’s Order on Reconsideration, we grant in part and deny in in part, as
set forth herein, various petitions for reconsideration3 of the Second Report and Order. Specifically,
3 Petition of Connoisseur Media for Reconsideration of the
2010/2014 Quadrennial Review Second Report and Order, MB
Docket Nos. 14-50 et al. (filed Dec. 1, 2016) (Connoisseur Petition); Petition of the National Association of Broadcasters for
Reconsideration of the 2010/2014 Quadrennial Review Second
Report and Order, MB Docket Nos. 14-50 et al. (filed Dec. 1,
2016) (NAB Petition); Petition of Nexstar Broadcasting, Inc. for
Reconsideration of the 2010/2014 Quadrennial Review Second
Report and Order, MB Docket Nos. 14-50 et al. (filed Dec. 1,
2016) (Nexstar Petition). In addition, various parties filed ex
parte comments—well after the filing deadline for petitions for
reconsideration—urging the Commission to address other aspects of the Second Report and Order that were not raised in
any petition for reconsideration. See, e.g., Letter from Barry A.
Friedman, Thompson Hine, Counsel for Dick Broadcasting
Company, Inc. of Tennessee, to Marlene H. Dortch, Secretary,
FCC, MB Docket Nos. 14-50, 09-182, and 07-294, at 2 (filed
Mar. 24, 2017) (Dicks Broadcasting Mar. 24, 2017 Ex Parte)
(stating that “continued applicability of the [AM/FM] subcaps
warrants a hard look from the Commission”). In effect, these ex
parte filings are untimely petitions for reconsideration, which
we lack discretion to consider absent extraordinary circumstances not present here. See 47 U.S.C. § 405(a) (“A petition for
reconsideration must be filed within thirty days from the date
upon which public notice is given of the order, decision, report,
or action complained of.”); Reuters, Ltd. v. FCC, 781 F.2d 946
(D.C. Cir. 1986) (express statutory limitations barred the Com-
69a
we (1) eliminate the Newspaper/Broadcast CrossOwnership Rule; (2) eliminate the Radio/Television
Cross-Ownership Rule; (3) revise the Local Television Ownership Rule to eliminate the Eight-Voices
Test and to modify the Top-Four Prohibition to better
reflect the competitive conditions in local markets;
(4) decline to modify the market definitions relied on
in the Local Radio Ownership Rule, but provide a
presumption for certain embedded market transactions; (5) eliminate the attribution rule for television
joint sales agreements (JSAs); and (6) retain the disclosure requirement for shared service agreements
(SSAs) involving commercial television stations.
3.
In addition, we find that the present
record supports adoption of an incubator program to
promote ownership diversity; however, the structure
and implementation of such a program requires further exploration. Accordingly, in the accompanying
Notice of Proposed Rulemaking (NPRM), we seek
comment on structuring our incubator program to
help facilitate new entry into the broadcast services.
II.
BACKGROUND
4.
Congress requires the Commission to
review these rules every four years to determine
mission from acting on a petition for reconsideration that was
filed after the due date); Adelphia Commc’ns Corp., 12 FCC Rcd
10759 (1997) (“The Commission may entertain petitions for reconsideration filed beyond the statutory deadline only where
‘extraordinary circumstances indicate that justice would thus
be served.’”) (citing Gardner v. FCC, 530 F.2d 1086, 1091 (D.C.
Cir. 1976)). Accordingly, we limit our action today to those issues properly raised in timely petitions for reconsideration.
70a
whether they “are necessary in the public interest as
the result of competition” and to “repeal or modify
any regulation [the Commission] determines to be no
longer in the public interest.”4 The history of this
review proceeding is long and well documented and
need not be repeated in detail here.5 In relevant
part, on August 10, 2016, the Commission adopted
the Second Report and Order (released on August 25,
2016) to resolve both the 2010 and 2014 quadrennial
review proceedings, as well as to address various issues related to the attribution of television JSAs, diversity initiatives, and SSAs. Then-Commissioner
Pai and Commissioner O’Rielly dissented from that
order.
5.
The Second Report and Order largely
retained the existing broadcast ownership rules, reinstated the previously vacated Television JSA Attribution Rule, and adopted a definition of SSAs and
a disclosure requirement for SSAs involving commercial television stations. The Commission reinstated the revenue-based eligible entity standard, as
well as associated measures, to help promote small
4 Telecommunications Act of 1996, Pub. L. No. 104-104, §
202(h), 110 Stat. 56, 111-12 (1996) (1996 Act); Consolidated Appropriations Act, 2004, Pub. L. No. 108-199, § 629, 118 Stat. 3,
99-100 (2004) (Appropriations Act) (amending Sections 202(c)
and 202(h) of the 1996 Act). In 2004, Congress revised the
then-biennial review requirement to require such reviews
quadrennially. See Appropriations Act § 629, 118 Stat. at 100.
5 The Second Report and Order provides a detailed accounting of the history of this proceeding, which we incorporate by
reference herein. Second Report and Order, 31 FCC Rcd at
9866, paras. 7-15.
71a
business participation in the broadcast industry.
However, the Commission determined that it could
not meet the demanding legal standards the courts
have said must be met before the Government may
implement preferences based on race or gender. Finally, the Commission committed to explore various
diversity-related proposals in the record, while declining to adopt other proposals, including an incubator program.
6.
Several parties seek reconsideration of
various aspects of the Second Report and Order. The
National Association of Broadcasters (NAB) petitions
the Commission to reconsider its decisions regarding
the Local Television Ownership Rule, television JSA
attribution,
SSA
disclosure,
the
Newspaper/Broadcast Cross-Ownership Rule, the Radio/Television Cross-Ownership Rule, and the rejection of NAB’s proposal to create an incubator program to encourage diversity.6 Nexstar Broadcasting,
6 NAB Petition at i-v. On January 24, 2017, UCC et al. filed
a motion to strike and dismiss the NAB Petition on the grounds
that the petition “improperly evades the strict 25-page limit on
reconsideration petitions by using a prohibited, undersized font
for footnotes and inserting a substantial portion of its argument
into those footnotes” in violation of 47 CFR § 1.49(a). Motion of
United Church of Christ et al. to Strike and Dismiss Petition of
the National Association of Broadcasters for Reconsideration of
the 2010/2014 Quadrennial Review Second Report and Order,
MB Docket Nos. 14-50 et al., at 2 (filed Jan. 24, 2017) (UCC et
al. Motion to Strike and Dismiss). The motion also alleges that
NAB’s summary was “well over twice the permissible length,
and improperly contains additional arguments” in violation of
47 CFR § 1.49(c). Id. In reply, NAB states that it did not intend to evade any Commission rules and offers to refile if the
72a
Inc. (Nexstar) also challenges the Local Television
Ownership Rule and the attribution of television
JSAs,7 while Connoisseur Media LLC (Connoisseur)
challenges an aspect of the Local Radio Ownership
Rule related to embedded markets.8 Oppositions to
the reconsideration petitions were filed by the American Cable Association (ACA), opposing reconsideration of the Local Television Ownership Rule and television JSA attribution,9 and UCC et al., opposing
reconsideration of the Local Television Ownership
Rule, television JSA attribution, the NewspaCommission is concerned about UCC et al.’s allegations. Reply
of the National Association of Broadcasters to Oppositions of
American Cable Association and United Church of Christ et al.
to Petition of the National Association of Broadcasters for Reconsideration of the 2010/2014 Quadrennial Review Second Report and Order, MB Docket Nos. 14-50 et al., at 2, n.4 (filed
Feb. 3, 2017) (NAB Reply to Oppositions). In addition, NAB
cites precedent that the Commission has considered previously
the merits of an application for review well in excess of the 25page limit and notes that both UCC et al. and ACA have pleadings in the proceeding that violate 47 CFR § 1.49 but have been
considered on the merits by the Commission. Id. We deny UCC
et al.’s motion. We find that, to the extent that NAB’s pleading
does not precisely conform to 47 CFR § 1.49, no party has been
prejudiced, and the public interest is best served by considering
NAB’s arguments. We remind parties, however, to be mindful
of the requirements of Section 1.49. See 47 CFR § 1.49.
