Supreme Court to take up FCC ownership rules case

High court agrees to hear longstanding argument

There is a lot at stake with the U.S. Supreme Court now taking up the case of the FCC’s ownership rules dilemma, a battle raging for some 40-plus years.

For one, this case would be the biggest one yet for the media industry as a decision on the FCC ownership rules have the potential to change broadcasting as we know it. And with a 6-3 conservative advantage at the high court with the all-but-certain appointment of Chicago-area Judge Amy Coney Barrett, the changes could hurt localism or in some cases, eliminate it altogether. Recent deregulation has seen a lot of local radio programming vanish, especially with African-American and Latino audiences and replaced by syndicated programming or voice-tracking. 

At issue is the FCC passed new ownership rules in 2017 along a 3-2 party line vote which eliminates the newspaper/cross-ownership rule; makes it easier for companies to buy additional TV stations in the same market; for stations to jointly sell advertising time; and to buy even more radio stations in smaller markets, with one possibly owning all the AM radio stations in a given market.

The cross-ownership rule has been moot for sometime now as most TV-radio-newspaper conglomerates have been broken up. For example, the Tribune Co. (owners of WGN-TV, WGN Radio, the former CLTV, and the Chicago Tribune) was split in 2014 into two separate companies: Tribune Publishing and Tribune Media, the latter being sold last year to Nexstar Broadcasting.

The cross-ownership rule was passed in 1975, but let the Tribune Co. and the Milwaukee Journal (among others) to keep their broadcast properties through a “grandfathered” provision. Other markets who had former TV-radio-newspaper combos (or a variation of one or the other) include Dallas Fort-Worth; Tampa-St. Petersburg; and South Bend, Ind. 

A few months ago, the Third U.S. Circuit Court in Philadelphia threw out the rules, a repeat of what happened when new ownership rules were passed by the commission in 2003, also among party lines. The court ordered the FCC to remake the rules again as the commission “did not adequately consider the effect its sweeping rule changes will have on ownership of broadcast media by women and racial minorities.”

This time however, the FCC – along with the NAB and others, appealed to the high court, saying the new rules would better reflect today’s media landscape.

This is not the first time the high court has taken up a major communications issue. In 2013, the Aereo case (ABC v. Aereo) was taken up by the Supreme Court where they ruled in favor of broadcasters in 2014 who felt the company was violating copyrights by transmitting their signals without permission. In 1984, the Supreme Court ruled 5-4 in the Sony Corp. of America v. Universal City Studios, Inc. case over recording television programs for later viewing as Sony was the manufacturer of the Betamax VCR.  Partisanship was absent in both cases – for example, liberal Justice Thurgood Marshall and conservative Justice William Rehnquist both dissented against Sony (had the ruling gone the other way, we would not have home video, DVRs, or streaming today.)

But this time, the court’s involvement in the ownership rules case have major stakes attached. If the court rules in favor of the FCC and let the new rules stand, major media consolidation could happen unabated, at least until the Justice Department steps in. 

Not surprisingly, conservatives and free market advocates applauded the decision for the Supreme Court to take up the case.

“The FCC’s media ownership limits hark back more than 40 years to a reality long ago upended by marketplace forces. Section 202(h) of the 1996 Act requires the Commission every four years to consider whether its rules ‘are necessary in the public interest as a result of competition,” said Free State Foundation senior fellow Andrew Long, a right-leaning organization. “Over the nearly two decades during which a divided Third Circuit repeatedly has blocked agency efforts to relevel the regulatory playing field, we have witnessed numerous examples of new entrants disrupting the media landscape – and, in the process, chipping away at the relevance of traditional outlets. But in terms of game-changing competitive impact, one need only consider the Internet. Facebook was created in 2004. YouTube in 2005. Twitter in 2006. Over half of U.S. adults today obtain at least some of their news and information from social media, and more identify it as their primary source of political news than either local television stations or newspapers. I therefore welcome the announcement that the Supreme Court will hear the FCC’s appeal.”

Of course, the problem with this statement is news on Facebook and social media in general isn’t exactly trustworthy. 

With the high court likely headed toward a more conservative direction and with the Justice Barrett confirmation hearings set to begin October 12 and seated before the November 3 election, this is the FCC’s best shot to deregulate the industry further as the Third Circuit decision will likely be overturned. However, the high court could pull a surprise like it did with Aereo as even though it sided with the NAB and broadcasters, the outcome wasn’t exactly split among partisan lines (three conservatives justices ruled for Aereo over broadcasters), so this may not be the forgone conclusion many expect.

But with so many available choices to consumers – from streaming and cable on the television side to Sirius/XM, podcasting, and streaming on the radio aside – not to mention tons of websites, those who want to prevent the new FCC rules from taking place face a very big uphill battle.