Appellant challenges the Federal Communications Commission’s refusal to grant it a permanent waiver, or at least a temporary-waiver pending the outcome of future rule-making, of its daily newspaper cross-ownership rule. We affirm.
I.
Tribune Company, which publishes the Sun-Sentinel newspaper in Fort Lauder-dale, Florida, agreed to merge with Renaissance Communications Corporation, the owner of six television station licenses, including WDZL(TV) in Miami, Florida, 1 subject to the FCC’s approval of the transfer of those licenses to Tribune. The Commission, however, determined that WDZL’s Grade A contour 2 encompassed the entire Fort Lauder-dale community; therefore, WDZL and the Sun-Sentinel were in the same primary market, and the daily newspaper cross-ownership rule prohibited their common ownership. The Commission nevertheless granted Tribune a temporary waiver of its rule, which allowed Tribune to take possession of the WDZL station license (the merger was consummated on March 25, 1997). But it required that Tribune divest itself of that license or the Sun-Sentinel before March 22, 1998, one year from the date of the FCC’s order.
The relevant portion of the Commission’s daily newspaper cross-ownership rule provides that “[n]o license for [a] ... TV broadcast station shall be granted to any party ... if such party directly or indirectly owns, operates or controls a daily newspaper and the grant of such license will result in [t]he Grade A contour of a TV station ... encompassing the entire community in which such newspaper is published.” 47 C.F.R. § 73.3555(d)(3) (1996). The Commission has explained that its rule rests on the twin goals of promoting viewpoint diversity and economic competition.
See
Multiple Ownership of Standard, FM, and Television Broadcast Stations, Second Report and Order,
Tribune acknowledged that the FCC’s cross-ownership rule would prohibit it from owning both media outlets. But it argued before the Commission that the South Florida mass media market, encompassing Dade (Miami), Broward (Ft. Lauderdale), and Palm Beach counties, was sufficiently diverse and competitive so as to obviate any need to apply the rule in this case. Tribune identified 23 separately owned television stations, 69 radio stations operated by 49 different *65 owners, 7 daily newspapers published by 6 different owners, 15 weekly community newspapers, and in excess of 250 magazines, specialty publications, and consumer journals all serving the South Florida market. It counted 35 cable systems providing an average of 62 channels of programming in the market, and claimed that cable television subscription rates in each county was above 60%. It showed that approximately 85% of all households owned a VCR; it also speculated that many had access to the Internet. And, in light of certain advertising, subscription, and audience share data, it argued that the rule clearly was not needed to encourage economic competition. Tribune claimed that the public would be disserved by strict enforcement of the rule, because it could exploit synergies arising from the common ownership of both print and broadcast news departments to enhance programming so as to compete more effectively with other South Florida news programs. For these reasons, Tribune sought a permanent waiver of the rule.
The Commission was unpersuaded. Its established waiver policy, set forth in the FCC’s 1975 Second Report and Order, provides in relevant part that the Commission will consider waiving the rule “where, for whatever reason, the purposes of the rule would be disserved by divestiture.”
In re Applications of Stockholders of Renaissance Communications Corp. and Tribune Co. (Renaissance Communications),
FCC97-98,
The Commission determined that to the extent Tribune called into question the validity of the rule itself or the FCC’s waiver policy, its arguments should be addressed in the broader context of a rulemaking; they were inappropriate in a restricted licensing proceeding. Presumably anticipating this response, appellant asked, in the alternative, that it be granted, in effect, a temporary waiver until such time as the Commission completed a rulemaking proceeding to review its cross-ownership rule or its waiver policy in light of the changes Tribune identified (which would have extended for a longer period than the temporary waiver it was ultimately granted). The FCC declined, apparently because it thought such action would be inconsistent with prior practice and because Knight-Ridder, Inc., publisher of the Miami Herald (which competes with the Surir-Sentine!), was opposed. See Renaissance Communications at ¶¶ 56 n.50, 57.
