`
`
`
`IN THE
`pìéêÉãÉ=`çìêí=çÑ=íÜÉ=råáíÉÇ=pí~íÉë=
`
`
`FEDERAL COMMUNICATIONS COMMISSION, ET AL.,
`Petitioners,
`
`v.
`PROMETHEUS RADIO PROJECT, ET AL.,
`Respondents.
`
`
`NATIONAL ASSOCIATION OF BROADCASTERS, ET AL.,
`Petitioners,
`
`v.
`PROMETHEUS RADIO PROJECT, ET AL.,
`Respondents.
`
`
`
`On Writs Of Certiorari To The United States
`Court Of Appeals For The Third Circuit
`
`
`
`OPENING BRIEF FOR
`INDUSTRY PETITIONERS
`
`
`
`EVE KLINDERA REED
`JEREMY J. BROGGI
`WILEY REIN LLP
`1776 K Street, NW
`Washington, DC 20036
`(202) 719-7000
`Counsel for Petitioner Nexstar
`Inc. f/k/a Nexstar
`Broadcasting, Inc.
`
`
`HELGI C. WALKER
` Counsel of Record
`JACOB T. SPENCER
`MAX E. SCHULMAN
`GIBSON, DUNN & CRUTCHER LLP
`1050 Connecticut Avenue, NW
`Washington, DC 20036
`(202) 955-8500
`hwalker@gibsondunn.com
`Counsel for Petitioner National
`Association of Broadcasters
`[Additional counsel listed on signature page]
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`QUESTION PRESENTED
`Section 202(h) of the Telecommunications Act of
`1996
`directs
`the
`Federal Communications
`Commission to review its media ownership rules
`every four years and to “repeal” or “modify” any rule
`that is no longer “necessary in the public interest as
`the result of competition.” In the Commission’s most
`recent review, the agency modified or eliminated
`several decades-old ownership rules that substantial
`competitive changes
`in the media marketplace
`rendered unnecessary. No party challenged the
`Commission’s statutorily mandated competition
`analysis, nor did the Third Circuit question it on the
`merits. Yet the Third Circuit concluded that the
`Commission inadequately considered the effect of
`those changes on minority and female ownership—
`even though Section 202(h) says nothing about that
`issue. On that ground alone, the Third Circuit
`vacated all the Commission’s rule changes (as well as
`other agency actions in these consolidated cases) and
`ordered the agency to collect additional statistics on
`ownership diversity. The same divided Third Circuit
`panel has repeatedly elevated its policy concerns over
`the statutory text and purported to retain jurisdiction
`over the FCC’s Section 202(h) orders, effectively
`blocking review by any other court for more than 15
`years.
`The question presented is:
`Whether under Section 202(h) the Commission
`must produce and consider statistical evidence or
`conduct an in-depth theoretical analysis regarding
`effects on minority and female ownership before
`repealing or modifying media ownership rules that it
`determines are no longer “necessary in the public
`interest as the result of competition.”
`
`
`
`
`
`
`
`ii
`
`PARTIES TO THE PROCEEDING AND
`RULE 29.6 STATEMENT
`Petitioners are the Federal Communications
`Commission,
`the United States of America,
`Bonneville International Corporation, Connoisseur
`Media LLC, Fox Corporation,
`the National
`Association of Broadcasters, News Corporation, News
`Media Alliance, Nexstar Inc., The Scranton Times
`L.P., and Sinclair Broadcast Group, Inc.
`Respondents that were petitioners in the Third
`Circuit are Prometheus Radio Project, Media
`Mobilizing Project, Office of Communication, Inc. of
`the United Church of Christ, National Association of
`Broadcast
`Employees
`and
`Technicians-
`Communications Workers of America, Common
`Cause, Multicultural Media, Telecom and Internet
`Council, National Association of Black Owned
`Broadcasters, Inc., Independent Television Group,
`and Free Press.
`Respondent that was intervenor petitioner in the
`Third Circuit is Cox Media Group LLC.
`Respondents that were intervenor respondents in
`the Third Circuit are Benton Foundation and
`National Organization for Women Foundation.
