BRIEF FOR FCC AND UNITED STATES IN THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT NOS. 08-3078, ET AL. PROMETHEUS RADIO PROJECT, ET AL., APPELLANTS-PETITIONERS v. FEDERAL COMMUNICATIONS COMMISSION AND THE UNITED STATES OF AMERICA, APPELLEE-RESPONDENTS ON NOTICES OF APPEAL AND PETITIONS FOR REVIEW OF ORDERS OF THE FEDERAL COMMUNICATIONS COMMISSION CHRISTINE A. VARNEY ASSISTANT ATTORNEY GENERAL CATHERINE G. O'S ULLIVAN NANCY C. GARRISON ATTORNEYS UNITED STATES DEPARTMENT OF JUSTICE WASHINGTON, D.C. 20530 AUSTIN C. SCHLICK GENERAL COUNSEL JACOB M. LEWIS ACTING DEPUTY GENERAL COUNSEL DANIEL M. ARMSTRONG ASSOCIATE GENERAL COUNSEL C. GREY PASH,JR. JAMES M. CARR COUNSEL FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554 (202) 418-1740 Case: 08-3078 Document: 003110223746 Page: 1 Date Filed: 07/21/2010 TABLE OF CONTENTS Page i PRELIMINARY STATEMENT.................................................................................1 STATEMENT OF ISSUES PRESENTED ................................................................3 STATEMENT OF JURISDICTION ..........................................................................3 STATUTES AND REGULATIONS ..........................................................................6 STATEMENT OF RELATED CASES ......................................................................6 COUNTERSTATEMENT..........................................................................................6 I. Statutory and Regulatory Background ..................................................6 A. The FCC’s Broadcast Ownership Rules .....................................6 B. The 1996 Telecommunications Act ............................................8 C. The Sinclair Decision .................................................................9 D. The 2002 Biennial Review........................................................10 E. The Prometheus Decision .........................................................12 II. The 2006 Quadrennial Review............................................................15 III. The Diversity Order.............................................................................25 IV. The 2010 Quadrennial Review............................................................26 SUMMARY OF ARGUMENT................................................................................27 ARGUMENT ...........................................................................................................32 I. STANDARD OF REVIEW.................................................................32 II. THE COMMISSION REASONABLY REVISED ITS NEWSPAPER/BROADCAST CROSS- OWNERSHIP RULE. .........................................................................33 A. The FCC Provided Adequate Notice Of The New Rule...................................................................................36 Case: 08-3078 Document: 003110223746 Page: 2 Date Filed: 07/21/2010 Page ii B. Substantial Record Evidence Supports The Commission’s Conclusion That Continued Regulation Of Newspaper/ Broadcast Cross- Ownership Is In The Public Interest. ........................................38 C. The Commission Reasonably Established A Case-By-Case Review Process. ................................................42 D. The Commission Reasonably Established A Positive Waiver Presumption For The Top 20 Markets.................................................................................45 E. The Commission Was Justified In Treating Newspaper/ Broadcast Combinations Differently From Other Media Mergers. ..................................58 III. THE COMMISSION’S GRANDFATHERING OF PENDING WAIVER APPLICATIONS WAS REASONABLE...................................................................................60 IV. THE COMMISSION REASONABLY DECIDED TO RETAIN THE RADIO/TELEVISION CROSS-OWNERSHIP RULE. ...........................................................69 V. THE COMMISSION REASONABLY DECIDED TO RETAIN THE LOCAL TELEVISION OWNERSHIP RULE. .........................................................................75 A. The Commission Adequately Explained Its Change Of Policy From The 2003 Order And Its Decision To Retain The Existing Rule. ..........................................................................................75 B. The Commission Adequately Explained Its Decision To Continue To Apply The “Top Four/Eight Voices” Test. ...........................................................79 C. The Commission Reasonably Determined Not To Tighten The Local Television Ownership Rule.........................................................................83 Case: 08-3078 Document: 003110223746 Page: 3 Date Filed: 07/21/2010 Page iii VI. THE COMMISSION REASONABLY RETAINED THE LOCAL RADIO OWNERSHIP RULE...................................................................................................84 A. The Decision To Retain The Rule Was Adequately Explained And Is Supported In The Record................................................................................85 B. The Decision To Retain The AM/FM “Subcaps” Was Adequately Explained And Is Supported In The Record. .....................................................88 VII. THE COMMISSION REASONABLY DECIDED TO RETAIN THE DUAL NETWORK RULE..................................91 VIII. THE COMMISSION’S MEDIA OWNERSHIP RULES ARE CONSTITUTIONAL....................................................95 IX. THE COMMISSION TOOK REASONABLE STEPS TO PROMOTE OWNERSHIP OF BROADCAST STATIONS BY MINORITIES AND WOMEN....................................................................................99 CONCLUSION......................................................................................................103 Case: 08-3078 Document: 003110223746 Page: 4 Date Filed: 07/21/2010 TABLE OF AUTHORITIES Page iv Cases Allied-Signal, Inc. v. NRC, 988 F.2d 146 (D.C. Cir. 1993) ........................ 104 American Iron & Steel Inst. v. EPA, 568 F.2d 284 (3d Cir. 1977)....................................................................................................37 Association of Public-Safety Communications Officials- Int’l, Inc. v. FCC, 76 F.3d 395 (D.C. Cir. 1996) .................... 81, 89, 90 AT&T Corp. v. FCC, 220 F.3d 607 (D.C. Cir. 2000).....................................76 AT&T Wireless Services v. FCC, 270 F.3d 959 (D.C. Cir. 2001)....................................................................................................66 Citizens for Health v. Leavitt, 428 F.3d 167 (3d Cir. 2005) ..........................36 Contemporary Media, Inc. v. FCC, 214 F.3d 187 (D.C. Cir. 2000).............................................................................................57 Covad Comm. Co. v. FCC, 450 F.3d 528 (D.C. Cir. 2006) ...........................38 Dickinson v. Zurko, 527 U.S. 150 (1999) ......................................................33 FCC v. Fox Television Stations, Inc., 129 S.Ct. 1800 (2009) ........................................................................................... 33, 45 FCC v. National Citizens Comm. for Broadcasting, 436 U.S. 775 (1978) ........ 2, 6, 7, 13, 29, 33, 40, 64, 65, 72, 97, 98, 99, 103 FCC v. Pottsville Broadcasting Co., 309 U.S. 134 (1940)............................33 FCC v. RCA Communications, Inc., 346 U.S. 86 (1953) ..............................33 FCC v. WNCN Listeners’ Guild, 450 U.S. 582 (1981) ..................................33 FCC v. WOKO, Inc., 329 U.S. 223 (1946) ....................................................57 Fox Television Stations, Inc. v. FCC, 280 F.3d 1027 (D.C. Cir. 2002)...................................................................................... 73, 74 Jean Alexander Cosmetics, Inc. v. L’Oreal USA, Inc., 458 F.3d 244 (3d Cir. 2006) .................................................................... 100 Case: 08-3078 Document: 003110223746 Page: 5 Date Filed: 07/21/2010 Page v MacLean v. Department of Homeland Security, 543 F.3d 1145 (9th Cir. 2008) ............................................................................63 Motor Vehicle Manufacturers Ass’n v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29 (1983)............................................... 32, 33 National Association of Independent Television Producers & Distributors v. FCC, 516 F.2d 526 (2d Cir. 1975) ............................................................................... 98, 99 National Broad. Co. v. United States, 319 U.S. 190 (1943) ................................................................................... 6, 7, 33, 56 National Cable & Telecommunications Association v. Brand X Internet Services, 545 U.S. 967 (2005).................................60 New Jersey Coalition for Fair Broadcasting v. FCC, 574 F.2d 1119 (3d Cir. 1978)............................................................... 56, 59 North Amer. Catholic Educ. Prog. Found. v. FCC, 437 F.3d 1206 (D.C. Cir. 2006)..................................................................63 NVE Inc. v. Department of Health & Human Services, 436 F.3d 182 (3d Cir. 2006) ................................................................37 Omnipoint Corp. v. FCC, 78 F.3d 620 (D.C. Cir. 1996) ............................ 103 PLMRS Narrowband Corp. v. FCC, 182 F.3d 995 (D.C. Cir. 1999).............................................................................................47 Prometheus Radio Project v. FCC, 373 F.3d 372 (3d Cir. 2004).............................................................................. 1, 6, 13, 14, 15, 16, 23, 32, 34, 35, 38, 39, 41, 42, 46, 49, 73, 76, 83, 90, 97, 98, 99, 101, 102 Qwest Corp. v. FCC, 482 F.3d 471 (D.C. Cir. 2007).............................. 62, 67 R/T 182, LLC v. FAA, 519 F.3d 307 (6th Cir. 2008) ......................................63 Red Lion Broadcasting Co. v. FCC, 395 U.S. 367 (1969) ..................... 97, 99 Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477 (1989) ............................................................................97 Case: 08-3078 Document: 003110223746 Page: 6 Date Filed: 07/21/2010 Page vi Service Electric Cable TV v. FCC, 468 F.2d 674 (3d Cir. 1972)....................................................................................... 57, 62, 67 Shuman ex rel. Shertzer v. Penn Manor School District, 422 F.3d 141 (3d Cir. 2005) ............................................................. 100 Sinclair Broad. Group., Inc. v. FCC, 284 F.3d 148 (D.C. Cir. 2002)...................................................................... 6, 9, 10, 34, 100 Time Warner Telecom, Inc. v. FCC, 507 F.3d 205 (3d Cir. 2007)..................................................................................... 40, 45, 103 Tribune Co. v. FCC, 133 F.3d 61 (D.C. Cir. 1998)........................................63 Turner Broadcasting Sys., Inc. v. FCC, 512 U.S. 622 (1994) ..................................................................................................98 United States v. Radio Corp. of America, 358 U.S. 334 (1959) ..................................................................................................28 United States v. Storer Broadcasting, 351 U.S. 192 (1956) ....................................................................................................2 WorldCom, Inc. v. FCC, 238 F.3d 449 (D.C. Cir. 2001) ........................ 47, 76 Administrative Decisions 2002 Biennial Regulatory Review, 18 FCC Rcd 13620 (2003) ...............................................................................10, 11, 12, 14, 17, 22, 25, 34, 38, 44, 49, 69, 70, 77, 84, 92, 93, 94, 95 2006 Quadrennial Regulatory Review, DA 10-1181 (released June 29, 2010)......................................................................66 2010 Quadrennial Regulatory Review – Review of the Commission’s Broadcast Ownership Rules, FCC 10-92 (May 25, 2010)..........................................................................26 Amendment of Section 73.3555 (formerly 73.35, 73.240, and 73.636) of the Commission’s Rules Relating to Multiple Ownership of AM, FM and Television Broadcast Stations, 100 F.C.C.2d 74 (1984).........................................7 Case: 08-3078 Document: 003110223746 Page: 7 Date Filed: 07/21/2010 Page vii Amendment of Section 73.3555 of the Commission’s Rules, 4 FCC Rcd 1741 (1989) .............................................................8 Amendment of Sections 3.35, 3.240 and 3.636 of the Rules and Regulations relating to Multiple Ownership of AM, FM, and Television Broadcast Stations, 9 Radio Reg. (P&F) 1563 (1953)...........................................7 Citicasters Licenses, L.P., 22 FCC Rcd 19324 (Med. Bur. 2007)....................................................................................................56 Cross-Ownership of Broadcast Stations and Newspapers, 16 FCC Rcd 17283 (2001) ..................................................................68 NewCity Communications, Inc., 12 FCC Rcd 3929 (1997) ..................................................................................................68 Public Notice, “Media Bureau Announces Comment Deadlines for Notice of Inquiry in Media Ownership Proceeding,” DA-1066 (Media Bur., June 11, 2010) .....................................................................................27 Public Notice, “Media Bureau Announces the Release of Requests for Quotation for Media Ownership studies and Seeks Suggestions for Additional Studies in Media Ownership Proceeding,” DA-10- 1084 (Media Bur., June 16, 2010).......................................................27 Review of the Commission’s Regulations Governing Television Broadcasting, 14 FCC Rcd 12903 (1999) ............................................................................... 47, 69, 74, 75 Review of the Commission’s Regulations Governing Television Broadcasting, 14 FCC Rcd 12903 (1999), on reconsideration, 16 FCC Rcd 1067 (2001) ....................................................................................................9 Revision of Radio Rules and Policies, 7 FCC Rcd 2755 (1992) ..................................................................................................89 Case: 08-3078 Document: 003110223746 Page: 8 Date Filed: 07/21/2010 Page viii Rules Relating to Multiple Ownership of Standard, FM, and Television Broadcast Stations, 50 F.C.C.2d 1046 (1975), amended on reconsideration, 53 F.C.C.2d 589 (1975) ......................................... 7, 33, 34, 55, 63, 64, 65 Statutes and Regulations 18 U.S.C. §1001.............................................................................................56 28 U.S.C. § 2342(1).........................................................................................3 28 U.S.C. § 2344..............................................................................................4 47 C.F.R. §73.3555(a) (2009)................................................................. 23, 84 47 C.F.R. §73.3555(b) (2009)........................................................................22 47 C.F.R. §73.3555(c) (2009)........................................................................20 47 C.F.R. §73.3580 ........................................................................................57 47 C.F.R. §73.3580(c)....................................................................................56 47 C.F.R. §73.3580(d) ...................................................................................56 47 C.F.R. §73.658(g) (2009)..........................................................................25 47 U.S.C. § 402(a) ...........................................................................................3 47 U.S.C. § 402(b)...........................................................................................4 47 U.S.C. §310(b)..........................................................................................62 47 U.S.C. §312(a) ..........................................................................................56 47 U.S.C. §405(a) ............................................................................. 56, 61, 66 47 U.S.C. §503...............................................................................................56 5 U.S.C. § 706(2)(A) .....................................................................................32 5 U.S.C. §553(b)............................................................................................62 5 U.S.C. §553(b)(3) .......................................................................................36 Case: 08-3078 Document: 003110223746 Page: 9 Date Filed: 07/21/2010 Page ix Telecommunications Act of 1996 §202(h), 110 Stat. 111- 12 .............................................................................................. 8, 10, 13 Telecommunications Act of 1996 §601(b) ....................................................28 Telecommunications Act of 1996, §202(a), 110 Stat. 110- 11 ...........................................................................................................8 Telecommunications Act of 1996, §202(b), 110 Stat. 110- 11 ...........................................................................................................8 Telecommunications Act of 1996, §202(c)(1)(A), 110 Stat. 110-11............................................................................................8 Telecommunications Act of 1996, §202(c)(2), 110 Stat. 111 .........................................................................................................8 Telecommunications Act of 1996, §202(d), 110 Stat. 111 ..............................8 Telecommunications Act of 1996, §202(e), 110 Stat. 111...............................8 Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996) ................................................................................8 Others Broadcast Station Totals As Of December 31, 2009 (FCC News Release, Feb. 26, 2010).............................................................91 RESTATEMENT (SECOND) OF JUDGMENTS §27 (1982).....................................99 Case: 08-3078 Document: 003110223746 Page: 10 Date Filed: 07/21/2010 IN THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT NOS. 08-3078, ET AL. PROMETHEUS RADIO PROJECT, ET AL., APPELLANTS-PETITIONERS v. FEDERAL COMMUNICATIONS COMMISSION AND THE UNITED STATES OF AMERICA, APPELLEE-RESPONDENTS ON NOTICES OF APPEAL AND PETITIONS FOR REVIEW OF ORDERS OF THE FEDERAL COMMUNICATIONS COMMISSION BRIEF FOR FCC AND UNITED STATES PRELIMINARY STATEMENT Section 202(h) of the Telecommunications Act of 1996 obligates the Federal Communications Commission (Commission) to review its media ownership rules quadrennially and to “repeal or modify any regulation it determines to be no longer in the public interest.” 110 Stat. 111-12. In Prometheus Radio Project v. FCC, 373 F.3d 372 (3d Cir. 2004), this Court remanded, for further explanation, the Commission’s 2003 decision modifying its media ownership rules under that provision. Case: 08-3078 Document: 003110223746 Page: 11 Date Filed: 07/21/2010 2 In response to that remand, and in satisfaction of the ongoing review obli- gation imposed by Section 202(h), the Commission in 2008 modified its decades- old rule prohibiting common ownership of a daily newspaper and a broadcast sta- tion to establish a presumption in favor of allowing newspaper/broadcast combina- tions in the largest 20 markets. The Commission also adopted measures to increase broadcast industry participation by small businesses, including minorities and women. The Commission has broad discretion to establish and revise its media own- ership rules in order to balance its competing policies of promoting competition, localism, and diversity and the changing facts of a dynamic media marketplace. See, e.g., FCC v. National Citizens Comm. for Broad., 436 U.S. 775, 796 (1978) (“NCCB”); United States v. Storer Broad., 351 U.S. 192, 203-06 (1956). The Commission’s policy judgments and its line-drawing must be upheld so long as they are reasonable and supported by substantial evidence in the record before the agency. Disagreement with reasonable policy judgment and line-drawing is not invalidating; nor is the fact that the record might support a different conclusion, so long as the result the Commission reached is within the range of permissible choices before it at the time. The Commission’s statutory obligation to re-evaluate its media ownership rules every four years reflects the rapidly changing, dynamic nature of the media marketplace. Even now, the Commission is taking a fresh look at its media owner- ship rules as part of the 2010 quadrennial review. What rule revisions might be supported by the up-to-date record to be generated in that proceeding remain to be Case: 08-3078 Document: 003110223746 Page: 12 Date Filed: 07/21/2010 3 seen. It is enough for present purposes that the revisions the Commission adopted in its 2008 order, on the basis of the record before it at the time, were within its broad discretion to regulate in the public interest. STATEMENT OF ISSUES PRESENTED 1. Whether the Commission’s incremental loosening of its 35-year prohi- bition on common ownership of newspapers and broadcast stations was reasonable. 2. Whether the Commission’s decision to approve five longstanding news- paper/broadcast combinations and to defer action on other pending requests to waive the newspaper/broadcast cross-ownership rule was reasonable. 3. Whether the Commission’s decision to retain its radio/television cross- ownership, local television ownership, local radio ownership, and dual network rules in their existing form was reasonable. 4. Whether the Commission’s revision or retention of these rules was con- sistent with the First and Fifth Amendments. 5. Whether the Commission took reasonable steps to promote policies that enhance broadcast station ownership by minorities and women. 6. Whether the Court should either transfer the notices of appeal among these cases to the U.S. Court of Appeals for the District of Columbia Circuit, or dismiss them itself for lack of jurisdiction. STATEMENT OF JURISDICTION This Court has jurisdiction to review the rule making portions of the FCC’s order in this case pursuant to 47 U.S.C. §402(a) and 28 U.S.C. §2342(1). The order was released on February 4, 2008. 2006 Quadrennial Regulatory Review, 23 Case: 08-3078 Document: 003110223746 Page: 13 Date Filed: 07/21/2010 4 FCC Rcd 2010 (2008) (“2008 Order”) (JA __). A summary was published in the Federal Register on February 21, 2008. 73 Fed. Reg. 9481 (2008). Each of the petitions for review was filed within 60 days of that date, as required by 28 U.S.C. §2344. On March 11, 2008, the Judicial Panel on Multidistrict Litigation consoli- dated all petitions for review in the U.S. Court of Appeals for the Ninth Circuit. By an order dated November 4, 2008, the Ninth Circuit transferred the consoli- dated petitions for review to this Court. The 2008 Order also contained adjudicatory decisions involving waiver requests relating to particular broadcasting licenses. Exclusive jurisdiction to review FCC radio or television broadcast licensing actions is by notice of appeal to the D.C. Circuit. 47 U.S.C. §402(b). A number of parties filed notices of appeal of the 2008 Order in the D.C. Circuit. Those appeals were consolidated with the petitions for review in this Court. 1 Appellants have moved to transfer their appeals back to the D.C. Circuit. Peti- tioners Office of Communication of the United Church of Christ and Media Alli- ance moved to dismiss the notices of appeal in the D.C. Circuit on the ground that the notices do not fall within 47 U.S.C. §402(b). Neither the D.C. Circuit nor the Ninth Circuit acted on that motion, and it was ultimately transferred to this Court, where it remains pending. 1 The consolidated notices of appeal are Nos. 08-4460 (Media General, Inc.); 08- 4469 (Newspaper Association of America); 08-4473 (Cox Enterprises, Inc., Cox Radio, Inc., Cox Broadcasting, Inc., Miami Valley Broadcasting Corp.); 08-4474 (Belo Corp.); 08-4476 (Morris Communications Co.). The United States is not a party to these cases. Case: 08-3078 Document: 003110223746 Page: 14 Date Filed: 07/21/2010 5 As the Commission has previously explained, it agrees with the motion and maintains that the appeals should be dismissed by the D.C. Circuit (which would have jurisdiction over them if they were properly brought under Section §402(b)), or by this Court. See Response of FCC to Motion to Dismiss, Nos. 08-4460, 08- 4469, 04-4473, 08-4474, 08-4476 (filed March 26, 2009). Section 402(b) provides for exclusive jurisdiction over actions brought by a proper party involving grant or denial of license applications or other specific matters not involved in the 2008 Order. In this case, Section 402(b) does not apply. One appellant (Media General) is the beneficiary of a waiver grant and thus cannot claim to be aggrieved by the Commission’s action as required by the statute; two appellants (Cox and Miami Valley Broadcasting) seek review of Commission action granting them additional time to modify their waiver requests, and their appeals thus are not ripe; the remaining appellants (NAA, Belo, and Morris) state only that they are challenging the Commission’s failure to repeal or relax rules and do not claim to challenge any action in the 2008 Order that could come within the scope of Section 402(b). Petitioner Prometheus Radio Project seeks review of a related Commission order. See Promoting Diversification of Ownership in the Broadcasting Services, 23 FCC Rcd 5922 (2008) (“Diversity Order”) (JA __). The Diversity Order was released on March 5, 2008, and a summary was published in the Federal Register on May 16, 2008. 73 Fed. Reg. 28361 (2008). The petition for review of that order was timely filed in this Court on July 15, 2008. It was docketed as No. 08- 3078 and thereafter consolidated with the other petitions for review and notices of appeal in this case. Case: 08-3078 Document: 003110223746 Page: 15 Date Filed: 07/21/2010 6 STATUTES AND REGULATIONS Pertinent provisions of the Communications Act of 1934, the Telecommuni- cations Act of 1996, and the Commission’s media ownership rules are reprinted as an addendum to this brief. STATEMENT OF RELATED CASES This case has not previously been before this Court. However, the Commis- sion’s action in this case was partly in response to the remand by this Court in Prometheus Radio Project v. FCC, 373 F.3d 372 (2004). In addition, the FCC’s local television station ownership rule was before the D.C. Circuit in Sinclair Broadcast Group, Inc. v. FCC, 284 F.3d 148 (2002). COUNTERSTATEMENT I. STATUTORY AND REGULATORY BACKGROUND A. The FCC’s Broadcast Ownership Rules “In setting its licensing policies, the Commission has long acted on the theory that diversification of mass media ownership serves the public interest by promoting diversity of program and service viewpoints, as well as by preventing undue concentration of economic power.” NCCB, 436 U.S. at 780. For example, in regulations that the Supreme Court upheld in National Broad. Co. v. United States, 319 U.S. 190, 206-08 (1943) (“NBC”), the Commission prohibited broadcast networks from owning more than one station in a given community. Subsequently, the Commission promulgated rules upheld in Storer Broadcasting, 351 U.S. at 203-06, limiting the total number of radio and TV stations a single entity could own nationwide. See Amendment of Sections 3.35, 3.240 and 3.636 of Case: 08-3078 Document: 003110223746 Page: 16 Date Filed: 07/21/2010 7 the Rules and Regulations relating to Multiple Ownership of AM, FM, and Televi- sion Broadcast Stations, 9 Radio Reg. (P&F) 1563, 1567-69 ¶¶9-11 (1953). In 1975, the Commission adopted a ban on common ownership of a daily newspaper and a broadcast station in the same local market. Rules Relating to Multiple Own- ership of Standard, FM, and Television Broadcast Stations, 50 F.C.C.2d 1046 (1975) (“1975 Order”), amended on reconsideration, 53 F.C.C.2d 589 (1975). In NCCB, the Supreme Court upheld the Commission’s newspaper/broadcast cross- ownership prohibition as a “reasonable means of promoting the public interest in diversified mass communications.” See 436 U.S. at 796-802. In the broadcast area, the problems before the Commission often can “not be solved at once and for all time by rigid rules-of-thumb.” NBC, 319 U.S. at 225. As a result, the agency may adjust its regulations “[i]f time and changing circum- stances reveal that the ‘public interest’ is not served by [their] application.” Ibid. The Commission has accordingly adjusted its broadcast ownership rules in recent years to take account of developments in the media marketplace, such as the sig- nificant increase in the number of broadcast outlets and the advent of competing video programming providers. Thus, the Commission in 1984 raised the national ownership limits for broadcast television. Amendment of Section 73.3555 (for- merly 73.35, 73.240, and 73.636) of the Commission’s Rules Relating to Multiple Ownership of AM, FM and Television Broadcast Stations, 100 F.C.C.2d 74, 84 ¶22, 90 ¶38 (1984). And in 1989, the Commission relaxed its radio/television cross-ownership rule by implementing a more lenient waiver policy for applica- Case: 08-3078 Document: 003110223746 Page: 17 Date Filed: 07/21/2010 8 tions involving radio and television combinations in the top 25 markets. Amend- ment of Section 73.3555 of the Commission’s Rules, 4 FCC Rcd 1741 ¶1 (1989). B. The 1996 Telecommunications Act The Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996), made a number of statutory changes that affected the FCC’s media owner- ship rules. Among other things, the 1996 Act modified the Commission’s national ownership restrictions by removing the limits on the number of radio or television stations that a single entity could own nationwide. §202(a), 202(c)(1)(A), 110 Stat. 110-11. Congress also eased the Commission’s local radio ownership restrictions, §202(b), 110 Stat. 110-11, and directed the Commission to conduct a rulemaking to determine whether to “retain, modify, or eliminate” its local television owner- ship limitations, §202(c)(2), 110 Stat. 111. The 1996 Act also directed the Com- mission to further relax its radio/television cross-ownership rule by extending its waiver policy to the “top 50 markets,” §202(d), 110 Stat. 111, and to revise the “dual network” rule to permit common ownership of two or more broadcast televi- sion networks, other than the six (now four) largest. §202(e), 110 Stat. 111. Finally, Section 202(h) of the 1996 Act instituted a “biennial review” requirement, which obligated the Commission to: (1) “review its rules adopted pursuant to this section and all of its ownership rules biennially,” (2) “determine whether any of such rules are necessary in the public interest as the result of com- petition,” and (3) “repeal or modify any regulation it determines to be no longer in Case: 08-3078 Document: 003110223746 Page: 18 Date Filed: 07/21/2010 9 the public interest.” 110 Stat. 111-12. In 2004 Congress modified the statute to require such review every four years, beginning in 2006. 2 C. The Sinclair Decision In line with its ongoing examination of its broadcast ownership rules, and guided by the statutory directives of the 1996 Act, the Commission in 1999 adopted an order revising its local television ownership rule. Review of the Com- mission’s Regulations Governing Television Broadcasting, 14 FCC Rcd 12903 (1999), on reconsideration, 16 FCC Rcd 1067 (2001). The revised local television rule continued to permit common ownership of two television stations whose sig- nals did not overlap, 14 FCC Rcd at 12926 ¶47, and for the first time enabled common ownership of two television stations with overlapping signals if “at least eight independently owned and operating full power commercial and noncommer- cial TV stations would remain post-merger, and the two merging stations are not both among the four top-ranked stations in the market, as measured by audience share.” 14 FCC Rcd at 12932-33 ¶64. The D.C. Circuit reviewed the Commission’s 1999 revision of its local television ownership rule in Sinclair Broadcast Group, Inc. v. FCC, 284 F.3d 148 (D.C. Cir. 2002). The court emphasized that “[w]here issues involve ‘elusive’ and ‘not easily defined’ areas such as programming diversity in broadcasting,” it was obligated to “accord[] broad leeway to the Commission’s line-drawing determina- tions.” 284 F.3d at 159 (citation omitted). It also rejected a First Amendment 2 Consolidated Appropriations Act of 2004, Pub. L. No. 108-199, 118 Stat. 3, 100 (2004). Case: 08-3078 Document: 003110223746 Page: 19 Date Filed: 07/21/2010 10 challenge to the rule as “foreclosed by” Supreme Court and circuit precedent, id. at 167-69, and found that the Commission had “adequately explained how the local ownership rule furthers diversity at the local level and is necessary in the ‘public interest’ under §202(h) of the 1996 Act.” Id. at 160. But because the court found that the Commission had not adequately explained its different approach in the local television ownership rule compared to its rule on cross-ownership of radio and television stations, the court remanded the rule for further consideration by the Commission. Id. at 162, 169. D. The 2002 Biennial Review In 2002, in accordance with its (then biennial) review obligations, the Com- mission initiated a “comprehensive review” of its broadcast ownership rules, which culminated in July 2003. 2002 Biennial Regulatory Review, 18 FCC Rcd 13620 (2003) (‘2003 Order’). The Commission performed this review in light of its “longstanding goals” of promoting diversity, competition, and localism – and tak- ing account of the changes in the marketplace, including the Internet. 2003 Order, 18 FCC Rcd at 13623, 13661 ¶¶ 4, 117. By promoting diversity, and more particu- larly viewpoint diversity, the Commission meant to help ensure “the availability of media content reflecting a variety of perspectives,” recognizing that “a diverse and robust marketplace of ideas is the foundation of our democracy.” Id. at 13627 ¶19. The Commission also reaffirmed its “longstanding commitment to promoting com- petition by ensuring pro-competitive market structures,” stating that “[c]onsumers receive more choice, lower prices, and more innovative services in competitive markets than they do in markets where one or more firms exercise market power.” Case: 08-3078 Document: 003110223746 Page: 20 Date Filed: 07/21/2010 11 Id. at 13638 ¶57. Finally, the Commission made clear that localism “continues to be an important policy objective,” and that “local television and radio stations” have long been required to be “responsive to the needs and interests of their local communities.” Id. at 13643 ¶74. The 2003 Order established a new cross-media rule to govern cross-owner- ship of daily newspapers, television stations, and radio stations, and modified two other rules that limit common ownership of multiple radio and multiple television stations in a single local market. Cross-Media Rule. The cross-media rule adopted in the 2003 Order pro- hibited combinations involving a daily newspaper and a broadcast station, or a radio station and a television station, in local markets with three or fewer television stations. 2003 Order, 18 FCC Rcd at 13797 ¶454. In local markets with four to eight television stations, such cross-media combinations would be permitted with certain limitations. Id. at 13803 ¶466. In local markets with nine or more televi- sion stations, the Commission declined to impose any cross-media limit. Id. at 13804 ¶473. In establishing its cross-media limits, the Commission utilized a “Diversity Index”—a tool based loosely on the Herfindahl-Hirshmann Index (HHI) used in antitrust analysis—to “inform [its] judgments about the need for ownership limits” and “where [the agency] should draw lines between diverse and concen- trated markets.” Id. at 13775 ¶391. Local Television Ownership Rule. Like the cross-media rule, the Commis- sion’s revised local television ownership rule established ownership restrictions that were tied to the number of television stations in the local market. Under the Case: 08-3078 Document: 003110223746 Page: 21 Date Filed: 07/21/2010 12 rule, a party was permitted to own two commercial television stations in individual markets with 17 or fewer television stations, and three commercial stations in mar- kets with 18 or more television stations. 