Supreme Court Upholds Rollback of Federal Restrictions on Media Ownership -- Update

By Brent Kendall and Jess Bravin

WASHINGTON -- The Supreme Court unanimously upheld a regulatory rollback of federal limits on media ownership in local markets, a decision that could open the door to further industry consolidation.

The court, in an opinion by Justice Brett Kavanaugh, ruled Thursday that the Federal Communications Commission acted reasonably in 2017 when it loosened three longstanding media-ownership restrictions.

The FCC's action came when the commission was under Republican control, led by then-Chairman Ajit Pai. Citing dramatic changes to the media landscape, the commission, split along partisan lines, made it easier for one entity to own multiple TV stations in the same market. It also removed prohibitions on common ownership of both a TV station and a newspaper in the same market, or a TV station and a radio station.

Some ownership limits had been in place for decades, to prevent concentration and preserve viewpoint diversity in local markets.

The rollback came after the commission concluded in 2016 that the rules were still needed. The FCC, across administrations, had been tied up in court on the media rules for nearly 20 years.

In the latest round of litigation, a federal appeals court in 2019 agreed with critics who challenged the FCC rollback on the grounds that the commission didn't adequately assess whether the changes would harm ownership of broadcast media by women and minorities.

The Supreme Court reversed that ruling and sided with the FCC.

"The FCC considered the record evidence on competition, localism, viewpoint diversity, and minority and female ownership, and reasonably concluded that the three ownership rules no longer serve the public interest," Justice Kavanaugh wrote for the court in FCC v. Prometheus Radio Project.

The court said the FCC had only sparse evidence to work with on minority and female ownership and made a reasonable prediction that its rollback wouldn't harm minority and female ownership levels.

The FCC and a group of media companies, including News Corp, owner of The Wall Street Journal, had appealed the case to the high court.

Other ownership restrictions remain in place, notably limits that still generally prohibit ownership of multiple top stations in the same market, and more FCC action is possible in the future. Congress has required the commission to review ownership regulations every four years.

"While I am disappointed by the court's decision, the values that have long upheld our media policies -- competition, localism, and diversity -- remain strong," said FCC Acting Chairwoman Jessica Rosenworcel, a Democrat, who voted against the rollback. "I am committed to ensuring that these principles guide this agency as we move forward," she said.

Helgi Walker, a partner at law firm Gibson Dunn who argued the case for the National Association of Broadcasters and other industry challengers, said the decision "gives broadcasters the freedom to innovate and compete in today's highly competitive media marketplace."

David Chavern, president of the News Media Alliance, an industry trade group, said repeal of the cross-ownership ban would generate investments and cross-platform synergies "that will help sustain local news media at a monumental time in our country's history when local news is needed more than ever."

Consumer groups took a dimmer view. The rollback "threatens to put the most trusted sources of local news in the hands of a few, giant consolidated corporations," said Harold Feld, senior vice president at public-interest group Public Knowledge.

In a separate ruling Thursday, a unanimous court gave Facebook Inc. something to like, dismissing a lawsuit alleging the Menlo Park, Calif., company violated federal robocall restrictions with text messages sent in error to consumers who didn't have accounts with the social network.

The issue was rather technical; the Telephone Consumer Protection Act of 1991 bans most unsolicited robocalls, which it defines as those sent by an "automatic telephone dialing system" that stores or produces calls using "a random or sequential number generator." Victims can recover up to $1,500 per violation, or three times their actual damages.

Facebook had an opt-in security service that would send text messages to account holders when an unknown device or browser attempted to log in to their accounts. In 2014, a California man, Noah Duguid, who had no Facebook account -- but whose mobile phone number might previously have been assigned to someone who did -- received repeated text messages regarding such logins.

After several unsuccessful entreaties to Facebook asking for the messages to stop, Mr. Duguid sued under the robocall law, seeking class-action status. A federal district judge dismissed the suit, but the Ninth U.S. Circuit Court of Appeals, in San Francisco, reinstated the case, reasoning that the robocall law covered Facebook's automated messaging system.

Writing for the court on the case, Facebook Inc. v. Duguid, Justice Sonia Sotomayor said Congress had defined robocalls more narrowly. "These prohibitions target a unique type of telemarketing equipment that risks dialing emergency lines randomly or tying up all the sequentially numbered lines at a single entity," she wrote. Facebook's system, in contrast, was designed to send messages to specific numbers that account holders had provided for security purposes.

"Expanding the definition of an auto-dialer to encompass any equipment that merely stores and dials telephone numbers would take a chain saw to these nuanced problems when Congress meant to use a scalpel," Justice Sotomayor wrote.

Write to Brent Kendall at [e-mail] and Jess Bravin at [e-mail]

(END) Dow Jones Newswires

04-01-21 1748ET