The FCC's Transaction Reviews and First Amendment Risks

27 Pages Posted: 27 Jul 2016

See all articles by Brent Skorup

Brent Skorup

George Mason University - Mercatus Center

Christopher Koopman

Utah State University - Center for Growth and Opportunity

Date Written: June 4, 2016


Since its creation in 1934, the Federal Communications Commission (FCC) has had authority to approve or deny the consummation of 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 — need FCC permission to transfer licensed assets. Moreover, the FCC increasingly uses license transfer proceedings as an opportunity for an ad hoc merger review that substitutes for rulemaking. We model the FCC’s decisions to extract concessions from firms under the empire-building model. The FCC’s subjective determinations of the public interest during transaction reviews and the impracticability of judicial review have 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 urge the FCC or Congress to limit what the agency can accomplish during transaction reviews.

Keywords: FCC, merger review, transaction review, telecommunications, net neutrality, programming, media, new media, public choice, First Amendment, regulation, constitutional law

JEL Classification: D63, D72, D73, D78, D79, D81

Suggested Citation

Skorup, Brent and Koopman, Christopher, The FCC's Transaction Reviews and First Amendment Risks (June 4, 2016). Harvard Journal of Law and Public Policy, Vol. 39, No. 3, 2016, Available at SSRN:

Brent Skorup (Contact Author)

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

Christopher Koopman

Utah State University - Center for Growth and Opportunity ( email )

3525 Old Main Hill
Logan, UT 84322
United States

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