2003 Order, 18 FCC Rcd at 13668 ¶134. The rule, moreover, prohibited combinations among the four highest-rated tele- vision stations in the market. Id. at 13691 ¶186. Local Radio Ownership Rule. The Commission also retained its numerical limits on local radio station ownership, which Congress had directed the Com- mission to establish in the 1996 Act. Much like the local television rule, the local radio rule limited the number of commercial radio stations a single party may own in a local market according to the number of radio stations located in the market. Although it did not change the numerical caps themselves, the Commission did change its application of those limits in two ways: It revised the method of deter- mining the scope of the radio market to which the rule’s numerical limits apply, 2003 Order, 18 FCC Rcd at 13724 ¶¶273-274, and it required inclusion of non- commercial radio stations when counting the number of radio stations in the market. Id. at 13734 ¶295. Dual Network Rule. Finally, the Commission decided to retain its “dual network” rule, which prohibits mergers among the top four broadcast television networks (ABC, NBC, CBS, and Fox). 2003 Order, 18 FCC Rcd at 13848 ¶¶592- 621. E. The Prometheus Decision Numerous parties sought judicial review of the 2003 Order in several cir- cuits, and the cases were consolidated in this Court. On June 24, 2004, the Court Case: 08-3078 Document: 003110223746 Page: 22 Date Filed: 07/21/2010 13 issued its decision on the merits. It held that the Commission’s structural limits on broadcast ownership do not violate the First and Fifth Amendment rights of newspaper owners or broadcasters. Prometheus, 373 F.3d at 401-02. The Court held that petitioners’ First Amendment arguments were foreclosed by NCCB, in which the Supreme Court upheld the nationwide ban on newspaper/broadcast cross-ownership as “a reasonable means of promoting the public interest in diver- sified mass communications.” Id. at 401 (quoting NCCB, 436 U.S. at 802). In addition, the Court explained that, even if NCCB did not control, it would assess petitioners’ First Amendment challenges under rational-basis review in light of the continuing physical scarcity of broadcast spectrum. Id. at 402 (explaining that regulation of use of broadcast spectrum is necessary because “many more people would like access to [broadcast spectrum] than can be accommodated”). Similarly, the Court held that petitioners’ equal protection claims were foreclosed by the Supreme Court’s rejection in NCCB of an equal protection challenge to the newspaper/broadcast cross-ownership restriction. Id. at 401. The Court added that the development of more media outlets since NCCB was decided in 1978 was not a basis for reaching a different result. Ibid. The Court likewise rejected petitioners’ argument that Section 202(h) of the 1996 Act limits the agency’s authority to adopt ownership restrictions. Id. at 394-95; see id. at 444 (Scirica, C. J., dissenting) (“[T]he statute does not foreclose the possibility of increased regulation under the biennial review if the Commission finds such action in the public interest.”). In a portion of the panel opinion from which Chief Judge Scirica dissented, the Court concluded that the Commission’s cross-media rule and local television Case: 08-3078 Document: 003110223746 Page: 23 Date Filed: 07/21/2010 14 and radio rules should be remanded for “additional justification or modification.” 373 F.3d at 382. For each of the three rules, the majority rejected the reasoning underlying the specific limits that the Commission had adopted (or, in the case of the local radio rule, retained). Cross-Media Rule. The Court concluded that the Commission’s cross-media rule was not supported by a “reasoned analysis.” 373 F.3d at 402. The majority focused its criticism on the Commission’s use of the Diversity Index to guide its judgment in setting ownership limits for local media markets of various sizes. In particular, the majority rejected the Commission’s decision to assign equal weight to “all outlets within the same media type (that is, television stations, daily papers, or radio stations).” Id. at 408. In the majority’s view, the equal share assignment “makes unrealistic assumptions about media outlets’ relative contributions to view- point diversity in local markets.” Ibid. The Court also found the Diversity Index flawed because, in the view of the panel majority, it “gave too much weight to the Internet as a media outlet.” Id. at 403. Local Television Ownership Rule. The Court likewise remanded the Com- mission’s local television ownership limits. 373 F.3d at 418-20. In constructing the 2003 local television rule, the Commission adopted a goal of preserving six equal-sized competitors (2003 Order, 18 FCC Rcd at 13693 ¶192), and generally treated each television station in the market as having equal significance. In line with its analysis of the cross-media limits, the panel majority rejected that approach because it found “no evidence” supporting the Commission’s equal weighting of local stations; and it further concluded that such weighting was unrea- Case: 08-3078 Document: 003110223746 Page: 24 Date Filed: 07/21/2010 15 sonable insofar as it allowed concentration – as measured by audience share – to exceed an HHI of 1800. 373 F.3d at 419. The Court therefore remanded the numerical limits for local television ownership “for the Commission to support and harmonize its rationale.” Id. at 420. Local Radio Ownership Rule. The Court upheld much of the Commission’s approach to local radio ownership, including the Commission’s decision to adopt a new methodology for delineating local radio markets, 373 F.3d at 423, and to include noncommercial stations in local markets for purposes of applying the own- ership rules. Id. at 425. The Court agreed that the Commission’s use of numerical limits to prevent undue concentration of radio stations by a single party was “rational and in the public interest.” Id. at 431-32. The majority concluded, however, that the Commission’s decision to retain the existing numerical limits – which the Commission had established at Con- gress’s specific direction in the 1996 Act – was not supported by “reasoned analy- sis.” 373 F.3d at 431. As with the other local ownership rules, the majority rejected the Commission’s reliance on a benchmark that evaluated competition or diversity in terms of a number of outlets rather than audience shares. Id. at 433-34. The majority emphasized that it was not passing judgment on the ultimate permis- sibility of the particular ownership rules the Commission chose. Instead, the Court stated, “the Commission gets another chance to justify its actions.” Id. at 382. II. THE 2006 QUADRENNIAL REVIEW The Commission initiated its 2006 quadrennial review proceeding in July 2006 with a Further Notice of Proposed Rule Making. 2006 Quadrennial Regula- Case: 08-3078 Document: 003110223746 Page: 25 Date Filed: 07/21/2010 16 tory Review – Review of the Commission’s Broadcast Ownership Rules, 21 FCC Rcd 8834 (2006) (“Further Notice”) (JA __). In response to that Further Notice as well as a Second Further Notice, 3 some commenters argued in favor of substan- tially easing or eliminating the rules. Others expressed significant concerns about the level and potential consequences of media consolidation, including concerns that such consolidation results in a loss of viewpoint diversity and negatively affects competition. In addition to receiving and reviewing these public comments, the Commis- sion conducted or commissioned ten studies and included numerous other studies in the record of the proceeding. 4 The Commission also conducted six media own- ership hearings around the country and heard divergent testimony from a number of commenters and speakers as to whether the media ownership rules should be relaxed, retained, or tightened. 5 In February 2008, the Commission concluded the quadrennial review of its media ownership rules with the release of the 2008 Order. A majority of the Com- mission determined that it should “modify the newspaper/broadcast cross-owner- 3 2006 Quadrennial Regulatory Review – Review of The Commission’s Broadcast Ownership Rules, 22 FCC Rcd 14215 (2007) (“Second Further Notice”) (JA __). 4 See FCC Seeks Comment on Research Studies on Media Ownership, Public Notice, 22 FCC Rcd 14313 (2007) (JA __) for a description of the studies. The studies themselves are available at: http://www.fcc.gov/ownership/studies.html. 5 Media Ownership hearings were held in Los Angeles and El Segundo, California; Nashville, Tennessee; Harrisburg, Pennsylvania; Tampa, Florida; Chicago, Illinois; and Seattle, Washington. Transcripts and audio webcasts of the hearings are available at http://www.fcc.gov/ownership/hearings.html. Case: 08-3078 Document: 003110223746 Page: 26 Date Filed: 07/21/2010 17 ship rule, and . . . generally retain the other broadcast ownership rules currently in effect.” 2008 Order ¶1 (JA __). The Commission majority described its approach as a “cautious” one. By modestly loosening the 32-year prohibition on newspaper/broad- cast cross-ownership, our approach balances the concerns of many commenters that we not permit excessive consolidation with concerns of other commenters that we afford some relief to assure continued diversity and investment in local news programming. We believe that the decisions we adopt today serve our public interest goals, appro- priately take account of the current media marketplace, and comply with our statutory responsibilities. Id. ¶5 (JA __). Two Commissioners dissented. They argued that there had been excessive consolidation of media ownership in recent years, and they disagreed in particular with the majority’s decision to relax the newspaper/broadcast cross- ownership rule. See (JA ___, ___). Newspaper/Broadcast Cross-Ownership Rule The Commission once again found that “retention of a complete ban” on newspaper/broadcast cross-ownership was “not necessary in the public interest,” particularly in light of the considerable recent turmoil in the media marketplace and the newspaper industry, 2008 Order ¶¶19, 24-38 (JA __). The agency also reaffirmed its earlier finding that “some cross-ownership limits are necessary to guard against ‘an elevated risk of harm to the range and breadth of viewpoints that may be available to the public.’” Id. ¶49 (JA __) (quoting 2003 Order, 18 FCC Rcd at 13793 ¶442). But given the extensive flaws that the Court found in the 2003 Order’s Diversity Index and cross-media limits, the Commission decided to abandon those limits in favor of a new rule. Id. ¶17 (JA __). Case: 08-3078 Document: 003110223746 Page: 27 Date Filed: 07/21/2010 18 The new cross-ownership rule presumes that it is not inconsistent with the public interest for a single entity to own a daily newspaper and a radio station in one or more of the top 20 Nielsen designated market areas (“DMAs”). 2008 Order ¶13 (JA __). The rule also presumes that it is not inconsistent with the public interest for a single entity to own a daily newspaper and a television station in the top 20 DMAs, so long as (1) the television station is not ranked among the top four stations in the market and (2) at least eight independent “major media voices” remain in the market. Ibid. “In all other instances” – including all proposed mergers in DMAs ranked below the top 20 – the rule presumes that “a newspaper/broadcast station combi- nation would not be in the public interest.” 2008 Order ¶13 (JA __); see also id. ¶63 (JA __). “In two special circumstances,” though, the Commission “will reverse the negative presumption that applies to those proposed combinations that do not otherwise qualify for a positive presumption.” Id. ¶65 (JA __). First, the Commission will apply a positive (rather than negative) presumption to any pro- posed combination where the newspaper or broadcast outlet “is failed or failing.” Ibid. (JA __). Second, the Commission “will reverse the negative presumption when a proposed combination … initiates local news programming of at least seven hours per week on a broadcast outlet that otherwise was not offering local newscasts prior to the combined operations.” Id. ¶67 (JA __). Under the new rule, the Commission will evaluate proposed newspaper/ broadcast combinations “on a case-by-case basis.” 2008 Order ¶52 (JA __). Parties objecting to a transaction with a positive presumption “will have a high Case: 08-3078 Document: 003110223746 Page: 28 Date Filed: 07/21/2010 19 hurdle to persuade the Commission that the transaction should not be approved.” Id. ¶68 (JA __). Conversely, “any applicant attempting to overcome a negative presumption about a major newspaper and television station combination” will be required “to demonstrate by clear and convincing evidence that, post-merger, the merged entity will increase the diversity of independent news outlets … and increase competition among independent news sources in the relevant market.” Ibid. “[N]o matter which presumption applies,” the Commission will consider four “specific factors in determining whether permitting a particular combination in a particular market would be in the public interest.” 2008 Order ¶52 (JA __). The four factors are: (1) whether the proposed merger will “increase the amount of local news disseminated through” the combining media outlets; (2) whether each of the combining media outlets will continue to “exercise its own independent news judgment”; (3) the “level of concentration” in the market; and (4) the “finan- cial condition” of the newspaper or broadcast station (and if either is in “financial distress,” the proposed future owner’s “commitment to invest significantly in newsroom operations”). Id. ¶13 (JA __). Newspaper/Broadcast Applications The Commission also acted in the 2008 Order on five pending requests (one by Gannett and four by Media General) for waiver of the newspaper/broadcast cross-ownership rule to allow the maintenance of local combinations of one news- paper and one broadcast station that were acquired prior to 2001. The Commission concluded that the five waivers were in the public interest because of the “syner- Case: 08-3078 Document: 003110223746 Page: 29 Date Filed: 07/21/2010 20 gies that have already been achieved from the newspaper/broadcast station combi- nation, the new services provided to local communities by the combination, the harms … associated with required divestitures, the prolonged period of uncertainty surrounding the status of the newspaper/broadcast cross-ownership ban, and the length of time that the waiver request has been pending.” 2008 Order ¶77 (JA __). In the case of other pending waiver requests that involved (i) more than one news- paper or broadcast station or (ii) an entity that had been granted a temporary waiver pending completion of the 2006 review, the Commission did not grant a waiver, but instead required either the amendment of the pending waiver request or the filing of a new request for a permanent waiver for consideration under the new presumption framework. Id. ¶78 (JA __). Radio/Television Cross-Ownership Rule The Commission decided to retain the radio/television cross-ownership rule that it adopted in 1999, which limits the number of commercial radio and television stations an entity may own in the same market. See 2008 Order ¶¶80-86 (JA __). Specifically, the rule allows a party to own up to two television stations (so long as permitted under the local television ownership rule) and up to six radio stations (to the extent permitted by the local radio ownership rule) in a market where at least 20 independently owned media “voices” would remain following a merger. 47 C.F.R. §73.3555(c) (2009). In markets where parties may own a com- bination of two television stations and six radio stations, the rule allows a party alternatively to own one television station and seven radio stations. 2008 Order ¶80 (JA __). A party may own up to two television stations (as permitted under Case: 08-3078 Document: 003110223746 Page: 30 Date Filed: 07/21/2010 21 the current local television ownership rule) and up to four radio stations (as permit- ted under the local radio ownership rule) in markets where, post-merger, at least 10 independently owned media voices would remain. Ibid. A combination of two television stations (as permitted under the local television ownership rule) and one radio station is allowed regardless of the number of voices remaining in the mar- ket. Ibid. The Commission acknowledged that it had sought to eliminate the radio/ television cross-ownership rule in its 2003 Order, but that approach, it explained, “was based in large part on our adoption of the cross-media limits” that the Court later invalidated in the Prometheus decision. 2008 Order ¶82 (JA __). Having concluded that the cross-media limits were no longer supportable, the Commission found that it “must adopt diversity protection provisions to act in their place, and therefore retain the current radio/television cross-ownership rule.” Ibid. Local Television Ownership Rule The Commission also found that its restrictions on common ownership of television stations in local markets continue to be necessary “in order to preserve adequate levels of competition within local television markets.” 2008 Order ¶87 (JA __). Under the local television ownership rule, an entity may own two televi- sion stations in the same DMA if: (1) the Grade B contours 6 of the stations do not overlap; or (2) at least one of the stations in the combination is not ranked among 6 The Grade B contour is the geographical representation of an area served by a specified television signal strength. 47 C.F.R. § 73.683; see Prometheus, 373 F.3d at 413 n.43. Case: 08-3078 Document: 003110223746 Page: 31 Date Filed: 07/21/2010 22 the top four stations in the DMA in terms of audience share, and at least eight inde- pendently owned and operating commercial or non-commercial full-power broad- cast television stations would remain in the DMA after the combination. 47 C.F.R. §73.3555(b) (2009). The Commission acknowledged that it was changing course from the new rule it sought to adopt in the 2003 Order, which would have allowed ownership of up to three TV stations (and wider ownership of two TV stations) in a market, but explained that it was reversing that “determination – which this Court invalidated – because we find that eliminating the rule could harm competition among broadcast stations in local markets.” 2008 Order ¶101 (JA __). Finally, the Commission reinstated what was known as the “failed station solicitation rule” – a requirement that an applicant for a waiver of the local televi- sion ownership rule provide notice of the sale of a failed, failing or unbuilt station to potential out-of-market buyers before it could sell the station to an in-market buyer. This Court in Prometheus had remanded for further explanation the Com- mission’s attempt to eliminate that requirement in 2003, see 2003 Order, 18 FCC Rcd at 13708 ¶225, because the Commission did not consider its potential impact on minority ownership. See Prometheus, 373 F.3d at 421-22. The Commission explained that after further consideration it decided to reinstate the failed station solicitation rule because it is “necessary to ensure that out-of-market buyers, including qualified minority broadcasters, have notice of, and an opportunity to bid for, a station before it is combined with an in-market station.” 2008 Order ¶109 (JA___). The Commission stated that it was inappropriate to assume, as had been Case: 08-3078 Document: 003110223746 Page: 32 Date Filed: 07/21/2010 23 the case in the 2003 Order, that “no out-of-market buyer will be interested unless an effort is made to find one.” Ibid. Local Radio Ownership Rule The Commission also concluded that its existing local radio ownership rule remains necessary in the public interest to protect competition in local radio mar- kets. 2008 Order ¶110 (JA __). Under that rule, an entity may own, operate, or control: (1) up to eight commercial radio stations, not more than five of which are in the same service (i.e., AM or FM), in a radio market with 45 or more full-power, commercial and noncommercial radio stations; (2) up to seven commercial radio stations, not more than four of which are in the same service, in a radio market with between 30 and 44 full-power, commercial and noncommercial radio stations; (3) up to six commercial radio stations, not more than four of which are in the same service, in a radio market with between 15 and 29 full-power, commercial and noncommercial radio stations; and (4) up to five commercial radio stations, not more than three of which are in the same service, in a radio market with 14 or fewer full-power, commercial and noncommercial radio stations, except that an entity may not own, operate, or control more than 50 percent of the stations in such a market. See 47 C.F.R. §73.3555(a) (2009). The existing rule, the Commission found, represents “a reasonable means for promoting the public interest as it relates to competition. … [N]umerical limits on radio station ownership help to keep the available radio spectrum from becoming ‘locked up’ in the hands of one or a few owners, thus helping to prevent the forma- tion of market power in local radio markets.” 2008 Order ¶116 (JA __). In addi- Case: 08-3078 Document: 003110223746 Page: 33 Date Filed: 07/21/2010 24 tion, the Commission concluded that “retaining the current, competition-based numerical limits on local radio ownership will promote diversity indirectly for the same reasons that the Commission pointed to in the [2003 Order].” Id. ¶129 (JA __); see also 2003 Order, 18 FCC Rcd at 18739 ¶¶305-315. Noting the substantial consolidation in the radio industry at both the national and local level following the Commission’s changes in its radio ownership rules in 1992 and Congress’ further relaxation of local radio ownership limits in 1996, the Commission found that “data in the record supports the conclusion that the current numerical limits are not unduly restrictive and that additional consolidation would not serve the Commission’s competitive goals.” 2008 Order ¶118 (JA __). The Commission also reaffirmed the separate AM and FM ownership limits, known as “AM/FM subcaps,” which further limit ownership of AM and FM radio stations within the overall limits for local radio station ownership. The Commis- sion found that “retaining the current competition-based subcaps will promote diversity indirectly by facilitating and encouraging entry into the local media mar- ket by new and underrepresented parties, and we thus conclude that the AM sub- caps are in the public interest.” 2008 Order ¶134 (JA __). Dual Network Rule Finally, the Commission retained the “dual network rule,” which prohibits a broadcast station from affiliating with “a person or entity that maintains two or more networks of television broadcast stations [where] such dual or multiple net- works are composed of two or more persons or entities that, on February 8, 1996, were ‘networks’ as defined in Section 73.3613(a)(1) of the Commission’s regula- Case: 08-3078 Document: 003110223746 Page: 34 Date Filed: 07/21/2010 25 tions (that is, ABC, CBS, Fox, and NBC).” 47 C.F.R. §73.658(g) (2009). The Commission had also retained the rule in 2003, concluding that it was necessary in the public interest to promote competition and localism. 2003 Order, 18 FCC Rcd at 13850-58 ¶¶599-621. No party sought judicial review of that rule in the prior Prometheus litigation. In this proceeding, the Commission noted, few parties had commented on the rule, and almost all supported retaining the rule in its present form. 2008 Order ¶141 (JA __). The Commission said that it had found no evidence in this record “convincing us that a departure from our [2003] decision to retain the rule in its current form is warranted.” Ibid. III. THE DIVERSITY ORDER One petitioner, Prometheus Radio Project, seeks review of a related Com- mission order that the agency adopted at the same time as the 2008 Order. See Promoting Diversification of Ownership in the Broadcasting Services, 23 FCC Rcd 5922 (2008) (“Diversity Order”) (JA __). In the Diversity Order, the Commission took a number of “steps to increase participation in the broadcasting industry by new entrants and small businesses, including minority- and women-owned busi- nesses, which historically have not been well-represented in the broadcasting industry.” Id. ¶1 (JA __). Among other things, the Commission modified its rules to give “eligible entities” easier access to financing, id. ¶¶29-34 (JA __), more time to complete construction of broadcast facilities, id. ¶¶15-16 (JA __), and the oppor- tunity to purchase a station from a licensee whose license is in jeopardy, id. ¶¶38- 39 (JA __). Case: 08-3078 Document: 003110223746 Page: 35 Date Filed: 07/21/2010 26 For purposes of these initiatives, the Commission continued to employ a definition of “eligible entity” it had used in the 2003 Order, i.e., any entity that would qualify as a small business consistent with Small Business Administration standards for its industry grouping, based on revenue. Diversity Order ¶¶6-7 (JA __). IV. THE 2010 QUADRENNIAL REVIEW The current Commission (four of the five members of which have been appointed since the 2003 Order) has continued to examine its media ownership rules in line with its quadrennial review obligation. On May 25, 2010, after holding a number of workshops to help frame the issues that had begun in 2009, the Commission issued a Notice of Inquiry for its fifth such review. 2010 Quadrennial Regulatory Review – Review of the Commission’s Broadcast Owner- ship Rules, FCC 10-92 (May 25, 2010) (“2010 NOI”). The notice sets forth the Commission’s intent to “seek a comprehensive understanding of the current media marketplace in order to determine whether the current ownership rules are neces- sary in the public interest as the result of competition.” Id. ¶3. As the Commission stated: Given the profound marketplace, economic, and industry changes in recent years, we commence this proceeding with no preconceived notions about the framework that will result from this review or what rules we will adopt. We will examine ownership issues based on the record that is established in this proceeding and will seek to establish a forward-looking framework based on the media marketplace of today, not on marketplace factors as they may have existed in the past. Ibid. Since then, the Commission has announced that it is commissioning at least nine economic studies to evaluate the current marketplace and the state of the Case: 08-3078 Document: 003110223746 Page: 36 Date Filed: 07/21/2010 27 media industry, 7 and numerous parties have filed comments in response to the 2010 NOI. 8 SUMMARY OF ARGUMENT Consistent with its longstanding policy of simultaneously promoting and balancing the values of diversity, competition and localism, the Commission in 2008 modestly loosened the decades-old newspaper/broadcast cross-ownership ban while keeping the rest of its media ownership rules unchanged for the time being. In doing so, the Commission permissibly took account of three overarching con- siderations: (1) the uncertain evidence in the record at the time regarding lasting trends in the media marketplace, particularly involving the state of the newspaper industry; (2) the Commission’s continuing obligation to review its ownership rules quadrennially, which permits the agency, in conditions of uncertainty, to act in increments; and (3) the fact that the newspaper/broadcast cross-ownership rule was the only one of the Commission’s media ownership rules that had not been sub- stantially relaxed over time. The specific regulatory lines the Commission drew when implementing these overarching principles were within the range of the agency’s broad discretion 7 See Public Notice, “Media Bureau Announces the Release of Requests for Quotation for Media Ownership studies and Seeks Suggestions for Additional Studies in Media Ownership Proceeding,” DA-10-1084 (Media Bur., June 16, 2010). 8 See Public Notice, “Media Bureau Announces Comment Deadlines for Notice of Inquiry in Media Ownership Proceeding,” DA-1066 (Media Bur., June 11, 2010) (establishing July 12, 2010 and July 26, 2010, respectively, as the dates for filing comments and reply comments). Case: 08-3078 Document: 003110223746 Page: 37 Date Filed: 07/21/2010 28 to regulate media ownership in the public interest. The parties challenging the 2008 Order cannot prevail on review by pointing to alternative rules the Commission might also permissibly have chosen or might choose at the end of its 2010 quadrennial review on an up-to-date record. Instead they must show that the rules adopted in the 2008 Order fall outside the Commission’s broad discretion given the record before the agency at that time. This they cannot do. 9 1. The Commission reasonably revised its decades-old ban on newspaper/ broadcast cross-ownership by establishing a framework that, as a general matter, rebuttably presumes that a proposed newspaper/broadcast combination in one of the top 20 markets will be in the public interest. The revised rule permissibly balances the potential benefits and synergies of newspaper/broadcast mergers with the continuing need to preserve viewpoint diversity by preventing excessive media consolidation. The media petitioners object to the Commission’s conclusion that the revised rule is necessary to promote viewpoint diversity. But as the Supreme Court long ago recognized, the Commission has “acted rationally in finding that diversification of ownership [will] enhance the possibility of achieving greater diversity of viewpoints.” NCCB, 436 U.S. at 796. The record before the Commis- 9 The Commission’s regulation of broadcast license ownership confers no antitrust immunity. United States v. Radio Corp. of America, 358 U.S. 334, 346 (1959). See also 1996 Act, §601(b) (the 1996 Act does not “modify, impair, or supersede the applicability of any of the antitrust laws”). The Department of Justice reviews broadcast mergers under the antitrust laws. The standards of the antitrust laws are distinct from those of the Communications Act, and their application may lead to different conclusions. Case: 08-3078 Document: 003110223746 Page: 38 Date Filed: 07/21/2010 29 sion in 2008 showed that newspapers and broadcast stations remained the most significant sources of local news for American consumers. The record therefore supported the Commission’s conclusion that newspaper/broadcast combinations continue to pose a serious threat to viewpoint diversity. 2. The Commission also permissibly grandfathered five longstanding news- paper/broadcast combinations in light of the synergies already generated by the combinations, the new services they had provided to their communities, and the disruption that would be caused by their divestiture. The Citizen Petitioners’ objections to the Commission’s approvals, which were never raised before the Commission in this proceeding, are more properly seen as objections to the license renewal proceedings and therefore belong in the D.C. Circuit. In any event, the Commission’s analysis was entirely consistent with the public interest considera- tions related to grandfathering outlined (and upheld by the Supreme Court) when the agency first adopted its newspaper/broadcast cross-ownership rule. 3. The Commission reasonably determined to retain its radio/television cross-ownership rule. In 2003, the agency had decided that the rule was no longer necessary in light of its newly adopted cross-media limits. In the 2004 Prometheus decision, however, this Court found the cross-media limits arbitrary; on remand, the limits (and the associated Diversity Index) were abandoned. Without cross- media limits, the Commission reasonably concluded that the radio/television cross- ownership rule remained necessary to promote viewpoint diversity. 4. The Commission found that its local television ownership rule likewise remains necessary to protect competition in local markets. Although in 2003 the Case: 08-3078 Document: 003110223746 Page: 39 Date Filed: 07/21/2010 30 Commission had relaxed the rule to permit one entity to own three stations in the largest markets and two stations in smaller markets, this Court in Prometheus remanded that revision as inadequately explained. In the 2008 Order, the Com- mission decided on account of competition concerns to retain the existing pre-2003 version of the rule, which permits an entity to own two stations in a local market provided that neither is among the top four local stations in audience share and eight stations will remain after the combination. The Commission has broad dis- cretion to revisit prior policy choices and lines drawn so long as it explains its new approach. This is particularly true where, as here, its prior determination has not survived judicial review. The Commission also addressed the D.C. Circuit’s remand in Sinclair, explaining that because the rule’s focus was on competition among local television stations, it was appropriate to count only television stations in determining how many voices are in a market and not other types of media such as radio, newspapers, cable or the Internet. 5. The Commission’s decision to retain the local radio ownership rule was also reasonable and supported by the record. Noting the substantial national and local consolidation that had occurred in radio with relaxation of the Commission’s rules in the 1990s, the Commission concluded that maintaining the existing limits was necessary to (1) guard against further consolidation that could harm competi- tion in local markets and (2) ensure a market structure that would continue to pro- vide opportunities for new entrants. The Commission explained that the existing limits struck a balance between relaxing the limits to permit greater consolidation (which could put at risk the Commission’s competition goal) and making the limits Case: 08-3078 Document: 003110223746 Page: 40 Date Filed: 07/21/2010 31 more restrictive (which would reduce or eliminate the benefits of limited common ownership). The Commission also adequately explained its decision to retain the local radio ownership rule’s limits on AM and FM ownership, finding that the “subcaps” promoted new entry (because AM stations are far less expensive to acquire than FM stations) and prevented excessive market power in those markets in which AM stations were dominant. 6. The Commission also had good reason to retain the dual network rule, which was not even challenged in the prior Prometheus litigation. As the Commis- sion explained, a merger of two or more of the top four broadcast networks would harm competition in the program acquisition and national advertising markets, and would hamper the ability of local affiliates to serve their communities. 7. Petitioners renew their previously unsuccessful attacks on the constitu- tionality of the Commission’s media ownership rules, including the revised news- paper/broadcast cross-ownership rule. The same arguments have been rejected by the Supreme Court and this Court, see Prometheus, 373 F.3d at 401-02, and peti- tioners have provided no basis for this Court to revisit that conclusion. 