The 2018 quadrennial review’s extension of the top-four prohibition to include low-power TV stations and multicast channels takes effect March 18, the FCC said in a public notice in Friday’s Daily Digest. The order was published in the Federal Register Thursday, which means the 60-day clock for entities to challenge the rule in the courts has begun. It is widely expected that NAB will bring a challenge before the deadline (see 2401020042).
Industry lawyers and analysts expect a busy start for the FCC in 2024, with the 3-2 Democratic majority able to approve items without the FCC’s two Republicans, and Chairwoman Jessica Rosenworcel eager to address priorities before the usual freeze in the months before and after a presidential election.
The 2018 quadrennial review order supports Gray Television's arguments against the FCC’s $518,000 enforcement action over a 2020 transaction involving an Anchorage station, Gray told the 11th U.S. Circuit Court of Appeals in a response letter Thursday. Gray was responding to an FCC letter last week giving the court notice of the QR order, which was released in December. Gray has argued that the agency created a requirement for what data is used to determine station rankings without notice when it issued the forfeiture in 2022 (see 2307240065). Ratings data from the time of the transaction showed Gray already owned two of the top-four stations in the market, which the broadcaster has argued means the Anchorage deal didn’t result in a new top-four combination -- instead an existing top-four combination added another station. The FCC has argued that this ratings data wasn’t available to Gray when it made the deal and so is invalid. The QR order changes the ranking methodology to use “available data over a 12-month period immediately preceding the date of application,” Gray told the court Thursday. The inclusion of the word “available” in the QR order “underscores its prior absence, and it highlights the FCC’s failure to provide Gray with fair notice of such a requirement which the FCC invented to justify penalizing Gray,” said the broadcaster. The QR order also doesn’t show that applying the agency’s rule against affiliation swaps to Gray’s purchase of a station’s network affiliation “furthered an interest in competition, as the First Amendment requires,” Gray told the court. “Thus, nothing the FCC said in the 2023 Order cures the fatal defect in the Forfeiture Order.” Oral argument in the case is set for March.
As the FCC sees increased dissent votes by Republican minority commissioners, those dissents frequently challenge agency authority. That's becoming a more common line of argument among GOP commissioners across federal regulatory agencies, often based on the U.S. Supreme Court's major questions doctrine, administrative law experts tell us. Republican commissioners and former commissioners say dissent votes are a reflection of the Democratic majority pushing partisan issues. Commissioner Nathan Simington in a statement said he is "disappointed that the Commission is now focused on misguided, partisan items, but I remain hopeful that we can continue making progress on real, non-partisan solutions to long-standing technical issues."
The U.S. Court of Appeals for the D.C. Circuit accepted the FCC’s 2018 quadrennial review order and dismissed NAB’s petition for a writ of mandamus as moot, a discharge order Tuesday said (docket 23-1120). NAB had asked the court to compel the FCC to act on the 2018 QR. Both NAB and the FCC requested the dismissal after the agency issued the 2018 QR one day before the court’s Dec. 27 deadline (see 2312280018).
Provisions in the 2018 quadrennial review order could inject uncertainty into negotiations between broadcasters and networks, several broadcast attorneys told us. The order’s extension of the top-four prohibition allows networks to switch an affiliation from one station to another even if that would create a same-market duopoly but only as long as there isn’t “any undue direct or indirect influence from a broadcast entity.” Attorneys told us it isn’t clear what constitutes undue influence. The QR "creates more confusion," said Rob Folliard, Gray Television senior vice president-government relations and distribution. “You can’t have a transaction where there’s confusion.”
Broadcast attorneys expect likely legal challenges against the FCC’s 2018 quadrennial review order will focus on two questions: Does the Communications Act allow the FCC to tighten regulations during the QR process? And do restrictions on shifting top-four network programming to low-power stations and multicast streams violate the Constitution?