WASHINGTON—Federal regulators may face more pressure to overhaul laws governing media ownership in the U.S. after a federal appeals court Thursday threw out a 2008 government decision to relax restrictions on companies seeking to control both newspapers and television stations.

A panel of the U.S. Court of Appeals in Philadelphia rejected Federal Communications Commission rules that made it easier for media companies to own a TV station and newspaper in the same market. The court said the FCC erred by failing to give the public enough time to comment on the rules, and sent them back to the agency for further review.

Former FCC Chairman Kevin Martin announced the rule change in a newspaper editorial in 2007 and allowed “only 28 days for response, not the usual 90 days,” the appeals court said.

The court’s decision upheld much of the then Republican-controlled FCC’s 2008 revamp of the nation’s media-ownership rules. But it returns the highly politicized issue of newspaper and television cross-ownership restrictions to an agency where power has shifted toward Democrats, and which has shown more interest lately in the Internet than older forms of media.

In late 2007, the FCC narrowly voted to allow companies to own newspapers and television stations in the nation’s 20 largest media markets, loosening cross-ownership restrictions that had applied for more than three decades. Under the rules, a company in the largest 20 markets could own both a newspaper and a TV station as long as there were at least eight media outlets in the market.

Then-Sen. Barack Obama was among 25 senators who wrote the FCC in 2007 asking the agency to reconsider Mr. Martin’s changes and threatening to block them.

It isn’t clear if the FCC’s current chairman, Julius Genachowski, will renew his Republican predecessor’s efforts to loosen the ownership curbs. He has remained silent on the issue in public. The agency is supposed to review the rules every four years, but the agency is behind on its scheduled 2010 review and still has significant work left to do, according to FCC officials.

In response to Thursday’s court decision, FCC General Counsel Austin Schlick, said in a statement that the FCC “is currently engaged in a statutorily mandated further review of its media-ownership rules. With an updated record and this supportive decision, the agency should be able to take appropriate steps to ensure that the nation’s media marketplace remains healthy and vibrant.”

The rules have caused political trouble for the FCC for years. In 2003, then FCC Chairman Michael Powell sought to deregulate and eliminate some rules pertaining to local-media ownership. Congress moved to revoke some of the changes.

Four years later, when the FCC debated loosening TV and newspaper cross-ownership rules, media companies including Media General Inc. and News Corp., owner of The Wall Street Journal, complained that the agency didn’t go far enough. But media companies didn’t lobby particularly heavily on the issue.

“There have been sweeping changes in the media landscape since most of the broadcast ownership rules were adopted decades ago,” said National Association of Broadcasters spokesman Dennis Wharton in a statement Thursday. He said the trade group “believes that modest reform of rules to allow free and local broadcasters to compete successfully in a universe of national pay-TV and radio platforms is warranted.”

Over the past few years changes in the media industry, including declining subscribership and advertising revenues, has significantly lessened investors’ interest in buying newspapers. In 2007, Mr. Martin argued that cross-ownership rules weren’t necessary in the Internet age and that relaxing the rules wouldn’t hurt consumers.

Proponents of a diverse media fought the changes, saying that further consolidation of the marketplace left too few sources of original news content for consumers. “This decision is a vindication of the public’s right to have a diverse media environment,” said Andrew Jay Schwartzman, senior vice president and policy director of Media Access Project, one of the group’s that challenged the FCC rules in court.

By Timothy Karr, HuffPost Media

It’s not every day that you can celebrate a win for the public over big media. But on Thursday a federal appeals court threw out an attempt by the FCC and industry titans to gut media ownership limits.

The decision by the U.S. Court of Appeals for the Third Circuit threw out a 2007 FCC rule change that would have allowed a single company to own a daily newspaper and several broadcast stations in one local market.

Such a change could have opened the floodgates to media mergers, leading to further layoffs in newsrooms while leeching diverse perspectives from local media.

The court also upheld the FCC’s decision to retain its other local broadcast ownership restrictions, and instructed the agency to better consider how its rules affect broadcast ownership by people of color.

Sweeping Victory for the Public Interest

The decision is a sweeping victory for the public interest. The court rejected arguments made by broadcast and newspaper giants while exposing the FCC’s repeated failures to rein in runaway consolidation.

