Cap on the ropes

In oral arguments, judges indicate broadcast limits could go

Federal judges last week gave strong indication they will eliminate FCC rules capping a national broadcast ownership reach and restricting cable/broadcast crossownership unless the regulators can provide better justification for the rules.

Less clear is whether the limits would stay in place while that review is taking place. The judges' comments were made during oral arguments in a case against the limits filed in the federal appeals court in Washington by Fox, NBC, CBS and AOL Time Warner.

"The agency is being pushed hard" by Congress to deregulate, Judge Harry Edwards told FCC attorney Grey Pash in a series of questioning suggesting the FCC's rationale for rules was too thin.

The most likely scenario, predicted several observers, is for the court to keep the rules in place but give the FCC a deadline, perhaps 90 days, to justify them.

Earlier this year, the appeals court threw out the FCC's 30% cap on a cable company's subscriber share. But regulators made that law; Congress created the broadcast cap.

At issue is whether the FCC's 2000 decision to maintain the limits was adequate, given that Congress ordered the FCC to review all its ownership regulations every two years beginning in 1998. The congressional mandate clearly implied that restrictions that could not be justified were to be relaxed or eliminated.

If either limit is vacated, the industry could face a tide of mergers allowing the major networks to gobble up more station groups and tear down the longstanding barriers to crossownership of local media.

The judges took shots at the law, calling the two-year review obligation a "silly" and "bizarre" mandate too burdensome for the FCC to fulfill. But, "there are a lot of laws I think are stupid," quipped Judge David Sentelle.

Defending the rules were lawyers for the National Association of Broadcasters and the Network Affiliated Stations Alliance, a coalition of TV-station groups. Public-advocacy groups are also urging the court to retain the limits. NAB/NASA lawyers argue that letting the networks grow beyond the cap would give them enough economic leverage to strip control of stations from their owners.

Fox and CBS reach 42% of TV households and are under orders to sell enough stations to get under the 35% cap, pending resolution of this case.

Broadcasters and cable- industry officials argue that the limits violate their free- speech rights by restricting the number of Americans they can reach directly and say that the rules should be vacated.

"I don't think it's a satisfactory outcome for the FCC to kick this around indefinitely when our First Amendment rights are being violated today," said Edward Warren, the networks' attorney.

The FCC's Pash said the 1998 review fulfilled the agency's obligations, despite the fact there was never a separate request for public comment on either of the limits.

The judges' demoralized rule supporters. "The commission has got its work cut out for it," said former FCC Commissioner Susan Ness, who voted to retain the limits when she was a commissioner. She was one of several media luminaries to attend the hearing.

Media Access Project Associate Director Harold Feld urged the judges to make paramount a viewer's right to receive a diversity of media voices.