Appeals court panel rebuffs FCC on broadcast ownership issue

By The Associated Press

02.20.02

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Editor's note: On April 19, the FCC asked the U.S. Court of Appeals for the District of Columbia Circuit to rehear the case involving ownership limits on broadcast and cable firms.

WASHINGTON — A federal appeals court panel says government rules aimed at protecting broadcast diversity in an era of increasing industry consolidation go too far in limiting the number of television stations a company can own.

The three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit told the Federal Communications Commission yesterday that it went too far in seeking to enforce a rule aimed at capping the national reach of a broadcast ownership group at no more than 35% of U.S. households.

Separately, the same panel vacated a commission rule that had prohibited cable systems and broadcast stations in the same market from being controlled by the same entity.

"We conclude that the commission's decision to retain the rules was arbitrary and capricious and contrary to law," wrote Chief Judge Douglas H. Ginsburg. The panel sent the television station ownership rule back to the FCC "for further consideration."

At the same time, the judges set aside the cable rule "because we think it unlikely the commission will be able on remand to justify retaining it."

The FCC did not immediately return a call for comment. During its biennial policy review, the agency had said that it retained the ownership rule to study the effect of the 35% cap on station ownership and to preserve the power of affiliates in bargaining with their networks, according to the brief.

The plaintiffs — Fox Television Stations, Inc.; National Broadcasting Company, Inc.; Viacom Inc., and CBS Broadcasting Inc. — challenged the FCC's decision to retain a rule that prohibits any entity from controlling television stations that, together, can reach more than 35% of U.S. households.

"We have long believed that the national broadcast ownership cap is outdated and no longer serves the public interest. We are pleased the court agreed with our view, and now look forward to a speedy resolution of this issue from the FCC," said Andrew Butcher, vice president for corporate affairs and communications for News Corp., Fox's parent company.

Time Warner Entertainment Co., L.P., had challenged the cable broadcast rule. Blair Levin, an analyst with Legg Mason, said the decision "is likely to lead to a dramatic change in the underlying economics and structure of the traditional mass media, with the large broadcast television networks and cable operators the primary beneficiaries."

"We believe the remand of the national broadcast-TV ownership rule will result in significant FCC relaxation of the current 35 percent cap," he said, "giving the major broadcast networks greater economic power over affiliates."

"The Court of Appeals continues its Sherman's march through the FCC rulebook, squashing congressional powers and the public's First Amendment access rights along the way," said Andrew Jay Schwartzman, an attorney who filed a brief on behalf of the Consumer Federation of America.

"It says anybody who doesn't like any rule in the entire FCC rulebook can go to court every two years without having to go through a rulemaking" proceeding, he added. "It leaves the FCC with no control over its docket."

Previous

Federal appeals panel urged to throw out media-ownership rules
Networks argue FCC regulation violates First Amendment by preventing them from reaching unlimited audience.  09.10.01

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FCC ordered to rewrite media-ownership rule
Federal appeals panel says commission must reconsider restrictions on companies that want to own two TV stations in the same market.  04.03.02