“We won on almost every point,” said Andrew Schwartzman, Senior Vice President and Policy Director of Media Access Project, who argued before the court against the FCC’s rules.

“This decision is a vindication of the public’s right to have a diverse media environment… Now that the Court has directed the FCC to make sure the public is not ignored, we can look forward to having a right to meaningful participation as the FCC looks at these questions again.”

“The court wisely concluded that competition in the media – not more concentration – will provide Americans with the local news and information they need and want,” said Corie Wright, Free Press policy counsel, who also argued the case on behalf of a coalition of public advocacy groups.

The case, Prometheus Radio Project v. FCC, is the second time the Third Circuit jettisoned FCC attempts to relax its media ownership rules. The first was in 2004, when the same panel of judges struck down then-Chairman Michael Powell’s attempts to gut media ownership limits.

“I was there when Andrew Schwartzman and his colleagues put together their case for the people,” said Hannah Sassaman, a longtime organizer at the Prometheus Radio Project who is now working with the New America Foundation. “The court threw out the FCC’s rules because these incredible lawyers and the millions of people they represented proved that letting one company own too much media hurts our communities.

Big Media Lobby Rebuked

Large media corporations have repeatedly lobbied the FCC to lift its 35-year-old ban on “newspaper/broadcast cross-ownership”. Had they been successful — and these rules gone into effect — a single company could have owned the main daily newspaper, eight radio stations, three television stations and a major cable provider in the same town.

The court decision vacated the FCC’s plan to relax the ban on such common ownership, finding that the Commission’s rule-making procedures were highly irregular and failed to give the public adequate notice and opportunity to weigh in.

The court also determined that record evidence supports the FCC’s decision not to relax any of the other media ownership rules.

“Today the court confirmed that the FCC’s media ownership rules are not only constitutional but necessary to preserve competition, as well as to promote diverse sources of news and information for the American people,” said Wright.

The FCC’s Diversity Problem

The court also blasted the FCC for repeated failures to consider the impact of media consolidation on broadcast license ownership by people of color.

Free Press research from 2007 exposed the FCC’s failure to foster minority ownership of radio and television stations: racial or ethnic minorities own just 7.7 percent of all full-power commercial broadcast radio stations and just 3.26 percent of all TV stations, though they account for 33 percent of the U.S. population.

The court’s findings come as the FCC embarks on yet another review of media ownership limits this summer. And while the court upheld the need for curbs, industry groups are still pushing the FCC to eliminate them, just as public interest groups are organizing against new and covert forms of media consolidation.

Now the FCC “cannot ignore the overwhelming evidence that existing media consolidation levels adversely impact the amount and quality of news from diverse sources,” Wright said.

A federal court rejected a rule change from the Federal Communications Commission on Thursday that would have made it easier for a single company to own both a newspaper and broadcast TV station in the same local market on technical grounds.

The U.S. Court of Appeals for the Third District ruled the FCC failed to give stakeholders adequate opportunity to comment before relaxing a three-decade ban on companies owning both types of media outlets.

Public interest groups that challenged the FCC’s rules claimed a victory despite the fact the court upheld most of the rest of the FCC’s 2008 media ownership decision.

“The FCC majority knew that its effort to allow more media concentration was politically and legally unworkable, so it tried to end-run the procedural protections that are designed to give the public the right to participate in agency proceedings,” said Media Access Project policy director Andrew Jay Schwartzman.

“It was disapointing that FCC Chairman Genachowski chose to defend his predecessor’s erroneous action, but now that the Court has directed the FCC to make sure the public is not ignored, we can look forward to having a right to meaningful participation as the FCC looks at these questions again.”

An appeal from the FCC is unlikely as the Commission is already undergoing its quadrennial review of media ownership rules and will likely address the issue through that process. The new rule would have essentially put a thumb or the scale in favor of allowing a firm to own both a newspaper and broadcast station in top 20 markets and a thumb on the scale against such transactions in smaller markets.

The FCC has maintained since 2003 that the ban on newspapers own TV stations and vice versa is no longer justified; the new rules would permit some transactions that wouldn’t previously be allowed. Still, the Commission framed the court’s decision as a win for the agency.

“The Third Circuit’s approval of the 2008 ownership rules for broadcast stations affirms the FCC’s authority to promote competition, localism, and diversity in the modern media marketplace,” said FCC general counsel Austin Shlick.

