The Federal Communication Commission allowed the U.S. Supreme Court to loosen the local media ownership restrictions, handing out a victory to broadcasters in a ruling that could facilitate industry consolidation as consumers increasingly move online.
In a 9-0 decision authored by Justice Brett Kavanaugh, the justices overturned a lower court decision that prevented the 2017 FCC's repeal of some media ownership regulations for failing to consider the effects on ownership by racial minorities and women. Critics of the industry have said that further consolidation would limit the media choices for consumers.
The courts acted in appeals by the FCC, companies including News Corp, Fox Corp and Sinclair Broadcast Group Inc and the National Association of Broadcasters.
The associations for local television stations backed the appeals, including ABC, NBC and CBS, arguing that consolidation would help ensure the economic survival of local television amid heavy competition from video companies that provide the cable content. Broadcast TV stations have said they are increasingly losing their advertising dollars to digital platforms.
In 2017- then led by Republicans during former administration of President Donald Trump- the FCC voted to eliminate a ban on cross-ownership of a newspaper and TV station in a major market since 1975. It has also voted to make it easier for media companies to buy additional TV stations in the same market, and for radio stations to buy additional stations in some markets.
The FCC, now divided equally between Democrats and Republicans, is led by acting chairwoman Jessica Rosenworcel, a Democrat, who voted against the 2017 decision. The agency is expected to have a Democratic majority when President Joe Biden nominates and the Senate confirms a new commissioner. The FCC could then seek to reverse the 2017 order, Rosenworcel did not immediately respond to a request for comment after the ruling.
Kavanaugh wrote for the unanimous court and said that the FCC reviewed the ownership rules reasonably to find that repealing or modifying them was not likely to harm minority and female ownership.
The FCC added: The Historical Justifications for these ownership rules no longer apply in today's media market and that creating efficient combinations among radio stations, television stations and newspapers would benefit consumers.
The case highlighted diverging views on the best way to promote a local environment that promotes a broad range of competitive news and information.
Critics of the FCC's action have said that a relaxed ownership rules could jeopardize a wider array of sources at the local level. The 3-rd Circuit Court of Appeals of the United States of America had thwarted the FCC's efforts to revise the rules in a series of decisions since 2003.
The new rules were challenged by a number of community advocacy groups led by the Prometheus Radio Project. The 3rd Circuit blocked the new rules in 2019: Former FCC Commissioner Mike O'Rielly, a Republican who voted for the 2017 order, said that he expects there will be some local deals to consolidate in which a massive newspaper could be acquired, but that no big deals are going to happen given the struggling local media sector. Cheryl Leanza, a lawyer for the plaintiffs who challenged the 2017 FCC decision, said the good news is that the Biden FCC can quickly get to work building a solid record to promote the Public Interest Standard and Media Ownership Diversity. The advocacy group Free Press said that the Biden FCC and Congress must recognize that Wall Street hedge fund and consolidation harms local communities and only decimates what is left of competition and diversity.
The silver lining in this area is left for the agency's judgement and deferred to a new commission to get this right.
David Chavern, CEO of the News Media Alliance group that represents more than 2,000 news organizations, hailed the ruling and said that the previous restrictions had shackled the newspaper industry for far too long.
The ban will generate much needed investments and local synergies that will help sustain cross-platform news media.