Ownership Reg Faces Murky Outcome

Owners of broadcast stations and newspapers who had hoped to take advantage of the FCC's new ownership rules need to cool it. There may not be a clear idea of what rules will survive court review until next year at best.

Following the Philadelphia federal appeals court's decision to retain a case attacking the new FCC broadcast-ownership limits rather than granting broadcast networks' pleas to transfer it to a sister court in Washington, analysts say it's impossible to predict which rules will be upheld, which will be sent back to the agency for revision and which will end up before the Supreme Court.

The muddied outlook and unpredictable environment for media regulation also have stalled the FCC's effort to set new cable-ownership limits.

The only certainty is that large broadcast mergers, and possibly cable mergers too, will be impossible to craft until the whole mess sorts out over the next year or two.

"The D.C. Circuit has been very predictable in favoring greater media-ownership deregulation," said Legg Mason analyst Blair Levin. The Philadelphia judges, on the other hand, haven't dealt with media ownership to the same extent and their leanings are far less obvious and could possibly be more hostile to relaxing ownership constraints, he said.

No doubt that's what opponents of media concentration hope. The Washington court has ruled on several media ownership cases since 2001 and was the favored venue for industry challenges to the latest rules because of its general predilection for deregulation. Public interest groups nevertheless shrewdly increased the odds that the case would be assigned somewhere else by filing challenges in several federal courts around the country. When related cases were consolidated, judicial administrators chose the venue via lottery and this time the odds were three-to-one against landing in Washington.

Still, Media Access Project President Andrew Schwartzman said it's "highly speculative" that the bid to keep the case out of Washington will pay off. Schwartzman represents community radio activists Prometheus Radio Project in their suit against the FCC rules.

The Philadelphia court set an expedited schedule for the case that indicated its decision could come as soon as first quarter 2004 but it's too early to know how fast the next phases of the fight will play out. The court said it will hear oral arguments Nov. 5. With petitioners' briefs due Sept. 30, the FCC's opposition Oct. 15, and reply briefs Oct. 22.

A panel of the Federal Appeals Court for the U.S. Third Circuit said it felt perfectly qualified to judge the case. "This court is no less qualified than any other Court of Appeals to determine whether the FCC has appropriately considered the public interest in its decision making," wrote Judge Julio M. Fuentes.

Officials from Fox, NBC and CBS, which sought the transfer, had no comment.

Still, the ultimate decisions over media concentration are likely to come out of Washington, either from appeals to the Supreme Court, remands to the FCC or new legislation now working its way through Congress.

Congress is already speaking out. Last week the Senate approved 55-40 approved a "legislative veto" of the FCC's relaxed broadcast-ownership rules. The margin of victory was not big enough to override a threatened White House veto but was sufficiently large to gin up hopes of supporters that the House would take up the proposal. "This vote demonstrates the power of the grassroots," said Eli Pariser, campaign director for MoveOn.org. A dozen Republicans broke party lines.

The networks, on the other hand, said they were encouraged that the margin of victory was less than the two-thirds necessary to override a threatened White House veto. The vote, added NBC lobbyist Bob Okun, "suggests that supporters of free over-the-air television are starting to prevail." The networks argue that they won't be able to afford expensive sports, movies or other high quality programming unless they can boost profits by buying more TV stations.

The Senate measure would return the national TV-ownership cap to 35% of television households as well as revive previous restrictions on local TV duopolies and local broadcast/newspaper crossownership while the FCC starts a complete new review of its rules.

The vote puts Senate approval on using congressional authority to nullify a new agency rule. The rarely used tactic is being led by Sens. Byron Dorgan (D-N.D.) Trent Lott (R-Miss.) and Russ Feingold (D-Wisc.) may be largely symbolic because House leaders oppose allowing a companion measure to come to a vote on their side of Capitol Hill. Dorgan, however, hopes the House rank and file will pressure their leaders into scheduling a vote or at least build momentum for separate, narrower legislation to reinstate the 35% cap.

House and FCC supporters of deregulation remain defiant. "It's time for Congress to move on," said House Commerce Committee Chairman Billy Tauzin, noting that the Senate fell well-shy of the 67 votes need to override a veto and earlier House attempts to reinstate several FCC broadcast rules was defeated. FCC Chairman Michael Powell said a congressional veto would bring "chaos" to media regulation.