7 Nexstar Petition at 4.
8 Connoisseur Petition at 1-2.
9 Opposition of American Cable Association to Petitions of
National Association of Broadcasters and Nexstar Broadcasting, Inc. for Reconsideration of the 2010/2014 Quadrennial Review Second Report and Order, MB Docket Nos. 14-50 et al., at
1-2 (filed Jan. 24, 2017) (ACA Opposition).
73a
per/Broadcast Cross-Ownership Rule, the Radio/Television Cross-Ownership Rule, and SSA disclosure.10 Subsequently, NAB, Nexstar, and Sinclair
Broadcast Group, Inc. (Sinclair) filed replies to the
oppositions.11
10 Opposition of UCC et al. to Petitions for Reconsideration of
National Association of Broadcasters and Nexstar Broadcasting, Inc. of the 2010/2014 Quadrennial Review Second Report
and Order, MB Docket Nos. 14-50 et al., at ii-iii (filed Jan. 24,
2017) (UCC et al. Opposition).
11 NAB Reply to Oppositions; Reply of Nexstar Broadcasting,
Inc. to Oppositions of American Cable Association and UCC et
al. to Petition of National Association of Broadcasters for Reconsideration of the 2010/2014 Quadrennial Review Second Report and Order, MB Docket Nos. 14-50 et al. (filed Feb. 3, 2017)
(Nexstar Reply to Oppositions); Reply of Sinclair Broadcast
Group, Inc. to Oppositions of American Cable Association and
UCC et al. to Petitions of National Association of Broadcasters
and Nexstar Broadcasting, Inc. for Reconsideration of the
2010/2014 Quadrennial Review Second Report and Order, MB
Docket Nos. 14-50 et al. (filed Feb. 3, 2017) (Sinclair Reply to
Oppositions). In addition, various parties filed comments in
support of reconsideration of certain issues. See Reply of Cox
Media Group, LLC in Support of Petition of National Association of Broadcasters for Reconsideration of the 2010/2014
Quadrennial Review Second Report and Order, MB Docket Nos.
14-50 et al., at 1 (filed Jan. 24, 2017) (Cox Reconsideration
Comments) (supporting NAB Petition and seeking repeal of the
Newspaper/Broadcast Cross-Ownership Rule); Reply of News
Media Alliance in Support of Petition of National Association of
Broadcasters for Reconsideration of the 2010/2014 Quadrennial
Review Second Report and Order, MB Docket Nos. 14-50 et al.,
at 1 (filed Jan. 24, 2017) (NMA Reconsideration Comments)
(supporting NAB Petition and seeking repeal of the Newspaper/Broadcast Cross-Ownership Rule); Reply Comments of
Bonneville International Corporation and Scranton Times, L.P.
in Support of Petition of National Association of Broadcasters
74a
7.
In addition, multiple parties sought judicial review of the Second Report and Order in the
D.C. Circuit and the Third Circuit. The D.C. Circuit
was selected initially as the venue for the case
through the judicial lottery, though the case has
since been transferred to the Third Circuit.12 Prometheus Radio Project (Prometheus) challenges various diversity-related decisions, certain media ownership rules, and the decision not to attribute SSAs.13
The Multicultural Media, Telecom and Internet
Council (MMTC) and the National Association of
Black Owned Broadcasters (NABOB) jointly challenge the Commission’s decision not to apply the cable procurement rule to all communications secfor Reconsideration of the 2010/2014 Quadrennial Review Second Report and Order, MB Docket Nos. 14-50 et al., at 1-2 (filed
Feb. 3, 2017) (Bonneville/Scranton Reconsideration Reply
Comments) (supporting the NAB Petition, in particular elimination of the newspaper/radio cross-ownership restriction, although also supporting the elimination of the Newspaper/Broadcast Cross-Ownership Rule in its entirety); Reply
Comments of News Media Alliance in Support of Petition of National Association of Broadcasters for Reconsideration of the
2010/2014 Quadrennial Review Second Report and Order, MB
Docket Nos. 14-50 et al., at 1 (filed Feb. 3, 2017) (NMA Reconsideration Reply Comments) (supporting the NAB Petition and
asserting that the UCC et al. Opposition provides “no valid reason for the Commission to refrain from reconsidering its decision to maintain the Newspaper/Broadcast Cross-Ownership
Rule”).
12 Order, Prometheus Radio Project et al. v. FCC, No. 17-1107,
Document No. 003112514755 (3rd Cir. Jan. 18, 2017).
13 Petition for Review of Prometheus Radio Project and Media
Mobilizing Project, Prometheus Radio Project et al. v. FCC, No.
16-4046, Document No. 003112457854 (3rd Cir. Nov. 3, 2016).
75a
tors.14 Finally, the News Media Alliance (NMA),
Bonneville International Corporation (Bonneville),
and The Scranton Time, L.P. (Scranton) challenge
the Newspaper/Broadcast Cross-Ownership Rule
adopted in the Second Report and Order.15 NAB initially sought judicial review, but withdrew its petition for review after filing a petition for reconsideration with the Commission,16 though NAB has re-
14 Petition for Review of Multicultural Media, Telecom and
Internet Council and the National Association of Black Owned
Broadcasters, Multicultural Media, Telecom and Internet Council et al. v. FCC, No. 16-1398, Document No. 1646418 (DC Cir.
Nov. 15, 2016).
15 Petition for Review of News Media Alliance, News Media
Alliance v. FCC, No. 16-1395, Document No. 1646214 (D.C. Cir.
Nov. 14, 2016); Petition for Review of Bonneville International
Corporation, Bonneville Intl. Corp. v. FCC, No. 16-1452, Document No. 1653313 (D.C. Cir. Dec. 28, 2016); Petition for Review
of The Scranton Times, L.P., The Scranton Times, L.P. v FCC,
No. 16-451, Document No. 1653302 (D.C. Cir. Dec. 28, 2016).
On September 7, 2016, the Newspaper Association of America
changed its name to the News Media Alliance (NMA). Press
Release, News Media Alliance, Newspaper Association of America Changes Name to News Media Alliance (Sept. 7, 2016),
https://www.newsmediaalliance.org/naa-name-change-newsmedia-alliance/. To avoid confusion, we will use NMA when
referring to any filings by this organization, even if they were
made before the name change.
16 Unopposed Motion to Voluntarily Dismiss Appeal of National Association of Broadcasters, National Association of
Broadcasters v. FCC, No. 16-1394, Document No. 1649059 (D.C.
