Court lifts stay of relaxed cross-ownership rules, but little immediate impact likely

It’s been 35 years since any new permanent commonly-owned newspaper/broadcast combinations could be created in any given U.S. market. But that may now change – the U.S. Court of Appeals for the Third Circuit has lifted its stay of the FCC’s 2007 decision relaxing that ban – although exactly when any changes may be realized is still up in the air.

The newpaper/broadcast cross-ownership prohibition was put in place in 1975 – during the Wiley Commission (for those of you with long memories) – out of concern that such combos would unduly dominate local media. In 2003, as part of its controversial ownership proceeding, the Powell Commission decided to relax the cross-ownership ban along with a variety of limits on common ownership. But before anybody could take advantage of the relaxation, the whole package of revisions – including the relaxation of the newspaper/broadcast cross-ownership ban – got appealed to the Third Circuit in the now famous Prometheus Radio Project case.  And while the appeal was pending, the Third Circuit stayed the effectiveness of the proposed rule changes. 

In 2004 the Court upheld the Commission’s determination that an absolute ban on newspaper/broadcast cross-ownership was not warranted . . . BUT the Court disagreed with the way the FCC proposed to loosen the reins. So the Court remanded the decision back to the Commission for further proceedings. And in the meantime, the stay remained in effect – meaning that the 1975 rules still ruled.

In 2006, the Martin Commission again took up the media ownership rules (as Congress told it to).  And after still more hearings and droves of public comments, in 2008 out came a decision adopting a somewhat revised version of the 2003 newspaper/broadcast cross-ownership approach. Under the 2008 approach (as had been the case with the 2003 revision), the absolute ban from 1975 was gone. But now, combinations of a single broadcast station and a single daily newspaper in the top 20 television markets would be allowed, as long as (a) the television station was not ranked in the top four, and (b) a sufficient number of independent “major media voices” would remain in the market. In markets below the top 20, the Commission retained the ban, but set out a four-factor test that it would consider in granting waivers. 

Not surprisingly, the FCC’s 2008 Order was appealed, ending up in the Third Circuit again. And sure enough, the Third Circuit promptly continued its stay of the FCC’s new rule changes. While the appeal was pending, the leadership of the FCC changed, and the new Genachowski Commission notified the Court that the 2008 decision no longer necessarily reflected the views of a majority of the current Commissioners. It asked the Court to continue the stay – and to hold the substantive appeal in abeyance – while the Commission addressed petitions for reconsideration of the 2008 decision and began its next statutorily required quadrennial review of its media ownership rules.

Three times in the past year the Third Circuit asked the FCC and the other parties to the case to update the Court on the status of those proceedings at the Commission. In its last such request (in December, 2009), the Court indicated some impatience with the lack of apparent progress: the Court expanded its previous request to ask why the stay shouldn’t be lifted and why the Court shouldn’t proceed to hear the case. The Commission responded that the Court really ought to wait until the conclusion of the 2010 quadrennial review. It appears that the Court was not convinced. 

In a very brief Order, the Court has now lifted the stay, and established a briefing schedule for the remainder of the case. With initial briefs now due on May 17, and the overall briefing cycle set to wrap up by July 1 (barring any intervening interruptions), things are likely to move reasonably quickly. 

In the interim, the 2008 changes to the newspaper/broadcast cross-ownership rule will go into effect, finally. But bear in mind that the current Commission has already made clear that it does not approve of those 2008 changes. Moreover, until the Third Circuit issues its decision on the merits of the pending appeals, the longevity of those changes is still very much an open question. (Recall that, in its 2004 opinion, the Third Circuit gave the thumbs up to relaxing the cross-ownership ban as a general matter, but at the same time gave the thumbs down to the mechanics of precisely how the Commission proposed to do the relaxing.) So the impact of the Third Circuit’s lifting of the stay is likely to be minimal for almost everybody, at least for the time being. (The technical effectiveness of the 2008 changes will put some burdens on a limited number of parties to the appeal, but they are by far the exception, not the rule.)

Interestingly, the FCC had already scheduled its next public workshop in the media ownership proceeding – a forum titled Newspaper/Broadcast Cross-Ownership Impact on Competition and Diversity in the Media Marketplace – for April 20. With the stay now lifted, that get-together could prove entertaining.