In response to appellant’s claim that the cross-ownership rule was unconstitutional as applied to Tribune, the FCC pointed to NCCB and the viewpoint diversity rationale that case endorsed. Tribune implored the FCC to consider whether the scarcity rationale' underlying that decision was still valid in light of the proliferation of media sources, but the Commission declined, noting that “nothing in the subsequent decisions of the courts” suggested that the rule was unconstitutional. Renaissance Communications at ¶ 51. We agreed to hear Tribune’s appeal on an expedited basis so that Tribune would have time to effect an orderly divestiture in the event of an adverse decision.
*66 II.
The Commission’s primary objections to appellant’s case are jurisdictional. The Commission contends that because the Communications Act only allows applicants whose license transfer application is denied to appeal one of its orders in our court, 47 U.S.C. § 402(b)(3) (1994), and it granted Tribune’s application (albeit subject to condition), we must dismiss Tribune’s appeal. Even were we to determine that that section is not a bar to the appeal, Tribune, the Commission also argues, failed to comply with the FCC’s administrative exhaustion requirement set forth in its rules. See 47 C.F.R. § 1.110 (1996).
We start with the statute. In
Mobile Communications Corporation of America v. FCC,
The Commission would have us limit
Mobile Communications
to those instances where there has been a change in law while an application is pending, but we do not see why that is a principled distinction. We were concerned generally that by “interpreting an application as one for a license subject to any condition of the Commission’s choosing [we] would permit the Commission to foreclose judicial review of a de facto denial by couching its decision as an approval subject to some intolerable condition.”
Mobile Communications,
Turning to the more troublesome exhaustion argument, the Commission’s rule provides, in pertinent part:
Where the Commission without a hearing grants any application in part, or with any privileges, terms, or conditions other than those requested ... the action ... shall be considered as a grant of such application unless the applicant shall ... reject[ ] the grant as made. [Where the applicant seeks reconsideration], the Commission will vacate its original action ... and set the application for hearing ....
47 C.F.R. § 1.110 (1996). We have squarely held that “[t]he plain language of § 1.110 implies an exhaustion requirement” that “does not allow applicants first to accept a partial grant, yet later to seek reconsideration of its conditions.”
Central Television, Inc. v. FCC,
Tribune contends, drawing on the logic of
Mobile Communications’
holding, that § 1.110 is not applicable because its application was really
denied.
But § 1.110, unlike § 402(b), is written to specifically deal with a conditional grant and it could not be clearer that it covers the present case. Just because a partial grant is a denial for purposes of § 402(b)(3) does not mean that the same reasoning applies to § 1.110. Indeed, we said
*67
in
Mobile Communications,
Tribune also argues that it would have been futile for it to have sought reconsideration in this case. We have recognized that § 1.110 does not bar review where appellant can show futility,
Central Television,
On the other hand, in
Action for Children’s Television v. FCC,
III.
Tribune essentially makes two arguments. It argues (with the support of amici Newspaper Association of America, Association of Local Television Stations, and National Association of Broadcasters) that the “factual and legal foundations” supporting the daily newspaper cross-ownership rule have been irreparably shaken by the dramatic changes in the *68 media marketplace over the last two decades. Since there has been a proliferation of media outlets, it can no longer be said that those outlets are scarce, and therefore the rule should no longer be applied to applicants, or at least not Tribune. Tribune alternatively claims that the Commission arbitrarily denied Tribune a procedural alternative — a longer temporary waiver — that it had recently offered- to a similarly situated applicant. We think that it would have been useless for Tribune to seek reconsideration of the former, but not the latter of those arguments.
* * * *
Tribune presents its dispute with the cross-ownership rule in three different forms: as a challenge to the rule, as a challenge to the Commission’s waiver policy, and as an “as applied” challenge. But whichever way the argument is made, the Commission clearly and repeatedly demonstrated that it would apply its rule, as upheld by the Supreme Court in NCCB, in this adjudicatory license transfer proceeding; if the rule is to be reconsidered, it must be in a rulemaking proceeding. Renaissance Communications at ¶¶ 50, 51. It can hardly be said that Tribune had a realistic chance to convince the FCC otherwise on rehearing, and reconsideration, then, would have been futile. We therefore consider each variation of Tribune’s argument.