“With an updated record and this supportive decision, the agency should be able to take appropriate steps to ensure that the nation’s media marketplace remains healthy and vibrant.”

The broadcasters file arguments in favor of most relaxing media ownership rules due to increasing competition cable and the Web, which the court broadly rejected.

“There have been sweeping changes in the media landscape since most of the broadcast ownership rules were adopted decades ago,” said National Association of Broadcasters executive vice president of communications Dennis Wharton.

“NAB believes that modest reform of rules to allow free and local broadcasters to compete successfully in a universe of national pay TV and radio platforms is warranted.”

The FCC will consider the newspaper-broadcast ownership rule along as part of the review of media ownership rules, at which point the Commission can choose to either pursue the same course or institute new rules.

A federal appellate court turned back the FCC’s effort to relax its limits on ownership of newspapers and TV stations in the same market, ruling that the agency failed to give adequate notice when they made the change in 2007.

The 3rd Circuit Court of Appeals means that the FCC will again have to take up the rules, which supporters argued was necessary to strengthen local news gathering in the face of declining ad revenue.

The new rules lifted the ban on cross ownership in the 20 largest media markets.

Public interest groups had argued that they were not given adequate time to comment on the proposed changes, made under then FCC-chairman Kevin Martin.

”We won on almost every point,” said Andrew Jay Schwartzman, senior vice president and policy director of the Media Access Project, which represented Prometheus Radio Project in challenging the changes. ”This decision is a vindication of the public’s right to have a diverse media environment. The FCC majority knew that its effort to allow more media concentration was politically and legally unworkable, so it tried to end-run the procedural protections that are designed to give the public the right to participate in agency proceedings.”

The court also said that the FCC also failed to consider the impact of its new rules on minority ownership of media outlets.

Judges Thomas Ambro and Julio Fuentes found fault with the FCC’s rule change, while Judge Anthony Scirica dissented.

The FCC is currently undertaking another review of its media ownership rules. In a statement, the agency said that they ‘’should be able to take appropriate steps to ensure that the nation’s media marketplace remains healthy and vibrant.”

WASHINGTON (AP) — A federal appeals court has restored a longstanding ban that prevents media companies from owning both a newspaper and a television station in the same market.

The 3rd U.S. Circuit Court of Appeals in Philadelphia said Thursday that the Federal Communications Commission didn’t give the public adequate opportunity to comment on new rules that lifted the ban in the 20 largest media markets. The appeals court sent the rules back to the FCC to be rewritten.

The so-called cross-ownership ban dates back to 1975 — a time when newspapers dominated the media industry. In 2007, then-FCC Chairman Kevin Martin, a Bush administration appointee, moved to ease those restrictions in the biggest media markets. He argued that the ban no longer made sense in a media landscape that had been upended by the Internet and had left many daily newspapers struggling for survival.

Public interest groups challenged Martin’s move and warned that too much consolidation would lead to less diversity in news coverage.

Andrew Jay Schwartzman, head of the nonprofit law firm Media Access Project, which led the challenge, hailed Thursday’s ruling. “We’re extremely pleased that the court recognized that the public has a right to a diverse media environment,” he said.

Congress requires the FCC to review its media-ownership rules every four years. Those rules include the cross-ownership restrictions and limits on the number of television and radio stations that one company can own in a market. Thursday’s ruling comes as the current FCC, now under Democratic control, is seeking to wrap up its latest review, which began last year.

In a statement Thursday, the FCC said the current review will allow it to take “appropriate steps to ensure that the nation’s media marketplace remains healthy and vibrant.”

The Third Circuit Court of Appeals has upheld the FCC’s 2008 decision not to loosen the TV duopoly, radio ownership or TV-radio crossownership rules, but has remanded its loosening of the broadcast/newspaper crossownership rule back to the FCC for failure to meet notice and comment requirements.

It also remanded some of the FCC’s minority-ownership efforts for further clarifiation.

The FCC is currently reviewing its ownership rules under a congressional mandate.

“Today we affirm the 2008 Order with the exception of the newspaper/broadcast cross-ownership rule,” wrote the court, “for which the Commission failed to meet the notice and comment requirements of the Administrative Procedure Act. We also remand those provisions of the Diversity Order that rely on the revenue-based “eligible entity” definition, and the FCC‘s decision to defer consideration of other proposed definitions (such as for a socially and economically disadvantaged business, so that it may adequately justify or modify its approach to advancing broadcast ownership by minorities and women.”

