Sinclair Broadcast Group, Inc.
Federal Communications Commission and
On Petition for Review of an Order of the
Federal Communications Commission
Barry H. Gottfried argued the cause for petitioner. With him on the briefs were Martin R. Leader and Kathryn R. Schmeltzer.
John R. Feore Jr. and Scott Dailard were on the brief for amicus curiae Paxson Communications Corporation, urging reversal. Nina Shafran entered an appearance.
Counsel, Federal Communications Commission, argued the cause for respondents. With him on the brief were Jane E. Mago,
General Counsel, Daniel M. Armstrong, Associate General Counsel, FCC, and Jacob
Angela J. Campbell, Amy R. Wolverton, Andrew Jay Schwartzman and Harold Feld were on the brief for intervenors.
Before: Sentelle and Rogers, Circuit Judges, and Williams, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge Rogers.
Opinion concurring and dissenting in part filed by Circuit Judge Sentelle.
Judge: Recently, in Fox TV Stations v.
FCC, 280 F.3d 1027 (D.C. Cir. 2002), the court addressed the national
television ownership caps, remanding the national caps for justification by the
Federal Communications Commission and vacating the cable-broadcast
The duopoly rule
prohibited common ownership or control of television stations with overlapping
"Grade B" signal contours. See
47 C.F.R. § 73.3555(b) (1998). When the
rule was promulgated in 1964, the television marketplace consisted only of 649
television stations and a small number of cable systems whose primary purpose
was to retransmit the signals of over-the-air broadcast stations. In 1991, the Commission issued a Notice of
Inquiry ("NOI"), launching an investigation into whether to relax
restrictions on the television industry in view of changes in the video
marketplace in the past 15 years, as reflected in a staff working paper. See Review of the Policy Implications of the
Changing Video Marketplace, Notice of Inquiry, FCC 91-215 (rel.
A year after
issuing its NOI, the Commission issued a Notice of Proposed Rulemaking to consider
changes to several of the structural rules that governed the television industry. See Review of the Commission's Regulations
Governing Television Broadcasting, Notice of Proposed Rulemaking, FCC 92-209
In 1995, the
Commission issued a Further Notice of Proposed Rulemaking, proposing a new
analytical framework for evaluating economic and diversity issues in view of
developments that had altered the telecommunications landscape and changes in
the local marketing agreements ("LMAs") rules for radio. See Review of the Commission's Regulations
Governing Television Broadcasting, Further Notice of Proposed Rule Making, FCC
In October 1996,
the Commission issued a Second Further Notice of Proposed Rulemaking addressing
the duopoly rule, the "one-to-a-market" rule, and LMAs. See Review of the Commission's Regulations
Governing Television Broadcasting, Second Further Notice of Proposed Rule
Making, FCC 96-438 (adopted
In the local
ownership order, the Commission relaxed the duopoly rule by narrowing the
geographic scope from a Grade B contour approach to a DMA test. See Local Ownership Order p 8, 47. Thus, common ownership of television stations
is permitted without regard to contour overlap if the stations are in separate
Nielsen DMAs. Common ownership of stations
in the same DMA is permitted, provided their Grade B contours do not overlap
(continuing the previous rule) or, where there is Grade B overlap, one of the
stations is not among the four highest-ranked stations in the market
("based on audience share as measured by Nielsen or any comparable
professional, accepted rating service, at the time the application is
filed") and "eight independently owned, full-power and operational
television stations (commercial and noncommercial) will remain
post-merger" ("the eight-voices exception"). Based on its finding that "[b]roadcast
stations, particularly television stations, reach large audiences and are the
primary source of news and entertainment programming for Americans," and
also because "there remain unresolved questions about the extent to which
[non-broadcast television] alternatives are widely accessible and provide
meaningful substitutes to broad stations," the Commission determined that
the only medium to be counted for purposes of the "eight-voices
exception" is broadcast television, unlike the minimum voices exception in
the radio-television cross-ownership rule, where certain local newspapers and
cable television stations are counted.
