Yesterday, I posted the first in a series of diaries that I hope will provide some useful background about the regulatory and judicial decisions that have led to the successive waves of media ownership consolidation that have had seriously detrimental effects on the quality of the news that makes it into the newspapers and on to the airwaves. In the days to come, I want to outline why media concentration is so harmful for a democracy, detail why diverse ownership of media is still necessary in the public interest, and propose some ideas for fixing the broken media ownership structure that currently exists.
If you're interested (and it provides useful background for this post), you can read the first diary here.
Today, we're going to look at the FCC's attempts to push through another round of media rules that would set the groundwork for further consolidation in 2002 and 2003 and the Third Circuit's rejection of many of those rules in a 2004 decision.
The FCC decided to consolidate the remands of the Fox Television Stations and Sinclair Broadcast Group, Inc. cases, along with other proceedings regarding media concentration, in its 2002 Biennial Ownership Regulation Review. The final Order, issued in 2003, represented the most far-reaching and comprehensive overhaul of the rules governing media ownership that the FCC had ever attempted in one rulemaking.
Probably due to the comprehensiveness of the proposed rulemaking and concerns that the FCC would drastically alter its ownership regulation regime, the FCC received between three quarters of a million and two million comments on the proposed rules, with the overwhelming majority of these comments opposing the FCC’s plans to relax the cap on media ownership.
Despite the public opposition to giving the green light to further consolidation and even though the courts in Fox Television Stations and Sinclair Broadcast Group, Inc. only really rejected the FCC’s prior rules because they were not sufficiently supported by evidence in the record, the Commission, under the leadership of Michael Powell (appointed by President Bush), took the Biennial review and the various remand orders as an opportunity to fully embrace the presumptively deregulatory reading of the 1996 Telecommunications Act.
The 2003 Order: increased the number of television stations a single entity may own, both locally and nationally; revised various provisions of the regulations governing common ownership of radio stations in the same community; and replaced two existing rules limiting common ownership among newspapers and broadcast stations (the newspaper/broadcast cross-ownership rule and the radio/television cross-ownership rule) with a single set of "Cross-Media Limits," based upon a Diversity Index.
The Diversity Index ("DI") – which the FCC based on a Federal Trade Commission Index that measures market concentration – used to determine the Cross-Media Limits was supposed to measure the availability of different categories of media for consumers in a given market, assigning a weight to each class of outlet based on their relative value to consumers.
The FCC concluded that broadcast television, daily and weekly newspapers, radio, and the Internet contributed to viewpoint diversity in local markets, gave each of these sources a relative weight based upon their popularity, and then counted the number of outlets within each media type and assigned each outlet an equal market share.
Both public interest and consumer advocacy groups – who argued that the deregulatory provisions in the Order went too far and conflicted with the FCC’s mandate to regulate in the public interest – and associations of networks, broadcasters, and newspaper owners – who claimed that the failure to push the deregulation further violated the Constitution, the Administrative Procedure Act, and the Act of 1996 – filed challenges in various Courts of Appeal across the country. These appeals were consolidated in the Third Circuit, in a case captioned Prometheus Radio Radio Project v. FCC.
Before the Court could even hear the review, Congress responded to public pressure and amended the 1996 Act to roll back the national television ownership rule’s audience reach cap from 45% to 39%, a move that addressed what was probably the least consequential of all of the FCC’s rule changes.
In its review of the remaining rules, the Third Circuit determined that the Commission was required to repeal or modify regulations that it deemed no longer "helpful" or "useful" to the public interest (the "plain public interest" standard of "necessary"), but it refused to accept the FCC’s idea that the 1996 Act "must therefore operate as a one-way ratchet" that can be used only to eliminate existing regulations.
Instead, the Prometheus court moderated previous interpretations of §202(h), insisting that, while that section of the statute was deregulatory in the sense that it imposed a requirement on the FCC that it justify its existing regulations, it just imposed the APA’s reasoned analysis requirement (which normally only applies to regulations that are to be repealed or modified) on the FCC’s retention of the media concentration regulations that were already on the books.
In applying this reasoned analysis standard, the court found that, based on the record the FCC produced, the Commission was justified in concluding that some newspaper/broadcast combinations can promote localism and that a blanket prohibition on this kind of cross-ownership was not necessary to protect diversity. However, the court found that the rules that the FCC did adopt for different sized markets based on the DI failed the reasoned analysis test because of the internal inconsistencies inherent in the construction of the DI itself.
The court’s analysis led it conclude that, despite the seeming mathematical complexity of the DI, all it really accomplished was counting and adding up all the number of media outlets in a given market. Under this logic, a market with fifty radio stations that all broadcast the same thing would be more diverse than a market with two radio stations with radically divergent points of view.
The DI failed, then, to actually measure diversity of viewpoints due in large part to its construction, which gave equal weight to each market participant in a given medium, regardless of the share of the media audience that the outlet had. In other words, the FCC once again failed to come up with any kind of coherent definition of market diversity that would survive a careful review by an appeals court.
Similarly, the court rejected the specific numerical limits that the FCC used in determining which markets it would allow triopolies of local television stations to exist in, holding that the particular line that the FCC chose to draw demarcating where a triopoly was permissible due to the number of competitors present invalid because it was "patently unreasonable." As it similarly found in concluding that a rational rulemaking process did not support the construction of the DI, the court concluded that the FCC ran aground in trying to define the level of diversity in a coherent numerical fashion that would satisfy a reviewing court.
The Prometheus decision meant that the FCC had failed yet again to pass a set of ownership rules that would pass judicial muster. While this was seen as a big win for opponents of media consolidation, the FCC, under the leadership of its Republican head, was still determined to push through new rules that would allow further media ownership concentration. The 2006 Quadrennial Review provided the opportunity for these new rules. Tomorrow, we'll look at that rulemaking and I'll give my critique of its many flaws.