Cir. Dec. 2, 2016).
76a
quested intervenor status with the court.17 No briefing schedule has been set and the Commission has
asked the court to hold the proceeding in abeyance
pending potential action on the Petitions for Reconsideration. The court has not yet made a decision on
this issue.
III.
MEDIA OWNERSHIP RULES
A.
Newspaper/Broadcast
Ownership Rule
1.
Cross-
Introduction
8.
Upon reconsideration, we repeal the
Newspaper/Broadcast Cross-Ownership (NBCO)
Rule in its entirety.18 For more than forty years, the
NBCO Rule has prohibited common ownership of a
daily print newspaper and a full-power broadcast
station (AM, FM, or TV) if the station’s service contour encompasses the newspaper’s community of
publication.19 After reviewing the record from the
17 Motion to Intervene of National Association of Broadcasters, Prometheus Radio Project et al. v. FCC, No. 16-1403, Document No. 1649063 (D.C. Cir. Dec. 2, 2016).
18 The NBCO Rule adopted in the Second Report and Order is
currently on appeal to the Third Circuit. See supra para. 7.
19 See Amendment of Sections 73.34, 73.240, and 73.636 of the
Commission’s Rules Relating to Multiple Ownership of Standard, FM, and Television Broadcast Stations, Second Report and
Order, 50 FCC 2d 1046, 1074-78, 1099-1106, paras. 99-107,
App. F (1975) (1975 Second Report and Order). The Commission attempted to modify the rule in its 2002 and 2006 ownership reviews, but those modifications never became effective.
Thus, the rule in effect before the Second Report and Order was
adopted in 2016 was the same as it existed in 1975. Specifical-
77a
2010 and 2014 ownership reviews, and the issues
raised on reconsideration, we find that the Commission failed to give adequate consideration to the significant record evidence demonstrating that the media marketplace has changed significantly. The
Commission’s prior reasoning reflected a time long
past when consumers had access to only a few
sources of news and information in the local market,
including significantly fewer broadcast outlets. Our
decision to repeal the rule means that all newspapers
(print or digital) now will be allowed to combine with
television and radio stations within the same local
market, subject to the remaining broadcast ownership rules and any other applicable laws, including
antitrust laws.
9.
The Commission adopted the NBCO
Rule in 1975 primarily to promote viewpoint diversity, observing that “it is essential to a democracy that
its electorate be informed and have access to divergent viewpoints on controversial issues.”20 In the
ly, the rule prohibited the licensing of an AM, FM, or TV broadcast station to a party (including all parties under common control) that directly or indirectly owns, operates, or controls a daily newspaper, if the entire community in which the newspaper
is published would be encompassed within the service contour
of the station, namely: (1) the predicted or measured 2 mV/m
contour of an AM station, computed in accordance with Section
73.183 or Section 73.186; (2) the predicted 1 mV/m contour for
an FM station, computed in accordance with Section 73.313; or
(3) the Grade A contour of a TV station, computed in accordance
with Section 73.684. See 47 CFR § 73.3555(d) (2002).
20 See 1975 Second Report and Order, 50 FCC 2d at 1074, para. 99 (also taking competition into account as a correlative
goal).
78a
past, the Commission maintained that requiring
separate ownership of local broadcasters and newspapers served the rule’s purpose because broadcast
stations and local newspapers generally were successful enterprises providing strong local voices in a
marketplace containing a very limited number of
speakers. We find upon further review, however,
that prohibiting newspaper/broadcast combinations
is no longer necessary to serve the Commission’s goal
of promoting viewpoint diversity in light of the multiplicity of sources of news and information in the
current media marketplace and the diminished voice
of daily print newspapers. Whatever the limited
benefits for viewpoint diversity of retaining the rule,
in today’s competitive media environment, they are
outweighed by the costs of preventing traditional
news providers from pursuing cross-ownership investment opportunities to provide news and information in a manner that is likely to ensure a more
informed electorate. As such, we conclude that the
NBCO Rule no longer serves the public interest and
must be repealed pursuant to Section 202(h).21
10.
The conclusion that the time has come
to eliminate the NBCO Rule is shared by many beyond the Commission. For example, following the
Commission’s ill-advised decision essentially to retain the existing ban in the Second Report and Order, Rep. Greg Walden (R-OR) and Rep. John
Yarmuth (D-KY) introduced legislation, with additional bipartisan cosponsors, to eliminate the NBCO
21 1996 Act § 202(h).
79a
Rule.22 Rep. Walden stated that eliminating the
rule would “provide much needed flexibility to the
many newspapers and broadcasters throughout the
country that provide important local news coverage
and encourage greater investment in original journalism.”23 And according to Rep. Yarmuth, “it is increasingly important that we do all we can to protect
legitimate sources of news.”24 Reed Hundt, a former
Commission Chairman during the Clinton Administration, has endorsed the rule’s repeal in light of
increased access to news and information over the
Internet and the financial support that a broadcaster
could offer to a troubled newspaper.25 There also is
support for eliminating the rule, as discussed below,
22 To Eliminate the Daily Newspaper Cross-Ownership Rule
of the Federal Communications Commission, H.R. 6474, 114th
Cong. (2016); see also Press Release, Energy and Commerce
Committee, Walden and Yarmuth Introduce Bill Eliminating
Disco Era Media Ownership Rules (Dec. 7, 2016) (Walden/Yarmuth
Press
Release),
https://energycommerce.house.gov/news-center/pressreleases/walden-and-yarmuth-introduce-bill-eliminating-discoera-media-ownership. The bill’s cosponsors included Rep. Gene
Green (D-TX), Rep. Bobby Rush (D-IL), Rep. Gus Bilirakis (RFL), Rep. Pete Olson (R-TX), Rep. Brett Guthrie (R-KY), and
Rep. Billy Long (R-MO).
23 Walden/Yarmuth Press Release.
24 Id.
25 Reed Hundt, Opinions, The FCC Should Repeal Its Newspaper-Broadcast Ownership Rule, Washington Post (June 6,
2013), https://www.washingtonpost.com/opinions/the-fcc-shouldrepeal-its-newspaper-broadcast-ownershiprule/2013/06/06/7084e764-cebb-11e2-8845-d970ccb04497
story.html?utm term=.5caff689bc73.
80a
among organizations representing minority-owned
media outlets.26 They assert that the rule is constraining the ability of minority-owned media outlets
to serve their local communities and has outlived its
usefulness. Finally, the Third Circuit in May 2016
noted that among the “costs of delay” in repealing
the rule has been continuance of a blanket ban on
newspaper-broadcast cross-ownership that “the FCC
determined more than a decade ago . . . is no longer
in the public interest”27—a determination that the
Third Circuit had upheld in 2004.28 With this decision, the Commission will finally acknowledge what
is clear to so many—it is time to eliminate the NBCO
Rule.
2.
Background
11.
We incorporate by reference the description of the background of the NBCO Rule in the
26 See Letter from James L. Winston, President, National Association of Black Owned Broadcasters (NABOB), to Hon. Ajit
Pai, Chairman, FCC, MB Docket No. 14-50 et al. (Feb. 24, 2017)
(NABOB Feb. 24, 2017 Ex Parte Letter) (supporting elimination
of the ban on newspaper/radio combinations); Letter from Dr.
