Opinion ID: 220512
Heading Depth: 2
Heading Rank: 1

Heading: Our Review of the Commission's 2003 Report and Order

Text: In September 2002, the Commission issued a Notice of Proposed Rulemaking, announcing that it would review six of its broadcast ownership rules in its 2002 Biennial Regulatory Review. Id. at 386 (citing 2002 Biennial Regulatory Review  Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Notice of Proposed Rulemaking, 17 F.C.C.R. 18,503, ¶ 6, 2002 WL 31108252 (2002) (the  2002 Notice )). In 2003, it issued an Order modifying the rules. See 2003 Order. We provide below a brief description of the rules, and the actions we took with respect to each.
Starting in 1975, the Commission banned common ownership of a full-service broadcast television station and a daily public newspaper. Prometheus I, 373 F.3d at 387 (citing Amendment 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 F.C.C.2d 1046, 1975 WL 30457 (1975)). Prior to 2003, it also regulated common ownership of television and radio stations. Id. In its 2003 Order, the Commission determined that the existing rules were no longer in the public interest, repealed them, and replaced them with a single set of Cross-Media Limits using a methodological tool called the Diversity Index. [2] Id. at 387-88. In Prometheus I, we upheld the Commission's decision that a complete ban on newspaper/broadcast cross-ownership was no longer necessary to protect diversity, but that continuing to regulate cross-ownership was in the public interest. Id. at 399-400. However, we did not uphold the Cross-Media Limits themselves because the Commission had failed to provide reasoned analysis to support them. Id. at 402-12. Specifically, we concluded that it did not justify its choice and weight of specific media outlets ... [selected] for inclusion in the Diversity Index, did not justify its assumption of equal market shares ... [for] all outlets within the same media type (that is, television stations, daily papers, or radio stations), and did not rationally derive its Cross-Media Limits from the Diversity Index results. Id. at 404, 408, 409.
The local television ownership rule allowed one entity to own two television stations in a market (a television duopoly) as long as at least one of the stations was not ranked among the market's four largest stations and at least eight independently owned and operated stations (called eight voices) would remain post-merger. Id. at 386. In 2003, the Commission amended this rule to permit triopolies in markets with 18 or more stations and duopolies in markets with 17 or fewer. Id. at 386-87. The Commission also repealed its failed station solicitation rule, which required applicants seeking waivers of the local television rule to provide notice of the sale to potential out-of-market buyers before it could sell a failed, failing, or unbuilt station to an in-market buyer. Id. at 420. The failed station solicitation rule was adopted in 1999 to alleviate concerns that the FCC's decision to allow local television duopolies  hence more concentration of ownership  would undermine station ownership by minorities. Id. We upheld the retention of the ban on cross-ownership of the top four stations in a market (known as the top four restriction), and the relaxation of the eight voices rule, but remanded the specific numerical limits for the Commission to support and harmonize its rationale. Id. at 415-16, 420. We also remanded its repeal of the failed station solicitation rule, as the Commission had failed to consider the effect on minority ownership of the repeal despite the rule being the only existing regulation intended to promote minority television ownership. Id. at 421.
Congress established specific numerical limits on radio ownership in the Telecommunications Act of 1996, Pub.L. No. 104-104, 110 Stat. 56, 110 (1996) (codified as amended at 47 U.S.C. § 202(b)(1)) (the 1996 Telecommunications Act). The 2003 Order retained these limits, but replaced the contour-overlap method [3] for determining radio markets with a geographic method and announced that the Commission would include noncommercial stations in the station count for each market. Prometheus I, 373 F.3d at 387. We upheld the new market definition and the inclusion of noncommercial stations but remanded the numerical limits for further consideration, including the AM subcaps. [4] Id. at 423-426, 431-35. Specifically, we held that the Commission had failed to support its proposition that the existence of five equal-sized competitors shows that local markets are sufficiently competitive (or that the Commission's limits would actually ensure five competitors) and to explain why it was necessary to impose an AM subcap at all. Id. at 432-35.
Under the dual network rule, a television station is prohibited from affiliating with more than one of the four largest networks. The top four restriction prohibits common ownership by ABC, CBS, Fox, and NBC. Id. at 388. We upheld the Commission's decision to retain this rule in 2003, as it was supported by ample record evidence. Id. at 417-18.
In Prometheus I we concluded that the FCC had failed to consider proposals to promote minority broadcast ownership that the Minority Media and Telecommunications Council (the MMTC) had submitted during the Commission's 2002 biennial review proceeding. The 2003 Order proposed a separate proceeding to address proposals for advancing minority and female ownership in broadcasting. See 2003 Order ¶¶ 49-50 (promising to issue a Notice of Proposed Rulemaking to address the MMTC's 13 specific proposals). We remanded this decision (in effect, to defer consideration of these proposals) and ordered the Commission to address them at the same time that it addressed the other remanded issues from the 2003 Order. Prometheus I, 373 F.3d at 421 n. 59. We also rejected concerns regarding the FCC's new transfer rule that prohibits the transfer or sale of grandfathered [radio/television] combinations that violate its local ownership limits except to certain `eligible entities' that qualify as small businesses. Id. at 426-427 (internal citation omitted). In upholding the transfer rule, however, we anticipate[d] ... that by the next quadrennial review the Commission will have the benefit of a stable definition of SDBs, as well as several years of implementation experience, to help it reevaluate whether an SDB-based waiver will better promote the Commission's diversity objectives than the small business definition it used in the rule. Id. at 427-28 n. 70.