In a closely watched decision with major implications for broadcasters and the Federal Communications Commission’s open quadrennial rulemaking on media ownership rules, a federal appeals court has upheld much of what the previous Commission decided. The Eighth Circuit Court of Appeals said it would not “second-guess” the FCC’s decision to leave radio ownership limits intact, with a more nuanced outcome for TV ownership limits. The court gave a partial win for television broadcasters seeking updated rules. It struck down the agency’s continued ban on same-market ownership of top-rated TV stations and a newly tightened restriction on network affiliations.

The court challenge began with the FCC’s December 2023 decision that retained the Local Radio and Local Television Ownership Rules, and made “modest adjustments” to rules governing the top four TV stations in each market. That brought an appeal by a wide swath of radio and television companies that felt the Commission overlooked marketplace realities, including the audience and advertisers challenges that local operators face from a growing number of digital competitors.

Petitioners representing local radio —including Beasley Media Group, Connoisseur Media, Eagle Communications, Legend Communications of Wyoming, Midwest Communications, Sun Valley Radio, and Zimmer Radio — headed to court challenging that conclusion, arguing the FCC had ignored a decade-long decline in radio listenership and advertising revenue. Broadcasters submitted evidence showing a sharp drop in local radio ad spending and increased competition from digital audio platforms like Spotify and YouTube Music.

But the court deferred to the Commission’s reasoning. “The FCC considered the growing prevalence of non-broadcast programming and articulated a rational reason for declining to broaden its market definition,” Judge Bobby Shepherd wrote in the 41-page decision. The court said the FCC acted within its discretion when it defined the market as only including broadcast radio, excluding online and satellite audio.

The court also upheld the FCC’s decision to retain so-called “subcaps” that limit how many AM or FM stations a company may own within its total allotment. The FCC had warned that relaxing these rules could further erode the AM band or lead to excessive concentration in FM ownership. The court agreed, saying these were “predictive judgments to which judicial deference is especially important.”

Court Vacates Key TV Restrictions

On the television side, the Eighth Circuit dealt a partial blow to the FCC’s long-standing Local Television Ownership Rule, specifically targeting the provision known as the Top-Four Prohibition.

Under the rule, broadcast station owners have been prohibited from owning more than one of the top four rated full-power stations in a single market. The FCC has justified the restriction for decades on grounds that it prevents consolidation among dominant players and preserves competition, localism, and viewpoint diversity. In its 2023 Order, the Commission chose to retain the Top-Four Prohibition and slightly revised how it determines which stations are in the “top four,” using audience share data that now includes multicast streams. But the appeals court found that the FCC failed to support the rule with up-to-date evidence. 

“The FCC’s justifications for the Top-Four Prohibition run counter to the evidence before the agency,” the three-judge panel wrote. Broadcasters pointed to dozens of markets where the top-ranked station’s audience share eclipses the combined total of the second-, third-, and fourth-ranked stations — undermining the FCC’s claim that top-four combinations necessarily harm competition.

The Commission also argued that the top four stations typically produce the most local news and hold affiliations with the major broadcast networks. But the court said the FCC failed to substantiate either point, relying in part on outdated studies and offering “conclusory assertions” without supporting data.

In a further rebuke, the court vacated the FCC’s tightening of a rule that previously allowed some flexibility in how broadcasters could acquire additional network affiliations. The 2023 change barred broadcasters from obtaining second top-four affiliations via multicast streams or low-power TV stations — a change the FCC said was meant to close “loopholes.” But the court found the FCC’s reasoning lacking and said the change could limit broadcasters’ ability to innovate, especially in smaller markets.

What Comes Next 

The court has given the FCC 90 days before formally lifting the Top-Four rule, allowing the Commission time to respond or revise the rule. But the Eighth Circuit decision will undoubtably set into motion a bigger response at the agency. 

FCC Chair Brendan Carr cast one of the two votes against the previous decision and he has said he supports relaxing some rules, calling it a “break glass moment” for local stations. And the Commission has the pending 2022 quadrennial ownership proceeding that gives Carr a ready-made opportunity to swiftly take action.

This is a developing story. Check back for updates on InsideRadio.com