Broadcasters have filed an initial joint brief in their legal challenge to the FCC's decision boost disclosure requirements for foreign government-sponsored programming.

The FCC voted unanimously in April to boost broadcasters’ disclosure requirements for programming on airtime leased by a foreign entity. The move came amidst heightened focus on disinformation campaigns and despite pushback from broadcasters, who argue the FCC is adding regulations to an already overregulated service.

Broadcasters argued in their brief that the FCC doesn't have the authority to impose the obligations on broadcasters to investigate "every existing or new leased programming agreement" to insure it does not run afoul of FCC rules.

And suggesting the FCC was signaling broadcasters for special mistreatment, the petitioners--the National Association of Broadcasters, Multicultural Media, Telecom and Internet Council (MMTC), and National Association of Black-Owned Broadcasters--said the FCC order didn't say anything about undisclosed foreign government programming on cable or over-the-top, which they argue the real problem is.

Broadcasters have also said that the FCC did not ask a single question about leased time in its notice of proposed rulemaking seeking comment on the changes, “and thus gave no notice that leases were the focus of its proceeding.” The result, they said, was that the FCC made the decision without any information on the actual impact of the new due-diligence requirements.

Per the rule change, broadcasters are required both to provide clear and uniform disclosures at “reasonable intervals” when airing leased content sponsored by a foreign government, but also take a number of steps to determine if leased airtime is being used for such programming. It also requires broadcasters to place copies of their disclosures in their public files.

The rules require “a specific disclosure at the time of broadcast if a foreign governmental entity has paid a radio or television station, directly or indirectly, to air material, or if the programming was provided to the station free of charge by such an entity as an inducement to broadcast the material.”

But the petitioners argue that FCC could have taken less restrictive means to the same end of enhanced disclosure, including by limiting broadcasters investigatory obligations to leases "where the broadcaster had a reason to know the sponsor was a foreign governmental entity."

Since the FCC did not use the least restrictive means, the order was "arbitrary and capricious," they argue, and thus in violation of the Administrative Procedure Act.

"NAB, MMTC and NABOB strongly urge the Court to overturn the FCC's flawed decision requiring overly burdensome investigations by every broadcaster into every sponsored program," the groups said in a joint statement on the petition. "While we share the Commission's goal of ensuring the public understands when listening or viewing programming supplied by foreign governmental entities, the FCC's order fails to adequately, sensibly or fairly achieve this objective. We appreciate the Court's consideration of this issue and believe it will agree that the Commission overstepped its bounds." ■ 

The National Association of Broadcasters said Federal Communications Commission policies are a big reason there isn't more diversity in broadcast ownership.

The broadcasting trade group shared that view in comments on the FCC's 2018 quadrennial review of broadcast and other ownership rules (the review has been delayed due to the legal back-and-forth over that issue).

The NAB told the commission that the FCC’s restrictions on multiple and small-market ownership are absurd and work against its goal of a more diverse media. It argues that the COVID-19 pandemic and economic recession have put an exclamation point on the need to reform the system.

The main reason for low levels of minority and female ownership is a lack of access to capital, the NAB said, which structural ownership rules don't address. But even if that capital were available, the FCC's rules are a disincentive to new investment, the trade group argued.

“In a world where investors and new entrants have countless other media and communications options,” NAB said, “the commission itself is a major impediment to increased diversity in the broadcast industry.”

Broadcasters have been trying to get out from under structural ownership rules for years, succeeding in getting some key deregulation under former FCC chairman Ajit Pai, only to have a federal court reverse that decision over what it said was the FCC's failure to sufficiently explore the impact of that deregulation on diversity. The U.S. Supreme Court then reversed that reversal, reinstating the deregulatory order but giving the new Democrat-led FCC a chance to restore the rules as part of the quadrennial review, for which the FCC has sought new comment to “refresh the record.”

The NAB also said the FCC’s ownership restrictions hurt localism because they prevent broadcasters in smaller markets from “leverag[ing] the strong economies of scale in local news production,” leveraging broadcasters' needs against the Big Tech companies that dominate content discovery and digital advertising, and “imperil[ing] the ability of news providers to reach online audiences with their local content and to derive ad revenue from that content.”