Broadcasters had challenged the FCC’s decision under then chairman Kevin Martin not to loosen most rule changes, and had challenged its loosening of the ban on newspaper/broadcast crossownerships as insufficient deregulation, as well as firing a blunderbuss shot at all media ownership regs as unconstitutional.

Martin had caught flack for essentially noticing the proposed newspaper-broadcast crossownership change in a New York Times op-ed only weeks before voting to adopt it. The Court concluded that was not sufficient notice.

The court upheld the FCC’s professed light deregulatory touch and said media ownership regs were not unconstitutional “because they are rationally related to substantial government interests in promoting competition and protecting viewpoint diversity.”

It also concluded that CBS’s argument that ownership rules are unconstitutional attempts to manipulate content has no basis, or Sinclair’s argument that they single out TV.

It remanded several of the FCC’s efforts to boost ownership diversity as insufficient.

“Despite our prior remand requiring the Commission to consider the effect of its rules on minority and female ownership, and anticipating a workable SDB definition well before this rulemaking was completed, the Commission has in large part punted yet again on this important issue,” said the court. “While the measures adopted that take a strong stance against discrimination are no doubt positive, the Commission has not shown that they will enhance significantly minority and female ownership, which was a stated goal of this rulemaking proceeding.”

The Third Circuit stayed and remanded the FCC’s 2003 deregulatory ownership changes. The 2008 decision by Martin simply to loosen the newspaper-broadcast crossownership ban, not loosen any other rules, and take several minority-ownership related moves, was a response to that remand, and one that drew immediate challenges by broadcasters as not enough dereg and anti-consolidation groups as too much. It is those consolidated challenges the court was ruling on Thursday.

Ironically, scrapping the newspaper/broadcast crossownership ban entered was one of the only changes the court said in its initially remand that 2003 FCC had justified. Now, due to the way a more moderate change was proposed, the ban is back in effect, at least for now.

In an interview for C-SPAN’s Communicators series, a trio of FCC chairmen, Democrats and Republicans, said they all thought the ban should go.

“The Third Circuit’s approval of the 2008 ownership rules for broadcast stations affirms the FCC’s authority to promote competition, localism, and diversity in the modern media marketplace,” said FCC general counsel Austin Schlick in a statement. “The Commission is currently engaged in a statutorily mandated further review of its media ownership rules. With an updated record and this supportive decision, the agency should be able to take appropriate steps to ensure that the nation’s media marketplace remains healthy and vibrant.”

“Today’s decision is a sweeping victory for the public interest,” said Corie Wright, policy counsel of Free Press, who argued the case along with Media Access Project’s Andrew Schwartzman. “In rejecting the arguments of the industry and exposing the FCC’s failures, the court wisely concluded that competition in the media – not more concentration – will provide Americans with the local news and information they need and want.”

“We won on almost every point, said Schwartzman in a statement. “This decision is a vindication of the public’s right to have a diverse media environment. The FCC majority knew that its effort to allow more media concentration was politically and legally unworkable, so it tried to end-run the procedural protections that are designed to give the public the right to participate in agency proceedings. It was disappointing that FCC chairman Genachowski chose to defend his predecessor’s erroneous action, but now that the Court has directed the FCC to make sure the public is not ignored, we can look forward to having a right to meaningful participation as the FCC looks at these questions again.”

Opponents of media consolidation won a big victory Thursday. The U.S. Court of Appeals for the Third Circuit tossed the Federal Communications Commission’s rule that loosened the ban on newspaper-broadcast cross-ownership. It also ruled to keep the limits on the number of TV and radio stations a single company can own in one market.

The court, which is based in Philadelphia where it heard arguments in February, was not unanimous in its decision. Chief Judge Anthony Scirica dissented on the newspaper-broadcast cross-ownership rule.

Public interest groups were giddy over the decision.

“We won on almost everything. This was a significant

vindication for us,” said Andrew Schwartzman, president and CEO of the Media Access Project, who argued on behalf of the Prometheus Radio Project in challenging the FCC’s rules.In 2007, under Republican FCC Chairman Kevin Martin, the ownership rules were modified to allow a single company to own both a newspaper and a radio or TV station in the top 20 markets.

