Appeals Court Backs FCC Radio Ownership Limits

The U.S. Court of Appeals for the Eighth Circuit issued a significant ruling on the FCC media ownership rules, impacting the future of both radio and television broadcasting. 

The decision, part of the FCC’s quadrennial review mandated by the 1996 Telecommunications Act, balanced the retention of local radio ownership limits with a partial deregulation of television ownership restrictions, reflecting the evolving media landscape and ongoing debates about competition, localism, and diversity.

Key Points of the Ruling

Upholding Local Radio Ownership Rules:  The court upheld the FCC’s December 2023 decision to retain the Local Radio Ownership Rule, which limits the number of radio stations an entity can own in a single market (e.g., up to eight stations in the largest markets, with no more than five on the same band—AM or FM).

Broadcasters, including the National Association of Broadcasters (NAB) and companies like Beasley Media Group and Zimmer Radio, argued that these rules are outdated due to competition from digital platforms like streaming services and social media, which siphon advertising revenue. 

The court rejected these arguments, deferring to the FCC’s judgment that radio remains a distinct market with unique local content, justifying limits to preserve competition, localism, and viewpoint diversity.

The FCC’s rationale included evidence of negative impacts from past radio consolidation, such as reduced local programming, and the court found the agency’s decision “reasonable and reasonably explained.”

Striking Down Key Television Ownership Limits: The court vacated parts of the FCC’s Local Television Ownership Rule, specifically the “Top-Four Prohibition,” which barred an entity from owning more than one of the top-four rated TV stations (typically affiliates of ABC, CBS, Fox, or NBC) in a single market. 

The court found that the FCC failed to provide up-to-date evidence to justify this restriction, especially given changes in the media marketplace.

Additionally, the court struck down a 2023 FCC revision that tightened restrictions on acquiring second top-four network affiliations via multicast streams or low-power stations, deeming it insufficiently supported and potentially stifling innovation, particularly in smaller markets.

The FCC was given 90 days to provide new evidence or revise these rules before the vacated provisions are formally lifted, potentially paving the way for increased consolidation among top TV stations.

FCC's Brendan Carr

The decision maintains the status quo for radio, limiting consolidation and frustrating broadcasters who sought relief to compete with digital giants. The NAB expressed disappointment, arguing that the rules hinder stations’ ability to thrive in a fragmented media landscape.

The partial deregulation is a significant win for TV broadcasters like Nexstar, Gray, and Sinclair, who can now pursue duopolies among top-four stations in the same market, potentially leading to a wave of mergers and acquisitions. This could enhance operational efficiencies but risks reducing competition and diversity in local markets.

FCC Chair Brendan Carr, who dissented in the 2023 FCC decision, supports relaxing ownership rules and is expected to use the ongoing 2022 quadrennial review to propose changes, especially given the court’s ruling and the recent overturning of the Chevron Doctrine, which reduces judicial deference to agency decisions.