Supreme Court Backs FCC, Allows Relaxed Media-Ownership Limits

(Bloomberg) -- The U.S. Supreme Court let the Federal Communications Commission ease limits on the ownership of local television and radio stations, siding with the broadcast industry and Trump-era regulators in a long-running fight.

The justices unanimously overturned an appeals court ruling that had required the FCC to first study the potential impact on female and minority ownership in the media industry.

The broadcast industry and many Republican lawmakers had been seeking to relax the ownership limits for decades, saying the restrictions were badly outdated.

“I don’t think this is going to facilitate a wave of acquisitions,” Jack Goodman, a Washington-based broadcast attorney, said in an interview. “What it does, is facilitate some transactions” such as those involving both TV and radio stations. Prospective new owners won’t need to shed stations to gain FCC approval, Goodman said.

Shares of television-station groups, which favor eased restrictions, jumped on news of the ruling before surrendering some gains. Sinclair Broadcast Group Inc. closed up 2.3%, Nexstar Media Group Inc. gained 1.6%, and Tegna Inc. advanced 3.6%. Fox Corp. was little changed.

Writing for the Supreme Court, Justice Brett Kavanaugh said the FCC made a reasonable judgment based on the limited evidence it had about any effect the changes might have on female and minority ownership.

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“The FCC repeatedly asked commenters to submit empirical or statistical studies on the relationship between the ownership rules and minority and female ownership,” Kavanaugh wrote. “Despite those requests, no commenter produced such evidence indicating that changing the rules was likely to harm minority and female ownership.”

In 2017 the FCC, under a chairman appointed by Trump, eliminated 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 change also let companies own two of the top four stations in some markets if the FCC grants a waiver.

In addition, the FCC eliminated 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.

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An appeals court ruling against the FCC put the changes on hold.

The National Association of Broadcasters “commends” the decision, said its president, Gordon Smith.

Backers of stronger rules said they would press for renewed action from the FCC, which is obligated to periodically review media ownership limits. Several restrictions remain, including a rule that usually prohibits owning two of the top four TV stations in a market, and another that sets limits on radio outlet ownership.

The FCC under President Joe Biden “is likely to move more slowly and cautiously” in easing those rules than the commission would have under former President Donald Trump, said Matthew Schettenhelm, an analyst at Bloomberg Intelligence.

“This decision clearly reinforces the FCC’s authority to issue new, stronger rules if the record would support that,” said Andrew Jay Schwartzman, co-counsel for the group that challenged the FCC’s rules relaxation. “We will likely press for better data and for rules that would address increased concentration nationally and within local markets.”

FCC acting Chairwoman Jessica Rosenworcel, a Democrat, said she was disappointed.

“The values that have long upheld our media policies -- competition, localism, and diversity -- remain strong,” Rosenworcel said in an emailed statement. “I am committed to ensuring that these principles guide this agency as we move forward.”

The cases are FCC v. Prometheus Radio Project, 19-1231, and National Association of Broadcasters v. Prometheus Radio Project, 19-1241.

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