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Policy

Supremes Pass on Media Case

6/17/2005 8:00 PM Eastern

Washington — The Supreme Court refused last Monday to disturb a lower court ruling that largely rejected the Federal Communications Commission's relaxation of rules governing the ownership of newspapers, TV stations and radio stations in markets across the country.

A comprehensive media-ownership regime was an important goal of former FCC chairman Michael Powell, but a three-judge panel of the U.S. Court of Appeals, in a 2-1 vote last June, struck down many of Powell's policies as lacking a solid analytical foundation, cheering consumer groups and others that believed Powell had been too deregulatory.

POWELL LIFTED BANS

Among other things, Powell's policies would have largely eliminated the ban on the common ownership of a newspaper and a TV or radio station in the same market and would have permitted one company to own up to three TV stations, at least one newspaper and up to eight radio stations in the country's largest media markets.

Powell argued that many of the rules were old — the newspaper-broadcast rule was adopted in 1975 — and failed to reflect major trends in the media landscape, including the advent of cable TV, satellite TV and the Internet.

Media General Inc., Tribune Co, the National Association of Broadcasters, the Newspaper Association of America and Sinclair Broadcast Group Inc. filed appeals with the Supreme Court. Without explanation, the high court issued an order turning aside those appeals.

The controversy returns to the FCC under new chairman Kevin Martin, who as a commissioner had backed Powell's policies.

“I am now looking forward to working with all of my colleagues as we re-evaluate our media-ownership rules consistent with the Third Circuit's guidance and our statutory obligations,” Martin said in a statement.

Consumer groups said they are ready for a new battle at the FCC.

“I expect difficult fights ahead. Chairman Martin has signaled that he will try to divide the media ownership proceeding into several pieces to reduce its visibility. If true, that won't work, because the American people now know what's at stake,” said Andrew Jay Schwartzman, president of the Media Access Project, a public-interest law firm that helped defeat Powell's policies.

Stanford Washington Research Group media analyst Paul Gallant — a former FCC official who helped craft Powell's rules — said in a client note that it was likely the FCC would “relax the newspaper rule on a stand-alone basis” as early as the first quarter of 2006.

Martin has been an outspoken critic of the newspaper-broadcast rule.

CONGRESS REACTED

Congress also reacted to the FCC's rules. One that was changed called for allowing a TV station group to own stations that could reach 45% of TV households, up from 35%.

That move angered the affiliates of ABC, CBS, NBC, and Fox, who fear network domination. Congress moved the cap to 39%.

The most drastic change in media ownership was not performed the FCC, but by a panel of the U.S. Court of Appeals for the D.C. Circuit, which voided an FCC rule effectively banning the common ownership of a TV station and a cable system in the same local market.

No major cable-TV stations deals have been completed since the court's February 2002 ruling.

 

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