`Pursuant to this Court’s Rule 29.6, Petitioners
`state that:
`is a
`International Corporation
`Bonneville
`privately held Utah corporation. Bonneville’s sole
`shareholder is Deseret Management Corporation,
`which, in turn, is privately held by the DMC Reserve
`Trust. There are three individual trustees, who are
`appointed by The First Presidency of The Church of
`Jesus Christ of Latter-day Saints.
`
`
`
`
`
`iii
`
`Connoisseur Media LLC is a limited liability
`company organized
`in the State of Delaware.
`Connoisseur
`is owned by Connoisseur Media
`Holdings, LLC, which is in turn controlled by CM
`Broadcast Management, LLC.
`Fox Corporation, a Delaware publicly held
`corporation, is a news, sports, and entertainment
`company that produces and delivers content through
`its primary brands, including FOX News Media, FOX
`Sports, FOX Entertainment, and FOX Television
`Stations. Based upon a review of Schedule 13D and
`Schedule 13G
`filings with the Securities and
`Exchange Commission, Fox Corporation is not aware
`of any publicly held company owning 10 percent or
`more of its total stock, i.e., Class A and Class B on a
`combined basis.
`is a
`National Association of Broadcasters
`nonprofit, incorporated association of radio and
`television stations and broadcast networks. It has no
`parent company, and has not issued any shares or
`debt securities to the public; thus, no publicly held
`company owns ten percent or more of its stock.
`News Corporation is a publicly held company
`consisting of businesses across a range of media,
`including news and
`information services, book
`publishing, and digital real estate services. It has no
`parent company, and no publicly held company owns
`ten percent or more of News Corporation’s stock.
`News Media Alliance is a not-for-profit trade
`association representing nearly 2,000 companies
`engaged in all aspects of the news media industry in
`the United States and Canada. Alliance members
`account for nearly 90 percent of the daily newspaper
`circulation in the United States, as well as a range of
`online, mobile and non-daily publications. News
`
`
`
`
`
`iv
`
`Media Alliance was known as the Newspaper
`Association of America until September 2016. News
`Media Alliance has no parent company, and no
`publicly held company has a ten percent or greater
`ownership interest in the News Media Alliance.
`Nexstar Inc.,
`formerly known as Nexstar
`Broadcasting, Inc., is a media corporation that owns
`and operates
`commercial broadcast
`television
`stations. Nexstar is wholly owned by Nexstar Media
`Group, Inc., which is a publicly held corporation. No
`publicly held corporation has a ten percent or greater
`ownership interest in the stock of Nexstar Media
`Group, Inc.
`The Scranton Times L.P. is controlled by its
`general partner, The Times Partner, L.L.C., a
`Pennsylvania limited liability company, which is in
`turn privately held and controlled by its four
`individual members.
`is a media
`Sinclair Broadcast Group, Inc.
`corporation that owns, operates, and provides
`programming and sales services to television stations
`in various cities across the country. Sinclair has no
`parent company and no publicly traded company owns
`more than ten percent of Sinclair’s stock.
`
`
`
`
`
`
`v
`
`TABLE OF CONTENTS
`
`Page
`
`
`QUESTION PRESENTED ........................................... i
`
`PARTIES TO THE PROCEEDING AND
`RULE 29.6 STATEMENT .................................... ii
`
`OPINIONS BELOW .................................................... 1
`
`JURISDICTION .......................................................... 1
`
`STATUTORY PROVISION INVOLVED .................... 2
`
`STATEMENT .............................................................. 2
`
`A. Congress Mandates Periodic
`“Regulatory Reform Review” Of
`Media Ownership Rules ........................... 6
`
`B. The Third Circuit Blocks Much-
`Needed Regulatory Reform For
`More Than Fifteen Years ......................... 9
`
`C. The FCC Adopts The
`Reconsideration Order ........................... 14
`
`D. The Third Circuit Again Blocks
`Critical Regulatory Reform ................... 17
`
`SUMMARY OF THE ARGUMENT .......................... 19
`
`ARGUMENT ............................................................. 24
`
`I. The Third Circuit Contravened Section
`202(h) By Elevating Policy Concerns
`Over The Competition Analysis That
`Congress Specifically Required .................... 24
`
`
`
`
`
`vi
`
`A. Section 202(h) Requires The FCC
`To Consider Competition, Not
`Minority And Female Ownership .......... 25
`
`B. The Reconsideration Order Fully
