The Score Is 4-0: FCC Media Ownership Policy, Prometheus Radio Project, and Judicial Review.

• Author: Terry, Christopher

TABLE OF CONTENTS I. INTRODUCTION 101 II. THE BEGINNING-TELECOMMUNICATIONS ACT OF 1996 103 III. FIRST REVIEW-THE FCC'S 1998 BIENNIAL REVIEW 105 IV. MOVING ALONG-THE FCC'S 2000 BIENNIAL REVIEW 107 V. FIRST OVERHAUL ATTEMPT-FCC'S 2002 BIENNIAL REVIEW 109 VI. FIRST LOSS-PROMETHEUS RADIO PROJECT V. FCC 114 VII. ROUND TWO BEGINS-THE 2006 QUADRENNIAL REVIEW 123 VIII. LOSS NUMBER TWO-PROMETHEUS II 126 IX. SINKING MORALE-THE 2010 AND 2014 QUADRENNIAL REVIEWS 128 X. YET ANOTHER LOSS-PROMETHEUS III 129 XI. THE FCC GIVES IT ANOTHER GO 130 XII. HERE WE GO AGAIN: THE FOURTH, MOST RECENT, BUT PERHAPS NOT FINAL LOSS-PROMETHEUS IV 135 XIII. HERE WE ARE AGAIN, AGAIN-WHERE WE ARE 138 XIV. A NEW, OLD APPROACH 139 I. INTRODUCTION

Media ownership continues to be an important democratic issue mired in a complicated policy limbo. (1) The relationship between the control of media outlets, the sources of information, and the range of viewpoint diversity available to citizens has been at the center of a continuing legal impasse between the FCC and the courts. Even in the Internet age, access to local news and information is an important element in maximizing political participation, and so broadcasting retains a central role in the media use of everyday Americans. (2)

The FCC implemented a media ownership policy to balance the economic goal of competition, the democratic societal values associated with viewpoint diversity, and the operational objectives of broadcast stations licensed to serve a local community. (3) The regulatory matrix of competition, localism, and diversity has been the pillar of media ownership policy since the agency's initial adoption of the conceptual relationship between ownership and diversity in the rulemaking proceeding that implemented the newspaper-broadcast cross ownership ban in 1975. (4)

While contemporary media ownership policy was not created by the adoption of a single economic theory, the central conceptual premise of media ownership policy is simple: ownership and diversity are directly related. Yet this simple premise has been elusive for the agency to support empirically. (5) Most significantly, the FCC's inability to demonstrate a clear relationship between the variables, and to functionally apply the relationship to the larger policy in a way that promotes ownership by women, minorities, and other underrepresented groups. This led to a series of paralyzing remands when the Third Circuit Court of Appeals reviewed FCC decisions on media ownership. (6) These remands involve the agency's rush to implement new ownership limits after passage of the Telecommunications Act of 1996 coupled with the functional abandonment of its localism and diversity objectives. These remands are the product of a running series of defeats for the FCC in cases brought by lead plaintiff and citizen petitioner Prometheus Radio Project. (7) After judicial setbacks in 2004, 2011, 2016, and 2019, the FCC continues to find itself in a legal quagmire with limited policy options moving forward. (8)

This Article traces the implementation of FCC media ownership policy since the passage of the Telecommunications Act of 1996 (9) through the FCC's continuing legal battle with the Prometheus Radio Project. The paper discusses the FCC's various policy proposals, the agency's 1998, (10) 2000, (11) and 2002 (12) Biennial Reviews, its Quadrennial Reviews undertaken in 2006, (13) 2010, (14) 2014 (15) and the ongoing review launched at the end of 2018. (16) Then, in context of this background, this Article concludes by proposing a new approach to media ownership and minority ownership policy based on the FCC's ongoing statutory mandate to regulate broadcast ownership.

This Article suggests that the FCC just do what it is told: develop and implement a minority ownership policy that puts broadcast stations in the hands of locally based owners who themselves are women and minorities. Furthermore, when faced with the precedent from Adarand, the FCC should recognize that because of spectrum scarcity, it is not subject to the same level of scrutiny that would dictate a content neutral approach in application. In short, the FCC should focus on just two aspects of the media ownership equation--localism and diversity. Empirical evidence strongly suggests this will lead to the competition that the FCC seeks. That is, unless the FCC intends to lose in court again.

