In August 2021, Gray Television asked the FCC to cancel in its entirety a Notice of Apparent Liability for Forfeiture handed to the company for its “apparent violation” of the Commission’s Top Four rule. That effort has failed, as the Commission on November 1, 2022, adopted a forfeiture order fining the broadcast TV station owner for violating the rule, as it determined the company owned two of the top four stations in Anchorage, Alaska.
Gray blasted the FCC, calling the Order “wrongly decided” and pledging to take the Commission to court. Late Wednesday (5/24), Gray moved forward with that promise.
Gray Television, Inc. v. Federal Communications Commission, et al, docketed in late December 2022 in the United States Court of Appeals for the Eleventh Circuit, saw the filing of an appellant’s brief just before 6pm Eastern to the Atlanta-based judicial body.
With Cooley LLP attorneys David Mills, Robby Lee Ray Saldaña and, notably, former FCC Commissioner Robert McDowell as its legal counsel, Gray requests oral argument on its Petition for Review of a final order of the Commission that fines the company the statutory maximum for a single broadcaster violation — $518,283 — for its concurrent ownership of KTUU-2 in Anchorage and KYES-TV.
The Commission’s decision is based on a series of actions associated with the July 2020 acquisition of the intellectual property of KTVA-11 from GCI subsidiary Denali Media Holdings.With the deal, KTVA went dark; its program schedule shifted to Channel 5, which at the time had the KYES-TV call sign. Because of the wholesale shift of KTVA’s programming to KYES, the Commission believes there’s no difference than if Gray had simply purchased KTVA. This is where Gray disagrees. But, the company was not persuasive in its August 2021 appeal request, in which it wanted the FCC to cancel the Notice of Apparent Liability for Forfeiture in its entirety. Notably, Republican Commissioner Nate Simington dissented, siding with Gray Television.
The Cooley attorneys, in the 71-page petition, present the appeals court “a question of first impression”: whether the FCC may use its general rulemaking authority to regulate and prohibit the purchase of programming by a broadcaster by asserting that the purchase is the “functional equivalent” of a broadcast license transfer when the agency has already conceded that such transactions are beyond its authority to regulate as license transfers, and Congress did not delegate authority to the FCC to regulate the “functional
equivalent” of license transfers.
In addition, the attorneys state, Gray’s petition raises “important questions regarding whether the FCC has the power to restrict First Amendment speech in this manner, whether the agency may punish a regulated party without giving fair notice of rule changes made
during the administrative proceeding, and whether unprecedented penalties assessed
under the circumstances are proper.”
The ultimate goal? To have the appeals court vacate the FCC ruling.
Cooley’s summary of its argument on behalf of Gray? First, it says the FCC lacked the authority to issue the Forfeiture Order. “Congress specifically delegated to the FCC authority over license transfers under § 310(d) of the Communications Act, but the Anchorage Transaction did not involve a license transfer,” it argues. “Both before and after the Transaction, Gray possessed the licenses for KTUU-TV and KYES-TV, and Denali possessed (and to this day possesses and operates) KTVA-TV’s license. To circumvent that limitation on its authority, the FCC deemed the transaction the “functional equivalent” of a license transfer and claimed without explanation that “ancillary authority” allowed it to regulate. But Congress did not delegate authority to the FCC to prohibit transactions that may be the “functional equivalent of” license transfers (language Congress used in other contexts but not here), nor could the FCC stretch its “ancillary authority” to prohibit the Transaction. Consequently, the FCC had no authority to penalize and cannot justify penalizing Gray’s programming choices, which are protected by section 326 of the Communications Act and the First Amendment.”
Second, they say, “even if it had authority to issue Note 11, the FCC erroneously
concluded the Anchorage Transaction violated it.”
Cooley attorneys also assert that even if the FCC’s new interpretations of Note 11 might have been reasonable, principles of fair notice do not allow the FCC to modify the rules during a proceeding and penalize the broadcaster based on new interpretations.
Lastly, Gray’s legal counsel believes the FCC erroneously assessed a daily base forfeiture penalty, which departed from FCC precedent. In considering the adjustment criteria under the statute and regulations, the FCC manufactured a new “egregiousness” justification
despite Gray’s cooperation and the absence of that rationale in the NAL. The FCC
also failed to consider relevant factors, including the circumstances of the alleged
violation and Gray’s good faith efforts to comply with the FCC’s rules. And, the
FCC relied on a “substantial economic gain” justification with no factual support.