8. Finally, the Commission took reasonable steps to promote ownership of broadcast stations by small businesses, including businesses owned by minorities and women. The Citizen Petitioners complain that the Commission should have tightened its media ownership rules in order to promote minority ownership, but it was within the Commission’s permissible policy discretion to adopt a different approach. Case: 08-3078 Document: 003110223746 Page: 41 Date Filed: 07/21/2010 32 ARGUMENT I. STANDARD OF REVIEW FCC rules adopted or modified through the informal rulemaking procedures of the Administrative Procedure Act may be overturned only if “arbitrary, capri- cious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. §706(2)(A); Prometheus, 373 F.3d at 389-90. The scope of review is “narrow and a court is not to substitute its judgment for that of the agency.” Motor Vehicle Manufacturers Ass’n v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 42 (1983). “[A] reviewing court may not set aside an agency rule that is rational, based on consideration of the relevant factors, and within the scope of the authority dele- gated to the agency by the statute,” id. at 41, and the agency’s decision will be affirmed so long as the agency has “examine[d] the relevant data and articulate[d] a satisfactory explanation for its action.” Id. at 42. See FCC v. Fox Television Sta- tions, Inc., 129 S.Ct. 1800, 1810 (2009). Where the agency’s decision is “bound up with a record-based factual conclusion,” it must be affirmed if it is supported by “substantial evidence.” Dickinson v. Zurko, 527 U.S. 150, 164 (1999). The Federal Communications Act grants the Commission “broad” and “expansive” powers to allocate broadcast licenses in the “public interest, conveni- ence and necessity.” FCC v. WNCN Listeners’ Guild, 450 U.S. 582, 594 (1981); NCCB, 436 U.S. at 795; NBC, 319 U.S. at 219. See 47 U.S.C. §§307(a), 309(a), 310(d). The Act’s public interest standard is “a supple instrument for the exercise of discretion by the expert body which Congress has charged to carry out its legis- lative policy.” WNCN, 450 U.S. at 593 (quoting FCC v. Pottsville Broadcasting Case: 08-3078 Document: 003110223746 Page: 42 Date Filed: 07/21/2010 33 Co., 309 U.S. 134 (1940)). The standard “leaves wide discretion and calls for imaginative interpretation.” FCC v. RCA Communications, Inc., 346 U.S. 86, 90 (1953). The Commission’s broad authority means that “the Commission’s judgment regarding how the public interest is best served is entitled to substantial judicial deference,” and “is not to be set aside” as long as the agency’s implemen- tation of the public interest standard is “based on a rational weighing of competing policies.” WNCN, 450 U.S. at 596. Where, as here, Commission decisions are “primarily of a judgmental or pre- dictive nature,” “complete factual support in the record … is not possible or required; ‘a forecast of the direction in which future public interest lies necessarily involves deductions based on the expert knowledge of the agency.’” NCCB, 436 U.S. at 813-14 (citation omitted). Indeed, “where issues involve ‘elusive’ and ‘not easily defined’ areas such as programming diversity in broadcasting,” judicial re- view “is considerably more deferential, according broad leeway to the Commis- sion’s line-drawing determinations.” Sinclair, 284 F.3d at 159. II. THE COMMISSION REASONABLY REVISED ITS NEWSPAPER/BROADCAST CROSS-OWNERSHIP RULE. In 1975, the FCC adopted a rule prohibiting common ownership of both a full-power broadcast station and a daily newspaper when the broadcast station’s service contour encompasses the newspaper’s city of publication. 1975 Order, 50 F.C.C.2d at 1074-78 ¶¶100-107. The rule was intended to promote “enhanced diversity of viewpoints” among mass media. NCCB, 436 U.S. at 786. At the time this rule was adopted, the FCC grandfathered most existing newspaper/broadcast Case: 08-3078 Document: 003110223746 Page: 43 Date Filed: 07/21/2010 34 combinations, requiring divestiture only in “the most egregious cases.” 1975 Order, 50 F.C.C.2d at 1080 ¶112. In 2003, as part of its biennial review of media ownership rules under Sec- tion 202(h), the Commission determined that an absolute ban on newspaper/broad- cast cross-ownership was no longer necessary in the public interest. 2003 Order, 18 FCC Rcd at 13747-67 ¶¶328-369. In place of the cross-ownership prohibition, the Commission established certain “cross-media limits,” which it derived from a complex formula called the Diversity Index. This formula was “developed as a measure of viewpoint diversity in local markets to identify those ‘at-risk’ markets where consolidation would have a deleterious effect.” Prometheus, 373 F.3d at 388. On the basis of the Diversity Index, the Commission decided to bar news- paper/broadcast combinations only in markets with three or fewer television sta- tions. 2003 Order, 18 FCC Rcd at 13799-800 ¶¶456, 459. The agency also imposed some restrictions on newspaper/broadcast cross-ownership in “small to medium size markets (those with between four and eight television stations).” Id. at 13802-03 ¶466. The cross-media limits never took effect. This Court stayed them pending judicial review. See Prometheus, 373 F.3d at 389. On review, the Court upheld the two principal findings underlying the FCC’s modified approach to regulating newspaper/broadcast cross-ownership: (1) a “blanket ban” on cross-ownership “was no longer in the public interest,” id. at 398; but (2) “retaining some limits” on newspaper/broadcast combinations “was necessary to ensure [viewpoint] diver- sity,” id. at 401. In addition, the Court rejected constitutional challenges to the Case: 08-3078 Document: 003110223746 Page: 44 Date Filed: 07/21/2010 35 Commission’s continued regulation of cross-ownership. Id. at 401-02. At the same time, however, the Court found fault with the specific cross-media limits adopted by the agency and the Diversity Index on which they were based. Id. at 402-11. Stating that the cross-media limits “employ several irrational assumptions and inconsistencies,” id. at 402, the Court remanded “for the Commission to justify or modify its approach to setting numerical limits.” Id. at 435. On remand, the Commission modestly revised the newspaper/broadcast cross-ownership rule. It replaced the flat ban on cross-ownership with a case-by- case review process that would be guided by certain presumptions. The Commis- sion explained that its new rule was “designed to promote diversity by presump- tively prohibiting combinations in the markets with the fewest number of voices, while presumptively permitting certain combinations in the largest markets where the loss of diversity is not a significant risk.” 2008 Order ¶49 (JA __). The pre- sumptions, the Commission predicted, would help companies respond to new marketplace challenges by allowing newspapers and broadcast stations “to explore synergies in certain circumstances.” Id. ¶51 (JA__). At the same time, recogniz- ing the continuing need to protect viewpoint diversity, the rule “maintains safe- guards to ensure that consumers continue to enjoy the benefits that flow from the operation of multiple, competing sources of news and information.” Ibid. While many parties to the agency proceeding urged a more deregulatory tack, the Commission concluded that its “cautious approach” in this area properly “balances the need to support the availability and sustainability of local news and Case: 08-3078 Document: 003110223746 Page: 45 Date Filed: 07/21/2010 36 informational programming” with the need “to preserve diversity and to avoid sig- nificantly increasing local ownership concentration.” Id. ¶20 (JA __). Several petitioners challenge various aspects of the FCC’s new newspaper/ broadcast cross-ownership rule. Their claims, however, involve (at best) policy disagreements rather than legal error. A. The FCC Provided Adequate Notice Of The New Rule. The Citizen Petitioners maintain that the FCC violated the APA by failing to provide sufficient notice of the new rule before adopting it. Citizens Br. 27-29. This argument is unfounded. Contrary to the Citizen Petitioners’ contention, the APA does not obligate the FCC to include “rule proposals” in its notice. As this Court has recognized, “the APA requires a notice to provide either ‘the terms or substance of the proposed rule’ or ‘a description of the subjects and issues involved.’” Citizens for Health v. Leavitt, 428 F.3d 167, 186 (3d Cir. 2005) (quoting 5 U.S.C. §553(b)(3)). A notice that contains no rule proposals complies with the APA so long as it is “sufficient to fairly apprise interested parties of all significant subjects and issues involved.” NVE Inc. v. Department of Health & Human Services, 436 F.3d 182, 191 (3d Cir. 2006) (quoting American Iron & Steel Inst. v. EPA, 568 F.2d 284, 291 (3d Cir. 1977)). The Further Notice in this proceeding plainly informed interested parties of the newspaper/broadcast cross-ownership issues the FCC was considering. In that notice, the Commission tentatively concluded that its Diversity Index was “an inaccurate tool for measuring diversity,” Further Notice ¶32 (JA __), and sought comment on alternative methods of prescribing cross-ownership limits. Specifi- Case: 08-3078 Document: 003110223746 Page: 46 Date Filed: 07/21/2010 37 cally, the Commission asked: “Should limits vary depending upon the character- istics of local markets? If so, what characteristics should be considered, and how should they be factored into any limits?” Ibid. In the 2008 Order, the Commission affirmed its tentative conclusion that the Diversity Index “is an inaccurate tool for measuring diversity” and declined to “reinstate the cross-media limits or rely on the [Diversity Index].” 2008 Order ¶17 (JA __). Instead, the agency crafted a new rule featuring revised cross-ownership limits. The questions that the agency posed in the Further Notice anticipated that the agency might establish a rule the application of which might “vary depending upon the characteristics of local markets.” Further Notice ¶32 (JA __). The Commission’s decision ultimately to conduct case-by-case evaluation of proposed combinations likewise flowed logically from the questions in the Further Notice about whether to tailor cross-ownership limits to the specific characteristics of local markets. The Commission’s new rule, which ties the waiver presumption to the size of the relevant local market, was thus “a logical outgrowth of its notice” and complied with the APA. Covad Comm. Co. v. FCC, 450 F.3d 528, 548 (D.C. Cir. 2006). 10 10 Because the Further Notice “was adequate for APA compliance purposes, it is immaterial” whether a subsequent press release by the then-FCC Chairman invit- ing comment on his more detailed proposal satisfied APA notice requirements. 2008 Order n.47 (JA __). We note, however, that this press release provided a further opportunity for public comment, and on a proposal that closely mirrored the rule that the Commission ultimately adopted. See News Release, Nov. 13, 2007 (JA __). Case: 08-3078 Document: 003110223746 Page: 47 Date Filed: 07/21/2010 38 B. Substantial Record Evidence Supports The Commission’s Conclusion That Continued Regulation Of Newspaper/ Broadcast Cross-Ownership Is In The Public Interest. In Prometheus, this Court held that it was reasonable for the FCC to con- clude that even though “a blanket prohibition on newspaper/broadcast cross-own- ership [was] no longer in the public interest,” “retaining some limits” on cross- ownership “was necessary to ensure diversity.” Prometheus, 373 F.3d at 400-01. Here, too, substantial record evidence supported the Commission’s finding that some restrictions on cross-ownership remain “necessary to guard against ‘an elevated risk of harm to the range and breadth of viewpoints that may be available to the public.’” 2008 Order ¶49 (JA __) (quoting 2003 Order, 18 FCC Rcd at 13793 ¶442). The record gathered for the 2008 Order contained “examples of existing media outlets, such as newspapers, introducing a new media outlet into the market, such as an Internet website, but using both outlets to provide the same local content for consumers.” 2008 Order ¶49 (JA __) (citing CU Comments at 136-47 (JA __- __)). Faced with this evidence that commonly owned media outlets sometimes adopt the same viewpoint, the Commission was “not in a position to conclude that ownership can never influence viewpoint.” Ibid. To protect against the realistic prospect that consolidation of media outlets in some instances could harm view- point diversity, the Commission adopted a presumption against newspaper/broad- cast cross-ownership in markets below the top 20. Because these smaller markets generally have fewer media outlets than the top 20 markets do, they are more Case: 08-3078 Document: 003110223746 Page: 48 Date Filed: 07/21/2010 39 vulnerable to the risk that media consolidation could severely reduce viewpoint diversity. See id. ¶¶56, 63 (JA __, __). The Commission’s determination that cross-ownership limits remained necessary to ensure diversity was not “unsupported.” Media General Br. 30; see NAA Br. 40. In Prometheus, this Court found “ample evidence … that ownership can influence viewpoint.” Prometheus, 373 F.3d at 400 n.26. Similarly, in this proceeding, the Commission found evidence that some commonly owned media outlets “provide the same local content for consumers.” 2008 Order ¶49 (JA __) (citing CU Comments at 136-47 (JA __- __)). See also 2003 Order, 18 FCC Rcd 13687 ¶ 174. This evidence of a link between ownership and viewpoint supported the Commission’s concern that newspaper/broadcast cross-ownership could threaten viewpoint diversity in certain circumstances. 11 Indeed, in affirming the Commission’s 1975 newspaper/broadcast cross- ownership ban in NCCB, the Supreme Court found that the “the rulemaking record” “did not conclusively establish” that a cross-ownership ban “would in fact lead to increases in the diversity of viewpoints among local communications media.” 436 U.S. at 796. The Court nonetheless ruled that “the Commission acted rationally in finding that diversification of ownership would enhance the possi- 11 Petitioners claim that the “Milyo Study” (Ownership Study 6) casts doubt on the Commission’s finding that cross-ownership can harm diversity. NAA Br. 38-39; Tribune Br. 25-30; Media General Br. 29. The Milyo Study, however, concluded only that “there is little consistent and significant difference in the partisan slant of cross-owned stations and other major network-affiliated stations in the same mar- ket.” Milyo Study at 29 (JA __). The study made no attempt to compare the view- points of newspapers and their cross-owned broadcast stations. Case: 08-3078 Document: 003110223746 Page: 49 Date Filed: 07/21/2010 40 bility of achieving greater diversity of viewpoints.” Ibid. The Court recognized that some element of predictive judgment is inherent in any analysis of viewpoint diversity because “[d]iversity and its effects are … elusive concepts, not easily defined,” and “evidence of specific abuses by common owners is difficult to com- pile.” Id. at 796-97 (internal quotations omitted). Like the Supreme Court in NCCB, this Court has recognized that the Commission’s “predictive judgments about matters within its expertise are entitled to substantial deference.” Time Warner Telecom, Inc. v. FCC, 507 F.3d 205, 221 (3d Cir. 2007). Media General and Tribune argue that the Commission, in assessing the need for cross-ownership limits, gave insufficient weight to the contribution of independent Internet news sites to viewpoint diversity. Media General Br. 31-33; Tribune Br. 30. But the agency was appropriately cautious in its analysis of new media, especially after this Court’s ruling in 2004 that the FCC had not justified its weighting of the Internet in its Diversity Index. See Prometheus, 373 F.3d at 404- 08. While the Commission acknowledged the Internet’s contribution to diversity, it was unable to find that the Internet was a “major” source “of local news or infor- mation.” 2008 Order ¶58 (JA __). According to evidence in the record gathered for the 2008 Order, “only a small percentage of people use the Internet frequently for local news and information,” and consumers who search the Internet for news “overwhelmingly go to the web sites of local or national television sources or to the sites of daily newspapers.” Id. ¶¶57-58 (JA __-__) (citing CU Comments, at 136-47 (JA __-__)). The record also provided “relatively unanimous support” for the conclusion that “consumers continue predominantly to get their local news Case: 08-3078 Document: 003110223746 Page: 50 Date Filed: 07/21/2010 41 from daily newspapers and broadcast television.” Id. ¶57 (JA __). On the basis of this evidence, it was permissible for the Commission to count “as major media voices only those outlets that consumers most rely on as sources of local news and information”: full-power television stations and major newspapers. Ibid. (JA __). 12 NAA maintains that “viewpoint diversity should be examined according to the availability of alternative sources of news and information, rather than the rela- tive importance of various outlets.” NAA Br. 39. In Prometheus, however, this Court held that the Commission was justified in “retaining some limits” on news- paper/broadcast cross-ownership “to ensure diversity” because the record in that case established that “the Internet and cable … do not outrank newspapers and broadcast television” as sources of local news. Prometheus, 373 F.3d at 400-01. Here, as in Prometheus, the Commission permissibly found that the continued pre- dominance of newspapers and television stations as sources of local news war- ranted continued regulation of newspaper/broadcast cross-ownership. Petitioners argue that the FCC should have more substantially relaxed – or even eliminated – its cross-ownership restrictions in light the newspaper industry’s financial difficulties. Media General Br. 23-25; NAA Br. 34; NAB Br. 57-59. The 12 Contrary to Media General’s suggestion (Br. 33), the Commission did not “dis- miss[] altogether the contribution new media outlets make.” The agency’s deci- sion to relax the newspaper/broadcast cross-ownership ban was based in part on evidence that “Internet use by both consumers and competitors is changing how traditional news media operate” and diminishing “mainstream media power over information flow.” 2008 Order ¶36 (JA __). Case: 08-3078 Document: 003110223746 Page: 51 Date Filed: 07/21/2010 42 Commission addressed the issue by adopting a presumption favoring the approval of any newspaper/broadcast combination that involves a “failed or failing” news- paper or broadcast outlet. 2008 Order ¶65 (JA __). The Commission additionally emphasized that its review of proposed transactions under the new rule would include consideration of “whether a newspaper or a broadcast station in a proposed combination is in financial distress.” Id. ¶74 (JA __). These features of the new rule showed due sensitivity to the financial plight of newspapers, insofar as it was revealed by the 2008 record. C. The Commission Reasonably Established A Case-By-Case Review Process. Contrary to NAA’s contention (Br. 44-50), the FCC rationally explained why it adopted a case-by-case review process instead of a bright-line rule to regu- late newspaper/broadcast cross-ownership. It noted that the need to enforce cross- ownership limits in a particular market “for the protection of diversity depends on the particular nature of both the market at issue and the transaction at issue.” 2008 Order ¶50 (JA __). The Commission reasoned that an “inflexible ‘one-size-fits- all’ rule” would not adequately account for “the diversity of media markets across the country as well as the diversity of media transactions.” Ibid. The “inconclusiveness of some of the data” on the relationship between newspaper/broadcast combinations and the provision of local information to the public and the “disagreement as to the outcome of the studies” before the Commis- sion that examined the subject provided further support for the FCC’s decision “to undertake a case-by-case review of particular combinations in particular markets, Case: 08-3078 Document: 003110223746 Page: 52 Date Filed: 07/21/2010 43 rather than providing hard, across-the-board limits.” 2008 Order ¶46 (JA __). The Commission found that its “case-by-case approach” would allow for “a more fully informed assessment that a proposed transaction in a particular market actually will increase the total amount of local news generated by the combined outlets.” Ibid. 13 More fundamentally, “given the long history of the newspaper/broadcast cross-ownership rule,” the Commission sensibly chose “to proceed cautiously in relaxing” the rule, 2008 Order n.206 (JA __), rather than effecting a sudden and dramatic change. 14 The Commission acknowledged that in 2003 it had found that, “on balance, the benefits of precision that case-by-case review … would provide were 13 Tribune and NAA assert that case-by-case review of the impact of cross-owner- ship on localism is unwarranted because some localism studies showed a positive correlation between cross-ownership and local news coverage. Tribune Br. 31; NAA Br. 36-38. But peer review revealed that those studies lacked the compre- hensive data needed to support a finding that cross-ownership would promote localism in all markets under all circumstances. See, e.g., 2008 Order n.149 (JA __) (while Study 6 provides “evidence consistent with overall trends and patterns for the period of time that it studies,” it “may not represent the behavior of all news outlets all the time”); id. n.147 (JA __) (“the author of Study 6 acknowledges the limitations of his data”); id. n.151 (JA __) (noting “the limitations of the data” used by Study 4.1). Given gaps in the data, the Commission reasoned that case-by-case review would permit “a more fully informed assessment” of how a given transaction would affect local news coverage in a specific market. Id. ¶46 (JA __). 14 NAA argues that “at the very least,” the Commission should have categorically authorized “combinations in all markets in which a sufficiently ‘robust number of diverse media sources’ exist.” NAA Br. 40 (quoting 2008 Order ¶19 (JA __)). The Commission reasonably determined, however, that even in the largest markets, a rebuttable presumption would be appropriate to permit the Commission to retain the ability to assess the impact of a particular transaction on localism and diversity in the particular market. 2008 Order ¶¶46, 50 (JA__-___). Case: 08-3078 Document: 003110223746 Page: 53 Date Filed: 07/21/2010 44 outweighed by the benefits of bright-line rules.” 2008 Order ¶54 (JA __) (citing 2003 Order, 18 FCC Rcd at 13645 ¶82). The agency came to a different conclu- sion when it revisited the issue in 2008, and it satisfied APA requirements by explaining why. See FCC v. Fox Television, 129 S.Ct. at 1810-11(agency action not subject to heightened scrutiny or more searching standard of review simply because it is changing policy). Noting that “bright-line rules can be over-inclusive or under-inclusive,” the Commission determined in 2008 that case-by-case analysis of proposed newspaper/broadcast combinations would provide a much more accurate assessment of the impact of particular transactions in particular markets. Ibid. And while a bright-line rule might produce more predictable outcomes, the Commission reasoned that “the built-in presumptions and the public interest test” employed by the new rule would “provide adequate predictability for the industry.” Ibid. The Commission also rejected arguments that “a case-by-case approach will impose undue regulatory burdens.” Id. n.178 (JA __). It predicted that, “in com- parison to the number of applications triggering the local radio, local television, and radio/ television ownership rules,” there will be relatively few newspaper/ broadcast applications filed. Id. ¶54 (JA __). On the basis of that prediction, which is “entitled to substantial deference,” Time Warner Telecom, 507 F.3d at 221, the Commission reasonably determined that “the more case-specific nature of the review” under its new rule would “not be unduly burdensome for the industry.” 2008 Order ¶54 (JA __). Case: 08-3078 Document: 003110223746 Page: 54 Date Filed: 07/21/2010 45 D. The Commission Reasonably Established A Positive Waiver Presumption For The Top 20 Markets. 1. The Line Between The Top 20 And Other Markets Is Reasonable. Tribune and Media General challenge the new newspaper/broadcast rule’s dis- tinction between the top 20 markets (where a positive presumption generally applies) and all other markets (where a negative presumption generally applies). Tribune Br. 41-42; Media General Br. 34-38. This challenge faces a very high hurdle. “Deference to the Commission’s judgment is highest when assessing the rationality of the agency’s line-drawing endeavors.” Prometheus, 373 F.3d at 410- 11. Courts are “generally unwilling” to disturb the FCC’s line-drawing “unless a petitioner can demonstrate that lines drawn are patently unreasonable, having no relationship to the underlying regulatory problem.” Covad, 450 F.3d at 541 (inter- nal quotations omitted). Petitioners have made no such showing here. Contrary to Media General’s contention (Br. 35), record evidence docu- mented “notable differences between the top 20 markets and all other [markets].” Id. ¶56 (JA __). For example, the Commission found that 18 of the top 20 markets – but “none of the [markets] ranked 21 through 25” – have “at least 10 indepen- dently owned television stations.” Ibid. (JA __). “Additionally, while [17] of the top 20 [markets] have at least two newspapers with a circulation of at least 5 per- cent” of the market’s households, “four of the five [markets] ranked 21 through 25 have only one such newspaper.” Ibid. Industry data further showed that the top 20 markets, on average, have significantly more independently owned television sta- tions, radio stations, and major newspapers than less populous markets do. Ibid. Case: 08-3078 Document: 003110223746 Page: 55 Date Filed: 07/21/2010 46 On the basis of this evidence, the Commission concluded that newspaper/broadcast combinations “generally raise fewer diversity concerns” in the top 20 markets because those markets “have more media outlets.” Id. ¶55 (JA __). 15 Tribune contends that the positive presumption should have been extended to markets 21 through 50 because “combinations in these markets could also leave at least eight independently owned ‘major media voices.’” Tribune Br. 41-42. But in defining the scope of the positive presumption, the Commission had to draw the line somewhere. “The relevant question” for the Court is whether the FCC’s line- drawing falls “within a zone of reasonableness, not whether” the line drawn by the agency is “precisely right.” WorldCom, Inc. v. FCC, 238 F.3d 449, 462 (D.C. Cir. 2001) (internal quotations omitted). Judged by this deferential standard, the Commission’s decision to limit the positive presumption to the top 20 markets should be upheld. Unlike markets 21 through 30, which have an average of only 9.5 major media voices (full power television stations and major daily newspapers), “the top 20 markets, on average, 15 Media General wrongly asserts (Br. 38) that the Commission “drew the line at the top-20 markets based” solely “on the number of television broadcast stations” in those markets, “without regard to the presence of any other type of media outlet.” This claim rests entirely on congressional testimony that the FCC’s then- Chairman gave before the Commission adopted the 2008 Order. Notwithstanding the former Chairman’s antecedent statements, FCC orders, “like judicial opinions, speak for themselves.” PLMRS Narrowband Corp. v. FCC, 182 F.3d 995, 1001 (D.C. Cir. 1999) (internal quotations omitted). The Commission plainly stated in the 2008 Order that it treated the 20 largest markets differently from the rest because those markets generally have more media outlets – not just television sta- tions, but radio stations and newspapers as well. 2008 Order ¶¶55-56 (JA - ). Case: 08-3078 Document: 003110223746 Page: 56 Date Filed: 07/21/2010 47 have 15.5 major voices.” 2008 Order ¶56 (JA __). Moreover, all of the top 20 markets “have at least eight television stations and one major newspaper.” Id. ¶60 (JA __). The same cannot be said for all smaller markets, which average less than 10 major media voices. Id. ¶56 (JA __). As for “total voices” (independently owned television stations, radio stations, and newspapers), the 20 largest markets average 87.8, compared to 65 on average for the next 10 markets. Ibid. In short, because “the top 20 markets share a robustness in media and outlet diversity that is not matched in smaller markets,” id. ¶63 (JA __), the Commission had good reason to limit the new rule’s positive presumption to the top 20 markets. 16 Contrary to NAA’s assertions (Br. 41-43), the 2008 Order is entirely con- sistent with this Court’s directives on remand. According to NAA (Br. 41), the agency was required to “use the 2003 cross-media limits as a baseline” and focus 16 Media General contends that the “top 20” presumption is inconsistent with the Commission’s statement in 1999 that “a market-size restriction” on radio/television cross-ownership was “unnecessary for purposes of competition and diversity as long as there are a minimum number of independent sources of news and infor- mation available to listeners.” Media General Br. 35 (quoting Review of the Com- mission’s Regulations Governing Television Broadcasting, 14 FCC Rcd 12903, 12949 ¶107 (1999) (“Local TV Ownership Order”)). That statement concerned the bright-line rule governing radio/television cross-ownership. When the Commis- sion made that statement, it was not contemplating the sort of rule at issue here: a rule creating a case-by-case review process that would be guided by presumptions. For this new type of rule, it made sense for the Commission to base its presump- tions on a market’s rank – a statistic that is clearly defined and readily ascertain- able – rather than the number of independent news sources in a market – a number that is not always self-evident and may be the subject of controversy. The Com- mission adopted easily identifiable triggers for its presumptions so that the rule as a whole would continue to “provide adequate predictability for the industry.” 2008 Order ¶54 (JA __). Case: 08-3078 Document: 003110223746 Page: 57 Date Filed: 07/21/2010 48 on addressing the “three discrete flaws” that the Court found in those limits. The Court’s remand, however, directed the Commission on remand “to justify or modify its approach to setting numerical limits.” Prometheus, 373 F.3d at 435 (emphasis added). The Commission permissibly responded to the remand decision by modifying its approach to setting limits on cross-ownership. NAA argues that the FCC failed to comply with Section 202(h) because it “retained” an inflexible cross-ownership ban (Br. 26), or in the alternative, did not modify the 1975 ban in “any meaningful sense” (Br. 28), after finding that such a rigid ban no longer served the public interest. This argument ignores the important ways in which the 2008 rule eased the 1975 rule’s broad prohibition of news- paper/broadcast combinations. During the more than three decades that the old rule was in effect, the Commission seldom granted permanent waivers. By con- trast, the new rule creates “a presumption that generally will permit certain news- paper/broadcast station combinations in the largest 20 markets.” 2008 Order ¶20 (JA __). Whereas the old rule placed a heavy burden of proof on parties seeking approval of newspaper/broadcast combinations, the new rule provides that parties objecting to a proposed combination in one of the top 20 markets, where a positive presumption applies, “will have a high hurdle to persuade the Commission that the transaction should not be approved.” Id. ¶68 (JA __). In light of this basic change to the Commission’s regulatory framework, NAA cannot seriously claim that the Commission left its 1975 cross-ownership rule unchanged. Tribune complains that the FCC’s new rule unjustifiably deviated from the agency’s previous analysis of cross-ownership regulation under Section 202(h). Case: 08-3078 Document: 003110223746 Page: 58 Date Filed: 07/21/2010 49 Tribune Br. 24-25. When the Commission conducted its Section 202(h) review in 2003, it “eliminated any newspaper-broadcast cross-ownership restrictions in media markets that had nine or more television stations.” Tribune Br. 24; see 2003 Order, 18 FCC Rcd at 13804 ¶473. Tribune contends that the Commission failed to explain why it “reversed course” from the 2003 Order “and reinstated owner- ship restrictions in the largest cities.” Tribune Br. 25. Similarly, NAA and Media General assert that the Commission offered no justification for the new rule’s “significant retrenchment from the 2003 Order” (NAA Br. 42) and its creation of “a much more restrictive regime than the one the 2003 Order contemplated” (Media General Br. 21). All of these arguments ignore the effect of this Court’s Prometheus remand, which raised fundamental questions about the lines drawn by the 2003 cross- ownership rule. For example, the Commission’s decision to impose no cross- media restrictions in markets with nine or more television stations rested in large part on an analysis of those markets under the Diversity Index – the methodology that this Court criticized and remanded in Prometheus. See 2003 Order, 18 FCC Rcd at 13804-05 ¶¶472-479. On remand, the Commission determined that it could not justify any of the 2003 limits or the flawed methodology on which they were based. 2008 Order ¶17 (JA __). Accordingly, the agency decided to take a more “modest step in loosening the complete ban on cross-ownership.” Id. ¶13 (JA __). 2. The “Top Four” Prohibition Is Warranted. The Commission reasonably refused to apply a positive presumption to any newspaper/television combination Case: 08-3078 Document: 003110223746 Page: 59 Date Filed: 07/21/2010 50 involving a “top four” station. 2008 Order ¶61 (JA __). It explained that such combinations “are likely to cause greater harm to diversity in a market” because “a daily newspaper and the top four [television] stations” are “the most influential providers of local news in their markets.” Ibid. Because the Commission expressly justified its “top four” restriction on newspaper/television combinations on diversity grounds (that is, promoting a multiplicity of viewpoints), Media General is wrong when it claims (Br. 38-39) that the agency irrationally based the restriction on a competition rationale. Tribune (Br. 46) acknowledges the FCC’s concerns about diversity, but asserts that they cannot justify the “top four” prohibition because “the record evidence does not support a viewpoint diversity rationale” for regulating news- paper/broadcast cross-ownership. To the contrary, as we explained in Part II.B. above, the Commission found substantial evidence that cross-ownership limits remained necessary to ensure diversity. 3. The Rule’s Definition of Major Media Voices Is Reasonable. For pur- poses of the newspaper/broadcast cross-ownership rule, the FCC defines “major media voices” as “full-power commercial and noncommercial television stations and major newspapers” (i.e., newspapers that are published at least four days a week and have a circulation exceeding 5 percent of the market’s households). See 2008 Order ¶57 & n.183 (JA __). By contrast, the radio/television cross-owner- ship rule defines “major media voices” to include radio stations and cable systems as well as television stations and newspapers. See 2008 Order n.259 (JA __). Media General and Tribune contend that it was arbitrary for the Commission to Case: 08-3078 Document: 003110223746 Page: 60 Date Filed: 07/21/2010 51 adopt different definitions of “major media voices” for different rules. Media General Br. 39; Tribune Br. 43-44. But the Commission cogently explained why it adopted a narrower definition for purposes of the newspaper/broadcast rule. The Commission reasoned that because newspaper/television combinations “involve the two most important types of sources for news and information,” the “voices test applied to such combinations” should include only “major voices in order to ensure that diversity in the market is safeguarded.” 2008 Order n.259 (JA __) (emphasis added). In this context, therefore, the Commission chose to count “as major media voices only those outlets that consumers most rely on as sources of local news and information”: full-power television stations and major news- papers. Id. ¶57 (JA __). This “cautious approach” was designed to “ensure” that the Commission would not erroneously “presume that sufficient diversity of major local news sources will remain in a top 20 market” after a newspaper/television merger “if such a presumption is not warranted.” Ibid. The Commission counts more media outlets as “voices” under the radio/ television cross-ownership rule. Because the combinations regulated by that rule include radio stations, the rule sensibly adds radio stations to the media “voices” that would remain post-merger. 