Benjamin F. Chavis, Jr., President and CEO, National Newspaper Publishers Association (NNPA), to Marlene H. Dortch,
Secretary, FCC, MB Docket No. 14-50, at 1 (Feb. 13, 2017)
(NNPA Feb. 13, 2017 Ex Parte Letter) (supporting elimination
of the entire NBCO Rule); see also infra paras. 44-45. NABOB’s
ex parte letter did not address newspaper/television combinations.
27 Prometheus Radio Project v. FCC, 824 F.3d 33, 51 (3d Cir.
2016) (Prometheus III).
28 Prometheus Radio Project v. FCC, 373 F.3d 372, 398-400 (3d
Cir. 2004) (Prometheus I).
81a
Second Report and Order and confine our summary
to a brief overview of the rule’s history.29 As we
stated, the Commission’s primary intent in adopting
the rule in 1975 was to preserve and promote a diversity of viewpoints at the local level.30 To that
end, the Commission prohibited cross-ownership of
what it determined to be the predominant providers
of local news within a market—daily newspapers and
television and radio broadcast stations—although it
acknowledged that radio stations generally play a
smaller role than newspapers and television stations
in the dissemination of local news.31 The Supreme
Court upheld the NBCO Rule in 1978 and found that
the Commission reasonably relied on separation of
ownership as a means to promote viewpoint diversity.32 Viewpoint diversity has remained the principal
basis for newspaper/broadcast cross-ownership restrictions for over forty years and currently provides
the sole support for the rule given the Commission’s
conclusions since 2003 that the rule is not necessary
29 Second Report and Order, 31 FCC Rcd at 9914-17, paras.
135-40.
30 1975 Second Report and Order, 50 FCC 2d at 1048-49,
1074, 1075, 1078-81, paras. 9-11, 99, 101, 110-12 (also taking
competition into consideration). In evaluating viewpoint diversity, the Commission has focused on local news providers, as
opposed to those that offer mostly regional or national news.
See id. at 1080-81, para. 112; see also Second Report and Order,
31 FCC Rcd at 9914, para. 135 & n.338.
31 See 1975 Second Report and Order, 50 FCC 2d at 1075,
1080-83, paras. 101, 112-15.
32 FCC v. Nat’l Citizens Comm. for Broad., 436 U.S. 775, 796
(1978) (NCCB).
82a
to promote the goals of competition or localism, and
may even hinder localism.33 The rule’s reliance on
viewpoint diversity is significant in light of the Supreme Court’s recognition on review of this rule that
diversity “has not been the sole consideration
thought relevant to the public interest” and that the
Commission’s “other, and sometimes conflicting, goal
has been to ensure ‘the best practicable service to the
public.’”34
12.
Despite the importance of the rule’s
purpose to promote viewpoint diversity, the Commission recognized from the outset that there may be
circumstances where the cross-ownership restriction
should not apply. When it adopted the initial NBCO
Rule in 1975, the Commission applied the rule prospectively and limited divestiture of existing newspaper/broadcast combinations to “only the most
33 See 2002 Biennial Regulatory Review - Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted
Pursuant to Section 202 of the Telecommunications Act of 1996,
Report and Order and Notice of Proposed Rulemaking, 18 FCC
Rcd 13620, 13748-67, paras. 330-69 (2003) (2002 Biennial Review Order); 2006 Quadrennial Regulatory Review – Review of
the Commission’s Broadcast Ownership Rules and Other Rules
Adopted Pursuant to Section 202 of the Telecommunications Act
of 1996 et al., Report and Order and Order on Reconsideration,
23 FCC Rcd 2010, 2021-22, 2038-39, paras. 18-19, 46-49 (2008)
(2006 Quadrennial Review Order); Second Report and Order, 31
FCC Rcd at 9912-13, 9917, 9928, 9930, paras. 129-30, 142, 162,
166-67.
34 NCCB, 436 U.S. at 782; see also id. at 807, 809-14 (citing a
Commission study showing that cross-owned stations had “statistically significant superiority” in terms of percentage of time
devoted to several categories of local programming).
83a
egregious cases.”35 In addition, it contemplated various situations potentially warranting a waiver of the
divestiture requirement.36 In its 2002 and 2006
ownership review proceedings, the Commission retained cross-ownership restrictions generally, but attempted to relax the NBCO rule, concluding that application of an absolute ban was overly restrictive.37
The Third Circuit deemed that conclusion reasonable
but found fault in both instances with the way the
Commission executed its decisions to revise the rule,
and thus, the 1975 ban remained in effect.38 In
35 1975 Second Report and Order, 50 FCC 2d at 1076, 108081, paras. 103, 112.
36 Id. at 1084-85, paras. 117-19 (finding that a waiver of the
divestiture requirement might be appropriate where: (1) there
was an inability to dispose of an interest to conform to the
rules; (2) the only possible sale was at an artificially depressed
price; (3) separate ownership of the newspaper and station
could not be supported in the locality; or (4) the purposes of the
rule would be disserved by divestiture).
37 2002 Biennial Review Order, 18 FCC Rcd at 13760, 13790,
paras. 355, 432 (replacing the NBCO Rule with a set of crossmedia limits); 2006 Quadrennial Review Order, 23 FCC Rcd at
2021-23, paras. 18-20 (adopting a waiver standard that granted
a favorable presumption to proposed newspaper/broadcast mergers meeting certain criteria).
38 Prometheus I, 373 F.3d at 399-413 (remanding the 2002
cross-media limits due to certain deficiencies in the Commission’s analysis); Prometheus Radio Project v. FCC, 652 F.3d
431, 445-53 (3d Cir. 2011) (Prometheus II) (vacating and remanding the 2006 modifications to the NBCO Rule after finding
that the Commission failed to comply with public notice and
comment requirements); see also Prometheus III, 824 F.3d at
51-52 (noting court’s agreement in Prometheus I that a complete ban no longer serves the public interest).
84a
2016, the Third Circuit observed in Prometheus III
that the ban’s continued operation had imposed “significant expense” on parties that otherwise might be
permitted “to engage in profitable combinations.”39
13.
In the Second Report and Order, the
Commission affirmed its previous findings that an
absolute ban was overly restrictive, but concluded
that some newspaper/broadcast cross-ownership restrictions continued to be necessary to promote viewpoint diversity.40 It retained the general prohibition
on common ownership of a broadcast station and a
daily print newspaper in the same local market, but
adopted minor changes to the rule to accomplish
what the Commission called a “modest loosening” of
the absolute ban. The Commission: (1) modified the
geographic scope of the rule to update its analog parameters and to reflect more accurately the markets
that newspapers and broadcasters actually serve;41
(2) adopted an explicit exception for failed and failing
39 Prometheus III, 824 F.3d at 51-52.
40 Second Report and Order, 31 FCC Rcd at 9913, para. 130.
41 Id. at 9930-33, paras. 168-71 (limiting the rule’s prohibition
to newspaper/television combinations within the same Nielsen
DMA and, in areas where Nielsen has designated an Audio
Metro market, to newspaper/radio combinations within the
same Nielsen Audio Metro market). Regarding the contour
trigger requirement for newspaper/television combinations, the
Commission updated the geographic scope of the restriction by
replacing its reliance on a television station’s obsolete Grade A
analog contour with the station’s digital principal community
contour, as defined in Section 73.625 of the Commission’s rules.