Finally, NAB said it is time for the FCC to stop maintaining the fiction that broadcasters compete only against other broadcasters. It pointed to a study submitted by the Justice Department that concluded that “digital platforms compete with local TV broadcasters for local ad dollars and that the relevant market for analyzing local TV station combinations should include advertising on digital platforms.”

The NAB pointed out that the prohibition on owning more than one AM, FM and TV station in a market dates from when Franklin D. Roosevelt was in the White House. “[T]he FCC cannot justify its ownership rules by acting as though broadcast stations are still the only relevant electronic outlets, as in the days of President Roosevelt’s famous fireside chats,” the NAB said.

The FCC actually closed the formal comment period on its delayed 2018 Quadrennial Review two years ago. But the Media Bureau, in opening up a new comment period, said: “The 2018 Quadrennial Review proceeding has generated, and continues to generate, significant interest, including through the submission of additional information even after the initial comment period has ended. Accordingly, we ask commenters to take this opportunity to update the record in the 2018 Quadrennial Review proceeding, including with regard to the diversity-related proposals cited therein.”

Gray Television is fighting the FCC's unprecedented half-million-dollar fine related to its purchase of an Alaska TV station, saying it was a case of "mistaken identify."

Gray, in asking the FCC to cancel the fine, said it was not the "willful and repeated violator of Commission rules" that the FCC characterized, that the deal complied with the rules and that the result has been improved service to anchorage, for which Gray should be "lauded" not "punished."

In a first for an acquisition of a network affiliation, the FCC last month proposed to fine Gray Television a half million dollars for "willfully and repeatedly" violating the commission's prohibition on owning two of the top-four rated full-power TV stations in a market.

The FCC move had drawn applause from MVPDs.

It was the first time the commission proposed fining an affiliation purchase for resulting in what it said was a violation of its prohibition on owning two of the top-four rated TV stations in a market.

The proposed fine stemmed from Gray's acquisition of the CBS affiliation of KTVA-TV--which went dark--when it already owned NBC affiliate KTUU-TV, both in Anchorage, Alaska. At the time the stations were ranked number one and two in the market. Gray put the CBS programming on its KYES-TV Anchorage, but then moved it to a co-owned low power station and simulcast it on a digital subchannel of KTUU-TV.

In 2016, the FCC clarified that its rule on owning two of top four stations barred "the common ownership of two top-four stations with overlapping contours in the same DMA through the acquisition of a network affiliation."

Gray laid out its case for why the FCC was way off base.

1. "Gray’s purchase of assets from KTVA(TV) did not involve any swap of affiliations and was not the “functional equivalent” of a license transfer; in fact, the transaction was structured in precisely the same manner as a prior Gray purchase of a Big Four affiliation for a MyNetworkTV-affiliated full power television station as part of a transaction that the Commission intensely reviewed and approved and never mentioned as violating the rule against swaps;

2. "The transaction did not result in Gray’s KYES-TV becoming a Top 4 station because KYES-TV was already a Top 4 station at the time of the transaction, and Gray acquired that station with the Commission’s approval subject only to the condition that KYES-TV not add a Big Four network affiliation to the station before February 2018;

3. "Gray purchased the Anchorage CBS affiliation after the network inquired about Gray’s interest and participated in moving the affiliation to KYES-TV, bringing the Anchorage transaction squarely within an exception to the rule that the Commission adopted; and

4. "Gray’s transaction advanced the public interest by saving jobs in an economy that was in recession long before the pandemic crippled local businesses, by expanding local news hours and resources in Anchorage (as well as Juneau), by providing more and higher quality advertising opportunities for advertisers, and by permitting the state’s dominant cable operator to enter into a novel retransmission arrangement to expand access to local broadcast stations to local households."

Gray said that any one of the above leads to the conclusion the proposed fine must be canceled given that it is based in a "novel and retroactive re-interpretation of the five-year-old rule against swaps," even if the FCC announces a "new rule" against  such network affiliation moves.

