NBC fights 35% cap

Net takes FCC to court over ownership restriction

NBC last week became the second major network to launch a legal fight against federal restrictions on broadcast station ownership.

Angered by the FCC's decision in May to retain ownership limits barring one company from reaching more than 35% of U.S. households, NBC officials told the federal appeals court in Washington that the rules are unjust because they are based on hypothetical market performance rather than actual viewership.

"This is a ludicrous approach to regulation," said NBC executive vice president Richard Cotton. "No other industry in the country is regulated according to potential customers." Cotton said the FCC should base any ownership limits on a company's ability to hinder competition in a market, the same approach antitrust regulators impose on other industries.

FOX Television asked the appeals court to strike down the rules May 31, just four days after the FCC announced its decision to retain the 35% cap.

The ownership cap has become one of the most divisive issues in the broadcast industry as the Big Four networks are blocked from further growth. But affiliates of the Big Four and the National Association of Broadcasters say allowing the networks to own more stations will unfairly weaken station groups' ability to negotiate affiliation deals.

Although the court is expected to combine the suits into one docket, NBC officials stressed that their challenge is much narrower than Fox's and predicted their "tightly focused" appeal would have a better chance of prevailing. FOX is arguing that the existence of any cap is a violation of First Amendment free-speech protection. Fox's case is on shakier ground because the Washington appeals court upheld the constitutionality of the government's cable ownership cap in May. A separate case challenging the FCC's specific cable ownership rule is pending.