See 47 CFR § 73.625.
85a
broadcast stations and newspapers;42 and (3) created
a case-by-case waiver standard whereby the Commission would grant relief from the rule if the applicants showed that a proposed merger would not unduly harm viewpoint diversity in the market.43 The
Commission declined to eliminate the newspaper/radio cross-ownership restriction from the NBCO
Rule after finding that, despite its earlier tentative
conclusion that radio stations typically are not primary outlets for local news, radio stations nonetheless provide a meaningful amount of local news and
information such that lifting the restriction could
harm viewpoint diversity.44 In addition, the Commission explained that, although the rule may benefit ownership diversity incidentally, the agency’s
purpose in retaining the rule was not to promote minority or female ownership.45
42 Second Report and Order, 31 FCC Rcd at 9933-34, paras.
172-75.
43 Id. at 9934-41, paras. 176-89.
44 Id. at 9921-26, paras. 150-59. But see 2010 Quadrennial
Regulatory Review – Review of the Commission’s Broadcast
Ownership Rules and Other Rules Adopted Pursuant to Section
202 of the Telecommunications Act of 1996 et al., Notice of Proposed Rulemaking, 26 FCC Rcd 17489, 17529-30, para. 112
(2011) (NPRM); 2014 Quadrennial Regulatory Review – Review
of the Commission’s Broadcast Ownership Rules and Other
Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996 et al., Further Notice of Proposed Rulemaking
and Report and Order, 29 FCC Rcd 4371, 4435-36, para. 145
(2014) (FNPRM and Report and Order).
45 Second Report and Order, 31 FCC Rcd at 9944, para. 197.
86a
14.
NAB petitioned the Commission to reconsider its retention of the NBCO Rule.46 NMA,
Cox, Sinclair, and Bonneville/Scranton filed comments and/or reply comments in support of NAB’s
petition.47 UCC et al. filed an opposition to NAB’s
petition, in which they urge the Commission to retain the NBCO Rule adopted in the Second Report
and Order.48
3.
Discussion
15.
We find that the NBCO Rule must be
repealed because it is not necessary to promote the
Commission’s policy goals of viewpoint diversity, localism, and competition, and therefore does not serve
the public interest.49 The parties that support re46 NAB Petition at 14-25; see also NAB Reply to Oppositions
at 5-6.
47 NMA Reconsideration Comments at 1-8; NMA Reconsideration Reply at 1-3; Cox Reconsideration Comments at 1-8; Sinclair Reconsideration Reply at 9-10; Bonneville/Scranton Reconsideration Reply at 1-10.
48 UCC et al. Opposition at 6-7.
49 The Commission has consistently concluded that the NBCO
Rule is not necessary to promote competition because broadcasters and newspapers do not compete in the same product
markets. See, e.g., Second Report and Order, 31 FCC Rcd at
9928-29, 9930, paras. 163, 166-67; 2002 Biennial Review Order,
18 FCC Rcd at 13748-53, paras. 331-41. Because we are repealing the NBCO Rule on other grounds, we need not address arguments that the rule should be repealed on competition
grounds. See, e.g., NABOB Feb. 24, 2017 Ex Parte Letter at 2-3;
NNPA Feb. 13, 2017 Ex Parte Letter at 1-2; NMA Mar. 27, 2017
Ex Parte Letter at 1-2; NMA Reconsideration Comments at 2.
Similarly, we need not reach arguments that ownership does
87a
consideration of the NBCO Rule argue that the modifications adopted in the Second Report and Order
were insufficient and that the rule is obsolete and
should be eliminated. We agree. We affirm the
Commission’s longstanding determination that the
rule does not advance localism and competition
goals, and find today that it is no longer necessary to
promote viewpoint diversity, the rule’s only remaining policy justification. Although elimination of the
rule could theoretically diminish viewpoint diversity
to a limited extent due to the loss of an independent
voice as a result of any newspaper/broadcast combination, we find that this impact will be mitigated by
the multiplicity of alternative sources of local news
and information available in the marketplace and
the overall financial decline of newspapers. In addition, we find that this concern is outweighed by the
countervailing benefits to consumers that can result
from newspaper/broadcast combinations. Finally,
based on our review of the record, we find that eliminot influence viewpoint. See Second Report and Order, 31 FCC
Rcd at 9917-18, paras. 142-44. Views on that issue diverge
among interested parties. See, e.g., NAB Petition at 14-15;
UCC et al. Opposition at 6; see also Cox Reconsideration Comments at 6-7 (asserting that consumer demand, not ownership,
drives viewpoint); NMA Reconsideration Comments at 6 (arguing that cross-ownership does not result in a single viewpoint).
But see Prometheus I, 373 F.3d at 400-01 (finding that the possibility of a connection between ownership and viewpoint is not
disproved by evidence that a connection is not always present).
However, we need not resolve the issue here because we are
eliminating the rule on the ground that, even if ownership
might influence viewpoint in certain circumstances, the NBCO
Rule is not necessary to foster viewpoint diversity (nor to promote localism or competition).
88a
nating the rule will have no material effect on minority and female broadcast ownership. Accordingly, we
grant NAB’s request that we eliminate the NBCO
Rule.
a.
The Marketplace Has
Changed Dramatically
16.
On reconsideration, we find that the
Commission’s decision to retain the NBCO Rule
failed to acknowledge the current realities of the media marketplace. In 1975, the broadcast industry
was still relatively young, but it had found its footing, owing in part to the role that newspaper/broadcast cross-ownership had played in its success.50 Supporters of common ownership claimed
that “joint ownership of newspapers and broadcast
stations made possible the early development of FM
and TV service even though these pioneering stations often had to be operated at a loss.”51 In adopting the cross-ownership rule, the Commission
50 See 1975 Second Report and Order, 50 FCC 2d at 1064,
1074-75, paras. 62, 100. In the 2006 Quadrennial Review Order, the Commission stated that “[i]n the early days of broadcasting, when the success of the then-new medium was not assured, the Commission had actively encouraged newspaper
owners to apply for newly available licenses in their local communities . . . hop[ing] that such established local media entities
would bring both expertise and financial support to the development of broadcasting as a viable mass medium.” 2006 Quadrennial Review Order, 23 FCC Rcd at 2023, para. 22 (citing
1975 Second Report and Order, 50 FCC 2d at 1066, 1074-75,
paras. 70, 100).
51 1975 Second Report and Order, 50 FCC 2d at 1064, para.
62.
89a
acknowledged the pioneering role of newspapers in
the broadcast medium but found that common ownership with newspapers was no longer a critical factor for broadcaster success.52 The Commission observed that, on the whole, the broadcast industry
had “matured” to the point that new entrants could
be expected to have an interest in pursuing station
ownership.53 It concluded that “the special reason
for encouraging newspaper ownership, even at the
cost of a lessened diversity, [was] no longer generally
operative in the way it once was.”54 The Commission
understood its obligation “to give recognition to the
changes which have taken place and see to it that its
rules adequately reflect the situation as it is, not
was.”55
17.
