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Duopoly rule ‘arbitrary,’ says fed appeals court

Apr 8, 2002  •  Post A Comment

In a move that could result in a new round of consolidation in local markets, a federal appeals court in Washington last week ordered the Federal Communications Commission to reconsider its duopoly rule.
The rule, as revised by the FCC in 1999, bars broadcasters from acquiring a second television station in markets where a merger would result in fewer than eight independently owned TV stations.
In response to a challenge from Sinclair Broadcast Group, the court held that the FCC’s ruling was “arbitrary and capricious” for failing to demonstrate why nonbroadcast media aren’t considered toward the eight-voice count.
Among other things, the court noted that the FCC, in setting the ground rules for common ownership of radio and TV stations in the same markets, had included daily newspapers and cable systems in the relevant voice count. “On remand, the commission conceivably may determine to adjust not only the definition of `voices’ but also the numerical limit,” said the court, in a 2-1 decision written by Judge Judith Rogers.
In a partial dissent, Judge David Sentelle said he would have axed the rule altogether.
“It made it all but impossible for the FCC to do anything but relax the duopoly rules,” said Mark Hyman, Sinclair VP, corporate relations.
But Andrew Schwartzman, president of the activist Media Access Project, said he found a silver lining in the ruling. “The court unambiguously reaffirmed the FCC’s constitutional and statutory authority to have regulations like these,” Mr. Schwartzman said.
Earlier this year, the same court directed the FCC to review its rationale for a rule that bars broadcasters from acquiring stations reaching more than 35 percent of the nation’s TV households. The same ruling vacated an FCC regulation barring cable operators from acquiring broadcast stations in their service areas.
Last year, the court also ordered the FCC to reconsider a rule barring cable operators from owning systems with more than 30 percent of the nation’s multichannel TV subscribers.
Analysts expect all the rules to be axed or relaxed substantially, clearing the way for consolidation that would for the first time permit one company to own a daily newspaper, two TV stations, a cable system and multiple radio stations in the same markets virtually everywhere.