Supreme Dilemmas

Fox, ownership actions may be double-edged sword for FCC

By John Eggerton -- Broadcasting & Cable, 7/23/2012 12:02:00 AM

Usually, by the time the Supreme Court has its say on a matter, everyone knows where they stand. But while the high court is done for the summer, its decision in Fox vs. FCC did leave some questions. Could this partial victory for the commission ultimately work against the FCC’s defense of network neutrality rules? And could the Supremes’ decision not to hear broadcasters’ media ownership challenge wind up costing TV stations at incentive auction time?

That’s two yes votes, according to various court watchers who say those decisions could lead to either good or bad news for the commission. They argue the Fox indecency decision provides precedent for overturning the FCC’s network neutrality rules and can be used to take aim at programming regulations that cable operators have been pushing against with increasing force.

Scott Cleland, chairman of Netcompetition. org, whose members include major cable operators, said the Supreme Court’s decision that the FCC had violated constitutional due process protections by not providing sufficient guidance/notice about what it would find indecent could and should inform a federal appeals court currently considering telco challenges to the rules.

Cleland said both net neutrality and indecency are judgment calls, with each difficult to define. Where the high court’s indecency ruling comes in is that the court overturned the FCC for applying a vague standard and expecting Fox and ABC to have known what to do without clear guidance.

“It signals that they would have similar or more disdain for the FCC applying a vague [network neutrality] standard,” Cleland blogged in the wake of the June Supreme Court decision. “This indirectly related unanimous Supreme Court decision is also a helpful reminder that the court is unlikely to cut the FCC broad slack under its ‘Chevron Deference’ precedent when the FCC is loose with due process,” he said.

But there is more grist for the legal mill in the decision, according to Seth Cooper, a research fellow at the Free State Foundation. Cooper, also in a blog posting, joined with Free State Foundation president Randolph May to argue that the indecency decision reaffirmed that government speech regulation based on vague standards runs afoul of due process. Cooper said that makes a host of FCC content-related regs constitutionally suspect, including program access and carriage regulations, leased access requirements, and must-carry/retrans rules.

Those are all regs that could come up for inspection next week in a Senate Commerce Committee hearing on video programming and the 1992 Cable Act.

According to Dan Brenner, a veteran cable attorney and partner at Hogan Lovells, a decision the Supreme Court decided not to make could also have a big impact on the media landscape. According to Brenner’s analysis of the Supreme Court’s decision not to hear broadcasters’ appeal of the media ownership rules, the denial could be particularly good news for the FCC’s effort to convince broadcasters to clear off spectrum.

Broadcasters had challenged the FCC’s decision not to lift any of its local market station caps. “By limiting the broadcast spectrum any one licensee can hold in a market [and nationwide], the cross-ownership rules unintentionally keep the price of that spectrum lower than it might otherwise be,” Brenner said.

“The potential reverse auction candidates are most likely to be single-station TV owners who are not market leaders and who might have been able to sell their stations to a more powerful in-market broadcaster,” Brenner wrote in his analysis. “The court’s decision not to review those cross-ownership rules…eliminates the possibility of a likely alternative buyer of a TV station, which lowers the price of the TV spectrum license and jettisons an alternative exit path for weak stations.”

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