FCC Draft Ownership Rules Said Likely to Lead Back to 3rd Circuit

FCC draft media ownership rules are likely destined for a fourth go-round at the 3rd U.S. Circuit Court of Appeals, attorneys on the broadcast and public interest sides of the issue told us Tuesday. Industry officials are divided on whether to describe the rules (see 1606270083) as maintaining the status quo or increasing regulation. Lawyers in both camps said they believe there's time to move the FCC in one direction or another through lobbying, since rules are in the circulation phase and both Republican commissioners are expected to oppose them. “I support eliminating the current cross-ownership bans that are keeping broadcasters and newspapers from potentially forming multi-platform entities that could better serve consumer demands,” said Commissioner Mike O'Rielly in a speech that was released shortly before the draft rules were reported to be circulating.

The draft order doesn't appear to address several of the concepts that were the focus of the 3rd Circuit Prometheus III ruling that spurred the FCC to tee up media ownership this month, said Multicultural Media, Telecom and Internet Council Senior Adviser David Honig in an interview. Though the fact sheet issued by the FCC on the draft order says it addresses diversity proposals (see 1606240058) offered by MMTC, it doesn't mention recommending them, which Honig said could mean they aren't included. The “diversity docket” advocated by MMTC was specifically mentioned in the 3rd Circuit ruling. One of those proposals would extend to broadcasting the same diversity rules for procurement that apply to cable companies, which Honig said would be consistent with FCC Chairman Tom Wheeler's technology-neutral approach to regulation.

The draft order doesn't offer any data collection on ownership diversity, which makes future litigation from the public interest side extremely likely, broadcast and public interest officials told us. The FCC didn't comment Tuesday. Its fact sheet said the agency doesn't have the basis to institute rules based on race or gender.

Litigation is likely to come from both sides, Fletcher Heald broadcast attorney Frank Jazzo told us. The court's knockdown of joint sales agreement attribution rules was on procedural grounds, leaving the door open for both the FCC to bring the rules back and for them to be challenged by broadcasters, he said. “The path the Chairman has chosen in proposing new rules is to further regulate rather than deregulate broadcasters, and to do so without gathering any additional record evidence to defend that regulatory initiative,” said Pillsbury Winthrop broadcast lawyer Lauren Lynch Flick in a blog post Tuesday. “This once again places the Commission on the well-trod path of adopting its desired result and leaving the task of defending it in court to a future FCC.” Flick called the draft order an increase in regulation, but other broadcast attorneys characterized them as closer to the status quo, with the changes proposed by the FCC seen as mostly minor.

Lawyers on both sides told us there might be wiggle room on the proposed rules and predicted very active lobbying at the commission in coming weeks. With both Republicans seen likely to vote against the draft order, Commissioners Mignon Clyburn and Jessica Rosenworcel are seen as having possible influence over the final order, attorneys told us. Since diversity is considered particularly important for Clyburn, one broadcast attorney suggested she might be a focus of lobbying efforts on the public interest side. Commissioner Clyburn's office didn't comment. The UHF discount item circulated Tuesday alongside the quadrennial broadcast ownership review item originated during Clyburn's acting chairwomanship and could have been brought forward now at her urging, one attorney suggested.