Nexstar, Beasley, Zimmer Petitions Seek to Set Aside FCC’s Quad Review Order

The FCC faces three petitions for review, all filed Friday, in separate circuits, challenging the lawfulness of the commission’s Dec. 26 quadrennial review order for allegedly violating Section 202(h) of the Telecommunications Act. Nexstar Media Group filed its petition (docket 24-60088) in the 5th U.S. Circuit Court of Appeals, Beasley Media Group and Tri-State Communications filed their joint petition (docket 24-10535) in the 11th Circuit, and Zimmer Radio of Mid-Missouri filed its petition (docket 24-1380) in the 8th Circuit.

Broadcasters are challenging the order in multiple circuits to increase odds that the eventual litigation comes before a panel less favorable to the FCC, several broadcast attorneys told us Monday. Though all previous rounds of litigation on quadrennial reviews occurred in the 3rd Circuit, the 2021 U.S. Supreme Court decision in the FCC's favor ended the 3rd Circuit's exclusive jurisdiction over the case.

With appeals in multiple circuits, attorneys said they expect the circuit that hears the petitions ultimately will be chosen randomly by lottery. The circuits that possibly could host the case are determined by what jurisdictions the petitions for review are filed in for the first 10 days after the order is published in the Federal Register, said Andrew Schwartzman, senior counsel to the Benton Institute for Broadband & Society. Additional petitions challenging the order, including from NAB, are widely expected.

The FCC order "misconstrues" the FCC's "statutory obligations," said Nexstar's petition. Despite Section 202(h)'s deregulatory aims, the order "further reinforces two rules that continue to impede local radio and television broadcasters," it said. The order takes effect March 18 (see 2401020042).

The order also flouts the "competition-oriented approach" commanded by the TCA and Section 202(h), said the Nexstar petition. Rather than taking account of the increasing competition that radio and TV broadcasters encounter from "contemporary sources," the FCC "adhered to narrow and inappropriate market definitions," it said.

The order “fundamentally misapprehends” the FCC’s statutory duties, said the Beasley/Tri-State petition in the 11th Circuit. Disregarding Section 202(h)’s “deregulatory purpose,” the order retains the FCC’s “analog-era local radio ownership rule and even manages to make the local television ownership rule more restrictive,” it said.

The local radio rule sharply limits the total number of radio stations and separately caps the number of AM stations and the number of FM stations, “that any one broadcaster can own in a local market,” said the Beasley/Tri-State petition. The order also strays from the “competition-based approach” that the TCA requires “by failing to account for the exponentially greater competition that broadcasters now face from a wide range of sources,” it said. That competition didn’t even exist in 1996, “when the current version of the local radio ownership rule was adopted,” it said.

The FCC also has “consistently flouted its duty” under Section 202(h) to review and determine the public interest necessity of its broadcast ownership rules every four years, said the Beasley/Tri-Star petition. The Dec. 26 order completed the agency’s 2018 review “more than five years after belatedly beginning it in late 2018, the year in which the FCC should have conducted the review,” it said.

Despite the FCC’s lengthy delay in completing the 2018 review, the order “is replete with legal and factual errors, and violates the law in several ways,” said the Beasley/Tri-Star petition. It misinterprets Section 202(h) “by disregarding its deregulatory intent and its competition-focused language,” it said. It also “contravenes” the Administrative Procedure Act “by failing to consider substantial parts of the record, including highly relevant data, analyses, and studies submitted by various participating parties,” it said.

The Zimmer Radio petition in the 8th Circuit argues many of the same points as the other two, including that the order “reaches conclusions unsupported by and, at times, directly contrary to, the voluminous record assembled during the comment period,” also in violation of the APA. "Significant aspects" of the FCC’s reasoning in its order "are illogical, inconsistent, or self-contradictory,” said the Zimmer petition.

Retaining “outdated” broadcast ownership rules “adversely affects Zimmer Radio and other broadcasters who face fierce competition from an ever-expanding array of content providers and advertising platforms,” said the Zimmer petition. The record demonstrates “substantial declines in listening” for AM and FM stations from new forms of competition, it said. Broadcasters additionally face “dwindling revenue” as advertisers move their dollars “from over-the-air radio and television to digital advertising giants like Facebook and Google,” it said.

Notwithstanding those trends, the FCC's order retains or tightens ownership rules dating to the 1990s, said the Zimmer petition. Those rules “obstruct” local broadcasters, but not their competitors, “from achieving the economies of scale necessary to compete” in a 21st Century media marketplace, it said. Broadcasters like Zimmer that operate in smaller markets are “particularly disadvantaged,” it said. That’s because the FCC’s local radio caps “improperly impose stricter limits on station ownership in mid-sized and smaller markets than in large markets,” it said.