Digital Beat

Here We Go (Again):

FCC Media Ownership Policy, Prometheus Radio Project and (now) the Supreme Court

“Here we are again. After our last encounter with the periodic review by the Federal Communications Commission (the ‘FCC’ or the ‘Commission’) of its broadcast ownership rules and diversity initiatives, the Commission has taken a series of actions that, cumulatively, have substantially changed its approach to regulation of broadcast media ownership. First, it issued an order that retained almost all of its existing rules in their current form, effectively abandoning its long-running efforts to change those rules going back to the first round of this litigation. Then it changed course, granting petitions for rehearing and repealing or otherwise scaling back most of those same rules. It also created a new ‘incubator’ program designed to help new entrants into the broadcast industry. The Commission, in short, has been busy.”

-- Judge Ambro’s Majority Opinion in Prometheus IV.

On April 17, the FCC and the National Association of Broadcasters each filed a petition asking the Supreme Court to review the United States Court of Appeals for the Third Circuit’s 2019 decision in Prometheus Radio Project v. FCC. The decision was the fourth in a line of intertwined cases dealing with the agency’s media ownership policies since 2004.

In Prometheus IV, the Third Circuit remanded the diametrically opposed FCC’s media ownership decisions in 2016 and 2017, as well as the agency’s 2018 incubator program. Although the Third Circuit decisions in this line of cases have each discussed some evidentiary and procedural shortcomings within the FCC’s statutorily mandated quadrennial reviews, one of the key issues since the first decision in June 2004 has been the FCC’s failure to develop, implement and (empirically) support a policy to promote the ownership of broadcast stations by women and minorities.

The recent appeals by the NAB and FCC to the Supreme Court follow the denial of an en banc review by the Third Circuit. Although the NAB’s petition to the Supreme Court does make arguments related to the section 202 (h) standard, both the NAB and the FCC argue that the unresolved minority ownership issue should not continue to impede other actions by the agency. In statements about the petition, both FCC Chairman Ajit Pai and Commissioner Michael O’Reilly referred to the Third Circuit’s Prometheus decisions as obstruction.

We have examined and published research on minority ownership policy including the Incubator proposal, and we would argue against that projective depiction. The simple reality is that media ownership policy continues to be an important democratic issue that is mired in a complicated policy limbo by years of actions (and often the lack of action) by the FCC itself. While the NAB and the majority of the FCC may object to the 17-year timeline of the Prometheus cases, the source of the Third Circuit’s ongoing concerns can be found empirically in the outcomes of the agency’s media ownership policies since 1996.

A provision in the Telecommunications Act of 1996 ended the long era of judicial deference to the FCC by shifting the burden of proof on the agency’s media ownership rules. Prior to the Telecommunications Act, FCC action on ownership rules could be overturned on judicial review only when a challenger could show that a decision of the agency was “arbitrary and capricious.” The Telecommunications Act (specifically, section 202(h)) altered this requirement substantially, requiring the FCC to periodically review each of its media ownership rules in order to “determine whether any of such rules are necessary in the public interest as the result of competition.” The statute mandates: “The Commission shall repeal or modify any regulation it determines to be no longer in the public interest.” In other words, the FCC now must affirmatively demonstrate that the rule was necessary for the public interest.

The new standard has made a huge difference in the deference courts are giving the FCC on policy decisions. In 2001 and 2002 the United States Court of Appeals for the District of Columbia Circuit not only overturned a cable-broadcasting cross-ownership rule, but also sent three other rules back to the FCC for justification under the new standard. Following the two inconclusive biennial reviews conducted by the agency in 1998 and 2000, the multiple challenges to the FCC’s 2003 media ownership decision landed the case in the Third Circuit under the lead plaintiff Prometheus Radio Project.

The Prometheus line of cases has provided us with a clear view of the FCC’s difficulty in adapting to the legal environment where the burden of proof falls on the Commission rather than on parties who challenged FCC decisions. Applying the new standard, the Third Circuit’s Prometheus I opinion contained several comments harshly critical of the FCC’s order, including the effect of the rules on ownership of stations by women and minorities.

After the FCC’s 2008 “Eligible Entity” proposal, the Prometheus II decision was scathing with respect to what the court saw as the FCC’s procedural laxness on the issue. Suggesting that the agency had “in large part punted” on the issue, the ruling imposed a mandate that the remand be addressed before the ongoing 2010 Quadrennial Review was completed.

[T]he eligible entity definition adopted in the Diversity Order lacks a sufficient analytical connection to the primary issue that Order intended to address. The Commission has offered no data attempting to show a connection between the definition chosen and the goal of the measures adopted—increasing ownership of minorities and women. As such, the eligible entity definition adopted is arbitrary and capricious, and we remand those portions of the Diversity Order that rely on it. We conclude once more that the FCC did not provide a sufficiently reasoned basis for deferring consideration of the proposed SDB definitions and remand for it to do so before it completes its 2010 Quadrennial Review. – Third Circuit Prometheus II decision

Following Prometheus II, the FCC began a long period of limited action on media ownership policy, eventually folding the ongoing and unresolved 2010 quadrennial review into the review mandated for 2014. The Third Circuit’s patience was wearing thin by the time it decided Prometheus III in 2016. The court mandated the FCC conclude the two open review proceedings, as well as formally address the lack of a viable minority ownership policy.