First, it is claimed that the Commission is obliged to reconsider its cross-ownership rule or at least to not apply it in this ease. The Commission, as we noted, refused to do so in the context of an adjudicatory licensing proceeding. Tribune (perhaps because of time constraints imposed by the merger) did not ask the Commission to initiate a new rulemaking procedure, so it can hardly appeal the Commission’s refusal to do so. And it is hornbook administrative law that an agency need not — indeed should not — entertain a challenge to a regulation, adopted pursuant to notice and comment, in an adjudication or licensing proceeding.
See
P. Strauss, et al., Gellhorn and Byse’s Administrative Law 657 (9th ed.1995) (agency is bound by its substantive rules unless validly amended or rescinded);
Consumer Energy Council of Am. v. FERC,
We have suggested (in dicta) that where an agency is confronted with an undisputable indication that its rule is illegal, either because of the reasoning of a Supreme Court decision or intervening legislation, it may be entitled, indeed obliged, to decline to apply it.
American Tel. & Tel. Co. v. FCC (AT&T),
Appellant’s next formulation' is that the Commission was obligated to reconsider its
waiver policy
in the licensing proceeding. Appellant relies on two of our prior cases,
Meredith Corporation v. FCC,
Finally, Tribune argues that the rule, os
applied
to Tribune, is unconstitutional. But the so-called “as applied” challenge is, like appellant’s challenge to the FCC’s waiver policy, really no different than a challenge to the rule. It is as apparent to us as it was to the Commission that Tribune is not presenting a unique “as applied” case. Again, the evidence Tribune presents is not particular to the South Florida market; most, if not all, of the country’s media markets have experienced similar growth. In any event, in upholding the rule in
NCCB,
the Supreme Court did so by relying, in part, on the Commission’s predictive judgment, based on experience, that it was unrealistic to expect diversity from commonly owned entities. The Commission apparently is still wedded to that judgment,
see Renaissance Communications
at ¶¶ 47, 51, and nothing in the subsequent decisions of the Court have called the constitutional validity of that judgment into question. Nor are we free to “reexamine the scarcity doctrine in this case on this record,” as Tribune asks. The Supreme Court has told the lower federal courts in no uncertain terms that we are to leave the overruling of its opinions to the Court itself.
See State Oil Co. v.
Khan, -
U.S.
-, ——,
‡ ‡ *
Tribune’s second main argument, that the Commission behaved in an arbitrary and capricious manner by not staying the running of the divestiture period until a rule-making to review the daily newspaper cross-ownership rule was completed, is its most compelling. 8 Two Commissioners in fact endorsed this course of action in separate statements. As Tribune points out, the Commission previously followed a closely analogous course of action in In re Applications of Capital Cities/ABC, Inc., and the Walt Disney Company, 11 F.C.C.R. 5841 (1996). In that case, the FCC approved the transfer of a radio license to a company that owned a newspaper in the same primary market, subject to an order to divest one of the assets within a year. Appellant is, of course, subject to the same condition. Yet in Capital Cities, the Commission at the same time began a review of its daily newspaper/radio cross-ownership waiver policy. See id. at 5851; see also In the Matter of Newspaper/Radio Cross-Ownership Waiver Policy, *70 11 F.C.C.R. 13003 (1996) (notice of inquiry-seeking comment on that policy). When it became clear that the proceeding to reexamine the waiver policy would not be completed until after the 12 month period had expired, the Commission granted Disney’s request to defer the divestiture date until six months from the issuance of the effective date of the FCC’s action in that proceeding. The Commission apparently denied Tribune’s request for what would be in effect a temporary waiver pending the outcome of a rulemaking concerning its daily newspaper/television cross-ownership rule in this case because such course of action would be somehow inconsistent with prior practice, Renaissance Communications at ¶ 57, and because Knight-Ridder, Tribune’s competitor, opposed it. Id. at ¶ 56 n. 50.