2008 Order n.259 (JA __). More generally, because “radio is a significantly less important source of news and information than newspapers or television,” the radio/television rule includes in its “voice” count “additional sources of viewpoint diversity that are less significant than newspapers and television stations.” Ibid. Case: 08-3078 Document: 003110223746 Page: 61 Date Filed: 07/21/2010 52 Although the newspaper/broadcast rule counts only “major” newspapers (those with circulation rates exceeding 5 percent) as “major media voices,” the rule’s restrictions apply to combinations involving any daily newspaper. Tribune argues that it is arbitrary for the rule to prohibit combinations between broadcast stations and “non-major” newspapers because such combinations “would have no effect on the number of ‘major media voices’ in the market.” Tribune Br. 45; see also id. at 46-47 (arguing that the FCC’s treatment of major and non-major news- papers is “internally contradictory”). This argument wrongly assumes that small daily newspapers have no real impact on viewpoint diversity. The Commission did not include low-circulation newspapers in its count of “major media voices” because, as part of its cautious approach to relaxing the newspaper/broadcast rule, it counted “only those outlets that consumers rely upon most as sources of local news and information.” Order n.183 (JA __) (emphasis added). Nonetheless, the Commission recognized that even less-read daily news- papers rank among “the most influential providers of local news in their markets.” Id. ¶61 (JA __). For that reason, the new rule provides for case-by-case review of all proposed combinations between broadcast stations and daily newspapers. The Commission has made clear, however, that “combinations involving non-major newspapers … will not face as high a hurdle” in obtaining FCC approval “as those involving major newspapers” because smaller newspapers are less influential than major newspapers. Id. n.220 (JA __). The Commission similarly declared that, compared to newspaper/television mergers, “proposed newspaper/radio combinations will not face as high a hurdle” Case: 08-3078 Document: 003110223746 Page: 62 Date Filed: 07/21/2010 53 in winning FCC authorization because “radio is generally a less influential voice than television.” 2008 Order n.220 (JA __); see also id. ¶73 (JA __). In addition, unlike newspaper/television combinations, newspaper/radio transactions are not subject to a “top four” prohibition or a “major media voices” test. A positive presumption applies to all proposed newspaper/radio combinations in the top 20 markets. 2008 Order ¶53 (JA __). Thus, there is no basis for NAA’s claim (Br. 55) that the new rule “subjects newspaper/radio combinations to the very same restrictions as newspaper/ television combinations.” Tribune and NAA assert that the retention of any limits on newspaper/radio cross-ownership is unjustified because radio stations are not considered “major media voices” for purposes of the newspaper/television cross-ownership rule and thus cannot be considered significant outlets even in the context of radio trans- actions. Tribune Br. 45; NAA Br. 55-57. The Commission disagreed. While it recognized that “radio stations generally have less of an impact on local diversity than television stations,” the Commission could not ignore the possibility that in a specific local market, the “combination of a daily newspaper with one or more radio stations may have significant negative implications for the range of view- points available.” 2008 Order n.206 (JA __). The Commission was especially concerned about small and medium-sized markets, “where such combinations pose a greater risk to viewpoint diversity.” Ibid. It reasonably concluded that case-by- case review was necessary to provide assurance that newspaper/radio combinations would not harm diversity in any market. Case: 08-3078 Document: 003110223746 Page: 63 Date Filed: 07/21/2010 54 4. The Local News and Four Factor Tests Provide Appropriate Guides For Commission Discretion. Under the new rule, the Commission “will reverse the negative presumption” that applies to markets below the top 20 if a proposed combination “initiates local news programming of at least seven hours per week on a broadcast outlet that otherwise was not offering local newscasts prior to the com- bined operations.” Id. ¶67 (JA __). In addition, in evaluating whether a particular newspaper/broadcast combination should be permitted under the new rule, the Commission will consider four factors: (1) whether the proposed merger will “increase the amount of local news disseminated through” the combining media outlets; (2) whether each of the combining media outlets will continue to “exercise its own independent news judgment”; (3) the “level of concentration” in the mar- ket; and (4) the “financial condition” of the newspaper or broadcast station (and if either is in “financial distress,” the proposed owner’s “commitment to invest sig- nificantly in newsroom operations”). 2008 Order ¶13 (JA __). a. The Local News Test. The Citizen Petitioners complain that the local news test for reversing the negative presumption is too ambiguous because “the term ‘local news’ is not defined.” Citizens Br. 32. But the Commission did define the term. It declared, consistent with the public interest, that “‘local news’ includes traditional newscasts as well as programming that addresses issues of local political interest or issues of public importance in the market.” 2008 Order ¶70 (JA __). This definition ensures that the public will receive some material benefit from a newspaper/broadcast combination that produces seven or more hours of local news per week on a broadcast station that previously offered none. Case: 08-3078 Document: 003110223746 Page: 64 Date Filed: 07/21/2010 55 The Citizen Petitioners claim that it is “unclear” how “the Commission will monitor combinations to see if they live up to their commitments” under the local news test. Citizens Br. 32. The 2008 Order removes any doubt. It requires appli- cants whose station licenses “are approved as a result” of the local news test “to report to the Commission annually regarding how they have followed through on their commitment to initiate at least seven hours a week of local news.” 2008 Order ¶67 (JA __). b. The Four-Factor Test. The Citizen Petitioners broadly assert that the four-factor test for evaluating waiver requests “is so vague and full of excep- tions that it undermines rather than serves” the FCC’s goal of protecting diversity. Citizens Br. 30. But they fail to identify any feature of the test that is inconsistent with the rule’s purpose, and each of the factors has long been a relevant aspect of the Commission’s public interest inquiry. See 1975 Order, 50 F.C.C.2d at 1085 ¶119; NBC, 319 U.S. at 203 (noting the importance of local public affairs coverage in the FCC’s public interest analysis). The Citizen Petitioners contend (Br. 32) that the 2008 Order provided no means for the Commission to assess whether a waiver recipient has satisfied its commitments. As this Court has noted, however, a licensee’s compliance with its commitments can be “easily monitored by the Commission” through the license renewal process. New Jersey Coalition for Fair Broadcasting v. FCC, 574 F.2d 1119, 1127 (3d Cir. 1978). The Citizen Petitioners complain that the 2008 Order created “no enforce- ment mechanism” to deal with waiver recipients who fail to fulfill their commit- Case: 08-3078 Document: 003110223746 Page: 65 Date Filed: 07/21/2010 56 ments. Citizens Br. 32. No new mechanisms are required, because the federal government already has a wide array of tools at its disposal to ensure that broad- cast licensees make good on their promises. Licensees that make false or misleading statements to the FCC are subject to substantial monetary forfeitures under 47 U.S.C. §503. See, e.g., Citicasters Licenses, L.P., 22 FCC Rcd 19324, 19337-39 ¶¶35-44 (Med. Bur. 2007). In particularly serious cases, a licensee’s misrepresentations to the FCC can result in license revocation or denial of license renewal. See 47 U.S.C. §312(a); FCC v. WOKO, Inc., 329 U.S. 223 (1946); Contemporary Media, Inc. v. FCC, 214 F.3d 187 (D.C. Cir. 2000). In addition, willful false statements to a government agency are punishable by fine or impri- sonment under 18 U.S.C. §1001. These harsh penalties provide a powerful incen- tive for FCC licensees to fulfill any commitments they make to the Commission. 17 17 The Citizen Petitioners also claim (Br. 33-36) that the Commission’s rules and procedures do not give the public adequate notice of pending newspaper/broadcast waiver requests. They are wrong. “[A]pplications for Commission approval of proposed newspaper/broadcast combinations are subject to the local public notice filing requirements of Section 73.3580 of the Commission’s rules.” 2008 Order ¶79 (JA __). Under this rule, an applicant for a broadcast license must inform the local community of the application by publishing a notice in a local newspaper and broadcasting an announcement. 47 C.F.R. §§73.3580(c)-(d). In addition, “to fur- ther ensure adequate local public notice” of waiver applications under the new rule, “the Commission will flag such applications in its public notices as seeking waiver of the newspaper/broadcast cross-ownership rule.” 2008 Order ¶79 (JA __). Although the Citizen Petitioners contend that this “flagging” procedure is insuffi- cient to “give meaningful notice” to the public (Br. 36), they never raised this objection in the proceeding below, so they cannot make it now. See 47 U.S.C. §405(a); Service Elec. Cable TV v. FCC, 468 F.2d 674, 676-77 (3d Cir. 1972). Even if this claim had not been waived, it is insubstantial. The Commission’s “flagging” procedure, in tandem with the newspaper and broadcast notices required Case: 08-3078 Document: 003110223746 Page: 66 Date Filed: 07/21/2010 57 While the Citizen Petitioners complain that the four-factor test is too lenient, Tribune and Cox assert that the test is overly intrusive. Tribune Br. 33-40; Cox Br. 33-34. Insofar as Tribune and Cox contend that the four-factor test amounts to content-based regulation, they are essentially challenging the constitutionality of the new rule. As we explain in Part VIII below, there is no merit to petitioners’ assertion that the rule violates the First Amendment. Tribune also claims (Br. 38-39) that the four-factor test amounts to the unauthorized regulation of newspapers. That is not the case. Instead, the rule regulates broadcast stations, by providing guidance to the agency in assessing whether common ownership of a daily newspaper and a broadcast station should be permitted in the public interest. It has no application unless a newspaper seeks to be held in common ownership with a broadcast station, and then only if the two companies serve the same local market. Tribune complains (Br. 39) that the new rule “will force” applicants “to offer concessions … to gain FCC approval” of newspaper/broadcast combinations. Of course, if an applicant would prefer not to make such concessions, it can simply decide against pursuing common ownership. In any event, there is nothing new or improper about the Commission taking account of commitments from broadcast licensees concerning the licensee’s public interest obligations. For example, in the 1970s, this Court held that the Commission adopted “a reasonable plan for improv- ing New Jersey television service” when it “elicited commitments from stations by 47 C.F.R. §73.3580, will provide sufficient public notice of newspaper/broad- cast waiver requests. Case: 08-3078 Document: 003110223746 Page: 67 Date Filed: 07/21/2010 58 regarding the use of news personnel and equipment which are deliberately planned to focus greater attention to New Jersey affairs.” New Jersey Coalition for Fair Broadcasting, 574 F.2d at 1126. E. The Commission Was Justified In Treating Newspaper/ Broadcast Combinations Differently From Other Media Mergers. The newspaper broadcast rule places greater restrictions on newspaper/ broadcast cross-ownership than on radio/television cross-ownership. A newspaper owner can own no more than “one commercial AM or FM radio station or one TV broadcast station” in the market where the newspaper is published. 2008 Order ¶63 (JA __). By contrast, in certain circumstances, the radio/television cross-own- ership rule allows a single entity to own as many as two television stations and six radio stations (or, alternatively, one television station and seven radio stations) in a single market. Id. n.259 (JA __). Tribune and NAA contend that this disparity in the rules is irrational and unjustified. Tribune Br. 42-43; NAA Br. 51-54. This argument is unfounded. The Commission explained that it “traditionally has been more cautious in allowing newspaper/broadcast combinations than in allowing broadcast-only com- binations due to the unique attributes of newspapers.” 2008 Order n.206 (JA __). Notwithstanding the proliferation of new sources of information in today’s evolv- ing media marketplace, the Commission found that newspapers remain “the most organized, systematic gatherers of news and information in their communities.” Id. ¶35 (JA __); see also CU Comments at 136-47 (JA __-__). On the basis of the record here, which reflected the fact that as of 2008 newspapers occupied a par- Case: 08-3078 Document: 003110223746 Page: 68 Date Filed: 07/21/2010 59 ticularly prominent place among news media, the Commission was justifiably con- cerned that the adverse impact of newspaper/broadcast combinations on viewpoint diversity could be especially severe. The Commission also reasoned that it should “proceed cautiously in relax- ing” the newspaper/broadcast cross-ownership rule in light of the rule’s “long history.” 2008 Order n.206 (JA __). While the radio/television cross-ownership rule “has been substantially relaxed over the years,” id. ¶80 (JA __), the ban on newspaper/broadcast cross-ownership “remained in effect without modification for over three decades,” id. ¶13 (JA __). Against this backdrop, the Commission decided to “take a modest step in loosening the complete ban” on newspaper/ broadcast cross-ownership. Ibid. It is well settled that the FCC may proceed “incrementally” when it decides to revisit a longstanding rule. See National Cable & Telecomm. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 1002 (2005). NAA complains (Br. 54) that the FCC treats newspapers differently from other media outlets (such as cable operators, satellite television operators, and Internet-based services), which face no restrictions on cross-ownership of broad- cast stations. As the Commission explained, however, newspapers are different from these other media. The record showed that consumers “predominantly” get their local news “from daily newspapers and broadcast television.” 2008 Order ¶57 (JA __). While the Commission acknowledged that “other types of outlets” – including cable networks and the Internet – “contribute to diversity,” none of those outlets is nearly as significant a source of local news as newspapers are. Id. ¶58 (JA __). For that reason, mergers between broadcast stations and media outlets Case: 08-3078 Document: 003110223746 Page: 69 Date Filed: 07/21/2010 60 other than newspapers do not pose the same risk to viewpoint diversity that news- paper/broadcast combinations do. III. THE COMMISSION’S GRANDFATHERING OF PENDING WAIVER APPLICATIONS WAS REASONABLE. At the time the Commission was considering revisions to its newspaper/ broadcast cross-ownership rule, several applications for waiver of the old rule were still pending. As part of the 2008 Order, the Commission granted “a limited num- ber” of these waiver requests “to permit the continuance of existing combinations of a newspaper and a single broadcast station that were formed by acquisitions occurring after the date of the broadcast station’s last renewal.” 2008 Order ¶77 (JA __). Specifically, the Commission granted permanent waivers authorizing Gannett’s combination in Phoenix and Media General’s combinations in four other markets. The Commission decided to “grandfather these combinations in the same manner” as it had grandfathered similar combinations in 1975. Ibid. Citing a variety of factors – including efficiencies that Gannett’s and Media General’s combinations had achieved, “the new services” they had “provided to [their] local communities,” and “the harms [that would be] associated with required divesti- tures” – the Commission found that “the public interest would be served” by grant- ing waivers to preserve these particular combinations. Ibid. The Citizen Petitioners challenge these waiver grants on both procedural and substantive grounds. Citizens Br. 37-43. As a threshold matter, the Court should dismiss these claims because they were never presented to the Commission. Under section 405 of the Communications Act, a party may not seek judicial review of a Case: 08-3078 Document: 003110223746 Page: 70 Date Filed: 07/21/2010 61 claim upon which the FCC has been given no “opportunity to pass.” 47 U.S.C. §405(a); Service Elec., 468 F.2d at 676-77. “[W]hen a petitioner has no reason to raise an argument until the FCC issues an order that makes the issue relevant, the petitioner must file a petition for reconsideration with the Commission before it may seek judicial review.” Qwest Corp. v. FCC, 482 F.3d 471, 474 (D.C. Cir. 2007) (internal quotations omitted). By failing to present the FCC with an oppor- tunity to address their objections to the waiver grants, the Citizen Petitioners have waived these claims. Even if it were not barred by section 405, the Citizen Petitioners’ challenge properly belongs in the D.C. Circuit. Under the 1975 rule, a newspaper could purchase a broadcast station and hold the commonly owned combination until the end of the broadcast station’s license term, 1975 Order, 50 F.C.C.2d at 1076 n.25. The only relevant effect of the waiver (and the only potential injury to the Citizen Petitioners) is that it permits the grant of related applications for license renewal, which otherwise would be barred by the cross-ownership rule. 18 For the Citizen Petitioners, the grandfathering raises a licensing issue. And exclusive jurisdiction to review FCC license renewals and other radio licensing actions is by notice of appeal to the D.C. Circuit. 47 U.S.C. §402(b); see Folden v. United States, 379 F.3d 1344, 1356 (Fed. Cir. 2004). The Citizen Petitioners’ challenge to the waiver grants therefore can be decided only by the D.C. Circuit on appeal from the Com- 18 Parties filed an application for Commission review of the Media Bureau’s grant of Media General’s license renewal application. See note 19 below. No party challenged the Media Bureau’s grant of Gannett’s license renewal application. Case: 08-3078 Document: 003110223746 Page: 71 Date Filed: 07/21/2010 62 mission’s grant of the license renewals. See North Amer. Catholic Educ. Prog. Found. v. FCC, 437 F.3d 1206, 1209-10 (D.C. Cir. 2006). In any event, even if the arguments concerning the waiver grants were not procedurally barred, they lack merit. The Citizen Petitioners argue (Br. 40-41) that the FCC violated the APA by failing to state in its rulemaking notice that it pro- posed to grant waivers. By its terms, however, the APA’s notice requirement applies only to “rule making.” See 5 U.S.C. §553(b). FCC rulings on party-speci- fic waiver requests (such as the waiver grants challenged here) are adjudications, not rulemakings. See Tribune Co. v. FCC, 133 F.3d 61, 68-69 (D.C. Cir. 1998). Adjudications are not subject to the APA’s notice requirement. See MacLean v. Department of Homeland Security, 543 F.3d 1145, 1151 (9th Cir. 2008); R/T 182, LLC v. FAA, 519 F.3d 307, 310 (6th Cir. 2008). The Citizen Petitioners complain (Br. 41) that the 2008 Order failed to address Free Press’s objections to Media General’s waiver requests. But those objections were not raised in this proceeding. They were presented in the separate proceedings before the agency concerning Media General’s license renewal appli- cations. See 47 U.S.C. §310(b). Those renewal proceedings remain pending because Free Press and the NAACP have filed an application for Commission review of the Media Bureau’s decision to renew Media General’s licenses. 19 When the Commission rules on this application for review, it will have an opportunity to address Free Press’s arguments in the proceeding concerning Media General’s 19 Application for Review, Application for Renewal of License WJHL-TV, Johnson City, Tennessee, File No. BRCT-20050401BYS, et al. (filed April 24, 2008). Case: 08-3078 Document: 003110223746 Page: 72 Date Filed: 07/21/2010 63 waivers. It is therefore premature for the Citizen Petitioners to claim (Br. 41) that Free Press has been denied its “right to be heard.” The Citizen Petitioners also assert (Br. 41) that the FCC based its decision to grant permanent waivers to Gannett and Media General on “impermissible or irrelevant factors.” To the contrary, the considerations that led the Commission to grant those waivers mirrored the concerns that motivated the agency to grandfather certain combinations when it adopted the original cross-ownership rule in 1975. The Supreme Court upheld the FCC’s 1975 grandfathering decision because it reflected “a rational weighing of competing policies.” NCCB, 436 U.S. at 803. 20 In the 2008 Order, just as in 1975, the Commission recognized that divesti- ture of existing newspaper/broadcast combinations could cause “disruption for the industry and hardship for individual owners.” 2008 Order ¶77 (JA __) (quoting 1975 Order, 50 F.C.C.2d at 1078 ¶109). Consequently, in deciding whether to grant waivers to Gannett and Media General, the agency reasonably took into account “the harms … associated with required divestitures.” Ibid. As part of its justification for grandfathering combinations in 1975, the Commission found that “stability and continuity of ownership … serve important 20 To be sure, the waiver recipients in this case were not in precisely the same posture as the combinations that were grandfathered in 1975. Before 1975, there was no prohibition on cross-ownership. By contrast, when Gannett and Media General formed their combinations, they knew that they could not maintain those arrangements unless the FCC’s cross-ownership rule was waived or modified. The Commission determined that notwithstanding this distinction many of the same factors that supported grandfathering in 1975 also justified the waiver grants in 2008. Case: 08-3078 Document: 003110223746 Page: 73 Date Filed: 07/21/2010 64 public purposes,” especially in markets where “[t]raditions of service were estab- lished and have been continued.” 1975 Order, 50 F.C.C.2d at 1078 ¶109. The same rationale supported the Commission’s grandfathering of Gannett’s and Media General’s combinations in 2008. “All of these combinations were acquired prior to 2001,” and they remained intact throughout a “prolonged period of uncertainty surrounding the status of the newspaper/broadcast cross-ownership ban.” 2008 Order ¶77 (JA __). The 2008 Order cited record evidence that these particular combinations had increased the quantity and improved the quality of local news coverage in their markets. Id. at nn.251-256 (JA __-__). The Commission declared in 1975 that “[a]scertaining and endeavoring to serve local needs was the key point” in deciding which combinations to grand- father. 1975 Order, 50 F.C.C.2d at 1081 ¶114. In upholding the FCC’s 1975 grandfathering decision, the Supreme Court held that the Commission could reasonably choose to grandfather some combinations “on the theory that preserv- ing continuity of meritorious service furthers the public interest.” NCCB, 436 U.S. at 805. These same factors influenced the Commission’s 2008 decision to grand- father Gannett’s and Media General’s combinations. In particular, the Commis- sion noted that these combinations, by achieving “synergies” through integrated news operations, had substantially expanded local news coverage and provided “new services” to their communities. 2008 Order ¶77 (JA __). The Citizen Petitioners do not really dispute any of the FCC’s findings supporting the waiver grants. Instead, they contend that the Commission acted improperly in granting these waivers because it applied neither the “waiver stan- Case: 08-3078 Document: 003110223746 Page: 74 Date Filed: 07/21/2010 65 dards applicable at the time the license renewals were filed” by Gannett and Media General nor the revised waiver standards prescribed in 2008 by the new cross- ownership rule. Citizens Br. 41-42. The waiver grants in the 2008 Order, though, applied the public interest inquiry that the Commission first elaborated on in the 1975 Order. Under that inquiry, “if it could be shown for whatever reason that the purposes of the [cross-ownership] rule would be disserved by divestiture” – that is, if the rule “would be better served by continuation of the current ownership pat- tern” – a waiver “would be warranted.” 1975 Order, 50 F.C.C.2d at 1085 ¶119. The Commission here reasonably found that the rule’s purposes – and the public interest – would be better served by preserving Gannett’s and Media General’s combinations. Waiver of a Commission rule has always been “appropriate when particular facts would make strict compliance inconsistent with the public interest.” AT&T Wireless Servs. v. FCC, 270 F.3d 959, 965 (D.C. Cir. 2001) (internal quotations omitted). Thus the presumptions established by the 2008 Order are “rebuttable” and exemptions from the rule can be based on “special circumstances.” 2008 Order n.175 (JA __) The Commission’s finding that requiring divestiture of the specific newspaper/broadcast combinations formed by Gannett and Media General would not serve the public interest made waiver of the cross-ownership rule warranted here. The Commission, by contrast, declined to rule on any pending waiver requests that involved combinations of “more than one newspaper and/or more than one broadcast station.” 2008 Order ¶78 (JA __). Cox’s waiver requests for Case: 08-3078 Document: 003110223746 Page: 75 Date Filed: 07/21/2010 66 the Atlanta and Dayton markets fell into this category. Id. n.257 (JA __). The Commission found it “inappropriate to grant these requests or grandfather these combinations across-the-board” because combinations involving “multiple news- papers and/or multiple broadcast stations … potentially raise heightened diversity concerns” not present with the Gannett and Media General combinations. Id. ¶78 (JA __). The agency decided to examine these waiver requests involving a greater number of outlets “on a case-by-case basis” in future orders, applying the factors enumerated in the new rule. Ibid. It directed the affected licensees to address these factors by either amending their pending applications or filing requests for permanent waivers. Ibid. Cox contends that the 2008 Order improperly required it to file new waiver requests for two of its Atlanta radio stations, WSRV(FM) and WALR-FM. Cox Br. 27-33. Cox cannot raise these arguments here because no party ever presented them to the FCC. See 47 U.S.C. §405(a); Qwest, 482 F.3d at 474-77; Service Elec., 468 F.2d at 676-77. Moreover, the Commission has not yet acted on Cox’s waiver requests and indeed has extended the time for Cox to file modifications. 21 21 Initially, the Commission gave these licensees “90 days after the effective date” of the 2008 Order to either amend their original applications or file requests for permanent waivers. 2008 Order ¶78 (JA __). The licensees have asked that this deadline be postponed until 90 days after the issuance of a final court order on pending legal challenges to the new rule. While the Commission considers that request, the Media Bureau has granted a series of extensions of the filing deadline. The deadline is currently set for October 4, 2010. See 2006 Quadrennial Regula- tory Review, DA 10-1181 (released June 29, 2010). Case: 08-3078 Document: 003110223746 Page: 76 Date Filed: 07/21/2010 67 above. Judicial review of its claims, even if properly before this Court, is therefore premature. 22 In any event, the claims are wholly without merit. There is no basis for Cox’s assertion (Br. 27-31) that the FCC “rejected” Cox’s “Longley-Rice” argu- ment regarding WSRV(FM). In its pending license renewal application for that station, Cox had argued that a Longley-Rice study of the station’s signal contour demonstrated that Cox’s ownership of WSRV(FM) and the Atlanta Journal- Constitution did not violate the newspaper/broadcast cross-ownership rule. In the alternative, Cox requested a temporary waiver of the cross-ownership rule. See Cox Br. 8-12. As Cox admits (Br. 12), the 2008 Order “is completely silent on the merits of WSRV(FM)’s Longley-Rice showing,” which was appropriate because the 2008 Order did not address the merits of Coz’s waiver request for WSRV. Nonetheless, Cox maintains (Br. 12) that the 2008 Order “necessarily reject[ed]” Cox’s Longley-Rice argument “by requiring Cox to seek a waiver” of the cross-ownership rule. The order did no such thing. It simply directed Cox and all similarly situated licensees to amend their pending applications – or to file requests for permanent waivers – in order to address the factors that will guide the Commission’s waiver analysis under the 2008 rule. 2008 Order ¶78 (JA __). Cox 22 Moreover, if Cox should be aggrieved by the Commission’s action on its waiver request, its remedy would be to seek review of the Commission’s ultimate action on its license renewal application. The exclusive forum for such review is the D. C. Circuit. See p. 61 above. Case: 08-3078 Document: 003110223746 Page: 77 Date Filed: 07/21/2010 68 may continue to press its argument that it is in compliance with the cross-owner- ship rule and does not need a waiver in its amended application. Cox further claims (Br. 31-33) that the 2008 Order “modified” its license for WALR-FM. Cox received that license in 1997 after the FCC granted Cox a temporary waiver of the newspaper/broadcast cross-ownership rule. See NewCity Communications, Inc., 12 FCC Rcd 3929, 3951-53 ¶¶53-57 (1997). Cox maintains that the temporary waiver remains in effect, and that the 2008 Order effectively modified the license for WALR-FM by requiring Cox to “seek a different waiver.” Cox Br. 32. Cox is mistaken. The temporary waiver that Cox received in 1997 expired by its own terms in 2008. It was scheduled to terminate after the completion of “the pending radio- newspaper cross-ownership waiver proceeding, Notice of Inquiry in MM Docket No. 96-197.” NewCity Communications, 12 FCC Rcd at 3958 ¶72. In 2001, the FCC replaced MM Docket No. 96-197 with MM Docket No. 01-235. Cross- Ownership of Broadcast Stations and Newspapers, 16 FCC Rcd 17283 (2001). Then in the 2008 Order, the Commission terminated MM Docket No. 01-235. See 2008 Order ¶161 (JA __). Once the newspaper/broadcast cross-ownership pro- ceeding was completed, the temporary waiver permitting Cox’s ownership of WALR-FM was no longer in effect, and Cox had to file a new “waiver request to permit the continued common ownership” of WALR-FM and the Atlanta Journal- Constitution. NewCity Communications, 12 FCC Rcd at 3958 ¶72. Case: 08-3078 Document: 003110223746 Page: 78 Date Filed: 07/21/2010 69 IV. THE COMMISSION REASONABLY DECIDED TO RETAIN THE RADIO/TELEVISION CROSS-OWNERSHIP RULE. The FCC’s restrictions on radio/television cross-ownership have “been sub- stantially relaxed over the years.” 2008 Order ¶80 (JA __). The current radio/ television cross-ownership rule was adopted in 1999. Local TV Ownership Order, 14 FCC Rcd at 12947 ¶100. It provides that, to the extent the FCC’s local tele- vision and local radio ownership rules permit ownership of multiple stations, a party may own: (1) up to two television stations and up to six radio stations (or, alternatively, one television station and seven radio stations) “in a market where at least 20 independently owned media ‘voices’ would remain post-merger”; (2) up to two television stations and up to four radio stations “in markets where, post- merger, at least 10 independently owned media voices would remain”; or (3) two television stations and one radio station in any market, “regardless of the number of voices remaining” after the merger. 2008 Order n.259 (JA __). In the 2003 Order, the FCC determined that this rule was no longer necessary to promote viewpoint diversity in light of the agency’s adoption at that time of new cross-media limits and modified local ownership rules. 2003 Order, 18 FCC Rcd at 13774-75 ¶¶389-390. Because this Court stayed the 2003 rules, however, the old cross-ownership rule remained in effect. After the Court invali- dated the cross-media limits in 2004, thereby removing the predicate for eliminat- ing the radio/television cross-ownership rule, the Commission decided to retain the radio/television cross-ownership rule. 2008 Order ¶¶80-86 (JA __-__). Case: 08-3078 Document: 003110223746 Page: 79 Date Filed: 07/21/2010 70 In 2003, the Commission had determined that the combination of the local ownership rules and the cross-media limits would provide sufficient protection of viewpoint diversity to render the existing cross-ownership rule unnecessary. 2003 Order, 18 FCC Rcd at 13774-75 ¶¶389-390. Once the Court invalidated the cross- media limits, the Commission found it necessary to “adopt diversity protection provisions to act in their place.” 2008 Order ¶82 (JA __). NAB argues (Br. 60) that “the Commission failed to articulate why the local radio and local television ownership rules are [alone] insufficient” to protect diver- sity. NAB and CBS also contend that the agency provided no “affirmative justifi- cation” (NAB Br. 61) or “tenable explanation” (CBS Br. 21) for retaining the radio/television cross-ownership rule. To the contrary, the Commission specifi- cally explained why radio/television cross-ownership limits are necessary. Because the public relies on “both radio and television for news and information,” those two media “compete in the same diversity market” and “serve as substitutes at least to some degree for diversity purposes.” 