Says conclusion it would have no material impact on diversity was reasonable, supported

The FCC told a federal appeals court this week that it did gauge the impact of its 2017 broadcast deregulation on media ownership diversity and found it would have “no material impact.” 

That came in a brief to the U.S. Court of Appeals for the Third Circuit, which is hearing appeals by Prometheus and others of that media ownership deregulation, both from groups that say the FCC was too deregulatory and without properly vetting the impact on diversity, and from those that say it was not deregulatory enough because it only loosened its prohibition on owning two of the top-four stations in a market. 

The FCC’s deregulatory moves came as part of its congressionally mandated quadrennial review, which also had to be responsive to a Third Circuit remand of its previous review, part of a years-long legal challenge to media deregulation stretching back to the early 2000s. 

Related: Third Circuit Won't Block FCC Broadcast Dereg 

Indicating, Goldilocks-like, that its decision was neither too regulatory nor too deregulatory, but justifiably “just right,” the FCC told the court that it had reasonably updated its rules in light of increased competition and its public interest analysis, which included that the old rules were doing affirmative harm. 

The FCC also told the court its conclusion of no material impact on women and minority ownership diversity was reasonable, supported by “substantial evidence,” and was made with sufficient notice of that finding to the public and stakeholders. 

As to why it loosened rather than eliminated the prohibition on owning two of the top four stations, the FCC told the court that top-four mergers still risk the greatest competitive harm, so it was reasonable to retain it subject to a case-by-case review that would allow such combos if the FCC concluded they served the public interest. 

Critics of the deregulation had also pointed out that while the Third Circuit had instructed the FCC to consider the impact of the broadcast incentive auction on diversity, it did not. The FCC said that was also reasonable because not all the facts were in. While the auction was over by the time it made its 2017 decision to deregulate, the repack was not.  

The FCC said it made sense “to defer its analysis until the transition progresses far enough to determine how many of the stations that elected to keep broadcasting through channel sharing will find partners.” 

As to the court’s direction to the FCC to get better diversity data, the FCC essentially said it punted on that because additional studies would not be helpful. “[N]either the record in this proceeding nor the Commission’s own efforts have produced additional study designs that we expect would develop the evidence necessary to support race- and/or gender-conscious measures.” 

In November 2017, as part of the quadrennial media ownership reg review, the Republican FCC majority, under Chairman Ajit Pai, eliminated some decades-old broadcast regulations and tweaked others in what broadcasters have argued is necessary to allow them to remain relevant in a sea of less-regulated competitors. 

The order eliminated the newspaper-broadcast and the radio-TV cross-ownership rules; allowed dual station ownership in markets with fewer than eight independent voices after the duopoly, and created the opportunity for ownership of two of the top four stations in a market on that case-by-case basis (the FCC was not calling it a waiver). It also eliminated attribution of joint sales agreements as ownership, and created a diversity incubator program. 

In doing so, the FCC reversed a decision by the previous FCC’s Democratic majority to leave most of the rules in place.