Mergers will be presumed to be in the public interest if one of the
stations in a proposed combination is a failed or failing station, or is not
yet constructed. As to LMAs, as proposed
in the Second Further Notice, LMAs entered prior to
account geographically large DMAs where viewers on the outskirts of a DMA may
not receive the signal of some broadcasters in the DMA, the Commission, in a
reconsideration order of January 19, 2001, determined to count towards the
eight voices only those stations whose Grade B signal contour overlaps with the
Grade B contour of one of the stations in the proposed merger. Reconsideration Order pp 16-17. The Commission otherwise generally affirmed
the local ownership rule on reconsideration, rejecting the First Amendment
challenges to ownership restrictions presented in the initial rulemaking.
We address in Part II a threshold jurisdictional issue raised by the Commission. Concluding that we have jurisdiction to consider Sinclair's challenges to the Local Ownership Order as well as the Reconsideration Order, we address in Part III Sinclair's contention that the Commission acted arbitrarily and capriciously in promulgating the local ownership rule; in Part IV Sinclair's challenge to the Commission's regulation of television LMAs; and in Part V Sinclair's First Amendment contentions.
petition for review stated that it sought review of the report and order issued
The law in this
circuit on when a petitioner's failure to designate the correct order is fatal
has evolved. On the one hand, the court
has held, citing Federal Rule of Appellate Procedure 15(a)(2)(C), that unless
an agency order is specified in the petition for review, the court lacks
jurisdiction to review the order. Thus,
in City of
cases, on the other hand, looking to Federal Rule of Appellate Procedure
3(c)(1)(B), the court held in Brookens v. White, 795 F.2d 178 (D.C. Cir. 1986)
(per curiam), that "a mistake in designating the judgment ... should not
result in loss of the appeal as long as the intent to appeal from a specific
judgment can be fairly inferred from the notice and the appellee is not misled
by the mistake."
For purposes of
the instant appeal, the distinction between administrative appeals under Rule
15(a)(2)(C) and civil appeals under Rule 3(c)(1)(B) all but evaporated when the
court deemed a petition for review under Rule 15 to be analogous to a notice of
appeal under Rule 3. In Southwestern
Bell, the court, upon noting that no party had suggested that a Rule 15
petition is not analogous to a notice of appeal under Rule 3, proceeded to
apply the Brookens test in looking at contemporaneously filed documents to
determine whether the intent to appeal an order unnamed in the petition for
review could be fairly inferred. 180
F.3d at 313 & n*. Other circuits had
taken a similar approach in construing Rule 15(a). See Gottesman v. INS, 33 F.3d 383, 388 (4th
Cir. 1994); Castillo-Rodriguez v. INS,
929 F.2d 181, 183-84 (5th Cir. 1991);
see also Shell Oil Co. v. Fed. Power Comm'n, 509 F.2d 176, 178 (5th Cir.
1975). The court in
relying on Entravision, Small Business in Telecommunications, and
"non-binding statement of the issues" cannot be cast aside as readily
as the Commission suggests. As the
Commission would have it, Sinclair's arbitrary and capricious issue is simply
"a boilerplate claim raised in every agency case" and is unlike both
the statement of issues in Schoenbohm that could have referred only to the
underlying order and not the reconsideration order, and the notice of appeal in
Damsky that referred to the underlying order.
The distinctions are not so fine as the Commission suggests. Sinclair's statement of issues named the
"new local television ownership regulations" as the source of each of
its issues, three involving challenges under the Constitution and a fourth
issue stating that the Commission "acted arbitrarily, capriciously, and
otherwise contrary to law in imposing the new local television ownership
regulations on broadcasters."
