Appeals court weighs killing the station cap

Sep 10, 2001  •  Post A Comment

A federal appeals court said Friday it may kill the 35 percent station ownership cap, a dramatic move-unthinkable to affiliates and watchdogs-that would likely trigger a massive wave of station consolidation by the major television networks.
If the U.S. Court of Appeals in Washington does kill the Federal Communications Commission rule-and it cautioned that’s only one of several options on the table-the agency could put together another regulation restricting ownership of broadcast stations.
But under today’s Republican-controlled FCC, there’s no guarantee a new rule would materialize, and if it did, it might not be as far-reaching as the existing one or could face court challenges of its own.
Another option for the court is to remand the rule back to the FCC, possibly with instructions to either justify it or modify it in a way that satisfies the court’s concerns.
A remand might leave the existing rule intact while the FCC takes action, but the restrictions could also be stayed pending agency action.
“The commission’s got its work cut out for it,” former FCC Commissioner Susan Ness, a Democrat, told reporters after Friday’s oral arguments before the court on network and cable television challenges to two FCC ownership rules.
Fox Television Stations, Viacom/CBS and NBC challenged the broadcast station cap, and Time Warner challenged the broadcast-cable cross-ownership rule.
“If the rules are eliminated, realistically the commission is going to have an extremely difficult time, even on a case-by-case basis, restricting ownership unless and until it has new rules in place,” Ms. Ness said. “Once it permits ownership configurations to take place, then that is precedent, and it [becomes] extremely difficult for the commission to reverse course at a later point in time.”
Harold Feld, associate director of the Media Access Project, a public-interest law firm that intervened on behalf of the defendants-the FCC, the Network Affiliated Stations Alliance and the National Association of Broadcasters-agreed.
“If this court strikes down these rules, which have been the centerpiece of preserving our system of diverse media outlets in this country, there are going to be mergers all over the place,” he said. “And the notion that the FCC’s merger review is going to stop that is simply not the case.”
Meanwhile, the FCC came under fire from the judges for appearing to drag its feet on deciding whether to retain the rules.
The cap bars broadcasters from owning stations reaching more than 35 percent of TV households nationwide, and the broadcast-cable restriction prohibits cable systems from owning TV stations in their markets and vice versa.
But the judges said the foot-dragging wasn’t entirely the FCC’s fault, because Congress requires it to evaluate these and other rules every two years under a biennial review.
“It’s a silly statute. It’s bizarre, because the time frame doesn’t make any sense,” U.S. Court of Appeals for the District of Columbia Circuit Judge Harry Edwards said of the review process.
The end result of all this, he said, is the agency keeps putting off decisions about its regulations until the next review. “You can’t just say we’ll hang around to the third or fourth biennial review,” he said.
The judge was also tough on Edward Warren, an attorney representing the networks seeking to abolish the 35 percent cap, quizzing him as to why the court shouldn’t send the rule back to the agency.
“This thing can go on forever unless this court takes action,” Mr. Warren responded.
He argued that the rule is “constraining investment decisions” by forcing investors to put money into cable, satellite and other nonbroadcast facilities. He also said the rule contradicts the FCC’s goal of promoting free over-the-air television.
Judge David Sentelle said Time Warner’s challenge of the broadcast-cable restrictions seemed particularly ripe for a remand to the FCC, which conceded in its legal briefs that it hasn’t fully explored all issues surrounding possible repeal of the rule, such as the state of competition against cable from satellite TV.
Watchdogs expressed concern that the broadcast networks are trying to use the court to sabotage the legislative and regulatory process.
“If these networks prevail, you’ll have three or four media oligarchs in control of this nation’s media system,” said Jeff Chester, executive director of the watchdog Center for Digital Democracy.
“This court action is simply an extension of their lobbying apparatus, and what’s at stake really here is the future structure of the digital media system,” he said.