Affil Group Sues FCC Over 45% Cap

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Hundreds of TV stations filed an appeal in federal court Wednesday seeking to
overturn a new broadcast-ownership rule adopted by the Federal Communications
Commission two months ago.

The appeal was filed by 600 affiliates of ABC, NBC and CBS, which oppose an
FCC ruling allowing the "Big Four" networks to acquire more local stations.

The appeal was filed with the U.S. Court of Appeals for the D.C. Circuit,
where the majority of cases deciding the legality of FCC rules are heard.

On June 2, the FCC raised the national TV-station cap to 45%, which means one
owner can own stations reaching 45% of TV households nationally.

The affiliates, represented by the Network Affiliated Stations Alliance,
supported retention of the 35% cap as a brake on the marketplace leverage of the
networks.

Last month, the House passed a spending bill 400-21 that would restore the
35% cap. The Senate Commerce Committee approved a 35% bill that also overturned
the FCC's decision to allow newspapers and TV stations to combine in the same
market for the first time since 1975.

Restoration of the 35% cap might require News Corp. and Viacom Inc. -- both
currently at about 40% due to waivers -- to sell stations.

In the appeal, NASA said the FCC decision to raise the cap to 45% was
"arbitrary, capricious and otherwise not in accordance with law."

A panel of the D.C. Circuit struck down the 35% cap in February 2002, ruling
that the FCC failed to demonstrate, as required by law, that the rule continued
to be necessary in the public interest as a result of competition.

The NASA appeal could sit at the court for a long time if the D.C. Circuit
decides not to advance the case while the commission consider petitions for
reconsideration that are likely to be filed in coming weeks. The FCC has been
known to sit on "recon" petitions for years.

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