Opinion ID: 220512
Heading Depth: 2
Heading Rank: 2

Heading: The Commission's 2006 Quadrennial Review, 2008 Order, and Diversity Order

Text: In July 2006, the FCC began another quadrennial review. Marking the culmination of the review process in December 2008, the FCC issued its 2008 Order containing changes to its ownership rules made in response to our remand, and deemed necessary to the public interest in the course of its own review, offering justifications for those changes, and issuing five permanent waivers of its newspaper/broadcast cross-ownership rule. Simultaneously, the FCC issued the Diversity Order in response to our remand and to carry out its statutory duty to enhance opportunities for minorities and women in broadcast ownership. We consider the proposed rule changes, the waivers, and the Diversity Order below. The following is a brief description of the rule changes made by the Commission following its 2006 Quadrennial Review that are challenged by one or more of the parties.
In its 2008 Order, the Commission abandoned the cross-media limits announced in the 2003 Order, declined to retain the ban abandoned in the 2003 Order (but still in existence due to our stay), and adopted an entirely new rule. Under the new rule, the Commission will consider newspaper/broadcast cross-ownership proposals on a case-by-case basis using a four-factor test, set forth below, guided by reversible presumptions. In the top 20 Designated Market Areas (DMAs), the Commission will presume that it is not inconsistent with the public interest for an entity to own ... either (a) a newspaper and a television station if (1) the television station is not ranked among the top four stations in the DMA, and (2) at least eight independent `major media voices' remain in the DMA; [5] or (b) a newspaper and a radio station. 2008 Order ¶ 53. In all other markets, the Commission will presume that it is inconsistent with the public interest for an entity to own newspaper and broadcast combinations. Id. at ¶ 63. However, the Commission will reverse that negative presumption if either (1) the proposed combination initiates at least seven hours a week of additional local news programming, or (2) the newspaper or broadcast outlet qualifies as failed or failing. Id. at ¶¶ 65-67. Guided by these reversible presumptions, the Commission will consider the following four factors in determining whether to approve a proposed combination: (1) the extent to which cross-ownership will serve to increase the amount of local news [6] disseminated through the affected media outlets in the combination; (2) whether each affected media outlet will exercise its own independent news judgment; (3) the level of concentration in the Nielsen DMA, [7] and (4) the financial condition of the newspaper or broadcast station, and if the newspaper or broadcast station is in financial distress, the owner's commitment to invest significantly in newsroom operations. Id. at ¶ 68. However, the presumptions  negative and positive  present a high hurdle for opposing parties to overcome. Id.
The Commission also abandoned the cross-media limits proposed in 2003 with respect to radio/broadcast cross-ownership. Instead, it announced that it would retain its pre-2003 rule (still in effect at that time due to our stay of the 2003 rule), which limits the number of commercial radio and television stations an entity may own in the same market, with the degree of common ownership permitted varying depending on the size of the relevant market. Id. at ¶ 80. More specifically, an entity may own up to two television stations and up to six radio stations (or one and seven) in a market where 20 independently owned media voices would remain post-merger, and up to two television stations and four radio stations where 10 voices would remain. Id. at ¶ 80 n. 259. An entity may own two television stations and one radio station regardless of the number of voices remaining in the market. Id. [8]
The Commission also chose to retain the pre-2003 local television ownership rule, under which an entity may own two television stations in the same DMA if (1) the station contours do not overlap; or (2) at least one of the stations in the combination is not ranked among the top four in terms of audience share and at least eight independently owned broadcast television stations would remain in the DMA after the combination. Id. at ¶¶ 87, 96. It abandoned completely the relaxed numerical limits in the 2003 Order. Additionally, the Commission reinstated the failed station solicitation rule.
As it did in the 2003 Order, the Commission retained the numerical limits prescribed by Congress in the 1996 Telecommunications Act (and the revised market definition we upheld in Prometheus I). See 2008 Order ¶¶ 110-11. However, it offered a new justification for those limits and for the AM/FM subcaps, as we had rejected as unreasonable the rationales given in its 2003 Order. Id. at ¶¶ 130-34; Prometheus I, 373 F.3d at 430-35. The rule provides that an entity may own, operate, or control (1) up to eight commercial radio stations, not more than five of which are in the same service ( i.e., AM or FM), in a radio market with 45 or more full-power, commercial and non-commercial radio stations; (2) up to seven commercial stations, not more than four of which are in the same service, in a radio market with between 30 and 44 (inclusive) full-power, commercial and non-commercial radio stations; (3) up to six commercial radio stations, not more than four of which are in the same service, in a radio market with between 15 and 29 (inclusive) full-power, commercial and non-commercial radio stations; and (4) up to five commercial radio stations, not more than three of which are in the same service, in a radio market with 14 or fewer full-power, commercial and noncommercial radio stations, except that an entity may not own, operate, or control more than 50 percent of the stations in such a market. 2008 Order ¶ 110.
In its separate Diversity Order, the FCC adopted, with modifications, 13 proposals submitted during the rulemaking proceeding and rejected 10 other proposals intended to increase broadcast ownership by minorities and women. It also sought comment on nine separate proposals in the accompanying Third Further Notice of Proposed Rulemaking (the Third FNPR). Diversity Order ¶¶ 80-101. It did not consider proposed SDB definitions. The Diversity Order adopts a number of measures to increase ownership opportunities for eligible entities, [9] which are defined to include all entities that qualify as small businesses under the standards of the Small Business Administration (the SBA) for industry groupings based on revenue. Among other provisions, the Diversity Order also establishes several measures intended to eliminate fraud and discrimination in broadcast ownership.
In March 2008, Common Cause and several other groups [10] filed a Petition for Reconsideration of the Commission's 2008 Order. See Common Cause et al., Petition for Reconsideration, MB Docket 60-121 (Mar. 24, 2008) ( Petition for Reconsideration ). In July 2008, Citizen Petitioners [11] filed for review of that Order in our Court. Subsequently, several other petitions for review were filed before us, all of which were consolidated with that of Citizen Petitioners. In December 2008, Citizen Petitioners filed a motion to hold these cases in abeyance pending the FCC's action on the Petition for Reconsideration. We granted that motion and ordered the parties to show cause why the stay entered in 2003, and continued in Prometheus I, should not be lifted. On consideration of their responses, we requested that the parties file status reports regarding the pending Petition for Reconsideration and our stay. Order Requesting Status Reports, June 12, 2009. After reviewing the status reports, we requested that the Commission advise us when it expect[ed] to issue its decision on reconsideration of the 2006 Quadrennial Regulatory Review.  Order Requesting Further Information, Nov. 4, 2009 (emphasis in original). In response, the Commission made clear that it was already working hard to reexamine the issues raised in the Petition for Reconsideration. Thus, it did not intend to issue a decision on reconsideration of the 2008 Order until that decision [could] be made harmoniously with the current Quadrennial Regulatory Review. Memorandum from Austin C. Schlick, FCC General Counsel, to Marcia M. Waldron, Clerk, U.S. Court of Appeals for the Third Circuit 1 (Nov. 25, 2009). The Commission requested that we continue to hold these cases in abeyance. Id. It asked that, in the alternative, we remand the 2008 Order to the Commission so that it may revisit the determinations made in that order in conjunction with its 2010 Quadrennial Review. Id. at 2. [12] We declined to do either, and in March 2010 we lifted the stay and set a briefing schedule for the consolidated cases pending before us.