Ellis v. Tribune Television Co.

• Decision Date: 29 March 2006
• Docket Number: Docket No. 05-1983-CV.
• Parties: Neil ELLIS, Plaintiff-Appellee, v. TRIBUNE TELEVISION CO., Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

Page 71

443 F.3d 71

Neil ELLIS, Plaintiff-Appellee, v. TRIBUNE TELEVISION CO., Defendant-Appellant.

Docket No. 05-1983-CV.

United States Court of Appeals, Second Circuit.

Argued: December 19, 2005.

Decided: March 29, 2006.

Andrew D. Herman (Stanley M. Brand and Helen-Mary Bridget McGovern, on the brief), Brand Law Group, P.C., Washington, D.C., for Appellee.

Carter G. Phillips (R. Clark Wadlow, Richard D. Klingler, Jennifer Tatel, on the brief), Sidley Austin Brown & Wood, LLP, Washington, D.C. (Crane H. Kenney and Roger Goodspeed, Tribune Company, Chicago, Illinois; James T. Shearin and Andrew J. McDonald, Pullman & Comley, LLC, Bridgeport, Connecticut), for Appellant.

Daniel M. Armstrong, Associate General Counsel, Federal Communications Commission (Samuel L. Feder, Acting General Counsel, Jacob M. Lewis, Associate General Counsel, and C. Grey Pash, Jr., Counsel), Washington, D.C., for Amicus Curiae Federal Communications Commission.

Before: OAKES, SOTOMAYOR and WESLEY, Circuit Judges.

WESLEY, Circuit Judge.

Congress has delegated exclusive authority over broadcasting licensure matters to the Federal Communications Commission ("FCC" or "Commission"). That authority includes wide discretion in granting, revoking, conditioning, and extending licenses in furtherance of the public interest. This case arises in part because of the FCC's inordinate delay in exercising that authority. Tribune Television Company ("Tribune") currently owns a daily newspaper and two television stations in the Hartford, Connecticut area. Without an FCC waiver, Tribune is in violation of the FCC's newspaper/broadcast cross-ownership rule. Tribune previously received several temporary waivers and had applied for a permanent waiver, but, after the last temporary waiver had expired and while Tribune's application for the permanent waiver was pending, plaintiff Neil Ellis ("Ellis"), a Hartford-area resident, brought suit under 47 U.S.C. § 401(b). Ellis contends that, although the FCC granted Tribune a temporary waiver, the FCC nonetheless mandated Tribune's eventual compliance with the cross-ownership rule.

Although we are sympathetic to Ellis's frustration in the face of agency inaction, we believe that the district court—even assuming that it had the authority to enforce the FCC's previous orders under § 401(b)—acted prematurely in not allowing the FCC to decide Tribune's pending waiver request. The district court's decision involved a substantial danger of establishing inconsistent rulings (a danger that later became a reality) on an issue squarely within the agency's expertise and discretion. Consequently, we conclude that the district court erred in failing to dismiss or stay this action and to refer the matter to the FCC under the primary jurisdiction doctrine. We therefore VACATE the district court's judgment and REMAND the case with directions to dismiss.

BACKGROUND

Tribune's licensing troubles result from its simultaneous ownership of one daily newspaper and two television stations in the same designated market area ("DMA"). Tribune owned one television station—WTIC-TV, Channel 61(FOX)—in Hartford, Connecticut, while managing another television station—WTXX-TV, Channel 20(UPN)—in Waterbury, Connecticut. Tribune managed WTXX pursuant to a "Management Services Agreement" with Counterpoint Communications Inc. ("Counterpoint"). On November 16, 1999, Tribune submitted an application to the FCC seeking to permit the transfer of Counterpoint-controlled Tiberius Broadcasting, Inc. ("Tiberius"), the licensee of WTXX, to Tribune. The transfer would result in Tribune simultaneously owning two televisions stations in the same DMA and would therefore bring Tribune in conflict with 47 C.F.R. § 73.3555(b)(2) (2002) (the "television duopoly rule"). The television duopoly rule permits the simultaneous ownership of two television stations in a DMA only under certain conditions specified by regulation.¹ Tribune's November 16 application sought a waiver of the television duopoly rule.²

While Tribune's application was pending, Tribune acquired the Times Mirror Company ("Times Mirror") on June 12, 2000. Times Mirror owned The Hartford Courant, and consequently, Tribune's acquisition of Times Mirror put Tribune in violation of a second FCC regulation, 47 C.F.R. § 73.3555(d) (2002) (the "newspaper/broadcast cross-ownership rule" or "cross-ownership rule"). The newspaper/broadcast cross-ownership rule, which the FCC originally promulgated in 1975, see In the Matter of Amendment of Sections 73.34, 73.240, and 73.636 of the Commission's Rules Relating to Multiple Ownership of Standard, FM, and Television Broad. Stations, 50 F.C.C.2d 1046, 1975 WL 30457 (1975) ("1975 Amendment"), recon. granted in part, 53 F.C.C.2d 589, 1975 WL 30972 (1975), prohibits among other things the simultaneous ownership of a daily newspaper and a television station in the same DMA under most circumstances.³ In this case, Tribune's simultaneous ownership of The Hartford Courant and WTXX violated the cross-ownership rule because WTXX's station signal "encompass[es] the entire community in which [the] newspaper is published." Id. § 73.3555(d)(3).