That same obligation now requires us to
eliminate the NBCO Rule. Not only have the means
of accessing content changed dramatically, but the
media marketplace has seen an explosion in the
number and variety of sources of local news and information since the Commission adopted the NBCO
Rule in 1975. Opponents of the rule point to this increase and argue that the NBCO Rule has become
obsolete as a result.56
52 Id. at 1074-75, para. 100.
53 Id.
54 Id.
55 Id.
56 See, e.g., NAB Petition at 16-21; Cox Reconsideration Comments at 7; Bonneville/Scranton Reconsideration Reply at 8-10;
Sinclair Reconsideration Reply at 9-10; NMA Reconsideration
90a
18.
In particular, Bonneville/Scranton provided evidence in the record demonstrating the substantial increase in the number of broadcast sources
(AM, FM, TV, LPTV) since the Commission originally contemplated the NBCO Rule.57 The Commission
failed to properly credit this increase in the Second
Report and Order.58 From the 6,197 full-power radio
stations and 851 full-power television stations that
existed in the late 1960s, the Commission’s latest
broadcast totals place the number of full-power radio
stations at 15,512 and full-power television stations
at 1,775.59 Contrary to the Commission’s conclusion
Comments at 2, 6-8; NMA Reconsideration Reply at 2; Letter
from Danielle Coffey, Vice President, Public Policy, NMA, to
Marlene H. Dortch, Secretary, FCC, MB Docket No. 14-50 et al.,
at 1-2 (Mar. 27, 2017) (NMA Mar. 27, 2017 Ex Parte Letter); see
also Letter from Robert M. McDowell and John R. Feore, Counsel to Gray Television, Inc., Cooley LLP, to Marlene H. Dortch,
Secretary, FCC, MB Docket No. 14-50 et al., at 3 (June 28,
2017) (Gray June 28, 2017 Ex Parte Letter). But see UCC et al.
Opposition at 6 (arguing that the Commission repeatedly has
considered and rejected the argument that the rule is unjustified given consumers’ access to a multitude of voices). We note
that the Gray June 28, 2017 Ex Parte Letter addresses issues
that are not properly before us on reconsideration (e.g., modifying the failed or failing waiver standard in the Local Television
Ownership Rule). As discussed above in footnote 3, supra, we
decline to reach these issues, but we note that the Commission
will be reviewing all its broadcast ownership rules in the 2018
Quadrennial Review proceeding.
57 Bonneville/Scranton FNPRM Reply at 4 n.7.
58 See Second Report and Order, 31 FCC Rcd at 9921, para.
149.
59 Broadcast Station Totals as of June 30, 2017, Press Release
(MB July 11, 2017) (June 30, 2017 Broadcast Station Totals),
91a
in the Second Report and Order, the fact that the
number of full-power broadcast stations has more
than doubled represents a significant increase that
should be considered when evaluating the continued
necessity of the NBCO Rule.60 In addition, the
Commission should have taken into account the
number of low-power broadcast stations, which, as of
June 2017, includes 417 Class A television stations;
1,968 low-power television (LPTV) stations; and
1,966 low-power FM (LPFM) stations—none of which
services existed when the rule was adopted.61 This
https://apps.fcc.gov/edocs_public/attachmatch/DOC345720A1.pdf; Bonneville/Scranton FNPRM Reply at 4 n.7.
The Commission referenced a total of 757 commercial television
stations when it adopted the NBCO Rule in 1975. 1975 Second
Report and Order, 50 FCC 2d at 1080, para. 112 n.30; see also
2002 Biennial Review Order, 18 FCC Rcd at 13647-67, paras.
86-128 (discussing changes in the media marketplace 19602000); id. at 13656, para. 106 (“There were more than 9,278
radio stations in 1980, and 1,011 broadcast television stations.”). As discussed in greater detail below, the impact of the
incentive auction on the number of full-power broadcast television stations does not appear to be significant at this time. See
infra note 248.
60 See Second Report and Order, 31 FCC Rcd at 9921, para.
149; June 30, 2017 Broadcast Station Totals. We also find that
it was improper for the Commission to dismiss Bonneville/Scranton’s data simply because it represented a nationwide increase which may have been spread unevenly across individual local markets without citing any evidence to support
this notion. See Second Report and Order, 31 FCC Rcd at 9921,
para. 149.
61 June 30, 2017 Broadcast Station Totals. Class A television
stations must broadcast an average of at least three hours per
week of locally produced programming each quarter. 47 CFR §
73.6001(b). Unlike translators, LPTV stations may originate
92a
situation is a stark contrast to the state of affairs in
1975, when the “changed circumstances in the
broadcasting industry” that prompted adoption of the
NBCO Rule included a trend in which “the number
of channels open for new licensing had diminished
substantially.”62
19.
Equally, if not more significantly, NAB
cites evidence of the growing prevalence of independent digital-only news outlets with no print or broadcast affiliation, many with a local or hyperlocal focus.63 Thirteen years ago, the Third Circuit agreed
with the Commission that the record suggested that
“cable and the Internet contribute to viewpoint diversity”; the panel members simply disagreed about
the “degree” and importance of this trend at that
Since then, however, the picture has
time.64
changed significantly. Even the U.S. Supreme Court
recently recognized the importance of the Internet
and social media as sources of news and information
for many Americans.65 As this trend continues to
programming. Id. § 74.701(f). Under the Commission’s LPFM
rules, all applicants must demonstrate a local presence; mutually exclusive applicants receive preference points for established local presence and pledges to originate locally at least
eight hours of programming per day.
Id. §§ 73.853(b),
73.872(b).
62 NCCB, 436 U.S. at 797.
63 NAB Petition at 19-20.
64 Compare Prometheus I, 373 F.3d at 400, with id. at 439,
448, 464-69 (Scirica, Chief Judge, dissenting in part).
65 Packingham v. North Carolina, No. 15–1194, 137 S.Ct.
1730, slip op. at 8 (S.Ct. June 19, 2017) (describing social media
as “for many . . . the principal sources for knowing current
93a
gain momentum and new voices proliferate, the dominance of traditional news outlets diminishes. Although the record contains some evidence that local
television stations and newspapers may still be consumers’ primary sources of local news and information,66 we find that the Commission improperly
discounted the role of non-traditional news outlets,
including Internet and digital-only, in the local media marketplace.
20.
The Commission concluded in the Second Report and Order that online outlets do not
serve as a “substitute” for newspapers and broadcasters providing local news and information.67 As
noted below, this conclusion does not appear to reflect the record evidence as to “how the Internet has
transformed the American people’s consumption of
news and information,”68 the direction of current
trends in this regard,69 and in particular how those
trends have affected younger adults. At a minimum,
events, checking ads for employment, speaking and listening in
the modern public square, and otherwise exploring the vast
realms of human thought and knowledge”).
66 See Second Report and Order, 31 FCC Rcd at 9920-21, paras. 147-48.
67 Id. at 9920, para. 148.
68 Id. at 10049 (Dissenting Statement of then-Commissioner
Pai).
69 In the FNPRM, the Commission acknowledged that “the
extent to which Americans turn to news websites unaffiliated
with traditional media may be increasing.” FNPRM, 29 FCC
Rcd at 4426, para. 130 (citing 2012 Pew Research Center
study).
