Supreme Court Rules FCC Can Relax Media-Ownership Rules

(Bloomberg) -- The U.S. Supreme Court let the Federal Communications Commission ease limits on the ownership of local media outlets, siding with the broadcast industry and former President Donald Trump’s administration in a long-running fight.

The justices unanimously overturned an appeals court ruling that had required the FCC to first study the potential impact on female and minority ownership in the media industry.

Republicans and the broadcast industry have been seeking to relax the ownership limits for decades, saying the restrictions are badly outdated. Easing the rules could mean a wave of consolidation affecting TV stations nationwide.

Shares of television-station groups, which favor eased restrictions, spiked on news of the ruling before retreating somewhat. Sinclair Broadcast Group Inc. rose as much as 5.1%, Nexstar Media Group Inc. gained 4.6%, and Tegna Inc. advanced 2.3%. Fox Corp. was up about 0.6% after the ruling but later turned negative.

The 2017 FCC changes eliminated a rule that had barred companies from owning two television stations in a market that didn’t have at least eight independently owned stations. The change also let companies own two of the top four stations in some markets.

In addition, the FCC is lifting separate bans on ownership of both a daily print newspaper and a broadcast station in the same coverage area, and on ownership of both a radio and television station in a single market.

Writing for the Supreme Court, Justice Brett Kavanaugh said the FCC made a reasonable judgment based on the limited evidence it had about any effect the changes might have on female and minority ownership.

“The FCC repeatedly asked commenters to submit empirical or statistical studies on the relationship between the ownership rules and minority and female ownership,” Kavanaugh wrote. “Despite those requests, no commenter produced such evidence indicating that changing the rules was likely to harm minority and female ownership.”

The cases are FCC v. Prometheus Radio Project, 19-1231, and National Association of Broadcasters v. Prometheus Radio Project, 19-1241.

©2021 Bloomberg L.P.