`Complied With Section 202(h) ............... 34
`
`II. No Principle Of Administrative Law
`Supports The Third Circuit’s
`Judgment ...................................................... 37
`
`A. The FCC’s Recognition Of Minority
`And Female Ownership As A
`Policy Goal In Some Contexts Does
`Not Convert It Into A Mandatory
`Factor In Section 202(h) Reviews .......... 38
`
`B. In Any Event, The FCC
`Adequately Considered Minority
`And Female Ownership ......................... 42
`
`III. The Third Circuit’s Remedy Is Vastly
`Overbroad, And The Panel Improperly
`Retained Jurisdiction Over The
`Commission’s Section 202(h) Reviews ......... 46
`
`CONCLUSION .......................................................... 51
`
`
`
`
`
`vii
`
`TABLE OF AUTHORITIES
`
`CASES
`
`Page(s)
`
`Adarand Constructors, Inc. v. Peña,
`515 U.S. 200 (1995) ........................................ 12, 31
`
`Allied-Signal, Inc. v. U.S. Nuclear
`Regulatory Comm’n,
`988 F.2d 146 (D.C. Cir. 1993) .............................. 48
`
`Black Oak Energy, LLC v. FERC,
`725 F.3d 230 (D.C. Cir. 2013) .............................. 48
`
`Cellco P’ship v. FCC,
`357 F.3d 88 (D.C. Cir. 2004) .................................. 8
`
`FCC v. Nat’l Citizens Comm. for Broad.,
`436 U.S. 775 (1978) .............................................. 30
`
`Fox TV Stations, Inc. v. FCC,
`280 F.3d 1027 (D.C. Cir. 2002) ........................ 7, 26
`
`Gustafson v. Alloyd Co.,
`513 U.S. 561 (1995) .............................................. 33
`
`Howard Stirk Holdings, LLC v. FCC,
`No. 14-1090 (D.C. Cir. Nov. 24, 2015) ................. 51
`
`K Mart Corp. v. Cartier, Inc.,
`486 U.S. 281 (1988) .............................................. 48
`
`Lamprecht v. FCC,
`958 F.2d 382 (D.C. Cir. 1992) .............................. 32
`
`
`
`
`
`
`
`viii
`
`TABLE OF AUTHORITIES
`(CONTINUED)
`
`CASES (continued)
`
`Page(s)
`
`Little Sisters of the Poor Saints Peter &
`Paul Home v. Pennsylvania,
`140 S. Ct. 2367 (2020) .......................................... 35
`
`Massachusetts v. EPA,
`549 U.S. 497 (2007) .................................. 36, 41, 44
`
`Me. Cmty. Health Options v. United
`States,
`140 S. Ct. 1308 (2020) .......................................... 36
`
`Metro Broad., Inc. v. FCC,
`497 U.S. 547 (1990) .............................................. 39
`
`Motor Vehicle Mfrs. Ass’n of U.S. v.
`State Farm Mut. Auto. Ins. Co.,
`463 U.S. 29 (1983) .................. 21, 37, 38, 41, 44, 48
`
`Mozilla Corp. v. FCC,
`940 F.3d 1 (D.C. Cir. 2019) .................................. 49
`
`Nat’l Broad. Co. v. United States,
`319 U.S. 190 (1943) .............................. 6, 20, 29, 33
`
`Nichols v. United States,
`136 S. Ct. 1113 (2016) .................................... 27, 29
`
`Pension Ben. Guar. Corp. v. LTV Corp.,
`496 U.S. 633 (1990) ........................................ 23, 45
`
`
`
`
`
`
`
`ix
`
`TABLE OF AUTHORITIES
`(CONTINUED)
`
`CASES (continued)
`
`Page(s)
`
`Prometheus Radio Project v. FCC,
`824 F.3d 33 (3d Cir. 2016) ............ 4, 13, 14, 18, 21,
` ............................................................ 27, 34, 40, 50
`
`
`
`Prometheus Radio Project v. FCC,
`652 F.3d 431 (3d Cir. 2011) ................ 4, 11, 12, 13,
` ............................................................ 34, 35, 40, 50
`
`
`
`Prometheus Radio Project v. FCC,
`373 F.3d 372 (3d Cir. 2004) .............. 4, 7, 9, 10, 11,
` ............................................................ 26, 27, 35, 50
`
`
`
`Red Lion Broad. Co. v. FCC,
`395 U.S. 367 (1969) ................................................ 6
`
`Rotkiske v. Klemm,
`140 S. Ct. 355 (2019) ...................................... 27, 28
`
`Russello v. United States,
`464 U.S. 16 (1983) ................................................ 50
`
`Schuette v. Coal. to Defend Affirmative
`Action,
`572 U.S. 291 (2014) .............................................. 39
`
`Sessions v. Morales-Santana,
`137 S. Ct. 1678 (2017) .......................................... 32
`
`Stewart v. Dutra Constr. Co.,
`543 U.S. 481 (2005) .............................................. 31
`
`
`
`
`
`
`
`x
`
`TABLE OF AUTHORITIES
`(CONTINUED)
`
`CASES (continued)
`
`Page(s)
`
`Stilwell v. Office of Thrift Supervision,
`569 F.3d 514 (D.C. Cir. 2009) .............................. 45
`
`Turner Broad. Sys., Inc. v. FCC,
`512 U.S. 622 (1994) .............................................. 30
`
`United States v. L.A. Tucker Truck
`Lines, Inc.,
`344 U.S. 33 (1952) ................................................ 47
`
`Vt. Yankee Nuclear Power Corp. v. Nat.