Tribune's common ownership of WTXX and The Hartford Courant—unlike its common ownership of WTIC and The Hartford Courant—required Tribune to comply immediately with the FCC's cross-ownership rule or to seek a waiver of that rule. An existing television station licensee that acquires a daily newspaper in the same market may retain both the station and the newspaper until the end of the station's license terms. See 1975 Amendment, 50 F.C.C.2d at 1076 ¶ 103 n. 26. Thus, Tribune is able to retain The Hartford Courant and WTIC at least until April 1, 2007, the renewal date of WTIC's license. However, because Tribune did not own WTXX at the time it acquired The Hartford Courant, FCC regulations required Tribune to comply immediately with the cross-ownership rule as it applied to WTXX. As a result, on June 12, 2000, Tribune filed an amendment to its earlier, November 16 FCC application and requested a two-year waiver to comply with the cross-ownership rule.

In an Order dated August 3, 2001, the FCC granted Tribune's request to transfer control of Tiberius to Tribune, granted Tribune a permanent waiver from the television duopoly rule, and granted Tribune a six-month (rather than a two-year) waiver to comply with the cross-ownership rule. See In re Application of Counterpoint Commc'ns, Inc. (Transferor) & Tribune Television Co. (Transferee), 16 F.C.C.R. 15,044, 15,048-49 ¶¶ 12-14, 2001 WL 876967 (2001) ("2001 Order"). The Commission, noting that Tribune's application was "unopposed," id. at 15044 ¶ 1, concluded that "granting Tribune a temporary period to come into compliance with the television/newspaper cross-ownership rule is appropriate," id. at 15047 ¶ 9. The FCC believed that "[t]he temporary loss of diversity in the Hartford market during this period due to Tribune's common ownership of WTIC and WTXX and The Hartford Courant will be outweighed by the benefits of permitting an orderly sale of media properties to a qualified buyer that will preserve these stations as media voices in the market." Id. at 15048 ¶ 10. The FCC announced that it nevertheless "expect[ed] Tribune to exercise its best efforts to sell the necessary assets to come into compliance with the rule." Id.

The FCC granted Tribune another six-month extension in an Order dated February 19, 2002. See In re Application of Counterpoint Commc'ns, Inc. (Transferor) & Tribune Televison Co. (Transferee), 17 F.C.C.R. 3243, 3246 ¶ 11, 2002 WL 233150 (2002) ("2002 Order"). The FCC noted that Tribune had received no proposals for the purchase of WTXX within the previous six months, that Tribune had continued its investment in WTXX's physical plant and equipment, and that Tribune continued its efforts to sell the station. Id. at 3244 ¶¶ 5-7. Thus, the FCC concluded that Tribune had demonstrated that it had "exercised its best efforts to achieve compliance with the multiple ownership rules." Id. at 3245 ¶ 10. In according Tribune an additional six-month waiver, the Commission emphasized that it expected Tribune to "continue to exercise its best efforts and to expand its current efforts if needed to sell the necessary assets to come into compliance." Id. Accordingly, the FCC mandated that Tribune report the progress of those efforts to the Commission every forty-five days—a requirement with which Tribune has consistently complied. Id.

With the second six-month waiver period due to expire on August 19, 2002, Tribune submitted a timely fifty-page request, in which Tribune sought a permanent waiver or, in the alternative, another temporary waiver for a reasonable period of time. See Application of Counterpoint Commc'ns & Tribune Television Co., File No. BTCCT—1999 1116AJW, Facility ID No. 14050, Request for Waiver (filed Aug. 2, 2002) ("permanent waiver request"). Tribune indicated that it had been unable to sell WTXX despite its best efforts, that the financial condition of WTXX had not improved significantly, and that, if the FCC were to order Tribune to divest WTXX, the station could face the possibility of "going dark." Tribune further asserted that special circumstances warranted a permanent waiver of the cross-ownership rule: namely, Tribune's selling WTXX to an independent owner was infeasible, Tribune's continuing to own WTXX would not hinder competition or diversity, and Tribune's investing in WTXX would continue to improve the station's programming, facilities, and operations.

The August 19, 2002 deadline came and went without a Commission response to Tribune's permanent waiver request. Approximately nine months later, on May 9, 2003, Hartford-area resident Neil Ellis filed a complaint pursuant to 47 U.S.C. § 401(b) in the United States District Court for the District of Connecticut.⁴ Ellis claimed that, since August 19, 2002, Tribune had been in violation of the...