by Frank Montero, Fletcher, Heald & Hildreth
On Thursday, April 1, 2021 the Supreme Court unanimously voted to overturn the United States Court of Appeals for the Third Circuit in Philadelphia (“Third Circuit”) in the case of Federal Communications Commission (“FCC”) v. Prometheus Radio Project, No. 19-1231. The possibility of this result was something we had considered in a previous post, which includes background on media ownership rules. By overturning the Third Circuit, the changes the FCC adopted in 2017 will likely go into effect soon. Those changes included eliminating the newspaper-broadcast and the radio-TV cross-ownership rules and allowing dual TV station ownership in markets with fewer than eight independent voices, creating an opportunity for ownership of two of the top four TV stations in a market on a case-by-case basis (the FCC did not call it a waiver), eliminating attribution of joint sales agreements for multiple ownership purposes, and creating an incubator program.
The FCC still has to deal with its pending Quadrennial Review of the ownership rules, which started in 2019. That proceeding largely looks at the radio rules, but also includes a review of the dual network rule (whether common ownership of 2 of the Top 4 TV networks should be permitted), the Top 4 rule for TV ownership (trying to decide if there are more definitive criteria that can be established as to when two of the Top 4 TV stations in a market can be commonly owned), and whether there should be any rules limiting shared services agreements between non-commonly owned stations. The FCC may ask for further comments on the issues raised in the Quadrennial Review. In comments filed in 2019 Quadrennial Review, the National Association of Broadcasters (“NAB”) proposed that there be no limits on AM ownership at all, nor any limits on ownership of radio stations in markets below the Top 75 rated markets. In the Top 75 markets, the NAB proposes that one owner be allowed to own up to 8 FM stations, and up to 2 more if it successfully incubates a new broadcast owner.
The new Democratic-controlled FCC under Acting Chair Jessica Rosenworcel could make other re-regulatory changes to the ownership rules. (As a reminder, the Quadrennial Review proceedings are also separate from any review of the FCC’s national television ownership cap and related UHF discount, both of which could be revisited in the new Democratic Congress or FCC). Of course, any re-regulatory changes raise the question of whether the Quadrennial Reviews are intended to only be deregulatory in nature. Even if the 2017 rules are allowed to continue unchanged under a Democratic FCC, applicants could likely expect a tighter review of waivers of the Top 4 prohibition on television duopolies.
As to timing of any action on the radio rules under consideration in the current Quadrennial Review, if the FCC takes new comments, it may be year’s end or Q1 2022 when a decision is released. But if the FCC doesn’t reopen the radio proceeding, then there a chance of a decision by summer or Q3 2021. However, there will likely be no movement on this until President Biden appoints a permanent FCC Chair and fills the vacant Democratic seat on the FCC.
If you have any questions regarding how these changes may affect your station, we encourage you to reach out to us.