Third Circuit to Lift Stay On FCC's Cross-Ownership Rule Revision

The Third Circuit Court of Appeals has given the FCC and backers of its position three weeks to explain why the court should not lift the years-long stay on the commission's media ownership rule rewrite and start hearing the legal challenges.

According to a copy of an order from a three-judge panel of the court supplied to Multichannel News, the judges want more input on why the court should not lift the stay on the revised newspaper-broadcast cross-ownership rule and set a schedule for briefs on court challenges to that rule--both those currently before the court and those held in abeyance.

"Upon consideration of the parties' status reports and the responses to the orders filed June 12, 2009, and November 4, 2009, the parties are hereby ORDERED to show cause why the stay entered by this Court...and continued in Prometheus Radio Project v. FCC should not be lifted," wrote the judges.

In particular, they said, "the parties are directed to address the Media Parties' argument in their status report that, despite proceedings over the last several years repealing the 1975 Ban [on newspaper-broadcast cross-ownership] that ban remains in effect. The parties shall file responses to this order to show cause within twenty-one days of the date of this order."

The FCC, back in October and again in November, asked to keep the court's current stay of the rule change in place or, failing that, remand the decision back to the commission. It also asked the court to hold off on hearing the legal challenges until the commission had finished the 2010 quadrennial review of the media ownership rules. For its part, the FCC said it was not going to rule on a petition to reconsider the cross-ownership decision until it had finished the review, which it has already begun.

In a status report filed with the court in October, the commission reaffirmed that its 2008 decision to loosen the ban no longer necessarily reflected the views of a majority of the commission (unlike in 2008, the current majority is now Democratic). In May, when Democrats gained the majority, the commission had made that point to the court in asking that the stay be kept in place. The court complied but has since sought the status report on the FCC's progress on the issue.

A group of broadcasters, including CBS, Belo, Media General and Gannet, opposed the remand and said the stay on the revised rules should be lifted. The court now apparently wants to hear a better argument for why that request should not be granted.

"This may indicate that the court recognizes that its actions have resulted in no change in ownership rules for years, and that result is not consistent with Congress' directive in the statute," said one veteran broadcast attorney.

Might the court also recognize that given the current economy, broadcasters have more urgent case for regulatory certainty? "I don't know how much the court really appreciates [broadcasters' current financial difficulties]," the attorney said. "I think the court appreciates that since 1995, the commission has been saying something needs to be changed in these rules, and 14 years later, they are still exactly the same as they were. And under the commission's proposal, nothing was going to happen for several more years."

In the 2008 decision, the FCC modified the outright ban on newspaper/broadcast cross-ownerships in the top 20 markets and outlined a new waiver process for smaller markets.

The FCC's media ownership rules have been under some form of court challenge, stay, or review since then-FCC chairman Michael Powell tried to loosen them in 2003. FCC chairman Kevin Martin argued the 2008 rules were a modest change and a compromise, but they were almost immediately taken to court by those who argued they went too far or not far enough.

In recent ownership workshops, broadcasters have argued that in an increasingly multiplatform world, where broadcast-online-print synergies may be one way of remaking their business models, the restrictions on cross-ownership are even less defensible.

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.