Gray said the FCC lacks the authority to apply such a new rule without notice or comment, and while such a rule would likely not harm viewers in large markets like New York and D.C., it said, where they "already enjoy the best that local television  has to offer," it "surely will result in second-class citizenship for TV viewers in small markets like Anchorage, where smaller populations can’t generate sufficient revenues to support many independently owned news producing television stations."

In short, it said, the FCC's decision works against, not for, the public interest the commission is sworn to serve.

The National Association of Broadcasters has told the Supreme Court that the Third Circuit has been trying for most of two decades to regulate media ownership when the decision whether to regulate it or deregulate it is the FCC's job. It said the Supreme Court should restore the FCC's latest effort to deregulate broadcast ownership.

That came in a brief filed with the High Court this week asking the Supremes to reinstate the FCC's media ownership deregulation decision, which the Third Circuit invalidated.

Related: Supremes to Hear Broadcast Dereg Case

Back in April, broadcasters and newspaper publishers joined with the FCC to petition the Supreme Court to review the Third Circuit decision vacating most of the FCC's 2017 effort under chairman Ajit Pai to deregulate broadcast ownership, including by eliminating the newspaper-broadcast cross-ownership rules.

That decision came in response to the commission's quadrennial review of its ownership rules to determine if they were still in the public interest as well as to an earlier Third Circuit remand of a previous deregulatory effort.

NAB said the lower court had overstepped its authority. The court threw out most of the media ownership dereg because it said the FCC had not taken into account its impact on media diversity.

Echoing the FCC's petition, media petitioners said that outdated ownership rules remain in force because a divided panel of the court has prevented the FCC from implementing "necessary adjustments to its ownership rules" that the FCC concluded would serve the public interest.

The FCC and Third Circuit have been sparring over successive attempts to deregulate broadcasting for most of two decades. This is the first time the Supremes have gotten involved.

In this week's brief, NAB said: "The Third Circuit’s decision was not based on the rules’ perceived merits or any defect in the competition analysis Congress directed the FCC to perform; in fact, no party disputed any aspect of that analysis or the FCC’s overarching conclusion that the rules no longer served the public interest in light of competition. Instead, the Third Circuit’s decision was based solely on a textual policy concerns about the gender and racial makeup of broadcast station owners." 

The National Association of Broadcasters is taking the FCC to court once again over its quadrennial media ownership regulatory review, the association has confirmed. Look for the filing within a week.

“Broadcasters want to compete in the digital age and continue being a trusted source for local news and information, but FCC rules need to reflect 2016 and not the 1960s," said NAB spokesman Dennis Wharton. "It defies belief that the FCC allows AT&T/DirecTV and Charter/Time Warner mergers while barring two Topeka TV stations from combining, or a radio station from buying a newspaper.”

NAB signaled even before FCC Chairman Tom Wheeler circulated the proposal that it was likely headed to court, saying that retaining the newspaper-crossownership ban, as the FCC did yet again, was arbitrary and capricious violation of the Administrative Procedures Act. It has since gotten direction from the board to file suit.

It has long said that it makes no sense to limit local TV station ownership in an era with video competition from cable and satellite and now the Web that fills those markets with competition voices.

NAB is filing its appeal in the U.S. Court of Appeals for the D.C. Circuit, the principal court of jurisdiction for FCC decisions. Prometheus Radio, which is also challenging the rules, filed in the Third Circuit.

The FCC released the final text of its order Aug. 25, in which it did not lift or loosen local ownership regs or scrap the crossownership ban, and reinstated the joint sales agreement-tightening it instituted in March 2014.

The NAB challenge--it said immediately following the decision that that decision was inexplicable--has to be filed by next Monday, according to an attorney familiar with the process, so it can meet the deadline for deciding which court will hear the appeal. The Third Circuit is the most likely since it remanded the JSA decision and was the court to originally stay the 2003 media ownership rule change that began the process.

The Third Circuit vacated the FCC's JSA order back in May, saying the FCC improperly enacted the rule, having done so before completing the quadrennial review to gauge the impact of its regs media ownership regs on the industry.

The court said nothing in its decision prevented the FCC from reinstating the JSA change in its quadrennial review if it found it to be in the public interest. The FCC did just that in its completed quadrennial, which a divided FCC voted to approve July 12.

Related: FCC Republicans Slam Quadrennial Order