Quick Update on Fox29 License Challenge License Renewal Challenge.

Two developments happened since I posted my Insanely Long Field Guide to the Fox29 license renewal challenge that potentially bear on the challenge. The first is Rupert Murdoch’s retirement announcement. The second is the Administrative Law Judge Decision in the other pending Character Policy case. As discussed below, neither really impacts the challenge to Fox29 — at least not at the hearing determination stage.

 

I explain why below.

 

Why Murdoch’s Retirement Does Not Matter Much at This Point

Last month, Rupert Murdoch announced his plan to retire as CEO of Fox Corp.† Since much of the case against Fox29 rests on the unfitness of Rupert Murdoch as the ultimate owner of the license (through his controlling interests in the various companies), it is logical to ask whether this moots or otherwise impacts the case.

 

Answer: Not really, at least not at this stage. First, Murdoch continues to have more than sufficient ownership interest to exercise “influence of control” over the licensee. Rule 73.3555(f) states that as little as a 5% active ownership of the licensee (or 30% passive interest, or various sorts of debt) are enough to give rise to an attributable ownership interest. As discussed last time, Murdoch owns lots more than a 5% interest in Fox Corp, which owns a controlling interest in Fox Broadcasting, the licensee of Fox29. Additionally, Murdoch stated in his retirement announcement that he planned to continue to be active in day-to-day operations of Fox Corp., particularly news.

 

So the question remains to what extent Murdoch’s statements in the Dominion Case (including the adjudication by the judge that Fox Corp had been less than fully candid about Murdoch’s editorial involvement in Fox News) remain. As noted last time, it’s still a question of material fact. If it comes to a hearing, Fox29 can still show that it has structures in place to prevent Murdoch or Fox Corp (which he controls) from influencing their programming. And, if the ALJ finds there are concerns under the Character Policy, Fox29 can show that the retirement will be structured in a way that prevent Murdoch (either independently or through Fox Corp) from incfluencing programming going forward. But for now, we are still at the “does a question of material fact exist that would warrant a hearing on the question of whether Murdoch and Fox Corp have sufficient moral character to hold a broadcast license and operate as a “trustee of the “public airwaves” for the Philadelphia community. Given the ownership interest and statement of continued involvement, the question of attribution remains unchanged.

 

The Arm & Rage License Revocation

 

Folks have pointed to the FCC’s revocation hearing against WJBE(AM) in TN for proof that the FCC still cares about the Character Policy. In that case, Joseph Armstrong, the owner of Arm & Rage LLC (the holder of the license) was convicted of tax evasion in 2017, reported this to the FCC two weeks late, and generally did a poor job on some of his other required reports and paperwork. The Enforcement Bureau brought a revocation hearing, arguing that under the Character Policy Armstrong was not fit to hold a license. On September 14, the Administrative Law Judge issued a ruling recommending against revoking the license. So does this precedent impact the Fox29 challenge?

 

Answer: Not really. Some folks seem to be arguing that the result shows that behavior that does not involve management of the broadcast license is irrelevant to the Character Policy. But that’s not what the ALJ said. The ALJ found that the Character Policy certainly applied to an adjudication that involved making false statements to a branch of government (here, the IRS) and that tax evasion went to the question of probity and whether the FCC could trust Armstrong to run a broadcast station. From there, the ALJ went on to apply the various factors applicable under the Character Policy and concluded that revocation was not warranted.

 

So again, it doesn’t bear on the question of whether to go to a hearing (the question the FCC must currently decide). To the contrary, the ALJ determined that there was a sufficient question of material fact on whether Armstrong had requisite character. The AJLJ resolved the question in Armstrong’s favor. I won’t go into the details, but will note two things. First, it is a good example of how the ALJ will conduct an analysis if this ever goes to hearing. Those interested in what sort of defenses Fox29 could raise and what mitigating factors it could invoke will find this interesting. But it doesn’t resolve the instant question of whether to have a hearing at all.

 

Second, this was a revocation hearing under Section 312 †rather than a license renewal under 307(c). In a license revocation, the Commission bears the burden of proof to show that revocation is necessary to serve the public interest. In a license renewal, the applicant for renewal bears the† burden of proof to show that renewing the license will serve the public interest (but, as I explained last time, with a big boost that continuing service is in the public interest). So even if the case were precisely on point, the precedential value would be somewhat weak.

 

Conclusion

 

Nothing has really changed since last month. The FCC still needs to make a decision as to whether the petitioners raise a question of material fact worth sending to an ALJ for a hearing. That is still a long-shot overall, but the odds haven’t changed as a result of the events in September.

 

Stay tuned . . . .

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