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FCC Rules at Stake in Philly

When judges in Philadelphia hear argument over the FCC's new media-ownership rules, their focus will be on controlling local markets. The broadcast cap will likely be left out of the court's decision.

Complaints about the commission's decision to limit a TV owner's national reach to 45% of TV homes garnered the most attention last summer. A vote by Congress last month set the cap at 39%.

Emphasis next week will be on rules controlling local markets: relaxing limits on TV duopolies, permitting triopolies, allowing more same-market TV/newspaper combos, and restricting somewhat the number of radio stations one owner can control. Networks, station groups and consumer activists will all weigh in on the issue.

The judges, though, are giving FCC General Counsel John A. Rogovin 35 minutes to discuss how the new 39% rule affects the case. The FCC has suggested that the court eliminate suits related to the national cap in order to "streamline" the case.

One contentious issue regarding the cap remains. Media Access Project has challenged the FCC's decision to retain the "UHF discount," tallying UHF stations at half their actual reach in counting an owner's national reach. The discount has allowed companies like Paxson and Sinclair to assemble groups with more than 60 stations without violating the national limit.

It's unclear whether the judges will accept that challenge in the case.

The discount was instituted in 1985 because the UHF stations historically had less reliable reception and were less likely to be affiliated with audience-drawing major networks. The rise of cable carriage for local broadcasters has eliminated any validity of those arguments, and the discount should have been removed in the FCC's June examination of ownership rules, MAP said.

Paxson, however, argues that Congress wanted the UHF discount retained: Because it revised the cap without changing the FCC's definition of audience reach, the UHF break must be left intact. "The court should not address any challenge to the FCC's retention of the UHF discount," said Paxson attorney John Feore. The FCC, Fox, NBC and CBS agree.

"That is clearly wrong," countered MAP President Andrew Schwartzman. He noted that Congress rejected the FCC plan raising the cap from 35% to 45% and slowed the pace of deregulation by spacing out ownership reviews to four years. "It is implausible that Congress would simultaneously freeze the UHF discount," contributing to media consolidation on one hand, he said, and restrict consolidation on the other.

FCC Associate General Counsel Jacob M. Lewis will have 45 minutes to defend against MAP's challenges to the new local caps and crossownership rules. Among the changes: TV duopolies are permitted in 72 markets, thanks to a decision allowing pairs in markets with five commercial stations. Also, newspaper/TV combos were permitted in markets with four TV stations, when they had essentially been banned. All the changes have been stayed pending outcome of the case.