Corie Wright, Policy Counsel for Free Press, argues that the Third Circuit’s ruling restoring the cross-ownership ban on media was a sweeping victory for the public interest and that the FCC must work to maintain diversity in media ownership to ensure competition and the quality of news…

It is déjà vu all over again for the Federal Communications Commission (FCC). The US Court of Appeals for the Third Circuit struck down—for a second time—an attempt by the FCC to relax portions of its longstanding media ownership rules. The case, Prometheus Radio Project v. FCC (Prometheus II), is the latest iteration of litigation that is notable both for its messy and contentious procedural history, as well as its “underdog” appeal. It pitted a handful of public interest groups against both the FCC and the nation’s most powerful and wealthiest media companies. It was a sweeping victory for the public interest.

The FCC’s media ownership limits are designed to promote competition and diversity by protecting local markets from being controlled by a small handful of media companies. The FCC maintains limits on the number of television and radio stations that one company can own in a single media market. Since 1975, the FCC has banned common ownership of a local daily newspaper and television station in the same market, commonly referred to as the “cross ownership rule.” The media industry has made repeated attempts to eliminate the rules, while public interest and consumer groups have pushed for at the very least maintaining protections, but also tightening the limits further.

In 2004, the Third Circuit threw out a previous FCC effort to relax all of its media limits in Prometheus Radio Project v. FCC (Prometheus I). Those rules were remanded to the agency for further review. This month, the same Third Circuit panel rejected the FCC’s decision on remand to relax its cross-ownership ban. It also faulted the FCC for failing to take logical steps to promote diversity in media ownership, which the court had instructed the agency to do when it remanded the rules in Prometheus I.

In Prometheus II, the newspaper and broadcast lobby, including media giants Tribune, News Corp. and Clear Channel, tried to have the ownership limits thrown out on constitutional grounds. Public interest groups defended the constitutionality of the rules, as well as the need for such rules to promote local media competition. The court rejected the corporations’ constitutional arguments, citing longstanding Supreme Court rulings upholding the merits of media ownership limits generally. In rejecting the industry arguments and exposing the FCC’s failures, the court wisely concluded that competition in the media—not more concentration—will provide Americans with the local news and information they need and want.

While the court upheld the constitutionality of the rules broadly and affirmed maintaining existing limits on broadcast television and radio ownership, the FCC’s decision to relax the cross ownership rule did not fare so well. Without even reaching the merits, the majority of the three-judge panel determined that by allotting only two vague sentences to the discussion of a new cross ownership rule in its Notice of Proposed Rulemaking, the FCC failed to provide sufficient notice of the rule change as required by the Administrative Procedures Act. Additionally, the majority cited evidence of highly irregular agency procedures, indicating that the outcome of the proceeding had been predetermined by then-FCC Chairman Kevin Martin. These included allegations that FCC officials suppressed internal research that supported the public interest groups’ position, and had circulated an order containing the revised cross-ownership rule even before the public comment process had concluded. The court vacated the rule altogether, reinstating the original ban on cross-ownership.

The court reserved particularly harsh words for the FCC’s failure to adequately consider measures to improve media ownership opportunities for women and people of color. Despite directing the FCC consider the problem in the Prometheus I decision, the court found that the agency had “punted yet again on this important issue.” A unanimous panel determined that the FCC failed to consider the effects of its rules on minority and female ownership, despite a congressional mandate to encourage ownership among underrepresented groups. It also suggested that the commission ignored evidence in the record that media concentration makes it harder for women and people of color to break into the industry and become broadcast station owners.

Even though the court upheld the need for media ownership limits, industry groups are still pushing the FCC to eliminate them. It is not the commission’s job to protect industry profit margins. The FCC cannot ignore the overwhelming evidence that existing media consolidation levels adversely impact the amount and quality of news from diverse sources. Instead it should use its upcoming ownership review to tighten current ownership limits and promote media diversity, localism and competition.

With the court’s recent decision, the FCC will now embark on yet another review of media ownership limits. Any action the agency takes will surely be subject to continued court battles as industry and public interest groups vie over the ultimate outcome. What is more, the Third Circuit has once again asserted jurisdiction over the remanded issues. The FCC has already struck out twice before that court. Maybe the third time will be the charm.

Corie Wright is Policy Counsel for Free Press, a non-partisan, non-profit organization dedicated to reforming the media. Wright argued Prometheus Radio Project v. FCC before the Third Circuit on behalf of Free Press and other public interest petitioners.

Suggested citation: Corie Wright, Media Ownership in the Third Circuit: A Sweeping Public Interest Victory, JURIST – Hotline, July 18, 2011, http://jurist.org/hotline/2011/07/corie-wright-media-ownership.php.