The Third Circuit’s reversal comes as a blow to broadcasters and newspaper owners who have maintained the rules—which dates back to 1975, before the days of cable and the Internet—are outdated. It’s also the second time the court ruled in favor of public interest groups, which continue to fight any weakening of the media ownership rules.

The decision, however, does clear the way for the FCC to proceed with its already-delayed 2010 quadrennial review of media ownership rules. In a statement, the Democratic-controlled FCC praised the Court’s decision.

“The Third Circuit’s approval of the 2008 ownership rules for broadcast stations affirms the FCC’s authority to promote competition, localism, and diversity in the modern media marketplace,” said Austin Schlick, the agency’s general counsel. “With an updated record and this supportive decision, the agency should be able to take appropriate steps to ensure that the nation’s media marketplace remains healthy and vibrant.”

A U.S. appeals court vacated Federal Communications Commission rules relaxing limits on cross- ownership of newspapers and broadcast outlets, saying the agency failed to provide adequate notice.

The FCC in 2007 approved rules allowing publishers to own both newspapers and broadcast stations in the biggest U.S. cities. The move was designed to help forestall erosion in local news coverage by enabling companies to share news-gathering costs, the FCC said at the time.

The federal appeals court in Philadelphia today sent the ownership rules back to the FCC for further consideration. CBS Corp. (CBS), Clear Channel Communications Inc., Gannett Co., Media General Inc. and Cox Enterprises Inc. had challenged the FCC order, contending that the agency erred by failing to relax the rule further. Consumer groups argued that the FCC didn’t provide adequate notice and that elements of the rule were unsupported by evidence.

“This decision is a vindication of the public’s right to have a diverse media environment,” Andrew Jay Schwartzman, policy director of Media Access Project, a Washington-based law firm, said in an e-mail. “The FCC majority knew that its effort to allow more media concentration was politically and legally unworkable, so it tried to end-run the procedural protections that are designed to give the public the right to participate in agency proceedings.”

The ruling approved part of the FCC rules limited to broadcast stations, the agency said in an e-mailed statement.

“The commission is currently engaged in a statutorily mandated further review of its media ownership rules,” Austin Schlick, the FCC’s general counsel, said in an e-mailed statement. “With an updated record and this supportive decision, the agency should be able to take appropriate steps to ensure that the nation’s media marketplace remains healthy and vibrant.”

The companies filed as petitioners in the main case Prometheus Radio Project v. FCC, 08-3078, 3rd U.S. Circuit Court of Appeals (Philadelphia).

Contact:
Andrew Jay Schwartzman
andys@mediaaccess.org
202-454-5681

WASHINGTON – The United States Court of Appeals for the Third Circuit today ruled in favor of public interest groups in deciding that the FCC acted improperly in attempting to liberalize its rules prohibiting ownership of newspapers and broadcast stations in the same market.  In addition, the Court agreed with the citizens groups that the Commission failed to consider the impact of its rules on minority ownership of the media.  The Court also agreed with the public interest groups that pre-existing limits on the number of TV and radio stations a broadcaster can own in one market should remain in place.

Media Access Project represented the Prometheus Radio Project in challenging the newspaper/broadcast rule and minority ownership actions, and in supporting the retention of the other rules.  Andrew Jay Schwartzman argued the case on behalf of Prometheus.

The decision of Judge Thomas Ambro was joined in full by Judge Julio Fuentes.  Chief Judge Anthony Scirica dissented as to the newspaper/broadcast rule.

The following statement on the study can be attributed to Andrew Jay Schwartzman, Senior Vice President and Policy Director of Media Access Project (MAP):

“We won on almost every point.  This decision is a vindication of the public’s right to have a diverse media environment.  The FCC majority knew that its effort to allow more media concentration was  politically and legally unworkable, so it tried to end-run the procedural protections that are designed to give the public the right to participate in agency proceedings.  It was disapointing that FCC Chairman Genachowski chose to defend his predecessor’s erroneous action, but now that the Court has directed the FCC to make sure the public is not ignored, we can look forward to having a right to meaningful participation as the FCC looks at these questions again.”

Media Access Project is a nonprofit, public interest law firm working to protect free expression, innovation, and economic growth by promoting low cost, universal access to media outlets and communications services.

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