`Res. Def. Council, Inc.,
`435 U.S. 519 (1978) .............................................. 45
`
`Whitman v. Am. Trucking Ass’ns,
`531 U.S. 457 (2001) ........................................ 28, 44
`
`STATUTES
`
`5 U.S.C. § 556 ............................................................ 45
`
`5 U.S.C. § 706 ............................................................ 47
`
`28 U.S.C. § 1254 .......................................................... 2
`
`28 U.S.C. § 1295 ........................................................ 49
`
`28 U.S.C. § 2342 .................................................. 24, 50
`
`28 U.S.C. § 2343 ........................................................ 50
`
`42 U.S.C. § 7607 ........................................................ 49
`
`
`
`
`
`xi
`
`TABLE OF AUTHORITIES
`(CONTINUED)
`
`STATUTES (continued)
`
`Page(s)
`
`47 U.S.C. § 161 .......................................................... 27
`
`47 U.S.C. § 309 .............................................. 14, 28, 29
`
`47 U.S.C. § 310 .......................................................... 29
`
`47 U.S.C. § 397 .......................................................... 29
`
`47 U.S.C. § 402 .............................................. 24, 49, 50
`
`Pub. L. No. 103-66, § 6002,
`107 Stat. 312 (1993) ............................................. 28
`
`Pub. L. No. 108-199, § 629,
`118 Stat. 3 (2004) ................................................... 2
`
`Telecommunications Act of 1996, Pub.
`L. No. 104-104, Preamble,
`110 Stat. 56 (1996) ............................................... 25
`
`Telecommunications Act of 1996, Pub.
`L. No. 104-104, § 202,
`110 Stat. 56 (1996) ........................ 2, 3, 6, 7, 20, 25,
` ............................................................ 26, 27, 32, 36
`
`
`
`REGULATION
`
`47 C.F.R. § 73.3555 ................................... 6, 11, 15, 16
`
`
`
`
`
`xii
`
`TABLE OF AUTHORITIES
`(CONTINUED)
`
`ADMINISTRATIVE PROCEEDINGS
`
`Page(s)
`
`In re 2002 Biennial Regulatory Review,
`18 FCC Rcd. 13620 (2003) ....................... 33, 39, 40
`
`In re 2002 Biennial Regulatory
`Review—Review of Commission’s
`Broad. Ownership Rules & Other
`Rules Adopted Pursuant to Section
`202 of Telecommunications Act of
`1996,
`17 FCC Rcd. 18503 (2002) ................................... 32
`
`In re 2018 Quadrennial Regulatory
`Review,
`33 FCC Rcd. 12111 (2018) ................................... 30
`
`In re Amend. of Sections 73.34, 73.240,
`and 73.636 of the Commission’s
`Rules Relating to Multiple
`Ownership of Standard, FM, and
`Television Broadcast Stations,
`50 FCC 2d 1046 (1975) .......................................... 7
`
`In re Amend. of Sec. 73.3555,
`100 FCC 2d 74 (1985) .................. 30, 31, 39, 41, 44
`
`In re Promoting Broadcast Internet
`Innovation Through ATSC 3.0,
`2020 WL 3091142
`(FCC June 9, 2020) .............................................. 33
`
`
`
`
`
`xiii
`
`TABLE OF AUTHORITIES
`(CONTINUED)
`
`ADMINISTRATIVE PROCEEDINGS
`(continued)
`
`Page(s)
`
`In re Promoting Diversification of
`Ownership in the Broadcasting
`Services,
`23 FCC Rcd. 5922 (Dec. 18, 2007). ...................... 12
`
`In re Review of the Commission’s
`Regulations Governing Television
`Broadcasting, Further Notice of
`Proposed Rule Making,
`10 FCC Rcd. 3524 (1995) ..................................... 30
