Articles Posted in Ownership Law & Regulation

In the latest chapter of what seems like a never ending saga of the Commission’s effort to adopt new ownership rules, the U.S. Court of Appeals for the Third Circuit recently lifted its stay of the FCC’s revised cross-ownership rules adopted in 2007, which immediately allows the FCC to presume that common ownership of a daily newspaper and a broadcast station in the Top 20 television markets is in the public interest. The Court’s decision, for the first time since 1975, effectively allows the common ownership of a full-power broadcast station and a daily newspaper in the same geographic market.
In 2003, the Chairman Powell-led Commission undertook what was ultimately a highly controversial review of all of its broadcast ownership rules. With respect to newspaper/broadcast cross-ownership rule, the Commission concluded that newspapers and broadcast stations do not compete in the same economic market and that continuation of the cross-ownership ban made no sense except in the smallest markets. Before the re-write of the broadcast rules took effect, it was challenged by various parties in the Third Circuit. The Court, in the well-known Prometheus Radio Project decision, stayed the effectiveness of the re-written rules. Despite the stay, the Court actually agreed with the Commission that a blanket ban on broadcast/newspaper cross-ownership was no longer warranted, so the Court remanded the FCC’s ownership limits back to the agency for further justification.
In response to the Court’s order, the Commission in 2007, this time led by Chairman Martin, once again decided that a complete newspaper/broadcast cross ownership ban did not make sense. It fashioned a rule that presumed that waiver of the ban is waived in the public interest in certain limited circumstances. The FCC said that it would review combinations involving a daily newspaper and either one radio station or one television station in the Top 20 markets on a case-by-case basis, and presume that they were in the public interest, so long as, in the case of television/newspaper combinations, the television station was not a Top-4 ranked station, and at least 8 independent “major media voices” would remain in the market. Combinations in markets outside of the Top 20 would be presumed to not be in the public interest, unless a showing could be made that overcame the presumption.

Again, before that rule could take effect, it was appealed and the Third Circuit continued to stay it. When the leadership of the FCC changed again in 2009, the new Chairman Genachowski-led Commission told the Court that relaxation of the newspaper/broadcast cross-ownership ban adopted by the previous Martin-led Commission does not necessarily reflect the view of a majority of the current Commission. The leadership also asked the Court to continue to hold off ruling on the Martin Commission’s version of the rule until this Commission could complete its Congressionally-mandated review of the broadcast ownership rules in 2010. Despite that request, the Court lifted its stay and ordered that initial briefs in connection with the Martin Commission revisions to its ownership rules be filed by May 17, 2010.

As a result, the FCC’s relaxed newspaper/broadcast cross-ownership rule adopted in 2007 is now in effect. Broadcast/newspaper combinations can now be reviewed and granted on a case-by-case basis in accordance with the standard described above. However, before trying to enter into a new cross-ownership combination, interested parties should keep in mind that the current Commission is on record as being wary of the Martin-era version of the rule, so any hope that the current Commission is in a hurry to review any proposed combos might be misplaced. They should also realize that the Martin-era rule is subject to the Third Circuit’s review, and that it is unclear precisely how, and when (if ever), this rule’s more than thirty-five year saga will end.