Court tosses FCC's relaxed ownership rule

A federal court rejected a rule change from the Federal Communications Commission on Thursday that would have made it easier for a single company to own both a newspaper and broadcast TV station in the same local market on technical grounds.

The U.S. Court of Appeals for the Third District ruled the FCC failed to give stakeholders adequate opportunity to comment before relaxing a three-decade ban on companies owning both types of media outlets.

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Public-interest groups that challenged the FCC's rules claimed a victory despite the fact the court upheld most of the rest of the FCC's 2008 media ownership decision.

"The FCC majority knew that its effort to allow more media concentration was politically and legally unworkable, so it tried to end-run the procedural protections that are designed to give the public the right to participate in agency proceedings," said Media Access Project policy director Andrew Jay Schwartzman.

"It was disapointing that FCC Chairman [Julius] Genachowski chose to defend his predecessor's erroneous action, but now that the Court has directed the FCC to make sure the public is not ignored, we can look forward to having a right to meaningful participation as the FCC looks at these questions again," Schwartzman said.

An appeal from the FCC is unlikely, as the commission is already undergoing its quadrennial review of media ownership rules and will likely address the issue through that process. The new rule would have essentially put a thumb on the scale in favor of allowing a firm to own both a newspaper and broadcast station in the top 20 markets and a thumb on the scale against such transactions in smaller markets.

The FCC has maintained since 2003 that the ban on newspapers owning TV stations and vice versa is no longer justified; the new rules would permit some transactions that would not previously have been allowed. Still, the commission framed the court's decision as a win for the agency.

“The Third Circuit’s approval of the 2008 ownership rules for broadcast stations affirms the FCC’s authority to promote competition, localism, and diversity in the modern media marketplace," said FCC general counsel Austin Shlick.

"With an updated record and this supportive decision, the agency should be able to take appropriate steps to ensure that the nation’s media marketplace remains healthy and vibrant.” 

The broadcasters filed arguments in favor of relaxing most media ownership rules due to increasing competition from cable and the Web — arguments the court broadly rejected.

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"There have been sweeping changes in the media landscape since most of the broadcast ownership rules were adopted decades ago," said Dennis Wharton, executive vice president of communications at the National Association of Broadcasters.

"NAB believes that modest reform of rules to allow free and local broadcasters to compete successfully in a universe of national pay TV and radio platforms is warranted," Wharton said.

The FCC will consider the newspaper-broadcast ownership rule as part of the review of media ownership rules, at which point the commission can choose to either pursue the same course or institute new rules.