`
`Statement of Policy on Minority
`Ownership of Broadcast Facilities,
`68 FCC 2d 979 (1978) .......................................... 39
`
`LEGISLATIVE HISTORY
`
`H.R. Rep. No. 104-204 (1995) .................................. 3, 7
`
`S. Rep. No. 104-230 (1996) ........................................ 27
`
`TREATISES
`
`William N. Eskridge Jr., Interpreting
`Law (2016) ............................................................ 31
`
`33 Charles Alan Wright et al., Federal
`Practice and Procedure § 8382
`(2d ed. supp. 2020) ............................................... 48
`
`
`
`
`
`
`
`
`
`BRIEF FOR INDUSTRY PETITIONERS
`
`of
`the National Association
`Petitioners
`Broadcasters, Bonneville International Corporation,
`Connoisseur Media LLC, Fox Corporation, News
`Corporation, News Media Alliance, Nexstar Inc., The
`Scranton Times L.P., and Sinclair Broadcast Group,
`Inc. (collectively, “Industry Petitioners”) respectfully
`submit that the judgment of the United States Court
`of Appeals for the Third Circuit should be reversed.
`
`OPINIONS BELOW
`The opinion of the Third Circuit (Pet.App.1a-63a)
`is reported at 939 F.3d 567.1 The order of the Third
`Circuit denying rehearing (Pet.App.311a-14a)
`is
`unreported.
` The
`orders
`of
`the Federal
`Communications Commission under review in this
`Court (JA101-576; Pet.App.64a-310a; JA577-704) are
`reported at 31 FCC Rcd. 9864, 32 FCC Rcd. 9802, and
`33 FCC Rcd. 7911.
`
`JURISDICTION
`The Third Circuit entered judgment on September
`23, 2019, and denied a timely petition for rehearing on
`November 20, 2019. On February 12, 2020, Justice
`Alito extended the time for filing a petition for a writ
`of certiorari to and including March 19, 2020. On
`March 12, 2020, Justice Alito further extended the
`time for filing a petition for a writ of certiorari to and
`including April 18, 2020. On March 19, 2020, this
`Court issued a standing order that also extended the
`time for filing a petition for a writ of certiorari to and
`including April 18, 2020. The petition for a writ of
`
`1 “Pet.App.” refers to the petition appendix in No. 19-1241.
`
`
`
`
`
`2
`
`certiorari was filed on April 17, 2020, and granted on
`October 2, 2020. This Court has jurisdiction under 28
`U.S.C. § 1254(1).
`
`STATUTORY PROVISION INVOLVED
`Section 202(h) of the Telecommunications Act of
`1996, Pub. L. No. 104-104, § 202(h), 110 Stat. 56,
`111-12 (1996), as amended by Pub. L. No. 108-199,
`§ 629, 118 Stat. 3, 99-100 (2004), provides:
`SEC. 202. BROADCAST OWNERSHIP.
`* * *
`REVIEW.—The
`COMMISSION
`(h) FURTHER
`Commission shall review its rules adopted pursuant
`to this section and all of its ownership rules
`quadrennially 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 Commission shall repeal or modify
`any regulation it determines to be no longer in the
`public interest.2
`
`STATEMENT
`In 1996, Congress enacted Section 202(h) to
`achieve “regulatory reform” of the rules limiting the
`ownership of our nation’s broadcast outlets and
`newspapers—rules that trace back to the 1940s, when
`black-and-white television sets were a novelty. To
`that
`end, Congress
`required
`the Federal
`Communications
`Commission
`(“FCC”
`or
`
`
`2 The Act originally required biennial review but was later
`amended to mandate quadrennial review. See Pub. L. No. 108-
`199, § 629(3), 118 Stat. at 100.