2008 Order ¶84 (JA __) (internal quotations omitted). Consequently, radio/television combinations have the poten- tial to reduce viewpoint diversity in some markets. The local television and radio ownership rules do not restrict such combinations. By their terms, those rules only limit combinations of stations “providing the same service” (either radio or tele- vision). Ibid. (JA __). Thus, “there remains a need to retain a [radio/television] cross-ownership rule to ensure that viewpoint diversity is adequately protected.” Ibid. (JA __) (internal quotations omitted). Case: 08-3078 Document: 003110223746 Page: 80 Date Filed: 07/21/2010 71 NAB asserts (Br. 60) that record evidence in this proceeding “showed that diversity of ownership does not necessarily promote diversity of viewpoints and may even have the opposite effect.” True enough. But the record contained evidence that commonly owned media outlets can also share (and promote) the same viewpoint. See 2008 Order ¶49 & n.169 (JA __); CU Comments, Study 8 at 136-47 (JA __-__); 2003 Order, 18 FCC Rcd 13687 ¶ 174. See also Section II.B., supra. In light of that evidence, it was reasonable for the Commission to maintain its longstanding, judicially endorsed position that “diversification of ownership would enhance the possibility of achieving greater diversity of viewpoints.” NCCB, 436 U.S. at 796. In light of that possibility, the Commission could not conclude that it would be in the “public interest” under § 202(h) to eliminate the radio/television cross-ownership rule. CBS argues (Br. 23-27) that the Commission’s decision to retain the radio/ television cross-ownership rule cannot be squared with record evidence that the media market is growing more diverse. While the Commission acknowledged the evidence that new media (such as the Internet) “contribute to diversity,” 2008 Order ¶58 (JA __), the record also contained substantial evidence that “traditional media” – broadcast television, newspapers, and broadcast radio – remain “the most frequently used and most important sources of local and national news,” id. ¶57 (JA __). Although CBS claims (Br. 21) that a “revolution” has transpired “in the media marketplace,” the record here showed that one thing remained unchanged as of 2008: New media such as “the Internet and cable” still did “not outrank news- papers” or the broadcast media as sources of local news. See Prometheus, 373 Case: 08-3078 Document: 003110223746 Page: 81 Date Filed: 07/21/2010 72 F.3d at 400. The record reflected that broadcast television, newspapers, and broadcast radio remained the top three sources of local news for American con- sumers. See 2008 Order ¶57 & n.279 (JA __, __). Because these media continued to be the most prominent providers of local news, any combinations involving these media create a greater risk that viewpoint diversity could be harmed. In view of that risk, the Commission was justified in retaining cross-ownership restrictions on both newspaper/broadcast and radio/television combinations. The Commission’s decision to treat broadcasters differently from cable operators, which face no cross-ownership restrictions, is not “arbitrary,” as NAB claims (Br. 61-62). In the Commission’s judgment, mergers involving cable systems do not pose a serious threat to viewpoint diversity because cable television is not nearly as significant a source of local news as the broadcast media. See 2008 Order ¶58 (JA __); see also Prometheus, 373 F.3d at 405 (finding “serious doubts as to the extent that cable provided independent local news – the Commission’s recognized indicator of viewpoint diversity in local markets”). CBS erroneously claims (Br. 22) that the radio/television cross-ownership rule is “much more restrictive” than the cable/broadcast cross-ownership rule that the D.C. Circuit vacated as inadequately explained in Fox Television Stations, Inc. v. FCC, 280 F.3d 1027, 1049-53 (D.C. Cir. 2002). The opposite is true. The cable/broadcast rule had “the effect of prohibiting common ownership of a broad- cast station and a cable television system in the same local market.” Id. at 1035. By contrast, the radio/television rule permits (limited) common ownership of a Case: 08-3078 Document: 003110223746 Page: 82 Date Filed: 07/21/2010 73 radio station and a television station in the same market. See 2008 Order n.259 (JA___). Given the fundamental differences between the cable/broadcast and radio/ television rules, CBS’s attempt to compare this case to Fox must fail. CBS Br. 21- 22. When the D.C. Circuit vacated the cable/broadcast rule in Fox, it concluded that the rule’s “across-the-board prohibition of cross-ownership” was hard to reconcile with the Commission’s finding in the Local TV Ownership Order that “common ownership of two broadcast stations in the same local market need not unduly compromise diversity.” Fox, 280 F.3d at 1052. No such conflict exists here. Consistent with the FCC’s view that not all broadcast combinations unduly harm diversity, the radio/television rule permits, but limits, common ownership of radio and television stations in the same market. CBS contends (Br. 22) that the radio/television cross-ownership rule “fails to meaningfully differentiate among markets.” The rule’s restrictions vary depending on whether the proposed merger will leave the affected market with at least 20, at least 10, or fewer than 10 independent “voices” (i.e., broadcast television and radio stations, daily newspapers, and cable systems). 2008 Order n.259 (JA __). Although CBS (Br. 23) says that “the vast majority of markets have more than twenty independent voices,” the network never explains why applying the least strict radio/television cross-ownership limitation would be unreasonable. In any event, over time, consolidation of media outlets could cause more markets to fall below the 20-voice threshold. Case: 08-3078 Document: 003110223746 Page: 83 Date Filed: 07/21/2010 74 Lastly, CBS objects to the treatment of radio stations under the radio/tele- vision cross-ownership rule. CBS Br. 27-29. “In markets where parties may own a combination of two television stations and six radio stations, the rule allows a party alternatively to own one television station and seven radio stations.” 2008 Order n.259 (JA __). CBS contends that this sort of “one-for-one substitution of television stations for radio stations” is inconsistent with the FCC’s determination that radio stations have “a lesser impact on diversity” than television stations do. CBS Br. 28. CBS also complains that the rule allows “combinations that include the maximum number of television stations [i.e., two] allowed under the local tele- vision ownership rule, but none involving the maximum number of radio stations [i.e., eight] allowed under the local radio ownership rule.” Ibid. CBS simply takes issue with the Commission’s decision (unchallenged since adopted in 1999) to limit radio/television combinations to “a total of eight outlets” per market. Local TV Ownership Order, 14 FCC Rcd at 12950 ¶108. That decision is not rendered unreasonable simply because it allows cross-ownership of up to two television stations (the maximum permitted by the local television rule), but only up to seven (rather than eight) radio stations (one less than the maximum permitted by the local radio rule). The Commission’s focus on the bottom line (eight outlets in total) was in keeping with its concern with the overall impact on the number of commonly-owned outlets within a local market. It was also reasonable for the Commission to conclude that, “in markets where there is sufficient competition and diversity to justify combinations involving two television stations and six radio stations, broadcasters should have Case: 08-3078 Document: 003110223746 Page: 84 Date Filed: 07/21/2010 75 the flexibility to purchase an additional radio station instead of a second television station,” since the latter would form a combination that would be if anything less worrisome from the standpoint of diversity. Local TV Ownership Order, 14 FCC Rcd at 12950 ¶108. Because the lines drawn by the Commission reflected reason- able policy judgments, they should be upheld. See WorldCom, 238 F.3d at 462 (“the Commission has wide discretion to determine where to draw administrative lines”) (quoting AT&T Corp. v. FCC, 220 F.3d 607, 627 (D.C. Cir. 2000)). V. THE COMMISSION REASONABLY DECIDED TO RETAIN THE LOCAL TELEVISION OWNERSHIP RULE. A. The Commission Adequately Explained Its Change Of Policy From The 2003 Order And Its Decision To Retain The Existing Rule. In the 2003 Order, the Commission relaxed the local television ownership rule to permit an entity to own up to two television stations in markets with 17 or fewer television stations and up to three television stations in markets with 18 or more while retaining the prohibition on combinations where one or more of the sta- tions was ranked among the top four in the market. The Court in Prometheus upheld many of the Commission’s determinations with respect to this rule, 373 F.3d at 414-18, but remanded the revised numerical limits for the Commission “to support and harmonize its rationale” after finding that the limits were based on an assumption regarding equal market shares that was unsupported by the record and could allow levels of concentration that exceeded the Commission’s own benchmark for competition, id. at 419-20. Case: 08-3078 Document: 003110223746 Page: 85 Date Filed: 07/21/2010 76 In the 2008 Order, the Commission determined that there remained a need for a local television ownership rule because such a rule “promotes competition for viewers and advertisers within local television markets.” 2008 Order ¶97 (JA __). As the Commission explained, “[i]n the video programming market, competitors profit by attracting new audiences and by attracting existing audiences away from their competitors,” and thus “[c]ompetition . . . provides an incentive to television stations to invest in better programming and to provide programming that is pre- ferred by viewers.” Ibid. Competition among local television stations also “pre- serve[s] competition for advertising by local businesses that want to advertise their products on television,” thereby benefiting consumers through “lower advertising costs.” Ibid. But the Commission in the 2008 Order decided against re-adopting the local television ownership limits it had set forth in the 2003 Order (and this Court remanded). Instead, the agency chose to adhere to the pre-existing limits, adopted in 1999, that it had unsuccessfully attempted to revise. As the Commission candidly acknowledged, its decision to continue in effect the 1999 local television ownership rule reversed its 2003 determination that the rule should have been loosened. 2008 Order ¶101 (JA __). The Commission explained that it was reversing its 2003 “determination because we find that eliminating the [1999 version of the] rule could harm competition among broadcast television stations in local markets.” Ibid. In doing so, the Commission echoed the concerns of commenter AFL-CIO that failing to retain the 1999 rule would “trigger multiple Case: 08-3078 Document: 003110223746 Page: 86 Date Filed: 07/21/2010 77 station mergers in local markets,” and “result[] in a loss of newscasts and shared news product.” Ibid. Contrary to petitioners’ contention (see, e.g., Sinclair Br. 28-29), the Com- mission did not ignore the changes that had occurred in local television and video markets between 1999 and 2008. See, e.g., 2008 Order, ¶¶ 6-8 (JA __) (acknow- ledging and describing those changes). The agency simply concluded that, despite those developments, the rule continued to be necessary in the public interest in 2008 “in order to preserve adequate levels of competition within local television markets.” Id. ¶87 (JA __). The Commission’s relaxation of the rule in 2003 was based on a determina- tion that the then-current rule was “not the best means to promote our diversity goal” because the rule was “premised on the notion that only local TV stations contribute to viewpoint diversity” when, in fact, “media other than television broadcast stations contribute to viewpoint diversity in local markets.” 2003 Order, 18 FCC Rcd at 13668 ¶133. In the 2008 Order, the Commission agreed that the local television ownership rule “is no longer necessary to foster diversity because there are other outlets for diversity of viewpoints in local markets, and a single- service ownership restriction is not necessary to foster diversity.” 2008 Order ¶100 (JA __) (emphasis added). The Commission explained, however, that the rule continued to be necessary to promote competition in local markets and that the existence of other media, including cable, satellite, and the Internet, did not sufficiently address this concern. See 2008 Order ¶¶97-102 (JA __). For instance, the Commission stated, it could Case: 08-3078 Document: 003110223746 Page: 87 Date Filed: 07/21/2010 78 not “rely on competition from cable programmers to respond to local needs and interests because most cable programming is provided by cable networks, and those networks respond primarily to national and regional forces.” Id. ¶97 (JA __). By contrast, “[l]ocal broadcast television stations have incentives to respond to conditions in local markets, and those incentives may be diminished by mergers between stations that reduce competition to anticompetitive levels.” Ibid. NAB suggests that the Commission has “redefined ‘competition’ to include diversity (and localism).” Br. 27. NAB ignores the distinction between the bene- fits of competition and the benefits of diversity. As the Commission explained, the “rule is no longer necessary to foster diversity because there are other outlets for diversity of viewpoint in local markets.” 2008 Order ¶100 (JA __). However, the Commission anticipated, a benefit of retaining the rule to preserve competition among local television stations likely would be “higher quality programming pro- vided to viewers,” and “local television stations, spurred by competition, will provide dynamic and vibrant alternative fare, including local news and public affairs programming.” Id. ¶¶97, 99 (JA __). The Commission’s reliance on these benefits of competition was rational. 23 23 NAB also claims that because the Commission’s focus with respect to the local television ownership rule now is primarily on competition, it was obliged to explain why antitrust enforcement by the Department of Justice and the Federal Trade Commission is not adequate. Br. 50. However, the Court recognized in Prometheus that the public interest goals of preserving competition among local television stations has a different purpose from the goals of the antitrust authorities. 373 F.3d at 414. The Commission’s decision to focus on competition as the pri- mary goal of the local television ownership rule within the public interest frame- work should not affect that conclusion. Case: 08-3078 Document: 003110223746 Page: 88 Date Filed: 07/21/2010 79 CBS complains that the Commission did not even “address the argument that triopolies” (ownership of three television stations in a local market) “should be allowed, much less explain why they should be prohibited in all markets.” CBS Br. 30. But the Commission did explain why it believed the public interest was served by continuing at this time to apply the existing rule rather than the revision that had been remanded by this Court in Prometheus. 2008 Order ¶101 (JA __). If the Commission’s explanation for retaining the existing limits as in the public interest to protect competition in local markets is reasonable, it need not address the advan- tages or disadvantages of some different limitation. Association of Public-Safety Communications Officials-Int’l, Inc. v. FCC, 76 F.3d 395, 400 (D.C. Cir. 1996) (“APCO”) (“[T]he fact that there are other solutions to a problem is irrelevant pro- vided that the option selected [by the FCC] is not irrational.”). 24 B. The Commission Adequately Explained Its Decision To Continue To Apply The “Top Four/Eight Voices” Test. The Commission also retained the exception permitting an entity to own two television stations in the same DMA provided that: (1) specified signal contours of the two stations do not overlap; or (2) at least one of the stations is not ranked among the top four in audience share; and (3) at least eight voices, i.e., at least 24 Essentially the same response answers NAB’s complaint (Br. 41) that the Com- mission failed to address the effect of the rule on smaller markets. The Commis- sion’s explanation for retaining the top four restriction and the eight voices test applies as well to smaller markets. Nothing in NAB’s argument points to anything that would have compelled the Commission to explain why it did not provide an exception to the local television ownership rule for smaller markets. This is especially true since the Commission’s focus on competition goals would be heightened in smaller markets with fewer station competitors. Case: 08-3078 Document: 003110223746 Page: 89 Date Filed: 07/21/2010 80 eight independently owned, full-power commercial or non-commercial broadcast television stations, remain after the combination. 2008 Order ¶87 (JA __). Sinclair claims (Br. 34) that the Commission nowhere “articulate[s] why ‘eight’ television voices are necessary to promote competition.” That is incorrect. The Commission explained that the “eight voices” test will effectively ensure that local markets include stations affiliated with each of the four major networks (i.e., ABC, NBC, CBS, and Fox), plus at least an equal number of independently owned-and- operated broadcast television stations that are not affiliated with a major network. Id. ¶99 (JA __). The Commission found that preserving independent ownership in local markets of “four stations that are neither owned by or affiliated with a major network nor commonly owned with a network affiliate in that market” will help ensure that local television stations will be spurred by competition to provide higher quality programming, “including local news and public affairs program- ming.” Ibid. “Recognizing the vital competitive role played in local television markets by stations that are not owned by or affiliated with the major networks’ stations,” the Commission believed it “important that there be a sufficient number of such stations that are truly independent of the major network stations in each market and that will therefore vigorously compete with each of the major network stations for viewers.” Ibid. The Commission also directly responded to the D.C. Circuit’s remand in Sinclair, which asked the Commission to explain why it excluded non-broadcast media from its eight voices test even though such media were included for pur- poses of the radio/television cross-ownership rule. 284 F.3d at 165. The agency Case: 08-3078 Document: 003110223746 Page: 90 Date Filed: 07/21/2010 81 explained that it was “appropriate” to limit its voices test to television stations because of its determination that the rule remains necessary to preserve competition among broadcast television stations. 2008 Order ¶100 (JA __). The Commission explained: The local television ownership rule counts only broadcast television stations as voices because the local television ownership rule is designed to preserve competition in the local television market. The radio/television cross-ownership rule, by contrast, is designed to pro- tect viewpoint diversity and thus takes into account a broader range of voices than does the local television rule. Furthermore, we count more voices in the radio/television cross-ownership rule than in the newspaper/broadcast cross-ownership rule because newspapers and television station combinations involve the two most important types of sources for news and information. 2008 Order n.259 (JA __). The Commission did not find, as NAB claims repeatedly, that “local broad- cast television stations compete only with each other.” Br. 29. Rather, it con- cluded that because the purpose of the rule is “primarily to foster competition among local television stations,” the agency’s “determination regarding the con- tinued need for the rule does not depend on the competitive impact of other video programming outlets.” 2008 Order ¶101 (JA __). The issue is not whether there was record evidence that other video programming outlets also compete with broadcast televisions stations to some degree. NAB Br. 30-34, Sinclair Br. 31-32. Rather, because the primary policy goal of the rule is to “foster competition among local television stations,” it was reasonable for the Commission to focus only on other local broadcast stations in determining what voices to count. Case: 08-3078 Document: 003110223746 Page: 91 Date Filed: 07/21/2010 82 Finally, the Commission adhered to the “top four” exception. As the Com- mission found, “[p]rohibiting mergers between the top four television stations in a market prevents well-established competitive harms,” and “the top four prohibition remains necessary to prevent deleterious levels of concentration.” 2008 Order ¶102 (JA __). The Commission’s determination finds support in this Court’s deci- sion in Prometheus, which found that the top four exception was a reasonable line- drawing decision that was supported by evidence in the record. 373 F.3d at 417- 18. Petitioners cite evidence that they contend demonstrates that the restriction is no longer sustainable. Sinclair Br. 42-48, CBS Br. 39-46, However, as the Commission explained, the “top four prohibition minimizes the likelihood that the market share of two merged stations will significantly overtake the market share of the largest station in a local market, which … could create welfare harms.” 2008 Order ¶102 (JA __). The fact that there may be particular circumstances where this may not be true (as petitioners claim) does not substantially undermine the Commission’s conclusion that, as a general matter, the rule is necessary to mini- mize the likelihood that such harms will occur. And the Commission added that “allowing two top four stations to merge would harm competition in the local broadcast television advertising market because the top four networks (whose affiliates tend to be the top four broadcasters in a given market) enjoy a large and growing advantage over other broadcasters with regard to advertising volume and prices.” Ibid. Again, while this may not be the case in every situation, the fact that it is true in general provides further support for the reasonableness of the Commis- Case: 08-3078 Document: 003110223746 Page: 92 Date Filed: 07/21/2010 83 sion’s conclusion that the top four exception continued to be necessary because “combinations of top four stations … would be the most deleterious to competi- tion.” Ibid. C. The Commission Reasonably Determined Not To Tighten The Local Television Ownership Rule. The Citizen Petitioners contend that the Commission failed to address the impact of the digital television (“DTV”) transition, which they contend justified making the local television rule more restrictive. Citizens Br. 43. They argue that because television broadcasters have the technical capability following the transi- tion to digital broadcasting to provide multiple streams of programming, “digital technology permit[s] broadcasters to generate new revenue without the need to purchase multiple stations in any market.” Id. at 45 (internal quotations omitted). However, the transition to digital television broadcasting was not completed until June 2009 – more than a year and a half after the Commission adopted the 2008 Order. See “Full-Power TV Broadcasters Go All-Digital,” (FCC News, June 13, 2009). At the time the 2008 Order was adopted, the timing and nature of the transition were uncertain. It was reasonable for the Commission to move cautiously and not rely on an incomplete transition to a new technology as a basis for making the local television ownership rule more restrictive. The Citizen Petitioners, of course, remain free to raise this issue in the now-commenced 2010 quadrennial review proceeding. Case: 08-3078 Document: 003110223746 Page: 93 Date Filed: 07/21/2010 84 VI. THE COMMISSION REASONABLY RETAINED THE LOCAL RADIO OWNERSHIP RULE. The Commission also decided to maintain its current local radio ownership rule as necessary in the public interest to protect competition in local radio mar- kets. 2008 Order ¶110 (JA __). The rule permits a single entity to own, operate or control from five to eight radio stations in a single local market, depending on market size, provided that one entity may not own more than 50 percent of the stations in a single local market. The rule also provides “subcaps” establishing, within the overall limitations, the number of stations that may be owned, operated or controlled in a single (AM or FM) service. See 47 C.F.R. §73.3555(a). In the 2003 Order, the Commission retained the numerical limits and the AM/FM service caps that Congress had adopted in the 1996 Act. See 2003 Order, 18 FCC Rcd at 13712, 13733-34 ¶¶239, 294. In the 2008 Order, the Commission largely reaffirmed that conclusion, finding that the rule continues to be necessary “for promoting the public interest as it relates to competition, and that numerical limits on radio station ownership help to keep the available radio spectrum from becoming ‘locked up’ in the hands of one or a few owners, thus helping to prevent the formation of market power in local radio markets.” 2008 Order ¶116 (JA __). Moreover, the Commission explained that the current numerical limits “strike the appropriate balance” because “relaxing the rule to permit greater con- solidation would be inconsistent with the Commission’s public interest objectives of ensuring that the benefits of competition and diversity are realized in local radio markets” and making the “limits more restrictive would be inconsistent with Con- Case: 08-3078 Document: 003110223746 Page: 94 Date Filed: 07/21/2010 85 gress’ decision to relax the local radio ownership limits in the 1996 Telecommuni- cations Act and would disserve the public interest by unduly disrupting the radio broadcasting industry.” Id. ¶117 (JA __). Petitioner Clear Channel challenges the Commission’s decision to retain the local radio ownership rule, contending that the Commission failed to adequately explain its decision and that its conclusions lacked support in the record. 25 A. The Decision To Retain The Rule Was Adequately Explained And Is Supported In The Record. The Commission explained the basis for its conclusion that “retaining the numerical limits at the current level is necessary to protect against excessive market concentration.” 2008 Order ¶118 (JA __). The Commission pointed out that changes in its rules in the early 1990s and the adoption of the 1996 Telecom- munications Act had substantially relaxed the limits on both local and national radio ownership. Those changes resulted in significant consolidation at both the national and local level. Specifically, the Commission noted that “[t]he number of commercial radio station owners declined by 39 percent between 1996 and 2007,” and that “[a]lthough the average number of commercial owners across all Arbitron radio markets currently is 9.4, the largest commercial firm in each Arbitron Metro market has, on average, 46 percent of the market’s total radio advertising revenue, 25 Although petitioner NAB contends in its issues presented that the Commission “acted arbitrarily and capriciously or contrary to law in failing to reform the local radio ownership rule” (Br. 2), its actual argument with respect to this rule is directed to justifying the Commission’s decision not to impose “additional restric- tions on local radio ownership.” (Br. 53-57). Case: 08-3078 Document: 003110223746 Page: 95 Date Filed: 07/21/2010 86 and the largest two firms have 74 percent of the revenue.” Indeed, the Commis- sion observed that in “111 of the 299 Arbitron Metro markets, the top two com- mercial station owners control at least 80 percent of radio advertising revenue.” Moreover, the Commission stated, “evidence in the record indicates that the increase in concentration in commercial radio markets has resulted in appreciable, albeit small, increases in advertising rates.” Ibid. (footnotes omitted). The Com- mission found that this evidence “supports the conclusion that the current numer- ical limits are not unduly restrictive and that additional consolidation would not serve the Commission’s competitive goals.” Ibid. Clear Channel contends that the Commission “arbitrarily ignored record evidence and relied on irrelevant considerations” in reaching this conclusion. Br. 17. It is wrong on both points. The claim that the Commission ignored record evidence is incorrect because the Commission cited the very study – Media Own- ership Study No. 5 (JA __) – that Clear Channel claimed it ignores. See 2008 Order n. 381 (JA __). That study found, among other things, that with respect to advertising prices, “consolidation has no statistically significant effect.” Study No. 5 at 45 (JA __). However, the record also contained a study cited by the Commis- sion finding that during a period of significant consolidation since the passage of the 1996 Telecommunications Act, “the cost of radio advertising has nearly doubled” while the Consumer Price Index increased 29 percent from 1996 until 2007. “In other words, the CPI increased approximately 3 percent per year during the time period, while the annual growth rate in radio [advertising] prices was approximately 10 percent.” Media Ownership Study No. 10 at 15-16 (JA __), Case: 08-3078 Document: 003110223746 Page: 96 Date Filed: 07/21/2010 87 cited in 2008 Order n. 381 (JA __). Thus, contrary to Clear Channel’s contention, there was substantial evidence in the record supporting the Commission’s conclu- sion that eliminating or relaxing the rule would not serve its competition goals. Clear Channel asserts that the Commission relied on an “irrelevant consid- eration” when it noted an increase in radio consolidation at the national level (as well as the local level as discussed above) since the 1996 Act. Br. 19. Clear Channel asserts that national consolidation in radio ownership is “wholly irrelevant to the question whether local radio ownership caps remain justifiable.” Ibid. But substantial record evidence showed significant consolidation of ownership at the local level both following the 1996 Act and more recently. 26 Moreover, the Com- mission’s reference to the substantial national consolidation in radio ownership that has occurred since the 1996 Act (which Clear Channel could hardly dispute) does not undermine the Commission’s conclusion that retaining the local radio ownership rule’s existing numerical limits is “necessary to protect against exces- sive market concentration at the local level.” 2008 Order ¶118 (JA __). Clear Channel also contends that the Commission failed adequately to eval- uate a proposal the company had made to relax the local radio ownership rule in the largest markets. Br. 23-25. Clear Channel’s argument is based on the errone- ous premise that because it had presented the Commission with, so the company 26 See, e.g., 2008 Order ¶ 118 (JA _), citing Ownership Study 10 at 1, 7-8, 22 (JA __); Future of Music Coalition Reply App., False Premises, False Promises: A Quantitative History of Ownership Consolidation in the Radio Industry at 50-81 (JA __). Case: 08-3078 Document: 003110223746 Page: 97 Date Filed: 07/21/2010 88 claims, “a reasonable, and less restrictive, alternative to the extant limits” (Br. 13), the Commission was obligated to explain why retaining its existing rule is the only or better way to achieve its goals. An agency, however, need not defend a policy choice on review by demonstrating that it is the only or the best way to address a problem. “[T]he fact that there are other solutions to a problem is irrelevant provided that the option selected [by the FCC] is not irrational.” APCO, 76 F.3d at 400. “The FCC need not demonstrate that it has made the only acceptable deci- sion, but rather that it has based its decision on a reasoned analysis supported by the evidence before the Commission.” Id. at 398. The Commission met that standard here. B. The Decision To Retain The AM/FM “Subcaps” Was Adequately Explained And Is Supported In The Record. The Commission adopted specific limitations on AM and FM radio station ownership in local markets in 1992 in order to “prevent one entity from putting together a powerful combination of stations in a single service that may enjoy an advantage over stations in a different service.” Revision of Radio Rules and Poli- cies, 7 FCC Rcd 2755, 2778 ¶44 (1992). The Commission reasonably retained the separate ownership limits in 2008. Clear Channel’s contention that the Commission failed to justify retaining the specific AM and FM ownership limits, or subcaps, is unfounded. The Com- mission recognized that the Court in Prometheus, while apparently agreeing that the Commission had justified the FM limit on the basis of FM stations’ techno- logical and economic advantages, had held that the 2003 Order did not adequately Case: 08-3078 Document: 003110223746 Page: 98 Date Filed: 07/21/2010 89 explain the decision to retain a limit on AM ownership and directed the Commis- sion on remand to provide an explanation or modify its approach. 2008 Order ¶130 (JA __), citing 373 F.3d at 434-35. The Commission specifically sought comment on this issue on remand. See Further Notice ¶22 (JA __). In the 2008 Order (and contrary to Clear Channel’s claim (Br. 30)), the Commission again acknowledged the evidence in the record detailing the “signifi- cant technical and marketplace differences between AM and FM radio stations.” 2008 Order ¶134 (JA __) (citing 2003 Order, 18 FCC Rcd 13733-34 ¶ 294). AM stations have less bandwidth than FM stations, and the fidelity of their audio signal is inferior to that of FM stations. 2008 Order, ¶ 134 (JA __). Moreover, AM signal propagation varies with time of day, as a result of which many AM stations are required to cease operation at sunset. See 2003 Order, 18 FCC Rcd at 13733- 34 ¶294. As the Commission noted in the 2003 Order, “[t]hese and other technical differences have an effect on radio listenership patterns.” Ibid. As of 2002, 82% of radio audience comes from the FM service, while 18% of radio audience comes from the AM service.” Ibid. The Commission recognized that while viewed alone these differences might call for a cap only on FM ownership, 2008 Order ¶134 (JA __), other evidence in the record led it to conclude that eliminating the subcap rule for AM stations “would be inconsistent with our interest in protecting competition in local radio markets.” Ibid. Specifically, it pointed to Clear Channel’s comments that AM stations were ranked number one in 11 of the top 50 markets and were in the top three ranked stations in seven additional top 50 markets. The Commission thus Case: 08-3078 Document: 003110223746 Page: 99 Date Filed: 07/21/2010 90 concluded that even with respect to AM stations, the rule’s limitation is “necessary to prevent excessive market power from being concentrated in the hands of one station owner.” Ibid. Therefore, contrary to Clear Channel’s argument (Br. 32), it was not inconsistent for the Commission to find that AM stations are inferior to FM stations while, in the same paragraph, noting that AM stations achieve high ratings in some markets. Despite the technical and marketplace advantages of FM stations over AM stations generally, there are nevertheless markets in which AM stations achieve dominant positions. The Commission also concluded that the limitation on AM station owner- ship would serve the public interest by promoting new entry into radio broad- casting. The Commission pointed out the United Church of Christ’s argument in its comments that “if the AM subcaps were removed, ‘large companies could bid up the price of AM stations and further erode th[e] abysmally low representation’ of minority and female radio station owners.” 2008 Order n.423 (JA __). The Commission agreed that AM radio “remains a likely avenue for new entry into the media business, particularly by small businesses, women, minorities, and entre- preneurs seeking to meet market demand by providing programming to under- served communities. New entry promotes outlet diversity, which in turn enhances diversity and the public interest [because …] AM stations are generally far less expensive than FM stations, permitting entry with far lower capital investment.” Id. ¶133 (JA __). The Commission concluded that “retaining the current, compe- tition-based subcaps will promote diversity indirectly by facilitating and Case: 08-3078 Document: 003110223746 Page: 100 Date Filed: 07/21/2010 91 encouraging entry into the local media market by new and underrepresented par- ties, and we thus conclude that the AM subcaps are in the public interest.” Ibid. Clear Channel’s claim (Br. 31) that the transition to digital radio “would obviate any perceived technical differences between” AM and FM stations, ignores that digital radio is still in its early stages and has had very limited impact. 27 The Commission recognized in 2003 that the development of digital broadcasting may eventually help AM stations overcome technical limitations. See 2003 Order, 18 FCC Rcd at 13739 n.628. But the 2008 Order also pointed to comments contend- ing that the digital transition may not have that effect, at least not immediately, because “‘FM stations have rights to more spectrum and are further along in their digital transition.’” 2008 Order ¶132 (JA __). Whatever the ultimate impact of the digital radio transition, it was reasonable for the Commission not to rely on that nascent technological development in this proceeding, particularly when it could be addressed in a more certain context in the 2010 (or later) Quadrennial Reviews. VII. THE COMMISSION REASONABLY DECIDED TO RETAIN THE DUAL NETWORK RULE. The FCC’s “dual network” rule “permits common ownership of multiple broadcast networks, but prohibits a merger between or among the ‘top four’ net- works” (i.e., ABC, CBS, Fox, and NBC). 