Federal court strikes down FCC effort to relax media ownership rules

The Third Circuit once again chastises the agency for not considering how local media consolidation will affect women and minorities.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
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The Federal Communications Commission suffered a legal blow as a federal appeals court once again rejected its effort to loosen media ownership rules. 

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The Republican-led Federal Communications Commission hit a roadblock Monday in its effort to deregulate the media industry. A federal appeals court struck down the agency's latest attempt to loosen its media ownership rules, which would have made it easier for big companies to own newspapers and broadcast stations in the same market.

In November 2017, the FCC voted to eliminate rules that had been in place for more than 40 years restricting cross-ownership of a newspaper and TV station in the same major market. The FCC also voted to make it easier for media companies to buy additional TV stations and radio stations in the same market.  

In a 2-1 decision, the Third Circuit Court of Appeals told the FCC that it "did not adequately consider the effect its sweeping rule changes will have on ownership of broadcast media by women and racial minorities." 

This was the fourth time the Third Circuit rejected some or all of the FCC's efforts to deregulate the media ownership rules for failing to study the effect the policy change would have on underserved groups. In Monday's ruling, the judges characterized the FCC's analysis as "so insubstantial that it would receive a failing grade in any introductory statistics class."

FCC Chairman Ajit Pai was critical of the court's decision, stating that the Third Circuit was thwarting the agency's attempts to modernize the rules as Congress had intended. 

"For more than twenty years, Congress has instructed the Federal Communications Commission to review its media ownership regulations and revise or repeal those rules that are no longer necessary," he said in a statement. "But for the last 15 years, a majority of the same Third Circuit panel has taken that authority for themselves, blocking any attempt to modernize these regulations to match the obvious realities of the modern media marketplace."

Pai added that "there is no evidence or reasoning -- newspapers going out of business, broadcast radio struggling, broadcast TV facing stiffer competition than ever -- that will persuade them to change their minds."

The FCC will challenge the decision, Pai said. 

The decision comes as Pai, appointed by President Donald Trump, has aggressively worked to roll back many of the marquee regulations adopted under President Barack Obama's administration. The agency is awaiting another big decision in the DC Circuit Court of Appeals over the dismantling of Obama-era net neutrality rules adopted in 2015. These popular regulations bar internet service providers from blocking or slowing online content or allowing broadband companies to charge internet companies to deliver web content to their customers faster. The FCC voted to get rid of those rules in 2017.

As for the media ownership rules, Democrats and consumer advocates argued the FCC's changes would result in less diversity in local news media, inferior phone and broadband services in some areas, and an ineffective social safety net for poor Americans.  

The court agreed. 

FCC Commissioner Jessica Rosenworcel, a Democrat, said "over my objection, the FCC has been busy dismantling the values embedded in its ownership policies." She added that the "court rightly sent the FCC's handiwork back to the agency because the FCC's analysis was so 'insubstantial.'"

The consumer watchdog group Free Press said that court's decision shows the importance of protecting the public from harmful media consolidation. 

"Congress put broadcast-ownership limits in place for a reason: to promote a diversity of viewpoints among local stations. Jessica J. González, counsel for Free Press, said in a statement. "Media consolidation leaves communities with far less of the local news and information people need to stay informed."

The one judge who dissented, Judge Anthony Scirica, agreed with Pai and the Republicans on the FCC, which argue that media ownership rules are out of date and out of sync with the current media market. 

"Rapid technological change had left the framework regulating media ownership ill-suited to the marketplace's needs," Scirica wrote in his dissent. "The public interest analysis at the heart of the FCC's ownership rules is as dynamic as the media landscape."

The National Association of Broadcasters said it was disappointed in the decision, arguing, as Scirica pointed out in his dissent, that the media marketplace has changed significantly in recent decades with TV broadcasters and newspaper publishers competing with online entities like Facebook and Google. 

"The media marketplace has undergone massive changes over the past few decades, let alone since 2004," Dennis Wharton, a spokesman for the trade group said in a statement. "We strongly encourage the FCC to appeal this misguided decision so that broadcasters can compete on an even playing field with tech giants and pay TV conglomerates."