Dear Expert

Relaxing the Rules

The Supreme Court’s broadcast-ownership decision impacts stations in critical ways, as legal eagle SALLY BUCKMAN explains.

Dear Expert, I heard that a recent U.S. Supreme Court decision resulted in changes to the Federal Communications Commission (FCC) multiple ownership rules. Does that mean that I can buy more FM radio stations? (My company is at the limit for our market.) —Hopeful in Harrisburg

Dear Hopeful,

You are correct that the Supreme Court issued a decision that eliminated and changed some of the FCC’s multiple ownership rules. Unfortunately, the rule limiting how many radio stations a company can own was not changed.

Here’s some background: in April, the Supreme Court issued a unanimous decision that upheld an order the FCC adopted in November 2017. That order eliminated both the newspaper-broadcast and newspaper-radio cross-ownership rules and relaxed the local television ownership rule so that one entity can own two television stations in any sized market if the stations are not both top-four network affiliates.

In the 2017 order, the FCC concluded that dramatic technological advances have transformed how Americans obtain news and entertainment. It concluded that the three rules at issue no longer served the public-interest goals of promoting competition, localism and viewpoint diversity.

The Third Circuit Court of Appeals vacated the FCC’s decision in November 2019. The Third Circuit did not dispute the FCC’s reasoning that the rules at issue no longer promoted competition, localism, and viewpoint diversity. However, the court found that the record did not support the FCC’s conclusion that the changes would have a minimal effect on minority and female ownership. As a result, the cross-ownership rules were reinstated, and other rule changes were eliminated.

In overruling the Third Circuit, the Supreme Court decided that the FCC’s determinations were reasonable and that its decision was consistent with the require-

ments that expert agencies must follow. Given the Supreme Court’s decision, the following multiple ownership rules apply: ■ The local radio ownership rule limits the number of AM and FM stations an entity can own in a local market, depending on market size. For example, in markets where there are 45 radio stations, a company can own no more than eight stations, and only five of them can be in the same service (AM or FM). In markets with 14 or fewer stations, companies can own no more than five stations, with only three in the same frequency band. ■ The local television ownership rule allows companies to own two stations in the same market as long as the outlets are not among the top-four stations, ranked by audience size. ■ The national television ownership cap limits one company from owning TV stations that serve more than 39% of all television households. However, UHF stations receive a 50% discount on the total number of households in a given market. ■ The dual network rule, which essentially prohibits the merger of any two of the big four television networks – ABC, CBS, Fox and NBC.

Don’t give up hope concerning a further relaxation of the local radio ownership limit. The FCC is required to review its multiple ownership rules every four years, and several parties asked the commission to relax the local radio ownership rule as part of its currently pending review—which was initiated in 2018. The same review is also examining a possible change to the local television rule.

Because of the Supreme Court’s decision – and the amount of time that’s elapsed since the 2018 review began – the FCC has asked parties that already made comments to update them. It is most specifically interested in new information regarding the media marketplace.

The FCC’s national television ownership rule is not part of the reviews the FCC is required to conduct every four years. However, possible relaxation of this rule, along with elimination of the UHF discount, is part of a separate proceeding that has been pending since late 2017.

There’s another benefit to the Supreme Court decision: the Third Circuit will no longer automatically retain jurisdiction over challenges to FCC orders in the quadrennial reviews of the multiple ownership rules. That situation had existed for two decades. Now, it will be possible for such challenges to be decided by other courts of appeals.

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Sally Buckman is a manager at the law firm Lerman Senter PLLC. She can be reached at (202) 416-6762 or sbuckman@lermansenter.com.