2008 Order ¶139 (JA __). In 2003, the Commission retained this rule, concluding that it was “necessary in the public 27 As of July 8, 2009, of the approximately 4790 operating AM radio stations, only 292, about 6%, had been authorized to transmit digital signals. See Broadcast Station Totals As Of December 31, 2009 (FCC News Release, Feb. 26, 2010); http://www.fcc.gov/mb/audio/digital.html. Case: 08-3078 Document: 003110223746 Page: 101 Date Filed: 07/21/2010 92 interest to promote competition and localism.” 2003 Order, 18 FCC Rcd at 13848 ¶592. The agency found that a merger of two or more of the top four networks would “harm competition in the program acquisition market,” id. at 13852 ¶605, “substantially lessen competition in the national advertising market,” id. at 13853 ¶607, and give networks “increased economic leverage over their affiliates, thereby diminishing” affiliates’ ability “to serve their communities,” id. at 13855 ¶611. No party sought review of the Commission’s retention of this rule in the previous Prometheus litigation. In this proceeding, only a few parties filed comments concerning the dual network rule. Most supported retention of the rule. 2008 Order ¶141 & n.443 (JA __). Only two parties – Fox and CBS – argued for repeal. On the basis of this record, the Commission decided to retain the rule in its current form. It found no evidence that would warrant a departure from its 2003 decision to retain the rule. Id. ¶141 & n.451 (JA __-__). The Commission explained: “We continue to believe that the four largest broadcast networks play a unique role in the electronic media and note that no other networks, cable or broadcast, reach nearly as large an audience as they do.” Ibid. Accordingly, “for the same reasons recited” in the 2003 Order, the Commission found that “the dual network rule is necessary in the public interest to promote competition and localism.” Id. ¶141 (JA __). CBS, the only petitioner challenging the rule, asserts (Br. 47) that the Com- mission “failed to identify the characteristics that make” the top four broadcast networks “unique.” On the contrary, the Commission extensively discussed the special characteristics of the top four networks when it decided to retain the dual Case: 08-3078 Document: 003110223746 Page: 102 Date Filed: 07/21/2010 93 network rule in 2003. See 2003 Order, 18 FCC Rcd at 13850-58 ¶¶599-621. In 2008, the agency made clear that it retained the rule “for the same reasons” that it gave in 2003. 2008 Order ¶141 (JA __). In the 2003 Order, the Commission identified several distinctive features of the top four broadcast networks that justified retention of the dual network rule. For one thing, those networks “comprise a ‘strategic group’ within the national advertising market” – i.e., “a cluster of independent firms within an industry that pursue similar business strategies.” 2003 Order, 18 FCC Rcd at 13853 ¶607 & n.1259. Unlike cable networks or emerging broadcast networks, which typically “target more specialized, niche audiences,” the four major broadcast networks “supply their affiliated local stations with programming intended to attract mass audiences.” Id. at 13853 n.1259; see also 2008 Order n.439 (JA __). The major networks “compete largely among themselves for advertisers that seek to reach” large, nationwide audiences. 2003 Order, 18 FCC Rcd at 13853 ¶607. For that reason, “a merger of two or more of the top-four networks would substantially lessen competition in the national advertising market, especially within the stra- tegic group.” Ibid. In addition, notwithstanding the recent growth of cable television and satellite television broadcasting, “the top-four networks continue to provide the greatest reach of any medium of mass communications.” 2003 Order, 18 FCC Rcd at 13853 ¶608. Those networks generally “attract much larger prime-time audiences in relation to advertisement-supported cable networks.” Ibid. “[N]o other networks, cable or broadcast, reach nearly as large an audience as [ABC, Case: 08-3078 Document: 003110223746 Page: 103 Date Filed: 07/21/2010 94 CBS, Fox, and NBC] do.” 2008 Order n.451 (JA __). Because the top four broadcast networks “still have the largest concentration of viewers,” they wield substantial “economic power” in the advertising market. 2003 Order, 18 FCC Rcd at 13854 ¶609. 28 Finally, unlike cable networks, the top four broadcast networks have local affiliates throughout the country. Those affiliates produce local news broadcasts and other programming of special interest to their local communities. The FCC reasonably found that a merger between or among the top four broadcast networks “would harm localism by providing the top-four networks with increased economic leverage over their affiliates, thereby diminishing the ability of the affiliates to serve their communities.” 2003 Order, 18 FCC Rcd at 13855 ¶611. CBS contends (Br. 48) that when the Commission decided to retain the dual network rule in 2008, it “failed to confront the significant, relevant market changes that have taken place.” But the only change cited by CBS – the greater variety of cable and broadcast networks available to viewers – has not altered the unique status of the top four broadcast networks in the media marketplace. Their clout in the advertising market remains unrivaled; and their affiliates are still the primary source of local news programming. See 2008 Order ¶102 (JA __); NASA Com- ments at 6-7 (JA __). Therefore, it was reasonable for the Commission to conclude 28 The unique position of the top four broadcast networks in the advertising market distinguishes them not only from other networks, but also from cable operators. Thus, CBS is wrong when it asserts (Br. 48) that the FCC had no basis for treating the major broadcast networks differently from cable operators. Case: 08-3078 Document: 003110223746 Page: 104 Date Filed: 07/21/2010 95 that the dual network rule remained “necessary in the public interest to promote competition and localism.” 2008 Order ¶141 (JA __). CBS claims to find an inconsistency between the FCC’s assertion that the dual network rule is necessary to protect competition and the agency’s description of the media marketplace as “dynamic.” CBS Br. 49-50 (quoting 2008 Order ¶6 (JA __)). This argument wilts under scrutiny. While the Commission generally described the media marketplace as “dynamic,” it specifically noted that “the traditional ‘mainstream media’ still maintain leading roles in many respects.” 2008 Order ¶6 (JA __). In particular, consistent with its market analysis in the 2003 Order, the Commission in 2008 found that the top four broadcast networks continue to play a “unique role in the electronic media,” and that “no other net- works, cable or broadcast, reach nearly as large an audience as they do.” Id. n.451 (JA __). Given the persistent predominance of the four largest broadcast networks in the media marketplace, the Commission was justified in concluding that the dual network rule remained necessary to protect competition. VIII. THE COMMISSION’S MEDIA OWNERSHIP RULES ARE CONSTITUTIONAL. The media petitioners aggressively contend that all of the FCC’s media own- ership rules are unconstitutional. 29 Primarily, petitioners urge the Court to overturn the “scarcity” doctrine – the Supreme Court’s longstanding rationale for applying less rigorous First Amendment scrutiny to federal regulation of broadcasting. See 29 Media General Br. 40-60; Cox Br. 39-49; CBS Br. 53-59; Tribune Br. 32-33, 39- 40, 47-50; NAA Br. 44; Clear Channel Br. 33-38; Sinclair Br. 49-52. Case: 08-3078 Document: 003110223746 Page: 105 Date Filed: 07/21/2010 96 NCCB, 436 U.S. at 799; Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 386-92 (1969). Here, as in the 2004 litigation, the Court should “decline [petitioners’] invitation to disregard precedent.” Prometheus, 373 F.3d at 401. See generally Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 484 (1989). “Even were [it] not constrained by Supreme Court precedent,” the Court declared in Prometheus that it would still reject petitioners’ “contention that the expansion of media outlets has rendered the broadcast spectrum less scarce.” 373 F.3d at 402. Petitioners repeat that contention here, but it is no more persuasive now than it was in the 2004 litigation. “The abundance of non-broadcast media does not render the broadcast spectrum any less scarce.” Ibid. Nothing in the record here alters “the fact that many more people would like access to [the broadcast spectrum] than can be accommodated.” Ibid. (citing NCCB, 436 U.S. at 799). Under this governing precedent, the FCC’s media ownership rules do not violate the First Amendment because “they are rationally related to a substantial government interest.” Prometheus, 373 F.3d at 402. Each of the rules is reason- ably designed to advance a substantial government interest – whether promoting competition (the primary goal of the local television, local radio, and dual network rules) or protecting viewpoint diversity (the primary objective of the newspaper/ broadcast and radio/television cross-ownership rules). See NCCB, 436 U.S. at 799- 800; see also Turner Broad. Sys., Inc. v. FCC, 512 U.S. 622, 662-63 (1994). Several petitioners claim that the revised newspaper/broadcast cross-owner- ship rule is unconstitutional because the specific factors guiding the Commission’s Case: 08-3078 Document: 003110223746 Page: 106 Date Filed: 07/21/2010 97 discretion take account of the “local news” to be provided by the combined proper- ties and therefore employs a form of “content-based” regulation that the First Amendment generally forbids. Media General Br. 49-51; Cox Br. 39-43; Tribune Br. 37-38. On the contrary, the FCC’s general power “to interest itself in the kinds of programs broadcast by licensees has consistently been sustained by the courts against arguments that the supervisory power violates the First Amendment.” National Association of Independent Television Producers & Distributors v. FCC, 516 F.2d 526, 536 (2d Cir. 1975) (“NAITPD”); see also Red Lion, 395 U.S. at 395. 30 Indeed, the Commission “cannot do its job” of ensuring that broadcasters serve the public interest “without interesting itself in general program format and the kinds of programs broadcast by licensees.” NAITPD, 516 F2d at 536. 31 Media General and Cox argue that the newspaper/broadcast cross-ownership rule violates the Fifth Amendment by treating newspapers differently from other media. Media General Br. 56-60; Cox Br. 46-49. The Supreme Court rejected that argument in NCCB, and this Court is bound by that precedent. See NCCB, 436 U.S. at 801; Prometheus, 373 F.3d at 401. 30 There is no colorable basis for petitioners’ contentions that the other media own- ership rules are impermissibly content-based, inasmuch as they apply irrespective of the content of any programming. Clear Channel Br. 36-37; CBS Br. 55-56. 31 Contrary to Media General’s suggestion (Br. 50), when the Commission assesses whether each of the media outlets in a proposed combination will exercise “inde- pendent news judgment,” it focuses solely on how those outlets are structured, not on the content of their speech. Under the 2008 Order, the Commission presumes that commonly owned media outlets will exercise independent news judgment if each outlet maintains its own separate news and editorial staff. 2008 Order ¶71 (JA __). Case: 08-3078 Document: 003110223746 Page: 107 Date Filed: 07/21/2010 98 Media General asserts (Br. 57-58) that the FCC cannot permissibly limit newspaper/broadcast cross-ownership while placing no ownership restrictions on non-broadcast media (such as cable systems and Internet sites) that have developed since NCCB was decided. This Court rejected that argument in Prometheus. While it recognized that “there are more media outlets today … than there were in 1978 when NCCB was decided,” the Court was not persuaded that these new non- broadcast media “contribute significantly to viewpoint diversity as sources of local news and information.” Prometheus, 373 F.3d at 401. The record here confirms, at least for now, what the Court suspected: Daily newspapers remain a much more prominent source of local news than cable television, the Internet, or any other non-broadcast media. See 2008 Order ¶¶57-58 (JA - ). The Commission thus had a rational basis for treating newspapers differently from other non-broadcast media. Because those other media are “not similarly situated” to newspapers, peti- tioners’ “equal protection claim must fail.” See Shuman ex rel. Shertzer v. Penn Manor School District, 422 F.3d 141, 151 (3d Cir. 2005). Finally, Sinclair contends (Br. 49) that the local television ownership rule violates the First Amendment because it “singles out television stations.” Sinclair presented the same argument to the D.C. Circuit in a previous case, and that court rightly rejected Sinclair’s claim, finding that the rule does not make any distinction that requires more than minimal scrutiny. See Sinclair, 284 F.3d at 168. The D.C. Circuit’s decision precludes Sinclair from reasserting its constitutional argument here. See Jean Alexander Cosmetics, Inc. v. L’Oreal USA, Inc., 458 F.3d 244, 249 (3d Cir. 2006) (“When an issue of fact or law is actually litigated and determined Case: 08-3078 Document: 003110223746 Page: 108 Date Filed: 07/21/2010 99 by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.”) (quoting RESTATEMENT (SECOND) OF JUDGMENTS §27 (1982)). IX. THE COMMISSION TOOK REASONABLE STEPS TO PROMOTE OWNERSHIP OF BROADCAST STATIONS BY MINORITIES AND WOMEN. In Prometheus, the Court held that the Commission had arbitrarily repealed its Failed Station Solicitation Rule (“FSSR”) – “its only policy specifically aimed at fostering minority television station ownership” – “without any discussion of the effect” of the rule’s repeal “on minority television station ownership (and without ever acknowledging the decline in minority station ownership notwithstanding the FSSR).” Prometheus, 373 F.3d at 421. The Court remanded “[f]or correction of this omission.” Ibid. It also directed the Commission to address “MMTC’s other proposals for advancing minority and disadvantaged businesses.” Id. at 421 n.59 (citing 2003 Order, 18 FCC Rcd at 13636-37 ¶¶49, 52). “To ensure” that the Commission did “not negatively impact minority owners,” the agency on remand reinstated the FSSR. 2008 Order ¶105 (JA __). In addition, in a separate order adopted on the same day as the 2008 Order, the Com- mission adopted a number of measures – including several of MMTC’s proposals – to promote greater diversity in broadcast station ownership. Diversity Order ¶¶10- 64 (JA __-__). Contrary to the Citizen Petitioners’ claim (Br. 53), the Court did not instruct the FCC on remand “to address the effect of the ownership limits on minority and Case: 08-3078 Document: 003110223746 Page: 109 Date Filed: 07/21/2010 100 female ownership.” The Court simply directed the Commission to correct its fail- ure to consider how the repeal of the FSSR (which had been adopted to promote diverse ownership) would affect minority ownership. Prometheus, 373 F.3d at 421. The Court also directed the agency to address MMTC’s proposals for pro- moting minority ownership. Id. at 421 n.59. The Commission has reasonably responded to the Court’s remand by restoring the FSSR and adopting several of MMTC’s proposals. The Citizen Petitioners complain (Br. 52) that the Commission “failed to consider the effect of the ownership rules on minority and female ownership.” This is not true. The Commission expressly considered the effect on minority and female ownership when it reinstated the Failed Station Solicitation Rule and when it decided to retain the AM/FM subcap provision of the local radio ownership rule. See pp. 22, 90 above. This claim amounts to nothing more than a policy disagree- ment. Both the Commission and the Citizen Petitioners agree on the need “to increase participation in the broadcasting industry” by “minority- and women- owned businesses, which historically have not been well-represented” among station owners. Diversity Order ¶1 (JA __). The Citizen Petitioners would prefer to address this problem by tightening media ownership limits across-the-board. The Commission chose a different approach: making targeted changes in its own- ership rules as well as adopting separate initiatives, such as rules that ban discrimi- nation in broadcast transactions and facilitate market entry by small businesses, including firms owned by minorities and women. See Diversity Order ¶¶10-64 (JA Case: 08-3078 Document: 003110223746 Page: 110 Date Filed: 07/21/2010 101 __-__). This Court should not disturb the agency’s reasonable policy judgment concerning how best to promote diversity in media ownership. 32 The Citizen Petitioners contend (Br. 53) that the Commission “provided no analysis of [the] effectiveness” of the measures that it adopted in the Diversity Order. Any assessment of the future effectiveness of these newly adopted policies in 2008 necessarily would have been “of a judgmental or predictive nature” – the sort of analysis for which “complete factual support in the record … is not possible or required.” NCCB, 436 U.S. at 813-14. The Commission offered just such an analysis here. It reasonably predicted that the steps it took in the Diversity Order “will be effective in creating new opportunities for broadcast ownership by a variety of small businesses and new entrants, including those owned by women and minorities.” Diversity Order ¶9 (JA __). This reasonable predictive judgment commands deference. NCCB, 436 U.S. at 813-14; Time Warner Telecom, 507 F.3d at 221. There is no basis for Citizen Petitioners’ speculation (Br. 53) that the FCC’s new rules granting preferences to small businesses (without regard to race or gen- der) “seem unlikely to result in increased ownership diversity.” As the D.C. Cir- cuit noted in an analogous context, a rule designed to promote the dissemination of 32 Insofar as the Citizen Petitioners suggest (Br. 49-51) that the FCC should have paid more attention to the Hammond study, which purported to find a link between increased media concentration and declining levels of minority and female owner- ship, we note that a peer review concluded that the Hammond study was “fatally flawed by a fundamental logical error that pervades every aspect of the analysis.” McCullough Peer-review Report at 1 (JA __). Case: 08-3078 Document: 003110223746 Page: 111 Date Filed: 07/21/2010 102 licenses (there, wireless service licenses) to small businesses (regardless of the owner’s race or gender) “will incidentally benefit businesses owned by women and minorities” because “many such businesses will qualify as small businesses.” Omnipoint Corp. v. FCC, 78 F.3d 620, 634 (D.C. Cir. 1996). By the same logic, the small business preferences that the FCC adopted in the Diversity Order are likely to increase broadcast station ownership by women and minorities. As the Commission observed, the measures that it adopted were “advocated by a variety of commenters [and] should help small businesses, including those owned by women and minorities, with access to financing and availability of spectrum, which have been identified as critical problem areas for new entrants into broad- casting, including women and minorities.” Diversity Order ¶102 (JA __). Case: 08-3078 Document: 003110223746 Page: 112 Date Filed: 07/21/2010 103 CONCLUSION For the foregoing reasons, the Court should deny the petitions for review. The Court should transfer to the District of Columbia Circuit or itself dismiss the notices of appeal consolidated with these cases as discussed above and in the Response of FCC to Motion to Dismiss. See p. 5 above. In the alternative, if the Court concludes that it has jurisdiction to consider the notices of appeal, the Court should affirm the actions of the FCC that have been appealed. 33 33 In the unlikely event that the Court concludes that a remand is warranted, it should decline petitioners’ invitations to vacate the challenged rules. Even if the Court determines that a rule is “inadequately supported,” the rule “need not neces- sarily be vacated.” Allied-Signal, Inc. v. NRC, 988 F.2d 146, 150 (D.C. Cir. 1993). “The decision whether to vacate depends on the seriousness of the order’s deficien- cies (and thus the extent of doubt whether the agency chose correctly) and the dis- ruptive consequences of an interim change that may itself be changed.” Id. at 150- 51 (internal quotations omitted). Serious deficiencies would have to be established to make vacatur apppropriate. Moreover, because restrictions on media ownership have been in effect for decades, vacatur of these rules could cause substantial disruption. Accordingly, if the Court decides to remand this case, it should not vacate any of the challenged rules. Case: 08-3078 Document: 003110223746 Page: 113 Date Filed: 07/21/2010 104 Respectfully submitted, CHRISTINE A. VARNEY ASSISTANT ATTORNEY GENERAL CATHERINE G. O'S ULLIVAN NANCY C. GARRISON ATTORNEYS UNITED STATES DEPARTMENT OF JUSTICE WASHINGTON, D.C. 20530 AUSTIN C. SCHLICK GENERAL COUNSEL JACOB M. LEWIS ACTING DEPUTY GENERAL COUNSEL DANIEL M. ARMSTRONG ASSOCIATE GENERAL COUNSEL /S/ C. Grey Pash, Jr. C. GREY PASH,JR. JAMES M. CARR COUNSEL FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554 (202) 418-1740 (TELEPHONE) (202) 418-2819 (FAX) July 21, 2010 Case: 08-3078 Document: 003110223746 Page: 114 Date Filed: 07/21/2010 IN THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT PROMETHEUS RADIO PROJECT, ET AL., APPELLANTS-PETITIONERS V. FEDERAL COMMUNICATIONS COMMISSION AND THE UNITED STATES OF AMERICA, APPELLEE-RESPONDENTS ) ) ) ) ) ) ) ) ) ) NOS. 08-3078, ET AL. CERTIFICATE OF COMPLIANCE I hereby certify that (1) this brief complies with the type-volume limitation of Fed. R. App. 32(a)(7)(B) because the brief contains 27,245 words, excluding the parts of the brief exempted by Fed. R. App. 32(a)(7)(B)(iii), and (2) this brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type- style requirements of Fed. R. App. P. 32(a)(6) because this brief has been prepared in a proportionally spaced typeface using Microsoft Word in 14-point Times New Roman type. Pursuant to Third Circuit Rule 31.1(c), I further certify that the text of the electronic brief is identical to the text in the paper copies and that a virus detection program, Symantec Endpoint Protection version 11.0.4014.26, has been run on the file and that no virus was detected. /S/ C. Grey Pash, Jr. C. Grey Pash, Jr. Counsel Federal Communications Commission Washington, D.C. 20554 (202) 418-1740 (Telephone) (202) 418-2819 (Fax) July 21, 2010 Case: 08-3078 Document: 003110223746 Page: 115 Date Filed: 07/21/2010 STATUTORY APPENDIX Page Telecommunications Act of 1996, Pub. L. No. 104-104, § 202, 110 Stat. 110 (1996)……………………. 2 5 U.S.C. § 553(b)………………………………………………………. 4 47 U.S.C. § 154(i)……………………………………………………….. 5 47 U.S.C. § 301………………………………………………………….. 6 47 U.S.C. § 303(r)……………………………………………………….. 7 47 U.S.C. § 307(a)……………………………………………………….. 8 47 U.S.C. § 309(a)……………………………………………………….. 9 47 U.S.C. § 309(d)(1)……………………………………………………. 9 47 U.S.C. § 310(d)………………………………………………………..10 47 U.S.C. § 402(b)………………………………………………………..11 47 U.S.C. § 405(a)………………………………………………………..13 47 C.F.R. § 73.658(g)…………………………………………………….15 47 C.F.R. § 73.3555………………………………………………………16 47 C.F.R. § 73.3580………………………………………………………29 Case: 08-3078 Document: 003110223746 Page: 116 Date Filed: 07/21/2010 2 PL 104-104, February 8, 1996, 110 Stat 56 UNITED STATES PUBLIC LAWS PL 104-104 (S 652) February 8, 1996 TELECOMMUNICATIONS ACT OF 1996 SEC. 202. BROADCAST OWNERSHIP. (a) NATIONAL RADIO STATION OWNERSHIP RULE CHANGES REQUIRED.-- The Commission shall modify section 73.3555 of its regulations (47 C.F.R. 73.3555) by eliminating any provisions limiting the number of AM or FM broadcast stations which may be owned or controlled by one entity nationally. (b) LOCAL RADIO DIVERSITY.-- (1) APPLICABLE CAPS.--The Commission shall revise section 73.3555(a) of its regulations (47 C.F.R. 73.3555) to provide that-- (A) in a radio market with 45 or more commercial radio stations, a party may own, operate, or control up to 8 commercial radio stations, not more than 5 of which are in the same service (AM or FM); (B) in a radio market with between 30 and 44 (inclusive) commercial radio stations, a party may own, operate, or control up to 7 commercial radio stations, not more than 4 of which are in the same service (AM or FM); (C) in a radio market with between 15 and 29 (inclusive) commercial radio stations, a party may own, operate, or control up to 6 commercial radio stations, not more than 4 of which are in the same service (AM or FM); and (D) in a radio market with 14 or fewer commercial radio stations, a party may own, operate, or control up to 5 commercial radio stations, not more than 3 of which are in the same service (AM or FM), except that a party may not own, operate, or control more than 50 percent of the stations in such market. (2) EXCEPTION.--Notwithstanding any limitation authorized by this subsection, the Commission may permit a person or entity to own, operate, or control, or have a cognizable interest in, radio broadcast stations if the Commission determines that such ownership, operation, control, or interest will result in an increase in the number of radio broadcast stations in operation. (c) TELEVISION OWNERSHIP LIMITATIONS.-- (1) NATIONAL OWNERSHIP LIMITATIONS.--The Commission shall modify its rules for multiple ownership set forth in section 73.3555 of its regulations (47 C.F.R. 73.3555)- - (A) by eliminating the restrictions on the number of television stations that a person or entity may directly or indirectly own, operate, or control, or have a cognizable interest in, nationwide; and (B) by increasing the national audience reach limitation for television stations to 35 percent. (2) LOCAL OWNERSHIP LIMITATIONS.--The Commission shall conduct a rulemaking proceeding to determine whether to retain, modify, or eliminate its limitations on the number of television stations that a person or entity may own, operate, or control, Case: 08-3078 Document: 003110223746 Page: 117 Date Filed: 07/21/2010 3 or have a cognizable interest in, within the same television market. (d) RELAXATION OF ONE-TO-A-MARKET.--With respect to its enforcement of its one-to-a-market ownership rules under section 73.3555 of its regulations, the Commission shall extend its waiver policy to any of the top 50 markets, consistent with the public interest, convenience, and necessity. (e) DUAL NETWORK CHANGES.--The Commission shall revise section 73.658(g) of its regulations (47 C.F.R. 658(g)) to permit a television broadcast station to affiliate with a person or entity that maintains 2 or more networks of television broadcast stations unless such dual or multiple networks are composed of-- (1) two or more persons or entities that, on the date of enactment of the Telecommunications Act of 1996, are "networks" as defined in section 73.3613(a)(1) of the Commission's regulations (47 C.F.R. 73.3613(a)(1)); or (2) any network described in paragraph (1) and an English-language program distribution service that, on such date, provides 4 or more hours of programming per week on a national basis pursuant to network affiliation arrangements with local television broadcast stations in markets reaching more than 75 percent of television homes (as measured by a national ratings service). (f) CABLE CROSS OWNERSHIP.-- (1) ELIMINATION OF RESTRICTIONS.--The Commission shall revise section 76.501 of its regulations (47 C.F.R. 76.501) to permit a person or entity to own or control a network of broadcast stations and a cable system. (2) SAFEGUARDS AGAINST DISCRIMINATION.--The Commission shall revise such regulations if necessary to ensure carriage, channel positioning, and nondiscriminatory treatment of nonaffiliated broadcast stations by a cable system described in paragraph (1). (g) LOCAL MARKETING AGREEMENTS.--Nothing in this section shall be construed to prohibit the origination, continuation, or renewal of any television local marketing agreement that is in compliance with the regulations of the Commission. (h) FURTHER COMMISSION REVIEW.--The Commission shall review its rules adopted pursuant to this section and all of its ownership rules biennially as part of its regulatory reform review under section 11 of the Communications Act of 1934 and shall determine whether any of such rules are necessary in the public interest as the result of competition. The Commission shall repeal or modify any regulation it determines to be no longer in the public interest. (i) ELIMINATION OF STATUTORY RESTRICTION.--Section 613(a) (47 U.S.C. 533(a)) is amended-- (1) by striking paragraph (1); (2) by redesignating paragraph (2) as subsection (a); (3) by redesignating subparagraphs (A) and (B) as paragraphs (1) and (2), respectively; (4) by striking "and" at the end of paragraph (1) (as so redesignated); (5) by striking the period at the end of paragraph (2) (as so redesignated) and inserting "; and"; and (6) by adding at the end the following new paragraph: "(3) shall not apply the requirements of this subsection to any cable operator in any franchise area in which a cable operator is subject to effective competition as determined under section 623(1).". Case: 08-3078 Document: 003110223746 Page: 118 Date Filed: 07/21/2010 4 5 U.S.C. § 553 UNITED STATES CODE ANNOTATED TITLE 5. GOVERNMENT ORGANIZATION AND EMPLOYEES PART I. THE AGENCIES GENERALLY CHAPTER 5. ADMINISTRATIVE PROCEDURE SUBCHAPTER II. ADMINISTRATIVE PROCEDURE § 553. Rule making * * * * * * (b) General notice of proposed rule making shall be published in the Federal Register, unless persons subject thereto are named and either personally served or otherwise have actual notice thereof in accordance with law. The notice shall include-- (1) a statement of the time, place, and nature of public rule making proceedings; (2) reference to the legal authority under which the rule is proposed; and (3) either the terms or substance of the proposed rule or a description of the subjects and issues involved. Except when notice or hearing is required by statute, this subsection does not apply-- (A) to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice; or (B) when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. * * * * * * Case: 08-3078 Document: 003110223746 Page: 119 Date Filed: 07/21/2010 5 47 U.S.C. § 154(i) UNITED STATES CODE ANNOTATED TITLE 47. TELEGRAPHS, TELEPHONES, AND RADIOTELEGRAPHS CHAPTER 5--WIRE OR RADIO COMMUNICATION SUBCHAPTER I--GENERAL PROVISIONS § 154. Federal Communications Commission * * * * * * (i) Duties and powers The Commission may perform any and all acts, make such rules and regulations, and issue such orders, not inconsistent with this chapter, as may be necessary in the execution of its functions. * * * * * * Case: 08-3078 Document: 003110223746 Page: 120 Date Filed: 07/21/2010 6 47 U.S.C. § 301 UNITED STATES CODE ANNOTATED TITLE 47. TELEGRAPHS, TELEPHONES, AND RADIOTELEGRAPHS CHAPTER 5. WIRE OR RADIO COMMUNICATION SUBCHAPTER III. SPECIAL PROVISIONS RELATING TO RADIO PART I. GENERAL PROVISIONS § 301. License for radio communication or transmission of energy It is the purpose of this chapter, among other things, to maintain the control of the United States over all the channels of radio transmission; and to provide for the use of such channels, but not the ownership thereof, by persons for limited periods of time, under licenses granted by Federal authority, and no such license shall be construed to create any right, beyond the terms, conditions, and periods of the license. No person shall use or operate any apparatus for the transmission of energy or communications or signals by radio (a) from one place in any State, Territory, or possession of the United States or in the District of Columbia to another place in the same State, Territory, possession, or District; or (b) from any State, Territory, or possession of the United States, or from the District of Columbia to any other State, Territory, or possession of the United States; or (c) from any place in any State, Territory, or possession of the United States, or in the District of Columbia, to any place in any foreign country or to any vessel; or (d) within any State when the effects of such use extend beyond the borders of said State, or when interference is caused by such use or operation with the transmission of such energy, communications, or signals from within said State to any place beyond its borders, or from any place beyond its borders to any place within said State, or with the transmission or reception of such energy, communications, or signals from and/or to places beyond the borders of said State; or (e) upon any vessel or aircraft of the United States (except as provided in section 303(t) of this title); or (f) upon any other mobile stations within the jurisdiction of the United States, except under and in accordance with this chapter and with a license in that behalf granted under the provisions of this chapter. Case: 08-3078 Document: 003110223746 Page: 121 Date Filed: 07/21/2010 7 47 U.S.C. § 303 UNITED STATES CODE ANNOTATED TITLE 47. TELEGRAPHS, TELEPHONES, AND RADIOTELEGRAPHS CHAPTER 5. WIRE OR RADIO COMMUNICATION SUBCHAPTER III. SPECIAL PROVISIONS RELATING TO RADIO PART I. GENERAL PROVISIONS § 303. Powers and duties of Commission Except as otherwise provided in this chapter, the Commission from time to time, as public convenience, interest, or necessity requires, shall— * * * * * * (r) Make such rules and regulations and prescribe such restrictions and conditions, not inconsistent with law, as may be necessary to carry out the provisions of this chapter, or any international radio or wire communications treaty or convention, or regulations annexed thereto, including any treaty or convention insofar as it relates to the use of radio, to which the United States is or may hereafter become a party. * * * * * * Case: 08-3078 Document: 003110223746 Page: 122 Date Filed: 07/21/2010 8 47 U.S.C. § 307 UNITED STATES CODE ANNOTATED TITLE 47. TELEGRAPHS, TELEPHONES, AND RADIOTELEGRAPHS CHAPTER 5. WIRE OR RADIO COMMUNICATION SUBCHAPTER III. SPECIAL PROVISIONS RELATING TO RADIO PART I. GENERAL PROVISIONS § 307. Licenses (a) Grant The Commission, if public convenience, interest, or necessity will be served thereby, subject to the limitations of this chapter, shall grant to any applicant therefor a station license provided for by this chapter. * * * * * * Case: 08-3078 Document: 003110223746 Page: 123 Date Filed: 07/21/2010 9 47 U.S.C. § 309 UNITED STATES CODE ANNOTATED TITLE 47. TELEGRAPHS, TELEPHONES, AND RADIOTELEGRAPHS CHAPTER 5. WIRE OR RADIO COMMUNICATION SUBCHAPTER III. SPECIAL PROVISIONS RELATING TO RADIO PART I. GENERAL PROVISIONS § 309. Application for license (a) Considerations in granting application Subject to the provisions of this section, the Commission shall determine, in the case of each application filed with it to which section 308 of this title applies, whether the public interest, convenience, and necessity will be served by the granting of such application, and, if the Commission, upon examination of such application and upon consideration of such other matters as the Commission may officially notice, shall find that public interest, convenience, and necessity would be served by the granting thereof, it shall grant such application. * * * * * * (d) Petition to deny application; time; contents; reply; findings (1) Any party in interest may file with the Commission a petition to deny any application (whether as originally filed or as amended) to which subsection (b) of this section applies at any time prior to the day of Commission grant thereof without hearing or the day of formal designation thereof for hearing; except that with respect to any classification of applications, the Commission from time to time by rule may specify a shorter period (no less than thirty days following the issuance of public notice by the Commission of the acceptance for filing of such application or of any substantial amendment thereof), which shorter period shall be reasonably related to the time when the applications would normally be