Boilerplate or not, the fourth issue, fairly read, can only refer to the
Local Ownership Order of August 6, 1999, and thus gave notice to a reasonably
intelligent person that Sinclair intended to make a substantive challenge to
the underlying Local Ownership Order and not only to the Reconsideration
Order. Sinclair's statement of issues,
which was filed with its docketing statement, was filed thirty-four days after
the petition for review, in accordance with the order of the clerk of this
court. By contrast, Sinclair's reliance
on its motion for a stay, which was filed ninety-one days after the petition
for review, can hardly be considered a "contemporaneous" filing. See Small Business in Telecommunications, 251
F.3d at 1022. Moreover, as in Schoenbolm
and Damsky, the Commission does not claim it was prejudiced or misled, see
Schoenbohm, 204 F.3d at 246; Damsky, 199
F.3d at 533, and we find neither for the Commission addressed both Orders in
Accordingly, because Sinclair's intent to appeal the Local Ownership Order can be fairly inferred from its contemporaneously filed statement of issues, the court has jurisdiction to consider Sinclair's challenges to both Orders.
Sinclair's challenge to the local ownership rule as arbitrary and capricious focuses primarily on the eight-voices exception, contending that it lacks any rational foundation or "connection to the amorphous goal of 'diversity.' " In its view, the Commission "plucked the number eight out of thin air" and arbitrarily defined "voices" to exclude media that were included in the radio-television cross-ownership rule. Sinclair contends that there is no longer any threat that diversity of programming sources, much less diversity of viewpoints, will be diminished if the Commission does not limit ownership of television stations in local markets, and, consequently, the Commission has failed to show the local ownership rule is necessary in the public interest. Sinclair observes that the Commission acknowledged both that the video marketplace has changed substantially since 1964 when it first promulgated the duopoly rule, and that a theory exists that common ownership can lead to better and more varied programming.
In reviewing a
contention that an agency rule is arbitrary and capricious, the court generally
examines whether the Commission has considered the relevant factors and has
provided a reasoned explanation for its action that does not "run[ ]
counter to the evidence before [it]."
Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto Ins. Co., 463
In the Local
Ownership Order, the Commission focused on "ensuring a sufficient number
of independently owned outlets ... [to] maximize the available independent
viewpoints in a given local market."
It took as a basic tenet of national communications policy that
"the widest possible dissemination of information from diverse and
antagonistic sources is essential to the welfare of the public" in
diversity (quoting Turner Broad. Sys., Inc. v. FCC, 512
The Commission determined, in view of changes in the video marketplace since 1964, that because "there may be some intermedia substitutability in the markets served by broadcasters," this "justifies some relaxation of our local television ownership rules, as it suggests that consumers and advertisers may have more viable alternatives to broadcast stations than they once had." Because of the high degree of consolidation in the broadcast industry since the passage of the 1996 Act, with a resultant downward trend in the number of station owners in each market, and in recognition of the economic benefits of common ownership, the Commission confronted what it described as an "exercise in line drawing" between allowing broadcasters to realize economic efficiencies and service benefits, and ensuring diversity and competition. The Commission found that "broadcast television [is] the primary source of news and information for most Americans," Local Ownership Order p 40, and concluded that only a limited degree of relaxation of local ownership restrictions was warranted in view of unresolved issues about the extent to which alternatives provide meaningful substitutes to broadcast stations and are widely accessible. First, the Commission found that the total number of television and radio stations had increased by more than 85% since 1970, while consumer choice had been increased by the introduction of DBS, cable, home satellite dishes, open video systems, the internet, and the less well known sources, wireless cable (MMDS) and single building cable (SMATV) systems. But, second, the Commission observed that many non-broadcast sources "are still establishing themselves in the marketplace and generally do not provide an independent source of local news and informational programming." Third, the Commission reported that, despite repeated requests for evidence regarding the degree to which cable, DBS, home satellite dishes, open video systems, the internet and other alternative media serve as economic substitutes for broadcast television, it had "received no evidence quantifying intermedia substitutability.... [and was] aware of no definitive empirical studies."