In response, the FCC released an order in August of 2016 that recycled the previously remanded Eligible Entity program, stating that it disagreed with the argument the court had used to direct the agency to resolve the issue of ownership by women and minorities:

…We disagree with arguments that the Prometheus II decision requires that we adopt a race- or gender-conscious eligible entity standard in this quadrennial review proceeding or that we continue this proceeding until the Commission has completed whatever studies or analyses that will enable it to take race- or gender-conscious action in the future consistent with current standards of constitutional law.

Legal challenges quickly followed the FCC’s decision for (non-)action but before the Third Circuit could rule, the FCC, now under Chairman Ajit Pai’s leadership, released a new media ownership decision in November of 2017, as an order on reconsideration of the agency’s August 2016 decision. While consolidated cases challenging both the 2016 and 2017 decisions were pending in what became Prometheus IV, the FCC also released the initial proposal for a new minority ownership policy, called the “Incubator.” Although nominally a minority ownership program, the Incubator proposal provided opportunities for additional ownership consolidation to companies willing to incubate a startup through assistance and fostering new entrant broadcasters, but contained no mechanism designed to directly promote ownership by women or minorities.

As before, the Third Circuit majority took a grim view of the FCC’s decisionmaking, including the Incubator proposal. In a decision which vacated and remanded the “bulk” of the FCC’s actions since 2016, the court’s majority suggested the FCC’s analysis was insubstantial enough to provide a reliable foundation for the agency’s conclusions:

The only ‘consideration’ the FCC gave to the question of how its rules would affect female ownership was the conclusion there would be no effect. That was not sufficient, and this alone is enough to justify remand… Even just focusing on the evidence with regard to ownership by racial minorities, however, the FCC’s analysis is so insubstantial that it would receive a failing grade in any introductory statistics class.

You don’t have to take our word for it. In February 2020, while the FCC was preparing to file the Supreme Court petition, the agency quietly released its most recent data on station ownership. The data, collected as part of licensee filings from Form 323 during 2017, painted a decidedly gloomy picture of the state of station ownership by women and minorities.

Women held a discernable, majority-voting interest in 73 (or just 5.3%) of the 1,368 full-power commercial television stations, a finding that had declined from the FCC’s 2015 assessment. Likewise, racial minorities had a discernable majority interest in just 26 (1.9%) full-power commercial television stations, a number that had also declined since the 2015 assessment. Hispanic/Latinos also saw a reduction in the overall number of stations controlled during the same time period.

For radio, women controlled only 9.3% of the commercial AM stations while racial minorities controlled just 5.9% of the AM stations, which were both marginal increases over the 2015 numbers. While racial minorities had a discernable majority interest in more commercial FM stations, going from 2.3% to 2.9% of stations between 2015 and 2017, both women (7.2%) and Hispanics (4.1%) each lost ground during the same time period.

For an agency that relies heavily on quantitative assessments as part of its media ownership policymaking, the reality that women, racial and ethnic groups control less than 10% of commercial AM, FM or broadcast television stations should provide the FCC a clear reason for the failing grade it earned from the Third Circuit.

To be fair, we do agree with both the NAB and FCC’s argument that the extended timeline of the Prometheus decisions is problematic. But let’s direct the blame appropriately. Since a decision from the court would likely postpone any further actions until 2021, we propose that instead of waiting on even more litigation, the FCC should complete the ongoing 2018 Quadrennial Review by focusing primarily on the issue of minority ownership that the agency has been avoiding for far too long. We understand that court precedent presents some inherent obstacles, but in the 16 years since Prometheus I, the FCC has preferred to “punt.”

Media ownership policy is not trivial, and the ongoing proceeding deserves the FCC’s immediate attention. Even in the age of the internet, broadcasting still plays an important role in the media use of every day Americans. According to Pew Research, in 2018 49% of adults reported that they often get their news from television and 26% said they often get news from radio. Add to that the recent struggles of the newspaper industry, and it becomes clear that access to local news and information via broadcast stations is an important element in maximizing political participation. It is unacceptable that women, who make up half of our population, and racial and ethnic minorities, who make up nearly 40% of the U.S., should be excluded from ownership of the platforms responsible for delivering that content.

Christopher Terry is a publicly engaged scholar who is currently an assistant professor of media law and ethics in the Hubbard School of Journalism and Mass Communication at the University of Minnesota. He was a commercial radio producer for nearly 15 years before receiving his Ph.D. in Mass Communication and Law from the University of Wisconsin. His research agenda involves maximizing the opportunities for political participation in a democratic society. He has published research on media ownership policy, minority ownership policy, indecency regulation and the regulation of political advertising.

Caitlin Ring Carlson is an Associate Professor in the Department of Communication at Seattle University. She teaches courses in Media Law, Social Media, and Strategic Communication. Her research focuses on media law, policy, and ethics from a feminist perspective. Carlson’s work has appeared in journals such as Communication Law and Policy, the Journal of Mass Media Ethics, and Communication Law Review. Her first book, entitled “Hate Speech,” will be published by MIT Press in Spring 2021. Carlson received her PhD in Media Studies from the University of Colorado Boulder.

The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.

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