`
`
`
`
`
`3
`
`“Commission”) to regularly review its rules restricting
`ownership of television stations, radio stations, and
`newspapers, and to “repeal” or “modify” any
`regulation that is no longer “necessary in the public
`interest as the result of competition.” Pub. L. No. 104-
`104, § 202(h), 110 Stat. 56, 111-12 (1996) (“1996 Act”).
`Despite Congress’ clear command that the FCC
`modernize
`its ownership rules by eliminating
`outdated restrictions, a single panel of the Third
`Circuit has blocked the FCC’s efforts to fulfill its
`statutory duty for more than 15 years.
`As a result, the media ownership rules have
`remained stuck in the past. When Congress enacted
`Section 202(h), the rules were already relics from a
`time when traditional television and radio broadcasts
`dominated video and audio entertainment and, along
`with print newspapers, were virtually the only means
`by which Americans received news. By 1996,
`revolutionary technological changes had sparked an
`“explosion of video distribution technologies and
`subscription-based programming sources that gave
`consumers new media options, including cable and
`satellite television, and challenged the dominance of
`newspapers and “free over-the-air broadcasting.”
`H.R. Rep. No. 104-204, at 55 (1995). Congress
`instructed the FCC to implement periodic “regulatory
`reform reviews” to ensure that its rules keep pace with
`these significant competitive changes. Since then, the
`Internet has dramatically increased the public’s
`information and
`entertainment
`options, and
`competition in the media marketplace only continues
`to grow.
`Despite Congress’ mandate and the ever-evolving
`media landscape, the FCC’s long-outdated rules are
`still in force because the same divided panel of the
`
`
`
`
`
`4
`
`Third Circuit has—time and again—prevented the
`FCC from implementing the reforms Section 202(h)
`requires. See Pet.App.46a (Scirica, J., dissenting).3 In
`the Reconsideration Order under review, the FCC
`made critical adjustments to its ownership rules by
`repealing certain provisions and modifying others
`that the FCC concluded no longer served the public
`interest
`in
`light of “dramatic changes
`in the
`marketplace.” Pet.App.67a (alteration omitted). The
`Third Circuit, however, vacated the Reconsideration
`Order in its entirety, thus reinstating all the prior
`rules. Pet.App.41a.
`The Third Circuit’s decision was not based on the
`rules’ perceived merits or any defect
`in the
`competition analysis Congress directed the FCC to
`perform; in fact, no party disputed any aspect of that
`analysis or the FCC’s overarching conclusion that the
`rules no longer served the public interest in light of
`competition. Instead, the Third Circuit’s decision was
`based solely on atextual policy concerns about the
`gender and racial makeup of broadcast station
`owners.
`faulted the
`Specifically, the Third Circuit
`Commission for failing to produce more robust
`statistical or in-depth theoretical analysis of how the
`Reconsideration Order’s rule changes would affect
`minority and female ownership. That holding finds
`no support in Section 202(h) or any principle of
`administrative law. Congress explicitly directed the
`
`3 See Prometheus Radio Project v. FCC, 652 F.3d 431, 472 (3d
`Cir. 2011) (“Prometheus II ”) (Scirica, J., dissenting); Prometheus
`Radio Project v. FCC, 373 F.3d 372, 435 (3d Cir. 2004)
`(“Prometheus I ”) (Scirica, C.J., dissenting); see also Prometheus
`Radio Project v. FCC, 824 F.3d 33, 60 (3d Cir. 2016) (“Prometheus
`III ”) (Scirica, J., dissenting).
`
`
`
`
`
`5
`
`Commission to consider competition, not minority and
`female ownership, in conducting Section 202(h)
`reviews.
` Congress knows how to direct the
`Commission
`to consider minority and
`female
`diversity,
`and
`did
`so
`elsewhere
`in
`the
`Communications Act, but not in Section 202(h).
`Citing no statutory authority, the Third Circuit
`elevated policy preferences about ownership diversity
`above Congress’ express competition-based command.