reached for processing. The petitioner shall serve a copy of such petition on the applicant. The petition shall contain specific allegations of fact sufficient to show that the petitioner is a party in interest and that a grant of the application would be prima facie inconsistent with subsection (a) of this section (or subsection (k) of this section in the case of renewal of any broadcast station license). Such allegations of fact shall, except for those of which official notice may be taken, be supported by affidavit of a person or persons with personal knowledge thereof. The applicant shall be given the opportunity to file a reply in which allegations of fact or denials thereof shall similarly be supported by affidavit. * * * * * * Case: 08-3078 Document: 003110223746 Page: 124 Date Filed: 07/21/2010 10 47 U.S.C. § 310 UNITED STATES CODE ANNOTATED TITLE 47. TELEGRAPHS, TELEPHONES, AND RADIOTELEGRAPHS CHAPTER 5--WIRE OR RADIO COMMUNICATION SUBCHAPTER III--SPECIAL PROVISIONS RELATING TO RADIO PART I--GENERAL PROVISIONS § 310. License ownership restrictions * * * * * * (d) Assignment and transfer of construction permit or station license No construction permit or station license, or any rights thereunder, shall be transferred, assigned, or disposed of in any manner, voluntarily or involuntarily, directly or indirectly, or by transfer of control of any corporation holding such permit or license, to any person except upon application to the Commission and upon finding by the Commission that the public interest, convenience, and necessity will be served thereby. Any such application shall be disposed of as if the proposed transferee or assignee were making application under section 308 of this title for the permit or license in question; but in acting thereon the Commission may not consider whether the public interest, convenience, and necessity might be served by the transfer, assignment, or disposal of the permit or license to a person other than the proposed transferee or assignee. * * * * * * Case: 08-3078 Document: 003110223746 Page: 125 Date Filed: 07/21/2010 11 47 U.S.C. § 402 UNITED STATES CODE ANNOTATED TITLE 47. TELEGRAPHS, TELEPHONES, AND RADIOTELEGRAPHS CHAPTER 5--WIRE OR RADIO COMMUNICATION SUBCHAPTER IV--PROCEDURAL AND ADMINISTRATIVE PROVISIONS § 402. Judicial review of Commission's orders and decisions * * * * * * (b) Right to appeal Appeals may be taken from decisions and orders of the Commission to the United States Court of Appeals for the District of Columbia in any of the following cases: (1) By any applicant for a construction permit or station license, whose application is denied by the Commission. (2) By any applicant for the renewal or modification of any such instrument of authorization whose application is denied by the Commission. (3) By any party to an application for authority to transfer, assign, or dispose of any such instrument of authorization, or any rights thereunder, whose application is denied by the Commission. (4) By any applicant for the permit required by section 325 of this title whose application has been denied by the Commission, or by any permittee under said section whose permit has been revoked by the Commission. (5) By the holder of any construction permit or station license which has been modified or revoked by the Commission. (6) By any other person who is aggrieved or whose interests are adversely affected by any order of the Commission granting or denying any application described in paragraphs (1), (2), (3), (4), and (9) of this subsection. (7) By any person upon whom an order to cease and desist has been served under section 312 of this title. (8) By any radio operator whose license has been suspended by the Commission. Case: 08-3078 Document: 003110223746 Page: 126 Date Filed: 07/21/2010 12 (9) By any applicant for authority to provide interLATA services under section 271 of this title whose application is denied by the Commission. * * * * * * Case: 08-3078 Document: 003110223746 Page: 127 Date Filed: 07/21/2010 13 47 U.S.C. § 405 UNITED STATES CODE ANNOTATED TITLE 47. TELEGRAPHS, TELEPHONES, AND RADIOTELEGRAPHS CHAPTER 5. WIRE OR RADIO COMMUNICATION SUBCHAPTER IV. PROCEDURAL AND ADMINISTRATIVE PROVISIONS § 405. Petition for reconsideration; procedure; disposition; time of filing; additional evidence; time for disposition of petition for reconsideration of order concluding hearing or investigation; appeal of order (a) After an order, decision, report, or action has been made or taken in any proceeding by the Commission, or by any designated authority within the Commission pursuant to a delegation under section 155(c)(1) of this title, any party thereto, or any other person aggrieved or whose interests are adversely affected thereby, may petition for reconsideration only to the authority making or taking the order, decision, report, or action; and it shall be lawful for such authority, whether it be the Commission or other authority designated under section 155(c)(1) of this title, in its discretion, to grant such a reconsideration if sufficient reason therefor be made to appear. A petition for reconsideration must be filed within thirty days from the date upon which public notice is given of the order, decision, report, or action complained of. No such application shall excuse any person from complying with or obeying any order, decision, report, or action of the Commission, or operate in any manner to stay or postpone the enforcement thereof, without the special order of the Commission. The filing of a petition for reconsideration shall not be a condition precedent to judicial review of any such order, decision, report, or action, except where the party seeking such review (1) was not a party to the proceedings resulting in such order, decision, report, or action, or (2) relies on questions of fact or law upon which the Commission, or designated authority within the Commission, has been afforded no opportunity to pass. The Commission, or designated authority within the Commission, shall enter an order, with a concise statement of the reasons therefor, denying a petition for reconsideration or granting such petition, in whole or in part, and ordering such further proceedings as may be appropriate: Provided, That in any case where such petition relates to an instrument of authorization granted without a hearing, the Commission, or designated authority within the Commission, shall take such action within ninety days of the filing of such petition. Reconsiderations shall be governed by such general rules as the Commission may establish, except that no evidence other than newly discovered evidence, evidence which has become available only since the original taking of evidence, or evidence which the Commission or designated authority within the Commission believes should have been taken in the original proceeding shall be taken on any reconsideration. The time within which a petition for review must be filed in a proceeding to which section 402(a) of this title applies, or within which an appeal must be taken under section 402(b) of this title in any case, shall be computed from the date Case: 08-3078 Document: 003110223746 Page: 128 Date Filed: 07/21/2010 14 upon which the Commission gives public notice of the order, decision, report, or action complained of. Case: 08-3078 Document: 003110223746 Page: 129 Date Filed: 07/21/2010 15 47 C.F.R. § 73.658 CODE OF FEDERAL REGULATIONS TITLE 47. TELECOMMUNICATION CHAPTER I. FEDERAL COMMUNICATIONS COMMISSION SUBCHAPTER C. BROADCAST RADIO SERVICES PART 73. RADIO BROADCAST SERVICES SUBPART E. TELEVISION BROADCAST STATIONS § 73.658 Affiliation agreements and network program practices; territorial exclusivity in non-network program arrangements. * * * * * * (g) Dual network operation. A television broadcast station may affiliate with a person or entity that maintains two or more networks of television broadcast stations unless such dual or multiple networks are composed of two or more persons or entities that, on February 8, 1996, were “networks” as defined in § 73.3613(a)(1) of the Commission's regulations (that is, ABC, CBS, Fox, and NBC). * * * * * * Case: 08-3078 Document: 003110223746 Page: 130 Date Filed: 07/21/2010 16 47 C.F.R. § 73.3555 CODE OF FEDERAL REGULATIONS TITLE 47. TELECOMMUNICATION CHAPTER I. FEDERAL COMMUNICATIONS COMMISSION SUBCHAPTER C. BROADCAST RADIO SERVICES PART 73. RADIO BROADCAST SERVICES SUBPART H. RULES APPLICABLE TO ALL BROADCAST STATIONS § 73.3555 Multiple ownership. (a)(1) Local radio ownership rule. A person or single entity (or entities under common control) may have a cognizable interest in licenses for AM or FM radio broadcast stations in accordance with the following limits: (i) In a radio market with 45 or more full-power, commercial and noncommercial radio stations, not more than 8 commercial radio stations in total and not more than 5 commercial stations in the same service (AM or FM); (ii) In a radio market with between 30 and 44 (inclusive) full-power, commercial and noncommercial radio stations, not more than 7 commercial radio stations in total and not more than 4 commercial stations in the same service (AM or FM); (iii) In a radio market with between 15 and 29 (inclusive) full-power, commercial and noncommercial radio stations, not more than 6 commercial radio stations in total and not more than 4 commercial stations in the same service (AM or FM); and (iv) In a radio market with 14 or fewer full-power, commercial and noncommercial radio stations, not more than 5 commercial radio stations in total and not more than 3 commercial stations in the same service (AM or FM); provided, however, that no person or single entity (or entities under common control) may have a cognizable interest in more than 50% of the full-power, commercial and noncommercial radio stations in such market unless the combination of stations comprises not more than one AM and one FM station. (2) Overlap between two stations in different services is permissible if neither of those two stations overlaps a third station in the same service. (b) Local television multiple ownership rule. An entity may directly or indirectly own, operate, or control two television stations licensed in the same Designated Market Area (DMA) (as determined by Nielsen Media Research or any successor entity) only under one or more of the following conditions: Case: 08-3078 Document: 003110223746 Page: 131 Date Filed: 07/21/2010 17 (1) The Grade B contours of the stations (as determined by § 73.684) do not overlap; or (i) At the time the application to acquire or construct the station(s) is filed, at least one of the stations is not ranked among the top four stations in the DMA, based on the most recent all-day (9 a.m.-midnight) audience share, as measured by Nielsen Media Research or by any comparable professional, accepted audience ratings service; and (ii) At least 8 independently owned and operating, full-power commercial and noncommercial TV stations would remain post-merger in the DMA in which the communities of license of the TV stations in question are located. Count only those stations the Grade B signal contours of which overlap with the Grade B signal contour of at least one of the stations in the proposed combination. In areas where there is no Nielsen DMA, count the TV stations present in an area that would be the functional equivalent of a TV market. Count only those TV stations the Grade B signal contours of which overlap with the Grade B signal contour of at least one of the stations in the proposed combination. (2) [Reserved] (c) Radio-television cross-ownership rule. (1) This rule is triggered when: (i) The predicted or measured 1 mV/m contour of an existing or proposed FM station (computed in accordance with § 73.313) encompasses the entire community of license of an existing or proposed commonly owned TV broadcast station(s), or the Grade A contour(s) of the TV broadcast station(s) (computed in accordance with § 73.684) encompasses the entire community of license of the FM station; or (ii) The predicted or measured 2 mV/m groundwave contour of an existing or proposed AM station (computed in accordance with § 73.183 or § 73.386), encompasses the entire community of license of an existing or proposed commonly owned TV broadcast station(s), or the Grade A contour(s) of the TV broadcast station(s) (computed in accordance with § 73.684) encompass(es) the entire community of license of the AM station. (2) An entity may directly or indirectly own, operate, or control up to two commercial TV stations (if permitted by paragraph (b) of this section, the local television multiple ownership rule) and 1 commercial radio station situated as described in paragraph (c)(1) of this section. An entity may not exceed these numbers, except as follows: (i) If at least 20 independently owned media voices would remain in the market post- merger, an entity can directly or indirectly own, operate, or control up to: Case: 08-3078 Document: 003110223746 Page: 132 Date Filed: 07/21/2010 18 (A) Two commercial TV and six commercial radio stations (to the extent permitted by paragraph (a) of this section, the local radio multiple ownership rule); or (B) One commercial TV and seven commercial radio stations (to the extent that an entity would be permitted to own two commercial TV and six commercial radio stations under paragraph (c)(2)(i)(A) of this section, and to the extent permitted by paragraph (a) of this section, the local radio multiple ownership rule). (ii) If at least 10 independently owned media voices would remain in the market post- merger, an entity can directly or indirectly own, operate, or control up to two commercial TV and four commercial radio stations (to the extent permitted by paragraph (a) of this section, the local radio multiple ownership rule). (3) To determine how many media voices would remain in the market, count the following: (i) TV stations: independently owned and operating full-power broadcast TV stations within the DMA of the TV station's (or stations') community (or communities) of license that have Grade B signal contours that overlap with the Grade B signal contour(s) of the TV station(s) at issue; (ii) Radio stations: (A)(1) Independently owned operating primary broadcast radio stations that are in the radio metro market (as defined by Arbitron or another nationally recognized audience rating service) of: (i) The TV station's (or stations') community (or communities) of license; or (ii) The radio station's (or stations') community (or communities) of license; and (2) Independently owned out-of-market broadcast radio stations with a minimum share as reported by Arbitron or another nationally recognized audience rating service. (B) When a proposed combination involves stations in different radio markets, the voice requirement must be met in each market; the radio stations of different radio metro markets may not be counted together. (C) In areas where there is no radio metro market, count the radio stations present in an area that would be the functional equivalent of a radio market. Case: 08-3078 Document: 003110223746 Page: 133 Date Filed: 07/21/2010 19 (iii) Newspapers: Newspapers that are published at least four days a week within the TV station's DMA in the dominant language of the market and that have a circulation exceeding 5% of the households in the DMA; and (iv) One cable system: if cable television is generally available to households in the DMA. Cable television counts as only one voice in the DMA, regardless of how many individual cable systems operate in the DMA. (d) Daily newspaper cross-ownership rule. (1) No license for an AM, FM or TV broadcast station shall be granted to any party (including all parties under common control) if such party directly or indirectly owns, operates or controls a daily newspaper and the grant of such license will result in: (i) The predicted or measured 2 mV/m contour of an AM station, computed in accordance with § 73.183 or § 73.186, encompassing the entire community in which such newspaper is published; or (ii) The predicted 1 mV/m contour for an FM station, computed in accordance with § 73.313, encompassing the entire community in which such newspaper is published; or (iii) The Grade A contour of a TV station, computed in accordance with § 73.684, encompassing the entire community in which such newspaper is published. (2) Paragraph (d)(1) of this section shall not apply in cases where the Commission makes a finding pursuant to Section 310(d) of the Communications Act that the public interest, convenience, and necessity would be served by permitting an entity that owns, operates or controls a daily newspaper to own, operate or control an AM, FM, or TV broadcast station whose relevant contour encompasses the entire community in which such newspaper is published as set forth in paragraph (d)(1) of this section. (3) In making a finding under paragraph (d)(2) of this section, there shall be a presumption that it is not inconsistent with the public interest, convenience, and necessity for an entity to own, operate or control a daily newspaper in a top 20 Nielsen DMA and one commercial AM, FM or TV broadcast station whose relevant contour encompasses the entire community in which such newspaper is published as set forth in paragraph (d)(1) of this section, provided that, with respect to a combination including a commercial TV station, (i) The station is not ranked among the top four TV stations in the DMA, based on the most recent all-day (9 a.m.-midnight) audience share, as measured by Nielsen Media Research or by any comparable professional, accepted audience ratings service; and (ii) At least 8 independently owned and operating major media voices would remain in the DMA in which the community of license of the TV station in question is Case: 08-3078 Document: 003110223746 Page: 134 Date Filed: 07/21/2010 20 located (for purposes of this provision major media voices include full-power TV broadcast stations and major newspapers). (4) In making a finding under paragraph (d)(2) of this section, there shall be a presumption that it is inconsistent with the public interest, convenience, and necessity for an entity to own, operate or control a daily newspaper and an AM, FM or TV broadcast station whose relevant contour encompasses the entire community in which such newspaper is published as set forth in paragraph (d)(1) of this section in a DMA other than the top 20 Nielsen DMAs or in any circumstance not covered under paragraph (d)(3) of this section. (5) In making a finding under paragraph (d)(2) of this section, the Commission shall consider: (i) Whether the combined entity will significantly increase the amount of local news in the market; (ii) Whether the newspaper and the broadcast outlets each will continue to employ its own staff and each will exercise its own independent news judgment; (iii) The level of concentration in the Nielsen Designated Market Area (DMA); and (iv) The financial condition of the newspaper or broadcast station, and if the newspaper or broadcast station is in financial distress, the proposed owner's commitment to invest significantly in newsroom operations. (6) In order to overcome the negative presumption set forth in paragraph (d)(4) of this section with respect to the combination of a major newspaper and a television station, the applicant must show by clear and convincing evidence that the co-owned major newspaper and station will increase the diversity of independent news outlets and increase competition among independent news sources in the market, and the factors set forth above in paragraph (d)(5) of this section will inform this decision. (7) The negative presumption set forth in paragraph (d)(4) of this section shall be reversed under the following two circumstances: (i) The newspaper or broadcast station is failed or failing; or (ii) The combination is with a broadcast station that was not offering local newscasts prior to the combination, and the station will initiate at least seven hours per week of local news programming after the combination. (e) National television multiple ownership rule. (1) No license for a commercial television broadcast station shall be granted, transferred or assigned to any party (including all parties under common control) if the grant, transfer or assignment of such license would result in such party or any of Case: 08-3078 Document: 003110223746 Page: 135 Date Filed: 07/21/2010 21 its stockholders, partners, members, officers or directors having a cognizable interest in television stations which have an aggregate national audience reach exceeding thirty-nine (39) percent. (2) For purposes of this paragraph (e): (i) National audience reach means the total number of television households in the Nielsen Designated Market Areas (DMAs) in which the relevant stations are located divided by the total national television households as measured by DMA data at the time of a grant, transfer, or assignment of a license. For purposes of making this calculation, UHF television stations shall be attributed with 50 percent of the television households in their DMA market. (ii) No market shall be counted more than once in making this calculation. (3) Divestiture. A person or entity that exceeds the thirty-nine (39) percent national audience reach limitation for television stations in paragraph (e)(1) of this section through grant, transfer, or assignment of an additional license for a commercial television broadcast station shall have not more than 2 years after exceeding such limitation to come into compliance with such limitation. This divestiture requirement shall not apply to persons or entities that exceed the 39 percent national audience reach limitation through population growth. (f) The ownership limits of this section are not applicable to noncommercial educational FM and noncommercial educational TV stations. However, the attribution standards set forth in the Notes to this section will be used to determine attribution for noncommercial educational FM and TV applicants, such as in evaluating mutually exclusive applications pursuant to subpart K of part 73. Note 1 to § 73.3555: The words “cognizable interest” as used herein include any interest, direct or indirect, that allows a person or entity to own, operate or control, or that otherwise provides an attributable interest in, a broadcast station. Note 2 to § 73.3555: In applying the provisions of this section, ownership and other interests in broadcast licensees, cable television systems and daily newspapers will be attributed to their holders and deemed cognizable pursuant to the following criteria: a. Except as otherwise provided herein, partnership and direct ownership interests and any voting stock interest amounting to 5% or more of the outstanding voting stock of a corporate broadcast licensee, cable television system or daily newspaper will be cognizable; b. Investment companies, as defined in 15 U.S.C. 80a-3, insurance companies and banks holding stock through their trust departments in trust accounts will be considered to have a cognizable interest only if they hold 20% or more of the outstanding voting Case: 08-3078 Document: 003110223746 Page: 136 Date Filed: 07/21/2010 22 stock of a corporate broadcast licensee, cable television system or daily newspaper, or if any of the officers or directors of the broadcast licensee, cable television system or daily newspaper are representatives of the investment company, insurance company or bank concerned. Holdings by a bank or insurance company will be aggregated if the bank or insurance company has any right to determine how the stock will be voted. Holdings by investment companies will be aggregated if under common management. c. Attribution of ownership interests in a broadcast licensee, cable television system or daily newspaper that are held indirectly by any party through one or more intervening corporations will be determined by successive multiplication of the ownership percentages for each link in the vertical ownership chain and application of the relevant attribution benchmark to the resulting product, except that wherever the ownership percentage for any link in the chain exceeds 50%, it shall not be included for purposes of this multiplication. For purposes of paragraph i. of this note, attribution of ownership interests in a broadcast licensee, cable television system or daily newspaper that are held indirectly by any party through one or more intervening organizations will be determined by successive multiplication of the ownership percentages for each link in the vertical ownership chain and application of the relevant attribution benchmark to the resulting product, and the ownership percentage for any link in the chain that exceeds 50% shall be included for purposes of this multiplication. [For example, except for purposes of paragraph (i) of this note, if A owns 10% of company X, which owns 60% of company Y, which owns 25% of “Licensee,” then X's interest in “Licensee” would be 25% (the same as Y's interest because X's interest in Y exceeds 50%), and A's interest in “Licensee” would be 2.5% (0.1 x 0.25). Under the 5% attribution benchmark, X's interest in “Licensee” would be cognizable, while A's interest would not be cognizable. For purposes of paragraph i. of this note, X's interest in “Licensee” would be 15% (0.6 x 0.25) and A's interest in “Licensee” would be 1.5% (0.1 x 0.6 x 0.25). Neither interest would be attributed under paragraph i. of this note.] d. Voting stock interests held in trust shall be attributed to any person who holds or shares the power to vote such stock, to any person who has the sole power to sell such stock, and to any person who has the right to revoke the trust at will or to replace the trustee at will. If the trustee has a familial, personal or extra-trust business relationship to the grantor or the beneficiary, the grantor or beneficiary, as appropriate, will be attributed with the stock interests held in trust. An otherwise qualified trust will be ineffective to insulate the grantor or beneficiary from attribution with the trust's assets unless all voting stock interests held by the grantor or beneficiary in the relevant broadcast licensee, cable television system or daily newspaper are subject to said trust. e. Subject to paragraph i. of this note, holders of non-voting stock shall not be attributed an interest in the issuing entity. Subject to paragraph i. of this note, holders of debt and instruments such as warrants, convertible debentures, options or other non-voting interests with rights of conversion to voting interests shall not be attributed unless and until conversion is effected. f. 1. A limited partnership interest shall be attributed to a limited partner unless that partner is not materially involved, directly or indirectly, in the management or operation Case: 08-3078 Document: 003110223746 Page: 137 Date Filed: 07/21/2010 23 of the media-related activities of the partnership and the licensee or system so certifies. An interest in a Limited Liability Company (“LLC”) or Registered Limited Liability Partnership (“RLLP”) shall be attributed to the interest holder unless that interest holder is not materially involved, directly or indirectly, in the management or operation of the media-related activities of the partnership and the licensee or system so certifies. 2. For a licensee or system that is a limited partnership to make the certification set forth in paragraph f. 1. of this note, it must verify that the partnership agreement or certificate of limited partnership, with respect to the particular limited partner exempt from attribution, establishes that the exempt limited partner has no material involvement, directly or indirectly, in the management or operation of the media activities of the partnership. For a licensee or system that is an LLC or RLLP to make the certification set forth in paragraph f. 1. of this note, it must verify that the organizational document, with respect to the particular interest holder exempt from attribution, establishes that the exempt interest holder has no material involvement, directly or indirectly, in the management or operation of the media activities of the LLC or RLLP. The criteria which would assume adequate insulation for purposes of this certification are described in the Memorandum Opinion and Order in MM Docket No. 83-46, FCC 85-252 (released June 24, 1985), as modified on reconsideration in the Memorandum Opinion and Order in MM Docket No. 83-46, FCC 86-410 (released November 28, 1986). Irrespective of the terms of the certificate of limited partnership or partnership agreement, or other organizational document in the case of an LLC or RLLP, however, no such certification shall be made if the individual or entity making the certification has actual knowledge of any material involvement of the limited partners, or other interest holders in the case of an LLC or RLLP, in the management or operation of the media-related businesses of the partnership or LLC or RLLP. 3. In the case of an LLC or RLLP, the licensee or system seeking insulation shall certify, in addition, that the relevant state statute authorizing LLCs permits an LLC member to insulate itself as required by our criteria. g. Officers and directors of a broadcast licensee, cable television system or daily newspaper are considered to have a cognizable interest in the entity with which they are so associated. If any such entity engages in businesses in addition to its primary business of broadcasting, cable television service or newspaper publication, it may request the Commission to waive attribution for any officer or director whose duties and responsibilities are wholly unrelated to its primary business. The officers and directors of a parent company of a broadcast licensee, cable television system or daily newspaper, with an attributable interest in any such subsidiary entity, shall be deemed to have a cognizable interest in the subsidiary unless the duties and responsibilities of the officer or director involved are wholly unrelated to the broadcast licensee, cable television system or daily newspaper subsidiary, and a statement properly documenting this fact is submitted to the Commission. [This statement may be included on the appropriate Ownership Report.] The officers and directors of a sister corporation of a broadcast licensee, cable television system or daily newspaper shall not be attributed with ownership of these entities by virtue of such status. Case: 08-3078 Document: 003110223746 Page: 138 Date Filed: 07/21/2010 24 h. Discrete ownership interests will be aggregated in determining whether or not an interest is cognizable under this section. An individual or entity will be deemed to have a cognizable investment if: 1. The sum of the interests held by or through “passive investors” is equal to or exceeds 20 percent; or 2. The sum of the interests other than those held by or through “passive investors” is equal to or exceeds 5 percent; or 3. The sum of the interests computed under paragraph h. 1. of this note plus the sum of the interests computed under paragraph h. 2. of this note is equal to or exceeds 20 percent. i.1. Notwithstanding paragraphs e. and f. of this Note, the holder of an equity or debt interest or interests in a broadcast licensee, cable television system, daily newspaper, or other media outlet subject to the broadcast multiple ownership or cross-ownership rules (“interest holder”) shall have that interest attributed if: A. The equity (including all stockholdings, whether voting or nonvoting, common or preferred) and debt interest or interests, in the aggregate, exceed 33 percent of the total asset value, defined as the aggregate of all equity plus all debt, of that media outlet; and B.(i) The interest holder also holds an interest in a broadcast licensee, cable television system, newspaper, or other media outlet operating in the same market that is subject to the broadcast multiple ownership or cross-ownership rules and is attributable under paragraphs of this note other than this paragraph i.; or (ii) The interest holder supplies over fifteen percent of the total weekly broadcast programming hours of the station in which the interest is held. For purposes of applying this paragraph, the term, “market,” will be defined as it is defined under the specific multiple ownership rule or cross-ownership rule that is being applied, except that for television stations, the term “market,” will be defined by reference to the definition contained in the local television multiple ownership rule contained in paragraph (b) of this section. 2. Notwithstanding paragraph i.1. of this Note, the interest holder may exceed the 33 percent threshold therein without triggering attribution where holding such interest would enable an eligible entity to acquire a broadcast station, provided that: i. The combined equity and debt of the interest holder in the eligible entity is less than 50 percent, or ii. The total debt of the interest holder in the eligible entity does not exceed 80 percent of the asset value of the station being acquired by the eligible entity and the interest holder does not hold any equity interest, option, or promise to acquire an equity interest Case: 08-3078 Document: 003110223746 Page: 139 Date Filed: 07/21/2010 25 in the eligible entity or any related entity. For purposes of this paragraph i.2, an “eligible entity” shall include any entity that qualifies as a small business under the Small Business Administration's size standards for its industry grouping, as set forth in 13 CFR 121.201, at the time the transaction is approved by the FCC, and holds: A. 30 percent or more of the stock or partnership interests and more than 50 percent of the voting power of the corporation or partnership that will own the media outlet; or B. 15 percent or more of the stock or partnership interests and more than 50 percent of the voting power of the corporation or partnership that will own the media outlet, provided that no other person or entity owns or controls more than 25 percent of the outstanding stock or partnership interests; or C. More than 50 percent of the voting power of the corporation that will own the media outlet if such corporation is a publicly traded company. j. “Time brokerage” (also known as “local marketing”) is the sale by a licensee of discrete blocks of time to a “broker” that supplies the programming to fill that time and sells the commercial spot announcements in it. 1. Where two radio stations are both located in the same market, as defined for purposes of the local radio ownership rule contained in paragraph (a) of this section, and a party (including all parties under common control) with a cognizable interest in one such station brokers more than 15 percent of the broadcast time per week of the other such station, that party shall be treated as if it has an interest in the brokered station subject to the limitations set forth in paragraphs (a), (c), and (d) of this section. This limitation shall apply regardless of the source of the brokered programming supplied by the party to the brokered station. 2. Where two television stations are both located in the same market, as defined in the local television ownership rule contained in paragraph (b) of this section, and a party (including all parties under common control) with a cognizable interest in one such station brokers more than 15 percent of the broadcast time per week of the other such station, that party shall be treated as if it has an interest in the brokered station subject to the limitations set forth in paragraphs (b), (c), (d) and (e) of this section. This limitation shall apply regardless of the source of the brokered programming supplied by the party to the brokered station. 3. Every time brokerage agreement of the type described in this Note shall be undertaken only pursuant to a signed written agreement that shall contain a certification by the licensee or permittee of the brokered station verifying that it maintains ultimate control over the station's facilities including, specifically, control over station finances, personnel and programming, and by the brokering station that the agreement complies with the provisions of paragraphs (b), (c), and (d) of this section if the brokering station is a television station or with paragraphs (a), (c), and (d) of this section if the brokering station is a radio station. Case: 08-3078 Document: 003110223746 Page: 140 Date Filed: 07/21/2010 26 k. “Joint Sales Agreement” is an agreement with a licensee of a “brokered station” that authorizes a “broker” to sell advertising time for the “brokered station.” 