Supreme Court Hints It Will Let FCC Relax Media-Ownership Limits

(Bloomberg) -- The Supreme Court suggested it will let the Federal Communications Commission ease limits on the ownership of local media outlets, giving the broadcast industry and President Donald Trump’s administration a mostly favorable reception in a long-running fight.

Hearing arguments by phone Tuesday, the justices questioned a federal appeals court decision that blocked the changes. The appeals court told the FCC to first study the potential impact on female and minority ownership in the media industry.

Republicans and the broadcast industry have been seeking to relax the ownership limits for decades, saying the restrictions are badly outdated. Easing the rules could mean a wave of consolidation affecting TV stations nationwide.

“We’re stuck with rules from the 1970s that 20 years ago, 25 years ago, Congress said were outdated,” Justice Neil Gorsuch said to Ruthanne Deutsch, the lawyer challenging the changes.

Companies including News Corp., Sinclair Broadcast Group Inc., Fox Corp. and Nexstar Media Group Inc. are part of a group backing the FCC efforts to ease the rules.

Advocacy organizations led by Prometheus Radio Project are fighting the FCC changes, saying the commission didn’t give an adequate explanation for ignoring its longstanding policy of fostering ownership diversity and didn’t give an adequate explanation. Justice Sonia Sotomayor suggested she agreed with that argument.

“We have a legion of cases that say you don’t have to rule in favor of one point of view or another, but when you’re rejecting something, you should give it adequate consideration,” Sotomayor said to Justice Department lawyer Malcolm Stewart. “Isn’t that what we’re judging?”

‘No Evidence’

But some of the court’s conservative justices suggested they saw no basis for the FCC to conclude that its changes would have a negative impact on minority and female station ownership.

“Why isn’t the commission correct that there was no evidence in the record that showed there would be harm?” Justice Amy Coney Barrett asked Deutsch.

The 2017 FCC changes would eliminate a rule that had barred companies from owning two television stations in a market that didn’t have at least eight independently owned stations. The commission is also seeking to allow companies to own two of the top four stations in some markets.

In addition, the FCC would lift separate bans on ownership of both a daily print newspaper and a broadcast station in the same coverage area, and on ownership of both a radio and television station in a single market.

Companies say the existing rules are relics from a era when limited broadcast spectrum meant the FCC had a role in ensuring a diversity of viewpoints within local markets. Gray Television Inc. told the justices the current ownership rules were undermining its strategy of acquiring and improving multiple stations in small and mid-sized markets.

A 1996 law instructs the FCC to revisit its ownership restrictions every four years and repeal or modify rules that are no longer “necessary in the public interest as the result of competition.”

The industry’s lawyer, Helgi Walker, told the justices Tuesday that the statute’s language doesn’t let the FCC use ownership diversity as a reason to stop changes it concludes are otherwise in the public interest.

The court is scheduled to rule by late June. The cases are FCC v. Prometheus Radio Project, 19-1231, and National Association of Broadcasters v. Prometheus Radio Project, 19-1241.

(Updates with excerpts from argument starting in seventh paragraph.)

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