Sinclair does not contest that, in fact, this was the state of the record before the Commission. Rather, as the Commission suggests in its brief, Sinclair is focusing on a changed television market, with highly diverse programming, that in its view ownership restrictions cannot help achieve, while the Commission has focused largely on viewpoint diversity. See, e.g., Local Ownership Order pp 22-23; Br. of Respondent at 24-27. The latter addresses station owners bringing unique points of view to the selection of material they air; the former addresses the number of different types of programs on the air, regardless of whether they reflect differing editorial viewpoints. The Commission concludes in its brief on appeal that, consequently, Sinclair's contention that the Commission failed to present substantial evidence that ownership diversity will lead to programming diversity is beside the point. In any event, Sinclair overstates the burden on the Commission. In NCCB, the Supreme Court stated that:
As the Court of Appeals observed, "[d]iversity and its
effects are ... elusive concepts, not easily defined let alone measured without
making qualitative judgments objectionable on both policy and First Amendment
Sinclair's reliance on Lamprecht v. FCC, 958 F.2d 382 (D.C.
Cir. 1992), is misplaced, for the expectation that a particular type of person,
e.g., women, will select particular types of programming is not the same as the
expectation that a variety of owners will present a variety of editorial
viewpoints. To the extent Sinclair
maintains that consideration of competition is beyond the proper purview of the
Commission, it is simply wrong. See
Our review of Sinclair's challenges to the "eight-voices exception" proceeds in recognition that the Commission "has wide discretion to determine where to draw administrative lines," and, therefore, the court will reverse that choice only for abuse of discretion. See AT&T Corp. 220 F.3d at 627. Thus, the court is "generally 'unwilling to review line-drawing performed by the Commission unless a petitioner can demonstrate that the lines drawn ... are patently unreasonable, having no relationship to the underlying regulatory problem.' " Cassell v. FCC, 154 F.3d 478, 485 (D.C. Cir. 1998) (quoting Home Box Office, Inc. v. FCC, 567 F.2d 9, 60 (D.C. Cir. 1977)). Choosing the number eight and defining "voices" are quintessentially matters of line drawing invoking the Commission's expertise in projecting market results. The Commission, observing that it has historically used voice-count tests as a means of promoting diversity, concluded, upon taking into account current marketplace conditions, that the eight-voices standard "strikes what we believe to be an appropriate balance between permitting stations to take advantage of the efficiencies of television duopolies while at the same time ensuring a robust level of diversity."
We leave for
another day any conclusion regarding the Commission's choice of eight. There is an obvious interrelatedness between
the Commission's choice of eight and its definition of "voices." Succinctly put, Sinclair contends that the
Commission has not provided any justification for counting fewer types of
"voices" in the local ownership rule than it counted in its rule on
cross-ownership of radio and television stations. We agree, for notwithstanding the substantial
deference to be accorded to the Commission's line drawing, the Commission
cannot escape the requirements that its action not "run[ ] counter to the
evidence before it" and that it provide a reasoned explanation for its
action. Motor Vehicles, 463
included a voice-count provision in both the radio-television cross-ownership
rule and the local television ownership rule.
For the cross-ownership rule, the Commission included as
"voices" not only broadcast television and radio stations but also
independently owned daily newspapers with circulation exceeding five percent of
households in the DMA, and cable systems providing generally available service
to television households in the DMA, provided all cable systems, within the DMA
are counted as one single voice. Local
Ownership Order p 111. The Commission
found that "[t]he public continues to rely on both radio and television
for news and information, suggesting the two media both contribute to the
'marketplace of ideas' and compete in the same diversity market." The Commission also found, in addressing
market shares, that radio and televison "serve as substitutes at least to
some degree for diversity purposes."
