Prof. Christopher Terry also guests on this week’s podcast to review the FCC’s recent court loss in detail. -Ed.
“Here we are again.”
That is the opening of the recent decision written by Judge Thomas L. Ambro in the latest judicial review of media ownership rules, in what is now Prometheus Radio Project v. FCC (IV). The FCC is 0-4 in court, in what amounts to another wipeout of the agency’s policies.
This is a process that has been ongoing for 15 years. Following the 1996 Telecommunications Act, the FCC conducted Congressionally-mandated biennial reviews of ownership regulations in 1998 and 2000 without significant action. The agency then suffered its first loss in the Third Circuit Court of Appeals in June of 2004 over the agency’s biennial decision release in June of 2003, something that has now happened three more times since then. This 2017 post gives a neat summary of the Commission’s “legacy of failure” in those first three rounds.
Nothing changed with Tthe election of Donald Trump. In fact,, and the election and the subsequent the promotion of Republican Commissioner Ajit Pai to the head of the FCC also had a trickle-down effect to media ownership policy. In a November 2017 Reconsideration Order, the Commission radically rewrote ownership rules. As I explained at the time,
The changes are substantial and include:
• The elimination of the Newspaper/Broadcast Cross-Ownership Rule
• The elimination of the Radio/Television Cross-Ownership Rule
• A revision to the Local Television Ownership Rule that eliminates the Eight-Voices Test and will incorporate a case-by-case review option in the Top-Four Prohibition.
• The elimination of the attribution rule for television Joint Service Agreements (JSAs)…
Now, put simply, the agency has had what I have coined as the “Legacy of Failure” on media ownership policy for one important reason above all: There is no empirical evidence to support the agency’s decision-making on media ownership…
The changes.. are justified, at least in part, by the failings the FCC has created with previous merger adjudications and ownership policy. The FCC cites, “the decline of radio’s role in providing local news and information,” as a justification for the rule changes it now seeks to make. That decline, in what was once radio’s bread and butter, can be directly tied to the agency’s decision making, the mergers it approved and the rise of radio giants (like Clear Channel, now iHeartRadio) in the early 2000’s.
The November 2017 order, like all of media ownership policy since 2002, returned to the Third Circuit for review over this past summer. Again, it did not go well for agency in oral arguments (as I discussed in episode 199 of the podcast), which previewed the outcome of the case.
But after all that, on September 23, 2019, the Third Circuit sent the FCC packing, again, in what amounts to close to a complete defeat for the agency. Judge Ambro writes,
“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.”
While, the Court suggests the agency has been busy, the Court will also go on to point out it has not been busy resolving the two core issues that the court has ordered the agency to get busy on: providing empirical evidence to support a rational policy decision and second, and coming up with a rational policy that increases ownership by women and minorities.
“We do…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.”
Problematically, the FCC is not embarrassed to admit, this failure is their own, failing to even argue otherwise, as it had at least tried to do in the past:
“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.”
No evidence whatsoever. None. Zip. Zilch, and as a reminder, this has been at the core of FCC ownership decisions since 2002. Not bad for an agency that is staffed largely by economists.
“The only ‘consideration’ the FCC gave to the question of how its rules would affect female ownership was the conclusion there 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.”
Importantly, the Third Circuit is forcing the FCC to recognize the outcomes of ownership policy are not natural effects, but rather the results of choices (bad ones) made by the agency. Judge Ambro’s decision suggests that the FCC has to show its work, and even determine if other choices or approaches might have been better:
“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.”
So, we remain where we have been for over 15 years, with an agency that can’t pass basic stats, nor do what it has been told to do three times in the past. Going 0-4 at the plate is bad by any metric in any sport, and at this point this situation would be comical if the stakes were not so high. The FCC regulates the industry that delivers information, a key component of that thing we like to call democracy. We, regardless of one’s viewpoint or ideology, need this to work. But the Circuit says no, again:
“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 believes 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.”
Stick around. I’ll see you next time, and probably the time after that as well.
Feature image adapted from a photo by Mark Mauno shared on Flickr with a (CC BY-SA 2.0) license.
