3rd Circuit Judges Slam FCC Ownership Delays; Remand and/or Mediation Seen

PHILADELPHIA -- The FCC faced skepticism from all three judges considering for a third time public interest group and broadcaster challenges to media ownership rules, as expected (see 1604150059). The FCC lawyer told the jurists that Chairman Tom Wheeler remains committed to his plan to circulate by June 30 an ownership item. Courtroom observers siding with FCC challengers said in follow-up interviews that rather than accepting the commission at its word, the 3rd Circuit may mandate the FCC take action.

In oral argument Tuesday at the 3rd U.S. Circuit Court of Appeals, Judges Thomas Ambro, Julio Fuentes and Anthony Scirica cited scenarios in which the 3rd Circuit may act against the commission, such as by issuing a remand and/or trying to get the parties to enter mediation to find a date by which the commission must act. FCC attorney David Gossett was repeatedly asked how long it would take the agency to act. Asked by Ambro if mediation "to find an agreeable timeline" would work, Georgetown Institute for Public Representation co-Director Angela Campbell, representing Prometheus Radio Project, said yes.

"Why so long?" asked Ambro, who raised among the most questions of the judges. "This is like deja vu all over again. ... All the way back to '04, we said we expect" FCC action, the judge told Gossett. "You seem to be dancing around the question," Fuentes followed up. "What is taking so long?" Gossett replied that June 30 remains the date by which Wheeler plans to circulate an order "addressing all of the issues here." Public interest groups led by Prometheus -- the case is called Prometheus III -- said the FCC erred in its last look at ownership by not extending attribution rules applied to TV joint sales agreements also to shared service agreements.

Gossett acknowledged the commission "arguably" missed the 2010 deadline to complete a quadrennial media ownership review by that year, and said repeatedly the FCC is working hard on the issue. "We're trying," he said. "We're working very hard at it." Asked by Ambro "what would be a reasonable time that you could commit to today" to act, Gossett said it could take in the range of months, saying commissioners would need to vote. "What about somebody to help you along," Ambro said. "You're saying end of the year?" Gossett replied that an order could be adopted by then. The 2010 quadrennial review was put into the 2014 quadrennial review. Congress subsequently changed the JSA attribution action by extending by eight years to 2025 the date by which existing JSAs are grandfathered. NAB is against JSA attribution, and broadcasters Howard Stirk Holdings and Nexstar also have JSA attribution concerns. Attributing JSAs means in some instances broadcasters won't be able to share functions with multiple, separately owned stations in a market.

Likely outcomes include court-ordered or court-encouraged mediation and/or a remand of the rules to the agency, said five people who heard oral argument and who side with public interest challengers to the FCC on its quadrennial media ownership review. The lawyers for broadcasters in the case and the FCC and NAB didn't comment for this report. During oral argument, Fuentes noted that for the commission in the court's Prometheus II ruling, the 3rd Circuit "did not really give them a timeline" to act.

Scirica, who sided with broadcasters and was in the 2-1 minority in that 2011 ruling (see 1107080084), did note a few times that some contend JSAs are beneficial to ownership diversity. Gibson Dunn's Helgi Walker, representing broadcasters on a Communications Act Section 202(h) issue, said the FCC hasn't sufficiently updated ownership rules to account for the competition broadcasters face from other media, including from the Internet. "Many of the rules have remained unchanged for 40 years," like the newspaper/broadcast cross-ownership rule, she said. Walker said her clients don't want mediation, they want the 3rd Circuit to vacate the rules. "You've gone for the home run here" by seeking that rather than other 3rd Circuit actions, Ambro told her. "Why?" She said the commission acted in an arbitrary and capricious way. "To go your way would be like Armageddon," Ambro said. Walker said that wasn't so. Short of vacating the FCC, Walker ran through a list of things the court could require in a remand.

The judges also asked Patrick Philbin, representing broadcasters on the JSA issue, whether there was evidence that type of arrangement had been abused. Scirica said that "was a pretty strong statement you made" that there was no evidence JSAs had been used to evade ownership rules. Philbin replied that his statement was correct and a dissenting vote against the last media ownership order said something similar. Gossett said under questioning by Scirica that the FCC acted to attribute JSA ownership in some circumstances because "creative lawyering" was letting station ownership caps be exceeded.

Those in the courtroom said the judges seemed exasperated with the FCC, in follow-up interviews with those siding with public interest groups. The 3rd Circuit judges may order mediation to come up with dates by when the FCC can act, Campbell told us. Her side also hopes the court will pave the way for a definition such as that for a small, disadvantaged business that could receive ownership-rule leeway in a way that would bolster broadcast-ownership diversity. "Clearly, the court was thinking about relief," said Cheryl Leanza, a public interest lawyer representing the United Church of Christ, which is allied with Prometheus. "They were in the mood."

"The court is dissatisfied with the process here," said Todd O'Boyle, program director for Common Cause's Media and Democracy Reform Initiative, which also is siding with Prometheus. "The FCC couldn't provide any meaningful answers ... for why minority and female ownership has gone unaddressed for so long." Multicultural Media, Telecom and Internet Council General Counsel David Honig, whose group backs Prometheus but thinks some SSAs and JSAs can add to broadcaster diversity, said what he "heard is a court frustrated by delay." The 3rd Circuit may "strongly encourage" mediation, Honig said: "At some point, you have to put your foot down."