94a
the record reflects studies that reject the premise
“that people have a primary or single source for most
of their local news and information.” Rather, “the
picture revealed by the data is that of a richer and
more nuanced ecosystem of community news and information than researchers have previously identified,” in which “Americans turn to a wide range of
platforms to get local news and information.”70
Thus, the contributions of such outlets cannot be
dismissed out of hand as the existence of these nontraditional news outlets nevertheless results in
greater access to independent information sources in
local markets. Furthermore, the Commission failed
to acknowledge adequately evidence in the record
demonstrating the emergence of online outlets that
offer local content and have no affiliation with traditional broadcast or print sources.
21.
Numerous studies cited in the record
establish the emergence and growth of alternative
sources of local news and information, including digital-only local news outlets as well as other online
sources of local news and information.71 For exam70 Pew Research Center and Knight Foundation, How People
Learn About Their Local Community 1 (Sept. 26, 2011) (How
People
Learn
About
Their
Local
Community),
http://www.pewinternet.org/2011/09/26/how-people-learn-abouttheir-local-community (cited in NAB FNPRM Comments at 25
& n.83 (cited in NAB Petition at ii & n.4) and Morris FNPRM
Reply at 5).
71 See, e.g., Letter from Erin L. Dozier, Senior Vice President
and Deputy General Counsel, Legal and Regulatory Affairs,
National Association of Broadcasters, to Marlene H. Dortch,
Secretary, FCC, MB Docket Nos. 14-50, 09-182, and 07-294, at
95a
ple, according to a 2014 Pew Research study, out of
438 digital news sites examined, more than half had
a local focus, with the “typical outlet” described as
“focused on coverage of local or even neighborhoodlevel news.”72 Even by 2011, a Pew study confirmed
that while newspapers remain popular sources for
some such information, 69 percent of those surveyed
said that if their local newspaper no longer existed, it
would not have a major impact on their ability to
keep up with information and news about their
2 (filed July 15, 2016) (citing two recent Pew Research Center
studies examining digital local news sites); Letter from Rick
Kaplan, General Counsel and Executive Vice President, Legal
and Regulatory Affairs, National Association of Broadcasters, to
Marlene H. Dortch, Secretary, FCC, MB Docket Nos. 14-50, 09182, and 07-294, Attach. at 6 (filed July 8, 2016) (documenting
several dozen local news sources, including digital-only outlets,
in Washington, D.C.); Tribune 2010 NPRM Comments at 28,
37-38, 47-48, 57, 67 (identifying local independent news websites and other sources in five specific markets). Several studies referenced in the above-referenced filings document the
prevalence of online local news sources in today’s media marketplace. For instance, a 2015 Pew Research Center study—
which looked specifically at news providers in Denver, Colorado, Macon, Georgia, and Sioux City, Iowa—found over 140 news
providers in Denver, including 25 digital-only news outlets (two
of which are affiliated with The Denver Post). Pew Research
Center, Local News in a Digital Age (Mar. 5, 2015),
http://www.journalism.org/2015/03/05/local-news-in-a-digitalage/. Moreover, in a smaller market—Sioux City, Iowa—the
study found nearly as many digital-only news outlets (three) as
local news/talk radio stations (four). Id.
72 Mark Jurkowitz, Small Digital News Sites: Young, Lean,
and Local (Apr. 10, 2014), http://www.pewresearch.org/facttank/2014/04/10/small-digital-news-sites-young-lean-and-local/.
96a
community.73 By 2016, Pew reported that just 20
percent of U.S. adults often get news from print
newspapers, with even steeper declines in particular
demographics—only 5 percent of those aged 18
through 29, and only 10 percent of those aged 30
through 49.74 According to the earlier Pew study, for
the 79 percent of Americans who are online, “the internet is the first or second most important source
for 15 of the 16 local topics examined.”75 Nearly half
of adults (47 percent) use mobile devices to get local
news and information, and for none of Pew’s topics
did more than 6 percent of respondents say they depended on the website of a legacy news organiza-
73 How People Learn About Their Local Community at 1 (cited
in NAB NPRM Comments at 42-43, n.162); see also id. at 4
(“The new data explodes the notion, for instance, that people
have a primary or single source for most of their local news and
information.”).
74 Letter from Rick Kaplan, General Counsel and Executive
Vice President, NAB, to Marlene H. Dortch, Secretary, FCC,
MB Docket No. 14-50 et al., at 1-2 (July 18, 2016) (citing
A. Mitchell, J. Gottfried, M. Barthel and E. Shearer, Pew Research Center, The Modern News Consumer (July 7, 2016)
(Modern News Consumer), http://assets.pewresearch.org/wpconntent/uploads/sites/13/2016/07/07104931/PJ_2016.07.07_Mo
dern-News-Consumer_FINAL.pdf).
75 How People Learn About Their Local Community at 22.
For this survey, the websites of print newspapers and broadcast
television stations were treated as non-Internet sources, i.e.,
respondents who relied on those websites were grouped with
respondents who relied on the print or broadcast source, as the
case may be. Id. at 4.
97a
tion.76 Among adults under age 40, “the web ranks
first or ties for first for 12 of the 16 local topics asked
about.”77 Furthermore, in the Second Report and
Order, the Commission too readily dismissed cable
news programming as primarily targeted to a wide
geographic audience,78 without considering that
most of the major cable operators carry locallyfocused cable news networks in parts of their footprint.79
22.
On reconsideration, we find that the
record clearly demonstrates that the wealth of additional information sources available in the media
marketplace today, apart from traditional newspapers and broadcasters, strongly supports repealing
the NBCO Rule. These dramatic and ongoing changes in the media industry negate concerns that repeal76 Id. at 4, 27. According to Pew, “The websites of newspapers
and TV stations do not score highly as a relied-upon information source on any topics.” Id. at 5.
77 Id. at 22; see also Letter from Rick Kaplan, General Counsel
and Executive Vice President, NAB, to Marlene H. Dortch, Secretary, FCC, MB Docket No. 14-50 et al., at 9-10 (July 7, 2016)
(citing study finding that millennials obtain 74 percent of their
news from online sources).
78 See Second Report and Order, 31 FCC Rcd at 9920, para.
148.
79 See Annual Assessment of the Status of Competition in the
Market for the Delivery of Video Programming, Seventeenth
Report, MB Docket No. 15-158, 31 FCC Rcd 4472, 4579-80, App.
C (MB 2016) (Seventeenth Video Competition Report); see also
Gray June 28, 2017 Ex Parte Letter at 3 (identifying niche cable
news channels as alternative sources of viewpoint diversity in
local markets).
98a
ing the NBCO Rule will harm viewpoint diversity.
We do not perceive a need for the rule in light of the
current trends toward greater consumer reliance on
these alternative sources of local news and information. The Commission’s failure to account properly for the multiplicity of news and information
sources available in the current media marketplace
factored heavily in its unjustified retention of the
NBCO Rule.
b.
The Decline of the
Newspaper
Industry
Has
Diminished
its
Voice
23.
In addition, restrictions on common
ownership of daily print newspapers and broadcast
stations are no longer justified to protect viewpoint
diversity as the strength of daily print newspapers
has declined significantly since 1975. In the Second
Report and Order, the Commission failed to credit
properly the evidence in the record regarding the
challenges facing the newspaper industry and the
resulting effects on the ability of print newspapers to
serve their readers. Rather than merely modifying
the rule’s waiver standard and adjusting its carveouts, the Commission should have acknowledged the
diminution of newspapers’ voices and concluded that
the time has come to eliminate the rule altogether.
