U.S. Appeals Court Strikes Down FCC Broadcaster Sales Rules

May 25, 2016, 6:40 PM UTC
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The Federal Communications Commission (FCC) headquarters stands in Washington, D.C., U.S., on Monday, Nov. 10, 2014. President Barack Obama called for the "strongest possible rules" to protect the open Internet, advocating stricter controls than a regulator he appointed and causing shares of Comcast Corp. and other broadband providers to drop. Obama's comments tilt the White House against positions advocated by broadband providers and FCC Chairman Tom Wheeler. Photographer: Andrew Harrer/Bloomberg via Getty Images
Photograph by Andrew Harrer —Bloomberg via Getty Images

A U.S. federal appeals court on Wednesday struck down regulations aimed at cracking down on joint sales agreements by local broadcasters, saying an overall review of media ownership rules was long overdue and needed to be completed first.

The Federal Communications Commission in 2014 banned such agreements, arguing they allowed companies to effectively control more than two television stations in a market, which is prohibited by commission rules.

Some members of Congress say such agreements help smaller local TV broadcasters reduce operating costs by merging different stations’ advertising sales departments.

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The 2014 rule allowed stations to seek fast-track appeals for waivers to use joint agreements. But a group of lawmakers introduced legislation last year to reverse the ban.

The three-judge panel of the U.S. Appeals Court in Philadelphia said the commission’s regulation “put the cart before the horse” because it had failed to finalize the overall review of media ownership rules.

Congress had ordered the commission in 1996 to review the rules every four years but it last completed a review in 2006. The FCC still has not completed the 2010 or 2014 reviews.

The court rejected a bid by broadcasters to throw out all the ownership rules, calling such a move the “administrative law equivalent of burning down the house to roast the pig.”

But “this remedy, while extreme, might be justified in the future if the commission does not act quickly,” the court warned.

“Today’s decision is a stern rebuke of an FCC that has often put rural Americans at a disadvantage,” Representative John Shimkus, an Illinois Republican, said in a statement.

FCC Chairman Tom Wheeler on Wednesday told reporters at a news conference that he intended to have a proposed order by June 30 to finalize the review of media ownership rules.

FCC Commissioner Ajit Pai, a Republican, said in a separate news conference the agency had been “derelict in its duty” to keep media ownership rules current.

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Dennis Wharton, a spokesman for the National Association of Broadcasters, said in a statement that “this opinion directs the FCC to do its job and adopt broadcast ownership rules that reflect the modern world.”

Because of court rulings, the FCC’s 1975 ban on cross-ownership of a newspaper and broadcast stations in the same market remains in effect even though the commission determined more than a decade ago that the ban was no longer in the public interest.

“We’re particularly delighted the court highlights the irrationality of a rule that bars broadcast/newspaper combinations in the same market,” Wharton said.

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