`The panel majority transformed minority and female
`ownership into not just a mandatory consideration in
`the FCC’s Section 202(h) reviews, which was itself
`error under the statute, but a dispositive threshold
`requirement in such reviews, which was further error.
`Under the Third Circuit’s decision, no matter what
`the Commission concludes about the necessity of its
`rules in light of competition, it cannot change those
`rules without sufficiently compelling empirical
`evidence or in-depth theoretical analysis about the
`prospective effect of the changes on minority and
`female ownership.
`In vacating the Reconsideration Order on that
`basis, the Third Circuit once again prevented the FCC
`from bringing its archaic ownership rules into the
`modern age, obstructing the ability of newspapers and
`local broadcasters to compete in today’s media
`marketplace. Industry Petitioners support the goal of
`advancing minority and
`female ownership of
`broadcast stations, and some have advocated for
`programs to do just that. But that goal was not one
`Congress required the Commission to consider in
`Section 202(h), and it thus cannot be invoked as the
`sole reason to prevent the Commission from updating
`ossified rules that harm the newspaper and broadcast
`industries—and ultimately the American public.
`
`
`
`
`
`6
`
`This Court should reverse the judgment below,
`instruct the Third Circuit to deny Respondents’
`petitions for review, and allow the Commission’s rule
`changes finally to take effect.
`A. Congress Mandates Periodic
`“Regulatory Reform Review” Of
`Media Ownership Rules.
`The Commission’s rules restrict ownership of
`multiple television or radio stations, as well as “cross-
`ownership” of different types of media outlets, in local
`markets. See 47 C.F.R. § 73.3555. Section 202(h)
`requires the FCC to assess those rules every four
`years “as part of . . . regulatory reform review” to
`determine whether they “are necessary in the public
`interest as the result of competition,” and provides
`that the agency “shall repeal or modify any regulation
`it determines to be no longer in the public interest.”
`1996 Act, § 202(h).
`the competitive
`in
`Despite seismic shifts
`industry, these FCC
`landscape of the media
`ownership rules have remained virtually unchanged
`for decades. Today, they exist as relics from a time
`when Americans had access to a very limited number
`of sources of information, and ownership regulations
`were designed to manage the perceived scarcity of
`radio spectrum, see Red Lion Broad. Co. v. FCC, 395
`U.S. 367, 376 (1969), by preventing undue economic
`concentration and promoting viewpoint diversity. The
`FCC first adopted structural ownership rules in the
`1940s. See Nat’l Broad. Co. v. United States, 319 U.S.
`190, 194-96 (1943).
` And
`it promulgated the
`Newspaper/Broadcast Cross-Ownership Rule, 47
`C.F.R. § 73.3555(d), which prohibits an entity from
`owning a daily newspaper and a single full-power
`radio or television station in the same geographic
`
`
`
`
`
`7
`
`market, in 1975. See In re Amend. of Sections 73.34,
`73.240, and 73.636 of the Commission’s Rules Relating
`to Multiple Ownership of Standard, FM, and
`Television Broadcast Stations, 50 FCC 2d 1046, 1075
`(1975).
`By 1996, technological innovation had rendered
`that regulatory approach obsolete. “On the cusp of an
`unprecedented
`revolution
`in
`communication
`technologies, Congress set in motion [a] statutorily-
`prescribed process of media deregulation based on the
`conviction that increased competition in the media
`marketplace would best serve the public interest.”
`Prometheus I, 373 F.3d at 438 (Scirica, C.J.,
`dissenting). Congress recognized that in this newly
`“competitive environment, arbitrary limitations on
`broadcast ownership” were “no longer necessary” to
`protect consumers and instead were harmful to “the
`industry’s ability to compete effectively
`in a
`multichannel media market.” H.R. Rep. No. 104-204,
`at 55.
`The solution, Congress determined, was to adopt
`a plan for regulatory reform compelling the FCC “to
`depart from the traditional notions of broadcast
`regulation and to rely more on competitive market
`forces.” H.R. Rep. No. 104-204, at 55. Congress
`kicked off this process by specifically directing the
`relaxation or elimination of several media ownership
`rules. See 1996 Act, § 202(a), (b), (c)(1), (e), (f )(1), (i).
