HILADELPHIA, Feb. 11 - Broadcasters and
public interest groups on Wednesday urged the federal appeals court
here to order the Federal Communications Commission to rewrite its
new rules that govern the size and reach of the nation's largest
media conglomerates. Many of the parties joining the fight against
the F.C.C., however, are doing so for diametrically opposed reasons.
The case has enormous implications for the newspaper, television
and radio industries. The new rules make it significantly easier for
the biggest companies to acquire other companies both in their
existing markets and in new ones. The rules have been supported by
some media companies, opposed by others, and have been heavily
criticized by many civic organizations on the grounds that they
could reduce competition and diversity of views on the airwaves, as
well as lead to reduced news coverage of local affairs.
At a hearing lasting more than eight hours, public interest
groups and some smaller broadcasters urged a three-judge panel of
the United States Court of Appeals for the Third Circuit to restore
the federal restrictions that had prevented a company from owning a
newspaper and a radio or television station in the same market.
Asserting that the commission used the wrong standard of review and
flawed theoretical models about consumer behavior to create the
ownership rules, the opponents also asked the court to reverse rules
that would make it easier for a broadcaster to own more television
stations in one market.
On the other side, a group of newspapers, television networks and
other broadcasters, including Clear
Channel Communications, the nation's largest broadcast radio
company, argued that the commission had not deregulated the industry
enough. They urged the court to return the rules to the commission
and order it to apply a higher standard of review in trying to
justify all of its media regulations.
Trying to steer a middle course, the commission's general
counsel, John A. Rogovin, asserted that the new regulations were
grounded in law and competition policy and should be affirmed by the
court.
The announcement on Wednesday by Comcast
of Philadelphia, the nation's largest cable company, that it was
making a $54.1 billion bid for the Walt
Disney Company, cast a shadow over the court proceedings, even
though that proposed deal is not affected by the rules at issue in
the court case. Two years ago, a federal appeals court struck down
the restrictions barring a single company from owning a cable
operator and a broadcaster in the same community.
But some advocates alluded on Wednesday to the proposed
Comcast-Disney deal as evidence that the old ownership rules for
newspapers and broadcasters were unfair.
"What we're saying is cable operators can buy any broadcaster,
and yet a newspaper in a community cannot," said Carter G. Phillips
of Sidley Austin Brown & Wood, which represents the Tribune
Company and Media
General. "I submit that is an immaterial and unfair
distinction."
"The one thing you cannot do is single out newspapers for
disparate treatment," he added.
(The New
York Times Company has previously filed comments with the
commission urging the repeal of the ownership restrictions for
newspapers and broadcasters. The Times Company was not a party to
the case before the court.)
The commission adopted the new rules in June in a contentious
proceeding that was criticized by a broad coalition of civil rights,
labor, religious and advocacy groups, including the National Rifle
Association. The rules struck down the restriction on one company's
owning a newspaper and a television or radio station in the same
market. They also gave television networks the ability to grow to
reach 45 percent of the national audience with their local affiliate
stations from the previous limit of 35 percent.
Last month, Congress attached a provision to a spending bill that
lowered that cap to about 39 percent - the current reach of the two
largest networks, Viacom's
CBS and the News
Corporation's Fox. The legislation, which President Bush signed,
eliminated that rule from consideration by the court.
In September, the appeals panel issued a surprise temporary order
that prevented the commission from enforcing the rules. It is rare,
though not unprecedented, for a court to issue such an order and
ultimately approve the rules, although the court made clear at the
time that it was not ruling on the merits of the case.
One central issue in the case before the court on Wednesday,
Prometheus Radio Project v. Federal Communications Commission, was
the appropriate legal standard for adopting the new rules. The
Telecommunications Act of 1996 requires the agency to review its
media ownership rules every two years to determine whether they are
"necessary in the public interest" and to "repeal or modify any
regulations it determines to be no longer in the public
interest."