Court Kicks Back FCC Rules

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New media-ownership rules adopted a year ago by the Federal Communications Commission were overturned last Thursday by a federal appeals court in Philadelphia in a ruling public-interest groups hailed as a victory over big-media consolidation.

FCC chairman Michael Powell — who pushed for relaxing the ownership rules despite strong special-interest and political opposition — complained the ruling would make it harder for the agency to place numerical limits on media ownership.

Last June, the Republican-controlled FCC voted 3-2 along party lines to make it easier for one company to accumulate newspapers, TV stations and radio stations in the same market.

Critics argued the commission simply abetted media consolidation at the expense of the public interest.

The new rules never took effect because a panel of the U.S. Court of Appeals for the 3rd Circuit froze them in place one day before they would have become law. The panel ended up maintaining the freeze while the FCC crafts new rules consistent with its 2-1 opinion.

At some point, the FCC can appeal the decision to the U.S. Supreme Court.

The ruling did not disturb the agency's decision to eliminate a rule that effectively banned the common ownership of a cable system and a TV station in the same local market. That change made it possible for Comcast Corp. to make a run at The Walt Disney Co., which owns 10 TV stations, including some in big Comcast markets.

The FCC crafted a formula, called a diversity index, to help the agency understand market power and decide where media ownership prohibitions should be retained and where discarded.

The court determined that the diversity index employed “several assumptions and inconsistencies” — for example, it gave “too much weight to the Internet as a media outlet [and] irrationally assigned outlets of the same media type equal market shares.”

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