Further, the Commission concluded that newspapers and cable systems
"are an important source of news and information on issues of local
concern and compete with radio and television, at least to some extent, as
By contrast, in
the local ownership rule the Commission excluded all media sources except
broadcast television in defining "voices." It gave two reasons for doing so. First, the Commission stated that its
decision to exclude non-broadcast media from its definition of
"voices" was based on its finding that "broadcast television
remains the primary source of news and information for most
Although the Roper study did not differentiate between broadcast and cable television as sources of news, the Commission repeatedly points to the study as support for its finding on the primacy of broadcast television in news. This is true when the Commission states that the "viewpoint a station uses in presenting the news can have a substantial impact on a local election" and when it states that "broadcast television, more so than any other media, continues to have a special, pervasive impact in our society given its role as the preeminent source of news and entertainment." Local Ownership Order pp 18, 68. Likewise on reconsideration, in reaffirming that "only broadcast TV stations ... are the primary source of news and other information," the Commission points to its original order, which in turn relies on the Roper study. See Reconsideration Order p 22.
record does not fill the evidentiary gap.
Comments submitted to the Commission suggested that the 1994 Commission
Report reprinted in the Federal Communications Law Journal stated that
"more than 70% of the public say they depend upon broadcast television for
most of their local news," when, in fact, the Journal article statement
includes neither the word "broadcast" nor the word
"local." See D.
The second reason the Commission gave for limiting "voices" to broadcast television involved the "unresolved questions about the extent to which [non-broadcast] alternatives are widely accessible and provide meaningful substitutes to broadcast stations." Local Ownership Order p 33. In the 1995 Further Notice, the Commission proposed to include cable systems as well as broadcast, acknowledging that their low market penetration at the time may rapidly change, and sought comments on which suppliers should be included. See Further Notice p 29. The Commission concluded that, in the absence of "definitive empirical studies quantif[ying] the extent to which the various media are substitutable in local markets," the "unresolved questions" on substitutability precluded further relaxation of local ownership restrictions. The Commission explained that "[t]his is a critical issue, for many of the arguments for greater relaxation or elimination of our ownership rules are premised on the assumption that consumers and advertisers have the option of turning to a large number of non-broadcast media." This "wait-and-see approach, however, cannot be squared with its statutory mandate ... to 'repeal or modify' any rule that is not 'necessary in the public interest.' " Fox TV Stations, 280 F.3d at 1042.
The deficiency of
the Commission's explanation is under-scored by the explanation it failed to
give for defining "voices" differently in the cross-ownership and
local ownership rules. Both rules
address monopolization of an industry in view of the limited number of
broadcast licenses available in spectrum.
The cross-ownership rule addresses the problem of saturation of a
community by a single editorial voice through numerous media outlets, allowing
ownership of two television stations and a varying number of radio stations
depending on the remaining number of independently owned media voices in the
market. The Commission based its
decision to relax the cross ownership restrictions in recognition of "the
growth in the number and types of media outlets, the clustering of cable
systems in major population centers, the efficiencies inherent in joint
ownership and operation of both television and radio stations in the same
market, as well as the public service benefits that can be obtained from joint
operation." Local Ownership Order p
102. It viewed "the voice test
components of the revised rule [to] ensure that the local market remains
sufficiently diverse and competitive."
At oral argument, the Commission suggested that even assuming complete substitutability of cable news for broadcast news still would leave the 20% of the viewing public that lacks cable dependent on television broadcast news alone, and their sources of diversity would be diminished if non-broadcast media were counted towards the eight voices test. As indicated in the Commission's Third Annual Report to Congress on Cable Competition, No. CS 97-1 (Released January 2, 1997) and the 1994 Cable Competition Report, cable, satellite, and other media sources generally are not as widely available as free television broadcasting to viewers. Other data pointed to the "digital divide," wherein low income persons and minorities do not have access to the newer technologies. In addition, only broadcast stations have public interest obligations. Yet these considerations did not deter the Commission from including other media in defining "voices" for the purpose of cross-ownership, and it is not readily apparent why they would do so in defining "voices" for the purpose of local ownership.
