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D.C. Circuit Sends FCC Media Ownership Joint Sales Agreement Appeal to Third Circuit

Cara O'Brien Schenkel

Cara O'Brien Schenkel,

Washington, D.C.

07 December 2015
A little over a week before oral arguments were scheduled to be heard, a federal court handed off the pending appeal of the Federal Communications Commission’s controversial Joint Sales Agreement rules to a new court.  The case, Howard Stirk Holdings, LLC v. FCC, involves appeals of the FCC’s failure to complete its 2010 quadrennial review, as well as challenges to rules adopted by the FCC regarding Joint Sales Agreements (“JSAs”) for television stations.  This marks the second time in recent years that the Third Circuit will hear challenges to FCC media ownership rules.  The decision on this appeal will affect the ownership structures, existing agreements, and other business decisions for television stations nationwide.

The JSA Rules

In an Order released in April of 2014, the FCC adopted stricter rules regarding JSAs for television stations in its review of media ownership rules.  The FCC determined that an agreement in which one television station sells 15 percent or more of the advertising time of another station in the same market creates an attributable ownership stake for the company doing the ad selling.  This means television stations could run afoul of the FCC’s multiple ownership rules for television stations in the same market by entering into JSAs because FCC rules restrict the number of stations in which an entity can have an attributable interest in a given market.  In the same Order, the Commission extended its quadrennial review of its media ownership rules, which was supposed to be completed in 2014, into 2016.

 Multiple entities appealed these new rules to the United States Courts of Appeals, and the appeals were consolidated in the District of Columbia Circuit.  After requests from parties to the appeal, however, the D.C. Circuit released an Order sending the appeal to the United States Court of Appeals for the Third Circuit.

The Third Circuit Remand

This move stems from an earlier challenge to the FCC’s media ownership rules.  In 2011, the Third Circuit remanded a case involving Prometheus Radio Project back to the FCC for further consideration.  The Third Circuit retained jurisdiction over the issues.  In part, this further consideration on remand by the FCC resulted in the JSA rules at issue here.  Prometheus argued in its final brief to the D.C. Circuit that the Third Circuit is “uniquely qualified” to consider the issues raised in this appeal and has “mastered the history and facts underlying” the Commission's consideration of its ownership rules, and therefore is best-suited to handle the current appeal.

D.C. Circuit Order

The D.C. Circuit agreed.  In the Order sending the case to the Third Circuit, Judge Williams explained that “all the issues presented here are either closely or tangentially linked” to the earlier Third Circuit case, in which the “deciding panel retained jurisdiction over all remanded issues.”

The Third Circuit has not set a timeline for hearing this case, and it could ask for supplemental briefs from the parties prior to hearing oral argument.

 

Companies operating in the media sector face significant competition and an ever-changing regulatory environment.  Hogan Lovells’ communications lawyers possess an in-depth understanding of the sector, working closely with cable, mobile, satellite, and all types of advanced broadband network operators; internet service and content providers; broadcasters and media companies; equipment providers and other vendors; as well as with regulators, government bodies, and investors in the sector.  For more information on our practice, click here:  http://www.hoganlovells.com/telecommunications/

Cara O'Brien Schenkel

Cara O'Brien Schenkel,

Washington, D.C.

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