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Third Circuit Remands Newspaper-Broadcast Rule Change to FCC

The Third Circuit Court of Appeals has upheld the FCC's 2008 decision not to loosen the TV duopoly, radio ownership or TV-radio crossownership  rules and vacated and remanded its loosening of the broadcast/newspaper crossownership rule for  failure to meet notice and comment requirements.

It also remanded some of the FCC's minority-ownership efforts for further clarification.

The FCC is currently reviewing its ownership rules under a congressional mandate and the court said it could solicit new comment on the newspaper-broadcast crossownership rules in that context, but the court retained jurisdiction over the remand.

"Today we affirm the 2008 Order with the exception of the newspaper/broadcast cross-ownership rule," wrote the court, "for which the Commission failed to meet the notice and comment requirements of the Administrative Procedure Act. We also remand those provisions of the Diversity Order that rely on the revenue-based "eligible entity" definition, and the FCC‘s decision to defer consideration of other proposed definitions (such as for a socially and economically disadvantaged business, so that it may adequately justify or modify its approach to advancing broadcast ownership by minorities and women."

Broadcasters had challenged the FCC's decision under then Chairman Kevin Martin not to loosen most rule changes, and had challenged its loosening of the ban on newspaper/broadcast crossownerships as insufficient deregulation, as well as firing a blunderbuss shot at all media ownership regs as unconstitutional.

Martin had caught flack for essentially noticing the proposed newspaper-broadcast crossownership change in a New York Times op-ed only weeks before voting to adopt it. The Court concluded that was not sufficient notice.

The court upheld the FCC's professed light deregulatory touch and said media ownership regs were not unconstitutional "because they are rationally related to substantial government interests in promoting competition and protecting viewpoint diversity."

It also concluded that CBS's argument that ownership rules are unconstitutional attempts to manipulate content has no basis, or Sinclair's argument that they single out TV.

It remanded several of the FCC's efforts to boost ownership diversity as insufficient.

"Despite our prior remand requiring the Commission to consider the effect of its rules on minority and female ownership, and anticipating a workable SDB definition well before this rulemaking was completed, the Commission has in large part punted yet again on this important issue," said the court. "While the measures adopted that take a strong stance against discrimination are no doubt positive, the Commission has not shown that they will enhance significantly minority and female ownership, which was a stated goal of this rulemaking proceeding."

The Third Circuit stayed and remanded the FCC's 2003 deregulatory ownership changes. The 2008 decision by Martin simply to loosen the newspaper-broadcast crossownership ban, not loosen any other rules, and take several minority-ownership related moves, was a response to that remand, and one that drew immediate challenges by broadcasters as not enough dereg and anti-consolidation groups as too much. It is those consolidated challenges the court was ruling on Thursday.

Ironically, scrapping the  newspaper/broadcast crossownership ban entered was one of the only changes the court said in its initially remand that 2003 FCC had justified. Now, due to the way a more moderate change was proposed, the ban is back in effect, at least for now.

In an interview for C-SPAN's Communicators series, a trio of FCC chairmen, Democrats and Republicans, said they all thought the ban should go.

"The Third Circuit's approval of the 2008 ownership rules for broadcast stations affirms the FCC's authority to promote competition, localism, and diversity in the modern media marketplace," said FCC General Counsel Austin Schlick in a statement. "The Commission is currently engaged in a statutorily mandated further review of its media ownership rules.  With an updated record and this supportive decision, the agency should be able to take appropriate steps to ensure that the nation's media marketplace remains healthy and vibrant."

"Today's decision is a sweeping victory for the public interest," said Corie Wright, policy counsel of Free Press, who argued the case along with Media Access Project's Andrew Schwartzman. "In rejecting the arguments of the industry and exposing the FCC's failures, the court wisely concluded that competition in the media - not more concentration - will provide Americans with the local news and information they need and want."

"We won on almost every point, said Schwartzman in a statement. "This decision is a vindication of the public's right to have a diverse media environment. The FCC majority knew that its effort to allow more media concentration was politically and legally unworkable, so it tried to end-run the procedural protections that are designed to give the public the right to participate in agency proceedings. It was disappointing that FCC Chairman Genachowski chose to defend his predecessor's erroneous action, but now that the Court has directed the FCC to make sure the public is not ignored, we can look forward to having a right to meaningful participation as the FCC looks at these questions again."

Broadcasters remain convinced that the regs need adjusting to reflect new market realities, and should have the opportunity to spell out those concerns with the FCC as part of the quadrennial review.

"There have been sweeping changes in the media landscape since most of the broadcast ownership rules were adopted decades ago," said National Association of Broadcasters spokesman Dennis Wharton. "NAB believes that modest reform of rules to allow free and local broadcasters to compete successfully in a universe of national pay TV and radio platforms is warranted."