[opendtv] News: Court Reverses Ownership Rules

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
  • Date: Fri, 25 Jun 2004 07:17:45 -0400

http://www.broadcastingcable.com/article/CA429374?display=Breaking+News&promocode=SUPP

Court Reverses Ownership Rules

By John Eggerton -- Broadcasting & Cable, 6/24/2004 7:10:00 PM

In a big victory for media-consolidation critics, a Philadelphia 
appeals court in a 2-1 decision has sent most of the Federal 
Communications Commission's new, more deregulatory, ownership rules 
back to the commission to try again.

Among the court findings were that the FCC was not required to loosen 
the rules, but could have tightened them as well.

Chairman Michael Powell had argued that Congress and the D.C. Circuit 
court in an earlier challenge to its rules had effectively instructed 
the FCC to get rid of whatever rules it could not sufficiently 
justify. Grabbing onto that, some broadcasters had argued to the 
court that the FCC hadn't deregulated enough. The court disagreed.

While the court said the FCC had the authority to make the changes it 
did, including allowing more stations per market and permitting 
newspapers and TV stations and TV and radio stations in the same 
market to be jointly owned, it also found that the FCC's method of 
arriving at those deregulatory moves--the so-called diversity 
index--was flawed.

As a result, the court continued to stay those rule changes and told 
the FCC to rejustify them. The court retained its jurisdiction over 
the case, meaning when the FCC has a new set of justifications, it 
must bring it back to the same court, in fact to the same panel of 
the same court, given the number of recusals from the case on the 
full court.

Since there will be no chance for an en banc (full court) appeal, The 
Supreme Court would appear to be the next stop if the commission 
wants to appeal.

A clearly frustrated FCC Chairman Michael Powell said the result of 
the decision, "perversely," could be to make it "dramatically more 
difficult for the Commission to protect against greater media 
consolidation."

How so? "It sets near impossible standards for justifying bright-line 
ownership limits," he said. "The fear is realized in the opinion 
itself.  The court rejected the Commission's effort to limit further 
radio consolidation. 

It also upheld the elimination of the newspaper cross-ownership rule, 
while rejecting our efforts to place reasonable limits on those 
combinations.  This is deeply troubling and hampers the flexibility 
of the agency to protect the American public, as this agency is 
charged to do."

Powell pointed out that it was the second time a court has set aside 
FCC numerical limits (the D.C. Circuit in an earlier appeal of its 
rules), saying the result has been chaos and  "a clouded and confused 
state of media law."

In good news for networks, the court did not deal with the 39% cap on 
a station group's national audience reach, which most directly afects 
the nets, since that was not an FCC rule but a compromise law passed 
by Congress late last year. It also did not deal with the challenge 
to the FCC's 50% discount on a UHF station's audience, saying that 
was tied to the cap and thus also moot.

The court upheld the FCC's new local radio rules, which actually 
tightened up ownership, including upholding the counting of joint 
sales agreements between stations toward ownership accountings. But 
those rules are stayed, too, which Powell said would have the effect 
of spurring more consolidation.

"We are regarding this as a near total win for our clients and the 
public interest," said Media Access Project Associate Director Harold 
Feld. MAP represented the winning side in the case. "The Third 
Circuit has found that what Congress intended was to protect 
democracy and competition, not encourage rampant consolidation."

The NAB wasn't commenting.  ""We are still reviewing this lengthy and 
complex decision," it said in a statement, "and will reserve comment 
until after our Board of Directors has a chance to meet and discuss 
all of the ramifications of the opinion."

Tribune's Shaun Sheehan was feeling "pretty good," however, given 
that the court agreed with it and the FCC majority that an absolute 
ban on broadcast-newpaper crossownership is unjustified. Tribune 
bought Times Mirror in 2000 banking that the ban would go away.

The Network Affiliated Stations Alliance was also happy about the 
newspaper-broadcast crossownership decision, but not so sanguine 
about the rest:

"While the Court rightly upheld the FCC's decision to relax certain 
of the local ownership rules such as the ban on newspaper/TV 
combinations," ," said NASA Chair Alan Frank of Post-Newsweek, "we 
are disappointed that the Court failed to give greater relief to 
small broadcasters whose ability to survive in today's environment is 
hampered by the 'top-four' local television ownership restriction.

Democratic FCC Commmissioners and frequent Big Media critics Michael 
Copps and Jonathan Adelstein were celebrating what they saw as a big 
win and a big vindication. " The court largely undid what would have 
been the most destructive rollback of media ownership protections in 
the history of American broadcasting," said Adelstein. Copps quickly 
called for the FCC to change direction.

"First, we should issue a notice confirming that until new rules are 
adopted, we will continue to apply the limits that were in effect 
prior to the June 2, 2003 decision. 

"Second, I call upon the Commission to schedule a series of hearings 
across the country designed to give citizens true access to the 
decision makers at the Agency, and seek to gain a better 
understanding of the impact of media concentration on our 
communities.  These hearings should begin immediately, and certainly 
no later than 30 days from now. 

"Third, we need independent research studies on media concentration 
in a variety of markets so that we can make a decision that has a 
more solid foundation.  Clearly, the court found that the FCC's 
previous studies were inadequate and lacked credibility. "

Copps told B&C that he thought new rules could be crafted by the end 
of the year
 
 
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