Media Ownership Ruling Aftershocks Expected on Hill, at FCC
Broadcaster joint sales agreements may come up in an appropriations rider this year despite Wednesday's court ruling remanding to the FCC JSA TV limits. House Communications Subcommittee Chairman Greg Walden, R-Ore., sees the 3rd U.S. Circuit Court of Appeals media ownership ruling, which vacated limitations on JSAs due to process concerns over the agency's delaying its quadrennial reviews (see 1605250073) as a bigger impetus for telecom oversight and overhaul, particularly in the form of FCC reauthorization legislation. Attorneys and analysts are divided over how the FCC will respond to the ruling, with some seeing a retooled JSA attribution rule in the offing and others expecting some deregulation.
“I would like to nail that down to make sure there’s no wiggle room at all,” said Senate Appropriations Financial Services Subcommittee Chairman John Boozman, R-Ark., in an interview Thursday. He said he's familiar with the 3rd Circuit ruling and still open to including policy language on JSAs: “I was very excited to see that.”
Boozman’s House counterpart told us Wednesday that such a court ruling likely would end the need for the JSA section now in the House FY 2017 FCC appropriations bill (see 1605250059). The House rider would prevent the FCC from cracking down on JSAs through the transaction review process (see 1605190050). The language builds on a rider that appropriators successfully advanced into law last year that grandfathered JSAs limited by FCC actions, limits nullified by the 3rd Circuit. The JSA grandfathering legislative language applied only to the 2014 regulations, and appropriators could still craft a 2016 rider that would provide JSAs protection from any future FCC limits. "NAB is reviewing our options," a spokesman told us. "Clearly there is bipartisan support in Congress for ensuring that JSAs are protected."
“There’s no accountability,” Walden told reporters Thursday. “And we’re going to figure out whatever tools are within our range of options to try and give that accountability. I think this speaks to a bigger issue, and that is the actual need to have agencies be reauthorized on a regular platform, on a regular timeline, whether that’s one year, five years, I don’t know. But I think it really does speak to trying to rein them in, hold them accountable, and have them do the jobs they’re supposed to do.”
The Senate Commerce Committee approved bipartisan FCC reauthorization legislation last month. Walden’s subcommittee hasn't considered its own reauthorization. Walden told us he’s watching the Senate action and awaits the FCC Reauthorization Act (S-2644) (see 1605030063). The Senate bill awaits hotline filing for unanimous consent consideration in that chamber. Senate Commerce Committee Chairman John Thune, R-S.D., told us in mid-May that staffers are awaiting Congressional Budget Office scoring before moving on that hotline.
“It’s a big task when you entertain reauthorization of the FCC because it opens up the whole Telecom Act,” Walden said of the status in the House. The media ownership ruling “absolutely” makes him more interested in pursuing the reauthorization bill, he said. “And we’ll see what the court does in theory Friday or Tuesday on Title II and all,” Walden said of that part of the Communications Act, citing the legal challenge to the FCC’s net neutrality order in the U.S. Court of Appeals for the D.C. Circuit. “But yeah, I think we have to, that’s always been sort of ‘next phase.’ Trying to take care of some of these individual items, try and do the reform in a bipartisan way but clearly, this circuit court decision is one of the spiciest, hottest decisions I’ve seen in a long time.”
Next FCC Steps
It’s not clear how the FCC will proceed, several attorneys said. They see hints in the 3rd Circuit opinion.
The ruling indicates the court “expected some relaxation of the rules,” said Wilkinson Barker broadcast attorney David Oxenford in a blog post Thursday. The opinion focuses on the newspaper/broadcast cross-ownership rule, which was deemed outdated by the FCC in 1975, Oxenford said. “The Court seemed skeptical that the newspaper-broadcast cross-ownership rule remained in the public interest.” Commissioners Ajit Pai and Mike O'Rielly also focused on that rule during their post-commissioner meeting news conference Wednesday.
The FCC is now obligated to begin collecting data on minority and female broadcast ownership, Cheryl Leanza of the United Church of Christ Communications Office said in a meeting with Media Bureau staff Tuesday. The commission should issue a report on its Form 323 demographic data soon to give the public time to review it in advance of a quadrennial review order, Leanza wrote. “In the past the FCC has circulated the report simultaneously with the circulation of a draft order, which does not permit the public to review the data upon which the FCC is basing its decision.”
The 3rd Circuit said the FCC needs to study the effects of broadcast ownership rules on minority and female ownership, said Georgetown Law Institute for Public Representation Senior Counselor Andrew Schwartzman. Schwartzman represented petitioner Prometheus Radio Project in the 3rd Circuit case. Such studies may not favor removing newspaper-broadcast ownership restrictions, especially when the effect of the incentive auction is factored in, he said. The ruling, in a footnote, ordered the FCC to consider the auction's effects on minority and female ownership, Schwartzman said. Since the FCC may not know the final effects of the auction on broadcasting for quite some time, the ruling should lead it to proceed with caution on eliminating rules, Schwartzman said. The FCC has “perfectly legitimate reasons to keep these rules in place, especially since we don't know what the industry is going to look like on the other side of the incentive auction,” Schwartzman said.
The FCC is unlikely to reverse its stance on JSA rules and media ownership, said Geoffrey Manne, executive director of the International Center for Law and Economics, in an interview. Manne filed an amicus brief in support of petitioner Howard Stirk Holdings, which had sought to have all broadcast ownership rules vacated. Though Manne believes a thorough FCC assessment of ownership restrictions would show such restrictions are no longer in the public interest, Chairman Tom Wheeler is likely to issue an order that will keep the rules in place and reestablish the JSA attribution rule in place, Manne said. Congress intended FCC review of its rules would have the possibility of finding that some are no longer in the public interest, Manne said.
Broadcaster Uncertainty
Whatever the agency does, the 3rd Circuit decision is unlikely to lead to dealmaking by broadcasters in the short term, said BIA/Kelsey Chief Economist Mark Fratrik. Though there's currently nothing stopping broadcasters from making JSA deals above the 15 percent threshold that previously had made them attributable, they're unlikely to do so because of uncertainty, Fratrik said. Though some of that uncertainty stems from the questions about the next FCC move, the incentive auction is also a factor, he said. “Everything is going to be relatively quiet during the next few months” as broadcasters try to determine what opportunities are available in the wake of the auction, Fratrik said.
Walden for years has harped during hearings and in interviews on the FCC need to complete its quadrennial review. He released a lengthy statement blasting the FCC after the ruling Wednesday. Walden’s appetite for oversight also includes ensuring the FCC tackles any comment backlog, he told reporters. “We’ll try and hold them accountable. It’s important the public has a say. We’ll talk to them. We will cajole them. We will try and hold them accountable, if we have to we’ll do that through the appropriations process.” He declined to elaborate, saying: “There are lots of tools at our disposal under the appropriations process."
Thursday, the FCC extended deadlines for comments on its study of Hispanic media ownership by a week at the request of the National Hispanic Media Coalition, a bureau order said. The study is part of the commission's effort to complete the 2014 quadrennial review. Comments on the study were due Thursday, but the deadline was extended to June 2, and for replies to June 9. The Hispanic study (see 1604290019) was released a few weeks after 3rd Circuit oral argument in the media ownership case; the study came up during the hearing.