Accordingly, we hold that the Commission has failed to demonstrate that its exclusion of non-broadcast media from the eight voices exception is "necessary in the public interest" under § 202(h) of the 1996 Act.
Challenging the LMA grandfathering provisions of the local ownership rule, see Local Ownership Order p 133, Sinclair contends that the Commission's decision to allow only limited grandfathering for LMAs is contrary to § 202(g) of the 1996 Act, constitutes retroactive rulemaking, and is an unconstitutional taking of property. None of these contentions has merit.
The question of
whether the Commission had ignored the plain directive of Congress, as Sinclair
contends, is ripe for review. Contrary
to the position of the Commission, Sinclair presents a purely legal question
that will not benefit from consideration in a more concrete form. See Abbott Laboratories v. Gardner, 387
The local ownership rule provides that LMAs in effect prior to November 5, 1996, will be grandfathered until the 2004 biennial review, a period of approximately five years, when their status will be reviewed on a case-by-case basis to assess the appropriateness of extending the LMA, based on public interest factors, digital TV conversion, marketplace conditions, and equities. See Local Ownership Order pp 133, 142, 146-48. Sinclair contends that this is a "blatant violation of Section 202(g)." We disagree.
Section 202(g) of the 1996 Act provides that:
Nothing in this section shall be construed to prohibit the origination, continuation, or renewal of any television local marketing agreement that is in compliance with the regulations of the Commission.
The statute says nothing about grandfathering. Hence, the only question is whether the
Commission's interpretation of the statute is reasonable. See Chevron, 467
contention that the LMA grandfathering provision constitutes impermissibly
retroactive rulemaking also fails. The
Local Ownership Order alters the future effect, not the past legal consequences
of LMAs. See Celtronix Telemetry, Inc.
v. FCC, 272 F.3d 585, 588 (D.C. Cir. 2001).
The Rule does not either alter the past legality of LMAs or impose any
liability for having engaged in LMAs that now constitute an impermissible
duopoly or introduce any retrospective duties for past conduct. See DirecTV, Inc. v. FCC, 110 F.3d 816,
825-26 (D.C. Cir. 1997); Buckeye
Cablevision, Inc., v. FCC, 387 F.2d 220, 227-28 (D.C. Cir. 1967). At most the Local Ownership Order is secondarily
retroactive in upsetting expectations at the time the LMAs were entered
into. See Bowen v.
As to post November 1996 LMAs, the Local Ownership Order is consistent with the 1996 Act, and the Commission gave notice in the Second Further Notice, that "television LMAs entered into on or after the adoption date of this Notice would be entered into at the risk of the contracting parties...." Hence, Sinclair could have no reasonable expectation that post November 1996 LMAs would remain unaffected. Sinclair does not suggest that the LMA provisions in the Local Ownership Order were not a logical outgrowth of the Commission's proposal. See, e.g., Arizona Pub. Prot. Co. v. EPA, 211 F.3d 1280, 1299 (D.C. Cir. 2000); see also Nat'l Black Media Coalition v. FCC, 822 F.2d 277, 283 (2d. Cir. 1987); Spartan Radiocasting Co. v. FCC, 619 F.2d 314, 322 (4th Cir. 1980).
Sinclair's Fifth Amendment takings contention fails too. Although the Commission half-heartedly contends that this contention is not properly before the court because it was first raised in the petition for reconsideration, its reliance on U.S. Cellular Corp. v. FCC, 254 F.3d 78, 89 (D.C. Cir. 2001), is misplaced. Sinclair did not seek in its petition for reconsideration to submit new evidence to the Commission that the Commission declined to receive, as occurred in U.S. Cellular. Rather, Sinclair raised a legal argument in its petition that the Commission had an opportunity to address on reconsideration. Likewise, the Commission's contention that Sinclair's claim is not ripe with respect to LMAs entered before November 1996 is unpersuasive for the same reasons we noted in rejecting the Commission's contention that Sinclair's statutory challenge was unripe. See supra Part III A.
