Court Rules Against FCC

The next wave of consolidation in the broadcasting industry has been dealt an indefinite setback by a US appeals court.

On June 24, the US Court of Appeals for the Third Circuit in Philadelphia voted 2-1 against relaxing ownership caps for media conglomerates. The ruling followed by a few days a Senate vote to overturn rules approved by the Federal Communications Commission that would have enabled ownership of more radio and TV stations, and newspapers, by fewer companies. The court's ruling will stymie expansion efforts by companies such as Viacom and News Corporation.

Executives from such companies had long campaigned for relaxing or removing the caps completely, arguing that the emergence of the Internet provided for a wider range of information that wasn't anticipated when the original rules were written.

The relaxed ownership caps drew criticism from across the political spectrum. Organizations as diverse as the National Rifle Association (NRA) and the National Organization of Women (NOW) worked diligently against the new rules, arguing that giving control of media to an ever-decreasing number of companies would effectively squelch diversity in news coverage.

Two of the three appeals judges agreed. "We have identified several provisions in which the Commission falls short of its obligation to justify its decisions to retain, repeal or modify its media-ownership regulations with reasoned analysis," they wrote.

In the face of Senate and judicial rejection, regulators will have to begin anew if they wish to rewrite regulations supported by most Americans. FCC Chairman Michael Powell criticized the court's decision, describing it as creating "a clouded and confused state of media law," one that "sets near-impossible standards for justifying bright-line ownership limits." The FCC had voted to boost the ownership cap to 45% from 35%, but widespread protests encouraged Congress to settle on a 39% limit.

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