Sisyphus, We’re Still Waiting

What’s happening with the never-ending review of broadcast ownership rules?

A year and a half ago, this blog discussed the “Sisyphean Task” imposed upon the Federal Communications Commission to engage in a never-ending review of its broadcast ownership rules.

If you are wondering what has happened since then, the answer is “very little,” in large part because of the odd lassitude of a federal appeals court. This is going to change in the coming months.

One can ask if it really matters whether one company should be limited in how many radio and TV stations it can own in a community, how many TV stations it can own nationally and whether common ownership of a newspaper and a broadcasting station in the same community should be allowed. However, even as more and more TV and audio content is delivered online, people still devote much more time to over-the-air sources. The critical fact is that over-the-air broadcasting continues to be, by far, the most important and influential source of local news and information.

As the earlier blog post explained, under Section 202(h) of the Telecommunications Act of 1996, the FCC is charged with reviewing its broadcast ownership rules every four years (called a Quadrennial Review) and adjust them as necessary. That may not sound like an impossible task, but the agency has been unwilling and/or unable to do that. The situation has been complicated by seemingly inexplicable inaction by a federal appeals court.

There is a long history of litigation relating to the FCC’s compliance with Section 202(h). The U.S. Court of Appeals for the Third Circuit in Philadelphia has twice (here and here) ruled in favor of public interest groups, led by Prometheus Radio Project (Prometheus) in rejecting portions of the FCC’s earlier decisions on the 2002 and 2006 Quadrennial Reviews. (This writer serves as co-counsel for Prometheus.)

The FCC actually began work on its 2010 Quadrennial Review in 2009. Even so, the Commission didn’t issue a decision in that proceeding until April 2014, at which time it also started its required 2014 Quadrennial Review. However, in large part, what the FCC did for the 2010 review was to not decide things; instead, it determined that it had not received or generated sufficient information to reach conclusions on whether most of its broadcast rules were still, in the terms of the statute, “necessary in the public interest” and therefore asked for more public comment. Of greatest concern to the public interest community was the Commission’s failure to assess the impact of changes in its rules upon minority and female ownership. This shortcoming was especially egregious in light of the fact that the Third Circuit had specifically directed the FCC to make such an assessment in connection with the 2010 Quadrennial Review.

The Commission did crack down on “Joint Sales Agreements,” a mechanism which has been used to evade the ownership rules in which one broadcaster contracts to operate a station owned by another. However, it failed to block the use of a similar evasive scheme referred to as “Shared Services Agreements.” (In December, broadcasters successfully added a rider to the massive appropriations bill to grandfather existing Joint Sales Agreements for 10 years.)

Broadcasters and public interest groups quickly filed appeals of the 2014 decision. Broadcasters filed suit in the U.S. Court of Appeals for the D.C. Circuit, challenging the Commission’s failure to reach a decision on many aspects of the rule. Prometheus asked the U.S. Court of Appeals for the Third Circuit (located in Philadelphia) to require the FCC to conclusively address the minority and female ownership issue and to rule that the FCC should require Shared Services Agreements to be subject to the same limitations as Joint Sales Agreements.

When cases are filed in more than one court, the initial venue is determined by lottery; the D.C. Circuit “won” the lottery. In June 2014, Prometheus asked the D.C. Circuit to send the case to the Third Circuit because that court had heard two earlier Quadrennial Review cases and had directed that new appeals come back to it. However, the D.C. Circuit deferred ruling on that motion and directed the parties to submit briefs.

The case then proceeded in slow motion, followed by a surprise development. For reasons known only to itself, the D.C. Circuit took several months to establish a schedule for filing of briefs and allowed them to be filed at a leisurely pace over several months. The last briefs were not filed until early August 2015. The court also took an usually long time to set December 3 as the date for oral argument. Then, just a week before argument, the court cancelled the argument and granted Prometheus transfer motion (did you forget about that?) and sent the case to the Third Circuit.

The Third Circuit has a track record of moving more quickly than the D.C. Circuit, but as of this date, has not announced plans for the case. While it may ask for additional briefs, it is more likely that it will schedule an oral argument for some time in March or April.

Earlier this month, the FCC did belatedly address one important loose end from the 2010 Quadrennial Review by revising the way it collects ownership data from broadcasters so that it may be better able to assess minority and female ownership in the future.

The bottom line is that the Court of Appeals will soon assess the sufficiency of the FCC’s decision on a proceeding that it was required to undertake in 2010. Meanwhile, the FCC claims that it will take action on the 2014 Quadrennial Review by the end of this year.

If history is a guide, don’t count on it.

By Andrew Jay Schwartzman.