On the merits,
however, the Commission's brief is persuasive.
First, Sinclair's takings contention appears, the Commission suggests,
to be challenging the Commission's decision to consider LMAs attributable
ownership interests and thereby subject them to the Local Ownership Order. The attribution decision was reached in the
Attribution Order, which is not before the court. See Attribution Order p 83. Second, Sinclair fails to show that the
grandfathering provision of the Local Ownership Order "reaches a certain
magnitude" as to deprive an owner of the use of property. See Pa. Coal Co. v.
As to LMAs
entered prior to
Sinclair's First Amendment challenge to the Local Ownership Order is foreclosed
by Supreme Court precedent as well as this circuit's precedent. First, contrary to the Commission's view,
Sinclair's First Amendment challenges are properly before the court because these
claims were raised early in the rulemaking, although not by Sinclair and not
expressly addressed by the Commission until its Reconsideration Order. See
Second, the court
applies a rational basis standard of review.
See NCCB, 436
"there is no unabridgeable First Amendment right comparable to the right
of every individual to speak, write, or publish" to hold a broadcast
license, NCCB, 436 U.S. at 799 (quoting Red Lion, 395 U.S. at 388); Nat'l Broad., 319 U.S. at 227, Sinclair does
not have a First Amendment right to hold a broadcast license where it would
not, under the Local Ownership Order, satisfy the public interest. NCCB, 436 U.S. at 800. In NCCB, the Supreme Court upheld an ownership
restriction analogous to the Local Ownership Order, based on the same reasons
of diversity and competition, id. at 794-95, 800, 802, in recognition that such
an ownership limitation significantly furthers the First Amendment interest in
a robust exchange of viewpoints.
To the extent that Sinclair frames its First Amendment challenge as one against the eight-voices exception rather than the Rule itself, its challenge is meritless. Sinclair contends that by comparison with the more inclusive standard for radio and television cross-ownership, the definition of "voices" here creates an overly broad restriction on television broadcasters' right to speak. As an exception to the local ownership restrictions in the Local Ownership Order, the eight-voices exception presents no separate constitutional implications because it imposes no independent burden on speech; if anything, as the Commission states in its brief, see Respondent's Br. at 30, it decreases the minimal burden on speech imposed by the Local Ownership Order.
Accordingly, we hold that, notwithstanding Sinclair's failure to name the Local Ownership Order in its petition for review, the court has jurisdiction to consider Sinclair's challenge to that Order, in addition to the Reconsideration Order, in view of its timely filed statement of issues, which gave fair notice of its intention to appeal the underlying Local Ownership Order. Although we reject Sinclair's statutory challenge to the local ownership rule provision on television LMAs and its constitutional challenges to the local ownership rule as a whole, we hold that the definition of "voices" in the local ownership rule is arbitrary and capricious, and we remand the rule to the Commission for further consideration.
Sentelle, Circuit Judge, concurring and dissenting in part: I agree with the majority that we have jurisdiction to hear this case. I also agree that the limited grandfathering of local marketing agreements ("LMAs") in the Review of the Commission's Regulations Governing Television Broadcasting, Report and Order, 14 FCC Rcd 12903 (1999) ("Local Ownership Order"), is permissible. Therefore I concur in Parts II and IV of the majority opinion. I agree that the amended "television duopoly" rule, as revised to include the "eight voices" exception (the "Local Ownership Rule"), is arbitrary and capricious, therefore I concur in Part III.B. However, I write separately and do not join Part III.A because I would find the Local Ownership Rule arbitrary and capricious for additional reasons. Further, because I believe that section 202(h) of the Telecommunications Act of 1996 mandates that we vacate this arbitrary and capricious Rule and not merely remand it, I dissent from the decision not to vacate.