1. Where two radio stations are both located in the same market, as defined for purposes of the local radio ownership rule contained in paragraph (a) of this section, and a party (including all parties under common control) with a cognizable interest in one such station sells more than 15 percent of the advertising time per week of the other such station, that party shall be treated as if it has an interest in the brokered station subject to the limitations set forth in paragraphs (a), (c), and (d) of this section. 2. Every joint sales agreement of the type described in this Note shall be undertaken only pursuant to a signed written agreement that shall contain a certification by the licensee or permittee of the brokered station verifying that it maintains ultimate control over the station's facilities, including, specifically, control over station finances, personnel and programming, and by the brokering station that the agreement complies with the limitations set forth in paragraphs (a), (c), and (d) of this section. Note 3 to § 73.3555: In cases where record and beneficial ownership of voting stock is not identical (e.g., bank nominees holding stock as record owners for the benefit of mutual funds, brokerage houses holding stock in street names for the benefit of customers, investment advisors holding stock in their own names for the benefit of clients, and insurance companies holding stock), the party having the right to determine how the stock will be voted will be considered to own it for purposes of these rules. Note 4 to § 73.3555: Paragraphs (a) through (d) of this section will not be applied so as to require divestiture, by any licensee, of existing facilities, and will not apply to applications for assignment of license or transfer of control filed in accordance with § 73.3540(f) or § 73.3541(b), or to applications for assignment of license or transfer of control to heirs or legatees by will or intestacy, if no new or increased concentration of ownership would be created among commonly owned, operated or controlled media properties. Paragraphs (a) through (d) of this section will apply to all applications for new stations, to all other applications for assignment or transfer, to all applications for major changes to existing stations, and to applications for minor changes to existing stations that implement an approved change in an FM radio station's community of license or create new or increased concentration of ownership among commonly owned, operated or controlled media properties. Commonly owned, operated or controlled media properties that do not comply with paragraphs (a) through (d) of this section may not be assigned or transferred to a single person, group or entity, except as provided in this Note or in the Report and Order in Docket No. 02-277, released July 2, 2003 (FCC 02-127). Note 5 to § 73.3555: Paragraphs (b) through (e) of this section will not be applied to cases involving television stations that are “satellite” operations. Such cases will be considered in accordance with the analysis set forth in the Report and Order in MM Docket No. 87-8, FCC 91-182 (released July 8, 1991), in order to determine whether common ownership, operation, or control of the stations in question would be in the public interest. An authorized and operating “satellite” television station, the Grade B contour of which overlaps that of a commonly owned, operated, or controlled “non- Case: 08-3078 Document: 003110223746 Page: 141 Date Filed: 07/21/2010 27 satellite” parent television broadcast station, or the Grade A contour of which completely encompasses the community of publication of a commonly owned, operated, or controlled daily newspaper, or the community of license of a commonly owned, operated, or controlled AM or FM broadcast station, or the community of license of which is completely encompassed by the 2 mV/m contour of such AM broadcast station or the 1 mV/m contour of such FM broadcast station, may subsequently become a “non-satellite” station under the circumstances described in the aforementioned Report and Order in MM Docket No. 87-8. However, such commonly owned, operated, or controlled “non- satellite” television stations and AM or FM stations with the aforementioned community encompassment, may not be transferred or assigned to a single person, group, or entity except as provided in Note 4 of this section. Nor shall any application for assignment or transfer concerning such “non-satellite” stations be granted if the assignment or transfer would be to the same person, group or entity to which the commonly owned, operated, or controlled newspaper is proposed to be transferred, except as provided in Note 4 of this section. Note 6 to § 73.3555: For purposes of this section a daily newspaper is one which is published four or more days per week, which is in the dominant language in the market, and which is circulated generally in the community of publication. A college newspaper is not considered as being circulated generally. Note 7 to § 73.3555: The Commission will entertain applications to waive the restrictions in paragraph (b) and (c) of this section (the local television ownership rule and the radio/television cross-ownership rule) on a case-by-case basis. In each case, we will require a showing that the in-market buyer is the only entity ready, willing, and able to operate the station, that sale to an out-of-market applicant would result in an artificially depressed price, and that the waiver applicant does not already directly or indirectly own, operate, or control interest in two television stations within the relevant DMA. One way to satisfy these criteria would be to provide an affidavit from an independent broker affirming that active and serious efforts have been made to sell the permit, and that no reasonable offer from an entity outside the market has been received. We will entertain waiver requests as follows: 1. If one of the broadcast stations involved is a “failed” station that has not been in operation due to financial distress for at least four consecutive months immediately prior to the application, or is a debtor in an involuntary bankruptcy or insolvency proceeding at the time of the application. 2. For paragraph (b) of this section only, if one of the television stations involved is a “failing” station that has an all-day audience share of no more than four per cent; the station has had negative cash flow for three consecutive years immediately prior to the application; and consolidation of the two stations would result in tangible and verifiable public interest benefits that outweigh any harm to competition and diversity. 3. For paragraph (b) of this section only, if the combination will result in the construction of an unbuilt station. The permittee of the unbuilt station must demonstrate Case: 08-3078 Document: 003110223746 Page: 142 Date Filed: 07/21/2010 28 that it has made reasonable efforts to construct but has been unable to do so. Note 8 to § 73.3555: Paragraph (a)(1) of this section will not apply to an application for an AM station license in the 535-1605 kHz band where grant of such application will result in the overlap of 5 mV/m groundwave contours of the proposed station and that of another AM station in the 535-1605 kHz band that is commonly owned, operated or controlled if the applicant shows that a significant reduction in interference to adjacent or co-channel stations would accompany such common ownership. Such AM overlap cases will be considered on a case-by-case basis to determine whether common ownership, operation or control of the stations in question would be in the public interest. Applicants in such cases must submit a contingent application of the major or minor facilities change needed to achieve the interference reduction along with the application which seeks to create the 5 mV/m overlap situation. Note 9 to § 73.3555: Paragraph (a)(1) of this section will not apply to an application for an AM station license in the 1605-1705 kHz band where grant of such application will result in the overlap of the 5 mV/m groundwave contours of the proposed station and that of another AM station in the 535-1605 kHz band that is commonly owned, operated or controlled. Paragraphs (d)(1)(i) and (d)(1)(ii) of this section will not apply to an application for an AM station license in the 1605-1705 kHz band by an entity that owns, operates, controls or has a cognizable interest in AM radio stations in the 535-1605 kHz band. Note 10 to § 73.3555: Authority for joint ownership granted pursuant to Note 9 will expire at 3 a.m. local time on the fifth anniversary for the date of issuance of a construction permit for an AM radio station in the 1605-1705 kHz band. Case: 08-3078 Document: 003110223746 Page: 143 Date Filed: 07/21/2010 29 47 C.F.R. § 73.3580 CODE OF FEDERAL REGULATIONS TITLE 47. TELECOMMUNICATION CHAPTER I. FEDERAL COMMUNICATIONS COMMISSION SUBCHAPTER C. BROADCAST RADIO SERVICES PART 73. RADIO BROADCAST SERVICES SUBPART H. RULES APPLICABLE TO ALL BROADCAST STATIONS § 73.3580 Local public notice of filing of broadcast applications. (a) All applications for instruments of authorization in the broadcast service (and major amendments thereto, as indicated in §§ 73.3571, 73.3572, 73.3573, 73.3574 and 73.3578) are subject to the local public notice provisions of this section, except applications for: (1) A minor change in the facilities of an authorized station, as indicated in §§ 73.3571, 73.3572, 73.3573 and 73.3574. (2) Consent to an involuntary assignment or transfer or to a voluntary assignment or transfer which does not result in a change of control and which may be applied for on FCC Form 316 pursuant to the provisions of § 73.3540(b). (3) A license under section 319(c) of the Communications Act or, pending application for or grant of such license, any special or temporary authorization to permit interim operation to facilitate completion of authorized construction or to provide substantially the same service as would be authorized by such license. (4) Extension of time to complete construction of authorized facilities. (5) An authorization of facilities for remote pickup or studio links for use in the operation of a broadcast station. (6) Authorization pursuant to section 325(c) of the Communications Act (“ * * * studios of foreign stations”) where the programs to be transmitted are special events not of a continuing nature. (7) An authorization under any of the proviso clauses of section 308(a) of the Communications Act concerning applications for and conditions in licenses. (b) Applications (as originally filed or amended) will be acted upon by the FCC no sooner than 30 days following public notice of acceptance for filing or amendment, except as otherwise permitted in § 73.3542, “Application for temporary authorization.” (c) An applicant who files an application or amendment thereto which is subject to the provisions of this section, must give notice of this filing in a newspaper. Exceptions to Case: 08-3078 Document: 003110223746 Page: 144 Date Filed: 07/21/2010 30 this requirement are applications for renewal of AM, FM, TV, Class A TV and international broadcasting stations; low power TV stations; TV and FM translator stations; TV boosters stations; FM boosters stations; and applications subject to paragraph (e) of this section. The local public notice must be completed within 30 days of the tendering of the application. In the event the FCC notifies the applicant that a major change is involved, requiring the applicant to file public notice pursuant to §§ 73.3571, 73.3572, 73.3573 or 73.3578, this filing notice shall be given in a newspaper following this notification. (1) Notice requirements for these applicants are as follows. (i) In a daily newspaper of general circulation published in the community in which the station is located, or proposed to be located, at least twice a week for two consecutive weeks in a three-week period; or, (ii) If there is no such daily newspaper, in a weekly newspaper of general circulation published in that community, once a week for 3 consecutive weeks in a 4-week period; or, (iii) If there is no daily or weekly newspaper published in that community, in the daily newspaper from wherever published, which has the greatest general circulation in that community, twice a week for 2 consecutive weeks within a 3-week period. (2) Notice requirements for applicants for a permit pursuant to section 325(b) of the Communications Act (“ * * * Studios of Foreign Stations”) are as follows. In a daily newspaper of general circulation in the largest city in the principal area to be served in the U.S.A. by the foreign broadcast station, at least twice a week for 2 consecutive weeks within a three-week period. (3) Notice requirements for applicants for a change in station location are as follows. In the community in which the station is located and the one in which it is proposed to be located, in a newspaper with publishing requirements as in paragraphs (c)(1)(i), (ii) or (iii) of this section. (4) The notice required in paragraphs (c)(1), (2) and (3) of this section shall contain the information described in paragraph (f) of this section. (d) The licensee of an operating broadcast station who files an application or amendment thereto which is subject to the provisions of this section must give notice as follows: (1) An applicant who files for renewal of a broadcast station license, other than a low power TV station license not locally originating programming as defined by § 74.701(h), an FM translator station or a TV translator station license, must give notice of this filing by broadcasting announcements on applicant's station. (Sample and schedule of announcements are below.) Newspaper publication is not required. An applicant who files for renewal of a low power TV station license not locally originating programming as defined by § 74.701(h), an FM translator station or a TV Case: 08-3078 Document: 003110223746 Page: 145 Date Filed: 07/21/2010 31 translator station license will comply with (g) below. (2) An applicant who files an amendment of an application for renewal of a broadcast station license will comply with paragraph (d)(1) of this section. (3) An applicant who files for modification, assignment or transfer of a broadcast station license (except for International broadcast, low power TV, TV translator, TV booster, FM translator and FM booster stations) shall give notice of the filing in a newspaper as described in paragraph (c) of this section, and also broadcast the same notice over the station as follows: (i) At least once daily on four days in the second week immediately following either the tendering for filing of the application or immediately following notification to the applicant by the FCC that Public Notice is required pursuant to §§ 73.3571, 73.3572, 73.3573 or § 73.3578. For commercial radio stations these announcements shall be made between 7 a.m. and 9 a.m. and/or 4 p.m. and 6 p.m. For stations which neither operate between 7 a.m. and 9 a.m. nor between 4 p.m. and 6 p.m., these announcements shall be made during the first two hours of broadcast operation. For commercial TV stations, these announcements shall be made between 6 p.m. and 11 p.m. (5 p.m. and 10 p.m. Central and Mountain time). (4) The broadcast notice requirements for those filing renewal applications and amendments thereto are as follows: (i) Pre-filing announcements. During the period and beginning on the first day of the sixth calendar month prior to the expiration of the license, and continuing to the date on which the application is filed, the following announcement shall be broadcast on the 1st and 16th day of each calendar month. Stations broadcasting primarily in a foreign language should broadcast the announcements in that language. On (date of last renewal grant) (Station's call letters) was granted a license by the Federal Communication Commission to serve the public interest as a public trustee until (expiration date). Our license will expire on (date). We must file an application for renewal with the FCC (date four calendar months prior to expiration date). When filed, a copy of this application will be available for public inspection during our regular business hours. It contains information concerning this station's performance during the last (period of time covered by the application). Individuals who wish to advise the FCC of facts relating to our renewal application and to whether this station has operated in the public interest should file comments and petitions with the FCC by (date first day of last full calendar month prior to the month of expiration). Further information concerning the FCC's broadcast license renewal process is available at (address of location of the station's public inspection file) or may be Case: 08-3078 Document: 003110223746 Page: 146 Date Filed: 07/21/2010 32 obtained from the FCC, Washington, DC 20554. (A) An applicant who files for renewal of a low power TV station locally originating programming (as defined by § 74.701(h)) shall broadcast this announcement, except that statements indicating there is a public inspection file at the station containing the renewal application and other information on the license renewal process, shall be omitted. (B) This announcement shall be made during the following time periods: (1) For commercial TV stations--at least two of the required announcements between 6 p.m. and 11 p.m. (5 p.m. and 10 p.m. Central and Mountain Time). (2) For commercial radio stations--at least two of the required announcements between 7 a.m. and 9 a.m. and/or 4 p.m. and 6 p.m. For stations which neither operate between 7 a.m. and 9 a.m. nor between 4 p.m. and 6 p.m., at least two of the required announcements shall be made during the first two hours of broadcast operation. (3) For noncommercial educational stations, at the same time as commercial stations, except that such stations need not broadcast the announcement during any month during which the station does not operate. (4) For low power TV stations locally originating programming (as defined by § 74.701(h)), at the same time as for commercial TV stations, or as close to that time as possible. (ii) Post-filing announcements. During the period beginning on the date on which the renewal application is filed to the sixteenth day of the next to last full calendar month prior to the expiration of the license, all applications for renewal of broadcast station licenses shall broadcast the following announcement on the 1st and 16th day of each calendar month. Stations broadcasting primarily in a foreign language should broadcast the announcements in that language. On (date of last renewal grant) (Station's call letters) was granted a license by the Federal Communications Commission to serve the public interest as a public trustee until (expiration date). Our license will expire on (date). We have filed an application for renewal with the FCC. A copy of this application is available for public inspection during our regular business hours. It contains information concerning this station's performance during the last (period of time covered by application). Individuals who wish to advise the FCC of facts relating to our renewal application and to whether this station has operated in the public interest should file comments Case: 08-3078 Document: 003110223746 Page: 147 Date Filed: 07/21/2010 33 and petitions with the FCC by (date first day of last full calendar month prior to the month of expiration). Further information concerning the FCC's broadcast license renewal process is available at (address of location of the station's public inspection file) or may be obtained from the FCC, Washington, DC 20554. (A) An applicant who files for renewal of a low power TV station locally originating programming (as defined by § 74.701(h)) shall broadcast this announcement, except that statements indicating there is a public inspection file at the station containing the renewal application and other information on the license renewal process, shall be omitted. (B) This announcement shall be made during the following time periods: (1) For commercial TV stations--at least three of the required announcements between 6 p.m. and 11 p.m. (5 p.m. and 10 p.m. Central and Mountain time), at least one announcement between 9 a.m. and 1 p.m., at least one announcement between 1 p.m. and 5 p.m., and at least one announcement between 5 p.m. and 7 p.m. (2) For commercial radio stations--at least three of the required announcements between 7 a.m. and 9 a.m. and/or 4 p.m. and 6 p.m., at least one announcement between 9 a.m. and noon, at least one announcement between noon and 4 p.m., and at least one announcement between 7 p.m. and midnight. For stations which do not operate between 7 a.m. and 9 a.m. or between 4 p.m. and 6 p.m., at least three of the required announcements shall be made during the first two hours of broadcast operation. (3) For noncommercial educational stations, at the same time as commercial stations, except that such stations need not broadcast the announcement during any month during which the station does not operate. In such instances noncommercial educational stations shall meet the requirements in the exact order specified in paragraph (d)(4)(ii)(A)(1) or (2) of this section (e.g., if only four renewal notices are broadcast by an educational TV licensee, 3 must be broadcast between 6 p.m. and 11 p.m. and the fourth between 9 a.m. and 1 p.m.). (4) For low power TV stations locally originating programming (as defined by § 74.701(h)), at the same time as for commercial TV stations, or as close to that time as possible. (iii) TV broadcast stations (commercial and noncommercial educational), in presenting the pre- and post-filing announcements, must use visuals with the licensee's and the FCC's addresses when this information is being orally presented by the announcer. Case: 08-3078 Document: 003110223746 Page: 148 Date Filed: 07/21/2010 34 (iv) Stations which have not received a renewal grant since the filing of their previous renewal application, shall use the following first paragraph for the pre-filing and the post-filing announcements: (Station's call letters) is licensed by the Federal Communications Commission to serve the public interest as a public trustee. (5) An applicant who files for a Class A television license must give notice of this filing by broadcasting announcements on applicant's station. (Sample and schedule of announcements are below.) Newspaper publication is not required. (i) The broadcast notice requirement for those filing for Class A television license applications and amendment thereto is as follows: (A) Pre-filing announcements. Two weeks prior to the filing of the license application, the following announcement shall be broadcast on the 5th and 10th days of the two week period. The required announcements shall be made between 6 p.m. and 11 p.m. (5 p.m. and 10 p.m. Central and Mountain Time) Stations broadcasting primarily in a foreign language should broadcast the announcements in that language. On (date), the Federal Communications Commission granted (Station's call letters) a certification of eligibility to apply for Class A television status. To become eligible for a Class A certificate of eligibility, a low power television licensee was required to certify that during the 90-day period ending November 28, 1999, the station: (1) Broadcast a minimum of 18 hours per day; (2) broadcast an average of at least three hours per week of programming produced within the market area served by the station or by a group of commonly-owned low power television stations; and (3) had been in compliance with the Commission's regulations applicable to the low power television service. The Commission may also issue a certificate of eligibility to a licensee unable to satisfy the foregoing criteria, if it determines that the public interest, convenience and necessity would be served thereby. (Station's call letters) intends to file an application (FCC Form 302-CA) for a Class A television license in the near future. When filed, a copy of this application will be available at (address of location of the station's public inspection file) for public inspection during our regular business hours. Individuals who wish to advise the FCC of facts relating to the station's eligibility for Class A status should file comments and petitions with the FCC prior to Commission action on this application. (B) Post-filing announcements. The following announcement shall be broadcast on the 1st and 10th days following the filing of an application for a Class A television license. The required announcements shall be made between 6 p.m. and 11 p.m. (5 p.m. and 10 p.m. Central and Mountain Time). Stations broadcasting primarily in a foreign language should broadcast the announcements in that Case: 08-3078 Document: 003110223746 Page: 149 Date Filed: 07/21/2010 35 language. On (date of filing license application) (Station's call letters) filed an application, FCC Form 302-CA, for a Class A television license. Such stations are required to broadcast a minimum of 18 hours per day, and to average at least 3 hours of locally produced programming each week, and to comply with certain full-service television station operating requirements. A copy of this application is available for public inspection during our regular business hours at (address of location of the station's public inspection file). Individuals who wish to advise the FCC of facts relating to the station's eligibility for Class A status should file comments and petitions with the FCC prior to Commission action on this application. (ii) [Reserved] (e) When the station in question is the only operating station in its broadcast service which is located in the community involved, or if it is a noncommercial educational station, publication of the notice in a newspaper, as provided in paragraph (c) of this section is not required, and publication by broadcast over that station as provided in paragraph (d) of this section shall be deemed sufficient to meet the notice requirements of this section. Noncommercial educational broadcast stations which do not broadcast during the portion of the year in which the period of broadcast of notice falls must comply with the provisions of paragraph (c) of this section. (f) The notice required by paragraphs (c) and (d) of this section shall contain, when applicable, the following information, except as otherwise provided in paragraphs (d)(1) and (2) and (e) of this section in regard to renewal applications: (1) The name of the applicant, if the applicant is an individual; the names of all partners, if the applicant is a partnership; or the names of all officers and directors and of those persons holding 10% or more of the capital stock or other ownership interest if the applicant is a corporation or an unincorporated association. (In the case of applications for assignment or transfer of control, information should be included for all parties to the application.) (2) The purpose for which the application was or will be filed (such as, construction permit, modification, assignment or transfer of control). (3) The date when the application or amendment was tendered for filing with the FCC. (4) The call letters, if any, of the station, and the frequency or channel on which the station is operating or proposes to operate. (5) In the case of an application for construction permit for a new station, the facilities sought, including type and class of station, power, location of studios, transmitter site Case: 08-3078 Document: 003110223746 Page: 150 Date Filed: 07/21/2010 36 and antenna height. (6) In the case of an application for modification of a construction permit or license, the exact nature of the modification sought. (7) In the case of an amendment to an application, the exact nature of the amendment. (8) In the case of applications for a permit pursuant to Section 325(b) of the Communications Act (“* * * studios of foreign stations”), the call letters and location of the foreign radio broadcast station, the frequency or channel on which it operates, and a description of the programs to be transmitted over the station. (9) A statement that a copy of the application, amendment(s), and related material are on file for public inspection at a stated address in the community in which the station is located or is proposed to be located. See §§ 73.3526 and 73.3527. (g) An applicant who files for authorization or major modifications, or a major amendment thereto, for a low power TV, TV translator, TV booster, FM translator, or FM booster station, must give notice of this filing in a daily, weekly or biweekly newspaper of general circulation in the community or area to be served. Likewise, an applicant for assignment, transfer or renewal, or a major amendment thereto, for a low power TV, TV translator or FM translator station, must give this same type of newspaper notice. The filing notice will be given immediately following the tendering for filing of the application or amendment, or immediately following notification to the applicant by the FCC that public notice is required pursuant to §§ 73.3572, 73.3573, or 73.3578. (1) Notice requirements for these applicants are as follows: (i) In a newspaper at least one time; or (ii) If there is no newspaper published or having circulation in the community or area to be served, the applicant shall determine an appropriate means of providing the required notice to the general public, such as posting in the local post office or other public place. The notice shall state: (A) The name of the applicant, the community or area to be served, and the transmitter site. (B) The purpose for which the application was filed. (C) The date when the application or amendment was filed with the FCC. (D) The output channel or channels on which the station is operating or proposes to operate and the power used or proposed to be used. (E) In the case of an application for changes in authorized facilities, the nature of the changes sought. Case: 08-3078 Document: 003110223746 Page: 151 Date Filed: 07/21/2010 37 (F) In the case of a major amendment to an application, the nature of the amendment. (G) A statement, if applicable, that the station engages in or intends to engage in rebroadcasting, and the call letters, location and channel of operation of each station whose signals it is rebroadcasting or intends to rebroadcast. (H) A statement that invites comment from individuals who wish to advise the FCC of facts relating to the renewal application and whether the station has operated in the public interest. (h) The applicant may certify in the appropriate application that it has or will comply with the public notice requirements contained in paragraphs (c), (d) or (g) of this section. However, an applicant for renewal of license that is required to maintain a public inspection file, shall, within 7 days of the last day of broadcast of the required publication announcements, place in its public inspection file a statement certifying compliance with § 73.3580 along with the dates and times that the pre-filing and post-filing notices were broadcast and the text thereof. This certification need not be filed with the Commission but shall be retained in the public inspection file for as long as the application to which it refers. (i) Paragraphs (a) through (h) of this section apply to major amendments to license renewal applications. See § 73.3578(a). Case: 08-3078 Document: 003110223746 Page: 152 Date Filed: 07/21/2010 08-3078, et al. IN THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT Prometheus Radio Project, et al., Petitioners v. Federal Communications Commission and United States of America, Respondents. CERTIFICATE OF SERVICE I, C. Grey Pash, Jr., hereby certify the following: (1) on July 21, 2010, I electronically filed the foregoing Brief for Federal Communications Commission and the United States of America with the Clerk of the Court for the United States Court of Appeals for the Third Circuit by using the CM/ECF system. (2) I have sent ten hard copies of the foregoing brief to the Clerk’s Office via UPS. (3) The text of the E-brief and hard copies of the brief are identical. Participants in the case who are registered CM/ECF users will be served by the CM/ECF system. Some of the participants in the case, denoted with asterisks below, are not CM/ECF users. I certify further that I have directed that copies of the foregoing document be mailed by First-Class Mail to those persons, unless another attorney at the same mailing address is receiving electronic service. Angela J. Campbell Institute for Public Representation Georgetown Law School 600 New Jersey Avenue, N.W. Suite 312 Washington, D.C. 20001 Counsel for: Prometheus Radio Project, Office of Communications of the United Church of Christ, Media Alliance Catherine G. O’Sullivan Nancy C. Garrison Robert J. Wiggers Robert B. Nicholson United States Department of Justice Antitrust Division, Appellate Section Room 3224 950 Pennsylvania Avenue, N.W. Washington, D.C. 20530 Counsel for United States Case: 08-3078 Document: 003110223746 Page: 153 Date Filed: 07/21/2010 08-3078, et al. Richard E. Wiley James R.W. Bayes Eve Reed Kathleen A. Kirby Helgi C. Walker Wiley Rein 1776 K Street, N.W. Washington, D.C. 20006 Counsel for: Newspaper Association of America, Morris Comm Co, LLC, Clear Channel Communications, Belo Corp, Gannett Co Inc., CBS Broadcasting Inc., CBS Corp. Carter G. Phillips James C. Owens, Jr. Mark D. Schneider James P. Young *Kurt A. Wimmer R. Clark Wadlow Ryan C. Morris Sidley Austin 1501 K Street, N.W. Washington, D.C. 20005 Counsel for: Tribune Co., Fox TV Stations Inc John R. Feore, Jr. Michael D. Hays M. Anne Swanson Dow Lohnes 1200 New Hampshire Avenue, N.W. Suite 800 Washington, D.C. 20036 Counsel for: Cox Enterprises, Inc., Cox Broadcasting, Inc., Cox Radio, Inc., Miami Valley Broadcasting Corporation, and Media Genera, Inc. Elaine J. Goldenberg Jenner & Block 1099 New York Avenue Suite 900 Washington, D.C. 20001 Counsel for: National Association of Broadcasters Robert A. Long, Jr. Enrique Armijo Covington & Burling 1201 Pennsylvania Avenue, N.W. Washington, D.C. 20004 Counsel for: Coalition of Smaller Market TV Stations, Raycom Media Inc. L. Andrew Tollin Craig E. Gilmore Kenneth E. Satten Wilkinson Barker Knauer 2300 N Street, N.W. Suite 700 Washington, D.C. 20037 Counsel for The Scranton Times/Scranton Tribune, Bonneville International Corporation Case: 08-3078 Document: 003110223746 Page: 154 Date Filed: 07/21/2010 08-3078, et al. *Bruce T. Reese Bonneville International Corporation 55 North 300 West Salt Lake City, UT 84101-3580 Counsel for: Bonneville International Corporation Parul Desai Andrew J. Schwartzman Media Access Project 1625 K Street, N.W. Suite 1000 Washington, D.C. 20006 Counsel for: Prometheus Radio Project. *Christopher Murray 1101 17 th Street, N.W. Suite 500 Washington, D.C. 20036 Counsel for: Consumer Federation of America, Consumers Union Marvin Ammori Corielle S. Wright Free Press 501 Third Street, N.W. Suite 875 Washington, D.C. 20001 Counsel for: Free Press John F. Sturm Newspaper Association of America 4401 Wilson Blvd., Suite 900 Arlington, VA 22203 Counsel for: Newspaper Association of America *Jane E. Mago *Jerianne Timmerman National Association of Broadcasters 1771 N Street, N.W. Washington, D.C. 20036 Counsel for: National Association of Broadcasters Clifford M. Harrington Jack McKay Pillsbury, Winthrop, Shaw & Pittman 2300 N Street, N.W. Washington, D.C. 20037 Counsel for: Sinclair Broadcasting, Sinclair Acquisitions, WRGT, WVAH, and WTAT Licensee Glenn B. Manishin Duane Morris LLP 505 9 th Street, N.W. Suite 100 Washington, D.C. 20004 Counsel for: Consumers Union, Consumer Federation of America /s/ C. Grey Pash, Jr. Case: 08-3078 Document: 003110223746 Page: 155 Date Filed: 07/21/2010