07.01.2004 12:00 PM
Court extends stay barring media ownership rules changes until FCC reworks rules

The U.S. Court of Appeals for the Third District in Philadelphia and the U.S. Senate separately have handed the FCC two major setbacks to sweeping changes of the rules relaxing ownership restrictions on media outlets that it adopted last June.

On June 24, the court affirmed the commission’s role in making rules governing media ownership but returned the FCC’s most recent, extensive regulations covering crossownership of newspaper and broadcast outlets in a local market back to the commission for more work.

The court, in a 2-1 decision, told the FCC that it had failed to justify its media ownership plan, particularly the plan’s limits for local television and radio ownership, and cross-ownership of media within local markets. The court had imposed a stay in the case led by the Prometheus Radio Project against media ownership deregulation; the decision confirmed that the stay would remain in place until the commission fixed the rules.

The court found flaws in a tool the commission created to assist in assessing the level of competition among media. This Diversity Index was modeled on the HHI, which the Department of Justice and the Federal Trade Commission use to measure the effect of proposed mergers in local markets. However, the court felt the FCC incorrectly used the index’s results to derive its cross-media ownership limits.

Separately, the Senate passed an amendment to a defense appropriations bill June 22 overturning the FCC’s rule changes to media ownership. The amendment passed as part of a unanimous consent decree.

The bill will move now to a House-Senate conference committee, which may strip it of its media ownership language. The House has previously expressed its objection to any attempt in the Senate to undo FCC rulemaking on media ownership.

To read the appeals court ruling, visit www.ca3.uscourts.gov/staymotion/033388p.pdf.

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