Broadcasters Push Back on FCC Market Definition in Quadrennial Review Legal Challenge

The FCC violated the Communications Act by not rolling back broadcast ownership rules in the 2018 quadrennial review (QR) order, ignoring the increased competition broadcasters face, said petitioners Zimmer Radio, Nexstar, NAB, Beasley Media and Tri-State Communications in a reply brief filed in docket 24-1480. It was filed in the 8th U.S. Circuit Court of Appeals Tuesday. In addition, all four network affiliate groups and a host of radio companies filed intervenor briefs against the FCC. The Communications Act's provision requiring QRs -- Section 202(h) -- isn't a “check-the-box exercise,” said the petitioner’s brief. “Congress intended it to operate as a mechanism of continuing deregulation,” and the plain text instructs that the FCC “demonstrate affirmatively that its rules remain necessary in light of competition” or “modify or repeal them entirely.”

Broadcasting is unique, the FCC has argued, and thus faces competition primarily from other broadcasters, but this ignores evidence that broadcasting faces competition from digital media, the broadcasters said. The FCC’s market definition is “arbitrary because its ‘uniqueness’ analysis fails to identify any relevant distinctions between broadcast and non-broadcast sources,” the affiliate groups said.

Under the FCC’s argument, unless broadcasters can show that local programming is no longer "the exclusive domain of broadcasters," the agency's definition of competition doesn't need adjusting, said the joint intervenor filing from Connoisseur Media, Eagle Communications and other radio groups. Following that logic would mean the agency could continue evaluating the competition between radio stations while ignoring digital competitors “until the ‘market’ dwindled to just a single radio station,” the radio broadcasters said. “Any plausible, ‘reasonable and reasonably explained’ analysis of competition that is grounded in the evidence before the Commission” would have found that local radio ownership limits “must be relaxed or eliminated.”

The QR order’s extension of rules prohibiting top-four duopolies to low-power TV stations and multicast channels should be rolled back because they regulate the content stations air, said the petitioners. The rule would prevent broadcasters with another top-four station from airing NBC on a multicast stream but not on (non-top-four network) the CW, the petitioners said. “That is straightforward content-based regulation, which is ‘preemptively unconstitutional.'” FCC arguments that the existence of a case-by-case waiver process means the order isn’t an overreach are “a red-herring,” the petitioners said. Though the FCC argued that it had received only three requests for waivers in recent years and that two were withdrawn before the agency could act, it didn’t tell the court that one of those was withdrawn after 18 months of commission inaction, the petitioners said.

“Few, if any, broadcasting groups would undertake the arduous and expensive process of executing a transaction hoping that the Commission might eventually grant leniency,” the filing said.

Although all previous QR orders that courts have struck down have been remanded to the FCC to adjust the rules, that should not happen with the 2018 order, the broadcasters said. Instead, the 8th Circuit should vacate all the FCC’s local TV and radio ownership rules, the petitioners said. The agency’s “many errors are substantive and serious,” the filing said. “It would be highly unjust to allow the rules to remain, likely for many more years, given the Commission’s immense delay in issuing the Order and its abysmal track record of belated reviews.”