Unfortunately for appellant, we are foreclosed from considering its claim that the Commission’s inconsistent treatment of the two cases reflects arbitrary and capricious decisionmaking, because we do not think that reconsideration of this specific challenge would have been futile. The Commission’s answer as to why it granted a temporary waiver pending the completion of a rulemak-ing in Capital Cities, but did not in Tribune’s case, seems inexplicable. We agree with appellant that the Commission “essentially ignored” this portion of Tribune’s argument. We can only speculate why the Commission did not give this issue the care it deserved. It appears that before the FCC, as before us, Tribune did not make this claim its focus; Tribune directs us to only three pages of its approximately 400 page application to show that it made the argument before the Commission. Had Tribune sought reconsideration, the Commission’s attention surely would have been squarely drawn to the issue. We thus, given the logic of appellant’s argument and the FCC’s inadequate response, do not see how we can conclude that reconsideration would have been futile.
We are not unsympathetic to Tribune’s position.
Amici
filed a petition for rulemak-ing seeking repeal of the daily newspaper cross-ownership rule (after the Commission’s order in the Tribune proceeding). The government’s counsel told us at oral argument that the Commission plans, pursuant to the requirement imposed by the Telecommunications Act of 1996, to review its cross-ownership rule in the near future. But the Commission subsequently informed us that it does not expect a review to begin until the summer or the fall of 1998. It seems a shame for Tribune not to be given the same relief as Disney in
Capital Cities.
Still, Tribune could' have protected itself by seeking reconsideration. Or, had it filed a petition for rulemaking at the same time that it filed its transfer application, the Commission might have been more willing to consider Tribune’s temporary waiver alternative. Tribune did not pursue either option, perhaps because, as the Commission suggests, to challenge the FCC’s original decision would have jeopardized its merger agreement with Renaissance. Whatever Tribune’s reason may have been, the Commission is entitled to preserve the “finality of its decisions.”
Central Television,
* # & #
The Commission’s order is affirmed. Tribune’s petition for review in No. 97-1229 is denied, and the portion of its appeal for which reconsideration would not have been futile is dismissed for want of jurisdiction.
So ordered.
Notes
. The other stations are: KTXL(TV), Sacramento, CA; WTIC-TV, Hartford, CT; WXIN(TV), Indianapolis, IN; WPMT(TV), York, PA; and KDAFCTV), Dallas, TX.
. Grade A contour is a measure of signal field strength. The Commission has said that the boundary of the Grade A contour is set where a good picture may be expected to be available for at least 90% of the time at the best 70% of receiver locations.
See Clarksburg Publ’g Co. v. FCC,
. The Commission explained that even temporary waivers of the kind Tribune received are granted in "relatively rare,circumstances.” Renaissance Communications at ¶ 44 n.34.
. Tribune comes before us as both appellant and petitioner, having appealed the Commission’s order in case No. 97-1228 pursuant to § 402(b), and having petitioned for review of that order in case No. 97-1229 pursuant to 47 U.S.C. § 402(a). As we have said before, "the provisions for judicial review contained in §§ 402(a) and 402(b) are mutually exclusive,”
Friedman v. FCC,
. The Commission's counsel suggests that appellant’s failure to comply with § 1.110 prevents us from reviewing any of Tribune’s claims. But we think that if it would have been futile for Tribune to have sought reconsideration of any particular claim, that claim may be severed from the rest and heard.
. We suggested in that unusual event the agency would presumably issue a notice of proposed revocation of the rule — -which would essentially go into effect immediately.
. The scarcity doctrine has been the subject of "intense criticism,"
see, e.g., Time Warner Entertainment Co. v. FCC,
. We note that Tribune devoted only one paragraph in a 58 page brief to making this argument, which barely survives our requirement that a parties’ arguments be sufficiently developed lest waived.