Summary
The Eleventh Circuit reviews the FCC's final forfeiture order against Gray Television for allegedly violating the Local Television Multiple Ownership Rule by acquiring a network affiliation that resulted in common ownership of two top-rated television stations in the same designated market area. Applying the arbitrary and capricious standard under the APA, the court affirms the FCC's finding of a violation based on the most recent available Nielsen ratings data but vacates the forfeiture penalty and remands for further proceedings.
Topics
Practice areas
Questions Presented
- Whether Gray's challenge to the FCC's statutory authority to issue Note 11 was barred by the Communications Act's exhaustion requirement.
- Whether the FCC reasonably found that Gray's acquisition of KTVA's network affiliation resulted in ownership of two top-four stations under Note 11.
- Whether Note 11 provided Gray fair notice that the acquisition of a network affiliation, as opposed to an affiliation swap, could violate the rule.
- Whether enforcement of Note 11 violated the First Amendment or 47 U.S.C. § 326.
- Whether the FCC's $518,283 forfeiture penalty was contrary to law or arbitrary and capricious because Gray lacked notice of the egregiousness finding and the FCC inadequately explained its consideration of Gray's good faith.
Holdings
- The court declined to consider Gray's argument that the FCC lacked statutory authority to issue Note 11 because Gray did not give the FCC a fair opportunity to address that argument as required by 47 U.S.C. § 405(a).
- The FCC reasonably determined that Gray's acquisition of KTVA's CBS network affiliation resulted in Gray owning two of the top-four-rated stations in the Anchorage DMA, in violation of Note 11.
- The FCC reasonably rejected Gray's narrow interpretation of functional equivalence and reasonably treated the acquisition of KTVA's network affiliation as a transaction covered by Note 11.
- Note 11 gave Gray fair notice that acquiring another station's network affiliation could be subject to the top-four prohibition if the transaction resulted in ownership or control of two top-four stations in the same DMA.
- Enforcement of Note 11 against Gray did not violate the First Amendment or § 326 because the rule is content neutral and rationally related to promoting competition and diversity in broadcast ownership.
- The FCC's $518,283 forfeiture penalty was contrary to law and arbitrary and capricious because the FCC relied on an egregiousness finding without giving Gray notice and failed adequately to explain its consideration of Gray's good faith.
Key quotations
“In sum, we hold that the FCC’s finding of a Note 11 violation on this record was not arbitrary and capricious.” (slip op. at 18-19)
“We conclude, however, that the FCC’s forfeiture penalty was contrary to law because it was based in part on an egregiousness finding that Gray was not given an opportunity to address, and was arbitrary and capricious because the FCC did not adequately explain its consideration of Gray’s good faith.” (slip op. at 36)
Factual background
Gray Television owned KTUU-TV, the highest-rated station in the Anchorage DMA, and KYES-TV, a second full-power station that Gray claimed had become fourth-rated in July 2020. Gray then acquired KTVA-TV's CBS network affiliation for KYES while Denali retained KTVA's license and facilities. The FCC relied on June 2020 Nielsen data ranking KYES fifth and found that the transaction resulted in Gray owning two top-four stations in violation of Note 11, imposing a $518,283 forfeiture.
Procedural history
Gray acquired the CBS network affiliation of KTVA-TV for its KYES-TV station in the Anchorage designated market area without seeking a waiver. The FCC issued a Notice of Apparent Liability and later a final forfeiture order finding a violation and imposing the statutory-maximum penalty. Gray sought review in the Eleventh Circuit, which affirmed the violation determination but vacated the penalty and remanded.
Remand instructions
The FCC must conduct further proceedings consistent with the opinion, including reconsidering the forfeiture penalty after giving Gray an opportunity to address any egregiousness finding and adequately explaining its consideration of Gray's good faith and other penalty factors.