Communications Commission ("FCC" or "Commission") argues
that the "eight voices" exception to the duopoly rule is a
"reasonable exercise of the Commission's line-drawing
authority." It claims that the
"eight voices" exception ensures the "appropriate level of
broadcast diversity," but also insists that it is unnecessary for it to
present substantial evidence that the proposed rule will result in
"diversity." In the absence of
evidence, the Commission then ducks for cover under the Supreme Court's dicta
in FCC v. National Citizens Committee for Broadcasting, 436 U.S. 775 (1978)
("NCCB"). There the Court
observed that diversity and its effects were "elusive concepts, not easily
defined." NCCB, 436
Even accepting for the moment that the FCC could regulate in the name of diversity without further elucidating that goal, it must still, at a minimum, explain how its rule furthers the goal of diversity. Here the FCC claims that the duopoly rule, mitigated only by an eight voices exception, is necessary in order to preserve a diversity of viewpoints in the local market. According to the Commission, the greater the diversity of ownership in a particular area, the less chance there is that a single person or group can have an inordinate effect on public opinion. Further, and critical to the Local Ownership Rule, the Commission's "concern for ensuring diversity in broadcasting is most pressing at the local level." Local Ownership Order, p 19 (emphasis added). The Commission concedes that its diversity goal is distinct from its goal of ensuring competition. See id. at p 20. Were the goal merely to preserve competition, then the FCC could readily apply the Department of Justice/Federal Trade Commission Antitrust Merger Guidelines. It declined to do so, apparently because its "diversity requirements" are a different goal than competition per se. Review of the Commission's Regulations Governing Television Broadcasting, Further Notice of Proposed Rule Making, 10 FCC Rcd 3524, p 123 (Jan. 17, 1995). Therefore the FCC must at least make some effort at showing how its Local Ownership Rule furthers diversity in the local market--because it is purporting to regulate to protect local diversity. I do not find that showing in the Commission's record. Therefore, I do not join Part III.A of the majority opinion.
I concur with the
majority in Part III.B regarding the inadequacy of the Commission's support for
its restrictive voice-count provision. I
believe, however, that our determination compels vacature of the Local
Ownership Rule. The FCC argues that in
adopting the eight voices exception and the revised duopoly rule, it
"decided to act cautiously and alter the rule only slightly." The Commission also reminds the Court that it
will keep monitoring the situation, and "can determine whether its
cautionary stance remains warranted or whether the rules can be relaxed
further" in the next biennial review.
But this rulemaking was conducted, in part, pursuant to section 202(h)
of the Telecommunications Act of 1996.
See Local Ownership Order, p 5 & n.13 ("Section 202 directs the
Commission to conduct a biennial review of all of its broadcast ownership rules
and to repeal or modify any regulation it determines is no longer in the public
interest.... We take such action today
in amending our TV duopoly and radio-television cross-ownership
rules."); 1998 Biennial Review, 13
FCC Rcd 11276, 11280, p 10 (
As the FCC itself
noted in the Second Further Notice of Proposed Rulemaking, the 1996 Act
"directs the Commission to undertake significant and far-reaching
revisions to its broadcast media ownership rules." 11 FCC Rcd 21655, p 2 (
majority acknowledges the "statutory mandate" of section 202(h),
Majority Op. at 22, it fails to fully appreciate it. This Court has held that "the mandate of
§ 202(h) might better be likened to Farragut's order at the battle of
As I would invalidate and vacate the duopoly rule on statutory grounds, I would not reach the First Amendment question raised by Sinclair. However, because the majority have opted only to remand, I will briefly express my thoughts on the constitutional questions.
At the outset, I
freely concede (as I must) that this Court "is not in a position to reject
the scarcity rationale even if we agree that it no longer makes
sense." Fox, 280 F.3d at 1046. The Supreme Court has already "declined
to question its continuing validity," Turner Broad., Inc. v. FCC, 512
Because I would vacate the Local Ownership Rule, I respectfully dissent from the majority's remedy.