Supreme Court Sides With FCC, Allows Loosening of Media Ownership Rules

The decision could lead to a massive wave of consolidation among local media

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The FCC scored a big win on Thursday as the Supreme Court decided, in a unanimous decision, that the regulatory body was well within its rights to loosen restrictions regarding media ownership rules.

The result could have a far-reaching impact on one of the oldest businesses in the TV industry.

In 2017, the FCC, led by Trump-appointed chairman Ajit Pai, proposed changes that would strike down the “Eight Voices Rule,” a ban on in-market consolidation of stations if the result would lead to fewer than eight independently owned stations Additionally, the FCC voted to remove a 45-year-old rule that bars one company from owning a TV station and newspaper within the same market (although a few exceptions have been made), along with restrictions on local media advertising.

The FCC’s changes were overturned last year by the Philadelphia-based Third U.S. Circuit Court of Appeals, which essentially told the agency to try again, finding the commission “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 said on Thursday that the FCC doesn’t need empirical data to justify its decision.

“In challenging the FCC’s order, Prometheus argues that the Commission’s assessment of the likely impact of the rule changes on minority and female ownership rested on flawed data,” Justice Brett Kavanaugh wrote in the decision. “But the FCC acknowledged the gaps in the data sets it relied on, and noted that, despite its repeated requests for additional data, it had received no countervailing evidence suggesting that changing the three ownership rules was likely to harm minority and female ownership.”

Local media, particularly TV stations, have been forced to abide by strict rules that stipulate, among many things, that no one company can own more than one of the top four stations in any single market. Successfully vacating the “Eight Voices Rule” could give the FCC precedent to eventually throw out the Top 4 rule.

There is a very real fear that loosening the ownership rules could lead to a massive wave of consolidation, led by already large station groups like Sinclair (which has been accused of having an openly partisan bias toward conservatives). At the same time, broadcasters, particularly stations in small markets that aren’t owned by one of the major station groups, are wary of going under because they’ve been elbowed out of the advertising market by larger, nationwide players.

The FCC is currently led by acting chairwoman Jessica Rosenworcel, a Democrat, and polar opposite of Pai. The commission right now is deadlocked at 2-2, but President Biden will likely nominate a Democrat to fill the vacant seat, giving them a 3-2 advantage. The FCC could decide to undo these changes may happen during the next Quadrennial Review in 2022.

Proponents of the FCC’s desire to change the ownership rules argue that the current rules are badly outdated, formed at a time before the internet and national cable networks upended the local media model. Local TV and newspapers, in particular, have struggled to adapt to the internet age against deeper-pocketed national networks and internet giants like Facebook and Google.

In major markets like New York and Los Angeles, local TV stations are owned by the networks themselves and thus better protected from the financial hardships many local stations in smaller, more rural areas, face. In those areas, the local TV stations are managed by smaller companies, and some are even family-owned. The NAB argues it’s become impossible for small stations to compete for ad dollars — still the lifeblood for many stations — against bigger players that have a stronger reach.

But detractors, including former FCC chairman Michael Copps, fear a massive wave of deregulation and consolidation in local media could threaten American independent journalism and, by extension, democracy itself.

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