24.
There was ample evidence in the Commission’s record in the 2010/2014 review confirming
then-Commissioner Pai’s assessment that the “news-
99a
paper industry is in crisis.”80 Given that the record
is public and extensive, we recount here only a sampling of the comments, which we believe suffices to
depict the overall state of the newspaper industry.
For example, NAB provided evidence that print
newspaper advertising revenue had decreased more
than 50 percent since 2008 and nearly 70 percent
since 2003, newsroom employees were one-third fewer than at their peak in 1989, and only 17 percent of
Americans paid for newspaper subscriptions.81 NAB
stated that digital advertising did not compensate for
the losses in print advertising, as evidenced by the
fact that total newspaper advertising revenues in
2013, including online advertising, were lower than
the total advertising revenues in 1954, after adjust-
80 Second Report and Order, 31 FCC Rcd at 10046 (Dissenting
Statement of then-Commissioner Pai). Then-Commissioner Pai
lamented, among other things, the fact that over 400, or onequarter, of the country’s newspapers had gone out of business
since the NBCO Rule was adopted, including in major cities.
He pointed to other newspapers that no longer publish on a daily basis. He cited newspapers’ declining circulations, decreased
advertising revenues, and shrinking newsrooms. He observed
that broadcasters and newspapers would make particularly
suitable partners given the compatibility of their businesses.
Id. at 10046-48 (Dissenting Statement of then-Commissioner
Pai). Noting newspapers’ “well-documented struggles,” Commissioner O’Rielly agreed that allowing newspaper/broadcast
cross-ownership might provide newspapers with “much-needed
relief in the form of committed and knowledgeable investors.”
Id. at 10059-60 (Dissenting Statement of Commissioner
O’Rielly).
81 NAB FNPRM Comments at 32, 35-37, 71; see also Bonneville/Scranton FNPRM Comments at 8.
100a
ing for inflation.82 Bonneville/Scranton observed
that hundreds of newspapers had closed, with 175
closures between 2007 and 2010, 152 closures in
2012, and 114 closures in 2013.83 NMA reported
that classified advertising, which had accounted for
40 percent of print advertising revenue in 2000,
plummeted by 71 percent between 2000 and 2010.84
As NMA noted, decreased revenue has led to lower
editorial spending, the shedding of thousands of
journalists, and reductions in paper size and the
amount of space in a paper devoted to news.85 NMA
remarked that the Information Needs of Communities report warned that the threat to independent reporting, particularly of local affairs, due to the diminished number of professional journalists was
having a substantial negative civic impact around
the country, particularly in small-to-midsize markets.86
25.
In light of the long decline of the newspaper industry, the loss of an independent daily
newspaper voice in a community will have a much
82 NAB FNPRM Comments at 70-71.
83 Bonneville/Scranton FNPRM Comments at 7-8 & n.26; see
also NMA NPRM Comments at 6-7 (noting that most of the
newspapers that closed served smaller markets).
84 NMA NPRM Comments at 5.
85 Id. at 5-6.
86 NMA NPRM Comments at 7-8 (citing Steve Waldman & the
Working Group on Information Needs of Communities: The
Changing Media Landscape in a Broadband Age at 10, 21, 24,
43-55
(2011),
https://transition.fcc.gov/osp/increport/The_Information_Needs_of_Communities.pdf).
101a
smaller impact on viewpoint diversity than would
have been the case in 1975. In addition, as discussed
below, repeal of the NBCO Rule will permit newspaper/broadcast combinations that can strengthen local
voices and thus enable the combined outlets to better
serve their communities.
c.
The NBCO Rule Prevents
Combinations
that Could Benefit Localism
26.
The Commission repeatedly has recognized that the NBCO Rule does not promote localism
and actually may hinder it by preventing local news
outlets from achieving efficiencies by combining resources needed to gather, report, and disseminate
local news and information.87 The Commission nevertheless retained newspaper/broadcast crossownership restrictions in order to promote its goal of
viewpoint diversity.88 Because the NBCO Rule is no
longer necessary to foster viewpoint diversity, and
the rule can be repealed without harming the public
interest, the potential benefits to localism arising
from common ownership finally can accrue. We expect that eliminating the NBCO Rule will allow both
87 See, e.g., Second Report and Order, 31 FCC Rcd at 9928,
para. 162; 2006 Quadrennial Review Order, 23 FCC Rcd at
2032-38, paras. 39-46; 2002 Biennial Review Order, 18 FCC Rcd
at 13753-60, paras. 342-54.
88 See, e.g., Second Report and Order, 31 FCC Rcd at 9928,
para. 162; 2006 Quadrennial Review Order, 23 FCC Rcd at
2038-39, paras. 47-49; 2002 Biennial Review Order, 18 FCC Rcd
at 13790-91, paras. 432-35.
102a
broadcasters and newspapers to seek out new
sources of investment and operational expertise, increasing the quantity and quality of local news and
information they provide in their local markets.89
27.
There is ample evidence in the record
that eliminating the rule will help facilitate such investment and enable both broadcasters and newspapers to better serve the public. For example, in support of NAB’s petition for reconsideration, Cox asserts that collaboration and cost-sharing between its
television station and its newspaper in Dayton, Ohio,
helped them be the first to report on what became a
89 The argument that newspaper/broadcast cross-ownership
promotes localism has been advanced in several media ownership reviews, and it is put forth again in this reconsideration
proceeding. See, e.g., NAB Petition at 15-16; Cox Reconsideration Comments at 3-5; NMA Reconsideration Comments at 5-6;
NMA Reconsideration Reply Comments at 2; Bonneville/Scranton Reconsideration Reply Comments at 3-4; Letter
from Danielle Coffey, Vice President, Public Policy, NMA, to
Marlene H. Dortch, Secretary, FCC, MB Docket No. 14-50 et al.,
at 1-2 (Feb. 27, 2017) (NMA Feb. 27, 2017 Ex Parte Letter); see
also Letter from Mark J. Prak, Counsel to Independent Broadcasters, Brooks, Pierce, McLendon, Humphrey & Leonard, LLP,
to Marlene H. Dortch, Secretary, FCC, MB Docket No. 14-50 et
al., at 1-2 & Att. (July 12, 2017) (Independent Broadcasters July 12, 2017 Ex Parte Letter) (asserting that the NBCO Rule affirmatively harms local journalism and that owners of local media outlets should be allowed to combine properties in order to
better serve their local markets); Letter from Kurt Wimmer,
Counsel to NMA, Covington & Burling LLP, to Marlene H.
Dortch, Secretary, FCC, MB Docket No. 14-50 et al. (July 25,
2017) (arguing that the NBCO Rule impedes “newspaper owners seeking investment to fund high-quality, responsible journalism”).
103a
national story about the failures of the Veterans
Administration to provide adequate medical services.90 In addition, Cox previously provided several
examples showing how the combination of resources
across its commonly owned newspaper, television,
and radio properties in both Dayton and Atlanta,
Georgia, allowed them to report on breaking news
stories more quickly and accurately and to also provide more thorough coverage of events, such as political elections, that involve numerous interviews and
in-depth issue reporting.91 Cox asserts that
This text is long and has been trimmed here. Open the source document for the complete record.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.