2. THE BEGINNING-TELECOMMUNICATIONS ACT OF

   On February 8th, 1996, President Bill Clinton signed the Telecommunications Act into law. (17) Congress designed the omnibus bill to update, but not replace, major elements of the Communications Act of 1934. (18) Among the changes within the Telecommunications Act were provisions that resulted in significant structural changes to the legal, policy, and social dynamics of media ownership.

   Largely overlooked in historical discussion is the reality that in the Telecommunications Act, Congress had, for the first time, directly substituted its own judgment on media ownership for the regulatory expertise of the FCC. (19) The statutory delegation of the Telecommunications Act mandated specific ownership limits for radio and television. (20) No longer would the FCC interpret a delegation and assess policy alternatives through the rulemaking process in its role as the expert agency in charge of assigning stations to qualified owners. This change in media licensing policy largely reduced the FCC to the status of a regulatory errand boy whose primary duty is to approve mergers and transfer station operation licenses. (21)

   Just as this do-as-we-are-told type approach to media regulation significantly changed the FCC'S traditional public-trustee decision making previously employed for assessing ownership and license allocation, Congress also moved away from the FCC'S traditional administrative process. This was brought about by a new statutory requirement to conduct a review of the agency's media ownership rules every two years. (22) This review required existing rules to survive an agency review process with an evidence standard roughly equivalent to FCC rulemaking. On top of that, Congress also set some media ownership policies itself. Section 202(b)(1) of the Telecommunications Act set new ownership limitations.

   In a radio market with 45 or more commercial radio stations, a single party may own, operate, or control up to 8 commercial radio stations, not more than 5 of which are in the same service (AM or FM); in a radio market with between 30 and 44 (inclusive) commercial radio stations, a party may own, operate, or control up to 7 commercial radio stations, not more than 4 of which are in the same service (AM or FM); in a radio market with between 15 and 29 (inclusive) commercial radio stations, a party may own, operate, or control up to 6 commercial radio stations, not more than 4 of which are in the same service (AM or FM); and in a radio market with 14 or fewer commercial radio stations, a party may own, operate, or control up to 5 commercial radio stations, not more than 3 of which are in the same service (AM or FM), except that a party may not own, operate, or control more than 50 percent of the stations in such market. (23) When Congress mandated these rules to the FCC, the process of rulemaking for media ownership also changed. In order to quickly comply, the FCC solicited no comments, and collected no evidence on the state of the media industry.

   We are revising these rules without providing prior public notice and an opportunity for comment because the rules being modified are mandated by the applicable provisions of the Telecom Act. We find that notice and comment procedures are unnecessary, and that this action therefore falls within the "good cause" exception of the Administrative Procedure Act ("APA"). The rule changes adopted in this Order do not involve discretionary action on the part of the [FCC]. Rather, they simply implement provisions of the Telecom Act that direct the [FCC] to revise its rules according to specific terms set forth in the legislation. (24) In the wake of this decision, the FCC approved a massive, rapid wave of station transfers and mergers that consolidated ownership, and between 1996 and 2010, the looser ownership limits resulted in significant changes to the media landscape and rapid consolidation of ownership within the industry. (25)

   Congress's alteration of the traditional rulemaking process resulted in rapid changes to the production and distribution models for media content. Furthermore, embedded within the Telecommunications Act was Section 202(h), an obscure but important mandate that requires the agency to remove or modify rules that are no longer necessary to promote competition or no longer in the public interest. (26) This mandate, which alters the traditional administrative process (27) specified that:

   The [FCC] shall review its rules adopted pursuant to this section and all of its ownership rules biennially as part of its regulatory reform review under section 11 of the Communications Act of 1934 and shall determine whether any of such rules are necessary in the public interest as the result of competition. The [FCC] shall repeal or modify any regulation it determines to be no longer in the public interest. (28) In a rush to implement the ownership changes mandated by the Telecommunications Act, the FCC failed to fully assess the state of media ownership before starting a process of rapid consolidation. (29) Lacking the baseline comparator data on the status of media ownership policy, and saddled with the ongoing review requirements of Section 202(h), it is unsurprising that a shortage of evidence demonstrating positive outcomes for media ownership policy bedevils the FCC. The relevant history shows this problem tormenting the agency time and time again.

3. FIRST REVIEW-THE FCC'S 1998 BIENNIAL REVIEW

   The FCC launched the first of the mandated biennial reviews for media ownership rules under...