Supreme Court Allows FCC to Move Forward With Changes to Media Ownership Rules

U.S. Supreme Court
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The Federal Communications Commission was within its rights to loosen restrictions regarding media outlet ownership, the U.S. Supreme Court has held, and it doesn't need empirical data to justify its decision.

The FCC's ownership rules limit the number of radio stations, TV stations and newspapers that one entity can own in any single market. It's obligated to review these rules every four years and repeal or modify any that is no longer “necessary in the public interest as the result of competition.”

In 2017, under then-chairman Ajit Pai, the FCC decided three of its rules were no longer necessary and removed longstanding restrictions prohibiting ownership of a both daily newspaper and TV station in any given market, limiting the number of radio stations and TV stations that can be owned, and requiring at least eight independently owned local TV stations remain in the market before a company can own two stations. It determined none of these changes would harm minority or female ownership of media outlets.

Prometheus Radio Project and other advocacy groups challenged the changes and argued the decision was arbitrary and capricious under the Administrative Procedure Act (APA).

In September 2019, the 3rd Circuit vacated the FCC's order and found it "did not adequately consider the effect its sweeping rule changes will have on ownership of broadcast media by women and racial minorities.”

The Supreme Court on Thursday released its opinion on the matter, a unanimous one delivered by Justice Brett Kavanaugh, that reverses the 3rd Circuit's decision.

"The FCC adopted those rules in an early-cable and pre-Internet age when media sources were more limited," writes Kavanaugh, noting that the FCC has been trying for decades to change these rules and the 3rd Circuit has repeatedly rejected them under the APA. This time, the appeals court "did not dispute the FCC’s conclusion that those three ownership rules no longer promoted the agency’s public interest goals of competition, localism, and viewpoint diversity. But the court held that the record did not support the FCC’s conclusion that the rule changes would 'have minimal effect' on minority and female ownership."

The Supreme Court found that in order to satisfy the APA's arbitrary-and-capricious standard the agency must merely act "within a zone of reasonableness" and explain its decision.

Prometheus argued the FCC's data was too simplistic and the agency acknowledged there were gaps, but Kavanaugh explains that its consideration of the available record justified its decision that the old rules don't help competition or consumers in the modern media market.

"To be sure, in assessing the effects on minority and female ownership, the FCC did not have perfect empirical or statistical data. Far from it," writes Kavanaugh. "But that is not unusual in day to-day agency decisionmaking within the Executive Branch. The APA imposes no general obligation on agencies to conduct or commission their own empirical or statistical studies."

That bit could be especially encouraging to the Biden Administration as it looks to make regulatory changes with regard to climate change, for example.

A concurring opinion from Justice Clarence Thomas says the FCC had no obligation to consider minority or female ownership in the first place. The fact that it was even part of the conversation with regard to these changes, he argues, was the result of judge-made procedures dating back to 2004. The FCC's focus is encouraging viewpoint diversity for the benefit of consumers, he argues, not ownership diversity for the benefit of producers.

"Here, as in 2003, once the FCC determined that none of its policy objectives for ownership rules — viewpoint diversity, competition, and localism — justified retaining its rules, the FCC was free to modify or repeal them without considering ownership diversity," Thomas writes. "Indeed, the FCC has long been clear that 'it would be inappropriate to retain multiple ownership regulations for the sole purpose of promoting minority ownership.' The Third Circuit had no authority to require the FCC to consider minority and female ownership. So in future reviews, the FCC is under no obligation to do so."

The full opinion is embedded below.