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Court Rejects NAB Challenge to Sharing Advisory

The U.S. Court of Appeals for the District of Columbia has dismissed a National Association of Broadcasters petition to review the FCC Media Bureau's public notice putting broadcasters on notice that the commission would be scrutinizing sharing arrangements that included financial elements.

The court said the bureau advice was not challengeable because it was not an order and had not first been reviewed by the FCC, as statute requires before a staff decision can be challenged in court.

NAB said the guidance functions as a "categorical presumption" against such deals — shared services agreements, joint sales agreements and others — which "adversely affects" NAB and its members by rendering such previously allowed deals invalid.

The FCC had asked the court to reject the NAB petition.

The National Association of Broadcasters first asked the FCC to rescind the March 13 advice in a letter, saying it was illegal, arbitrary and capricious, but not asking specifically for review.

In that advisory, the bureau essentially provided notice that henceforth, in reviewing license transfers or assignments with associated financial agreements, it would scrutinize all sharing arrangements based on how they operate and the incentives they create.

The bureau was signaling that technical nonviolation of rules is not a free pass if the FCC concludes that a deal's terms and conditions are not in the public interest and are meant to circumvent ownership limits.

The FCC didn't rescind the advisory, and NAB challenged the advisory in the federal appeals court.

The court said Tuesday that because the advisory is not a final order of the commission, so that NAB would have had to file an application for review, wait until the FCC ruled on that, then sue.

NAB had pointed out that it had sent letters to the FCC secretary, but the court said the first one was not equivalent to a request for review because it did not ask for review, and the second one was not filed in time. 

NAB argued that the notice was a de facto rule and so could be reviewed as though it were an order, but the court said that the fact that it was immediately in effect did not change the fact that according to statute, the FCC must review a staff decision before it can be challenged in court.

The court also said that “the Association’s protest that dismissing this action will allow the Public Notice to 'evade' judicial review misses the mark, given that nothing appears to have prevented the Association or any regulated entity from filing a timely application for FCC review.”