`And it enacted Section 202(h) to ensure that the FCC
`would continue to update its rules to reflect ongoing
`technological change and increased competition. In
`sum, Congress enacted a deregulatory provision
`designed to free broadcast stations and newspapers
`from regulatory burdens that hindered their ability to
`compete in the modern media marketplace. See Fox
`
`
`
`
`
`8
`
`TV Stations, Inc. v. FCC, 280 F.3d 1027, 1044 (D.C.
`Cir.) (likening the “deregulation . . . mandate” of
`§ 202(h) “to Farragut’s order at the battle of Mobile
`Bay (‘Damn the torpedoes! Full speed ahead.’)”),
`opinion modified on reh’g, 293 F.3d 537 (D.C. Cir.
`2002); Cellco P’ship v. FCC, 357 F.3d 88, 89-99 (D.C.
`Cir. 2004) (explaining that the parallel provision in
`Section 11 of the 1996 Act establishes a “deregulatory
`presumption”).
`Despite Congress’ mandate that the FCC’s
`structural ownership rules accurately reflect the
`current media marketplace—and not the marketplace
`that existed decades ago when the rules were
`adopted—many antiquated restrictions remain in
`place today.
` The Newspaper/Broadcast Cross-
`Ownership Rule, for example, remains exactly the
`same as when it was first promulgated more than 45
`years ago. Similarly, local television ownership limits
`from the last century remain in force, despite vastly
`greater competition from other video services. See
`Pet.App.146a-47a.
` The FCC has repeatedly
`acknowledged that the media landscape has rapidly
`and radically evolved, most recently because “the
`Internet has transformed the American people’s
`consumption of news and
`information.”
` E.g.,
`Pet.App.92a-98a.
`These outdated restrictions harm the newspaper
`and broadcast industries—and the American public.
`For example, broadcast stations and newspapers face
`significant online competition for audiences and
`advertising dollars, competition that did not exist
`when the rules were adopted. See, e.g., Pet.App.98a-
`100a & n.80; cf. Pet.App.152a. As a result of that
`competition, “print newspaper advertising revenue
`ha[s] decreased more than 50 percent since 2008 and
`
`
`
`
`
`9
`
`nearly 70 percent since 2003,” while digital
`advertising has failed to compensate for those losses.
`Pet.App.99a; see also Pet.App.94a-97a. This revenue
`drop has hampered newspapers’ ability to invest in
`their newsrooms.
` See Pet.App.99a (“newsroom
`employees were one-third fewer than at their peak in
`1989”); cf. Pet.App.152a (noting that small and mid-
`sized markets in particular have “less advertising
`revenue to fund local [television] programming”).
`Moreover, 175 newspapers
`ceased publication
`between 2007 and 2010, with another 152 closures in
`2012, and 114 closures in 2013. Pet.App.100a. The
`industry might have been able to avert many of these
`cut-backs and closures through efficiency-maximizing
`transactions, if those deals were not prohibited by
`ancient rules that still apply in a marketplace for
`which they are entirely unsuited.
`B. The Third Circuit Blocks Much-
`Needed Regulatory Reform For More
`Than Fifteen Years.
`Over the last two decades, the FCC has attempted
`to modernize its broadcast ownership rules through
`its statutorily mandated regulatory reform reviews.
`Yet on multiple occasions, starting in 2004, the same
`divided panel of the Third Circuit has prevented the
`FCC from doing so. Along the way, the Third Circuit
`has transformed the non-statutory policy goal of
`promoting minority and female ownership into the
`controlling factor in the FCC’s reviews.
`the
`1. In
`its 2002 review,
`for example,
`the
`Commission
`decided
`to
`repeal
`Newspaper/Broadcast Cross-Ownership Rule and
`replace it with cross-media limits that varied based on
`the size of the relevant market. See Prometheus I, 373
`F.3d at 387, 397-98. That Rule was no longer
`
`
`
`
`
`10
`
`necessary, the FCC concluded, because—among other
`reasons—it “undermines
`localism by preventing
`efficient combinations that would allow for the
`production of high-quality local news.” Id. at 398. In
`other words, a newspaper and a broadcast station
`working together can produce more—and better—
`local news and programming than either could alone.
`On review, the Third Circuit agreed “that the blanket
`ban on newspaper/broadcast cross-ownership was no
`longer in the public interest.” Id.
`The FCC also modified its Local Television
`Ownership Rule to permit ownership of more than one
`station in most markets, with up