How Fcc Transaction Reviews Threaten Rule of Law and the First Amendment

Since its creation in 1934, the Federal Communications Commission has had broad discretion to approve or deny the consummation of major transactions by wireless and wired communications firms under a public interest standard. Despite the passage of decades, neither the FCC nor the courts have put meaningful limits on what the FCC can pursue under this authority. Today, regulated companies--including broadcast TV and radio, satellite TV and radio, cable TV, and Internet service providers--are the primary producers and distributors of mass media and publications. We model the FCC’s decisions to extract concessions from firms under the empire building model. The FCC’s ad hoc determinations of the public interest and the impracticability of timely judicial review has pernicious effects on modern media and the rule of law. Consistent with the model, the FCC increasingly extracts nominally voluntary concessions from firms--including programming decisions, hiring practices, and “net neutrality” compliance--in the transaction approvals that the agency is legally barred from or unwilling to pursue through the normal regulatory process. We argue that the FCC’s unpredictable and coercive transaction reviews violate rule of law norms and pose significant First Amendment problems. We question the necessity of the FCC’s powerful merger review authority and suggest that if Congress does not revoke the agency’s authority, the agency should at least promulgate guidelines for what its public interest standard requires.