Big Media's expansion plans have been put on hold, at least for now. In an at-times sharply worded ruling, the U.S. Court of Appeals for the 3rd Circuit on Thursday overturned the Federal Communications Commission's attempt last June to dramatically loosen the rules of media ownership. Delivering an embarrassing rebuke to FCC Chairman Michael Powell, the court essentially took the centerpiece of Powell's policy initiative -- media consolidation -- and threw it back into the commission's lap, telling Powell the FCC had to do a much better job of explaining its rationale for wanting to do away with decades worth of ownership regulations. The court found fault with both the logic and the evidence presented by the FCC.
"The Commission falls short of its obligation to justify its decisions to retain, repeal or modify its media ownership regulations with reasoned analysis," the appeals court in Philadelphia ruled. The decision, coming on the heels of Tuesday's bipartisan vote in the Senate to repeal those same FCC media ownership rules if necessary, highlights how opposition to media consolidation continues to mushroom.
"The ruling is an absolute repudiation of Chairman Powell's theory that allowing large media companies to dominate the most important sources of local news and information is appropriate public policy," says Gene Kimmelman, senior public policy director for the Consumers Union, one of the petitioners in the court case.
In an angry response to the court's decision, Powell insisted Thursday that it "perversely may make it dramatically more difficult for the commission to protect against greater media consolidation. This is deeply troubling and hampers the flexibility of the agency to protect the American public, as this agency is charged to do."
The ruling represents a clear setback for media giants that are anxious to expand, such as NBC, Viacom, Clear Channel and News Corps. But the ruling is also bad news for the White House. Early in this administration the White House vigorously supported loosening media ownership rules (and even more so supported the FCC chairman who championed them). In recent months, however, as bipartisan opposition to the FCC's media rules has grown, the White House, reportedly upset about the political capital being spent over an issue that was thought to have been put to bed a year ago, has had little to say publicly on the matter. By contrast, presumptive Democratic nominee John Kerry has been speaking out about the dangers posed by increased media consolidation. And a poll last year by the Pew Research Center for the People and the Press found that just 10 percent of Americans viewed further media consolidation positively.
Instead, opposition to media consolidation has emerged over the past year as a broad-based populist issue, with a curious coalition of liberal and conservative groups --from the National Rifle Association to MoveOn.org -- joining to aggressively oppose the suggested rule changes. The consensus on the issue became so wide ranging that conservative New York Times columnist William Safire, who warned the Bush White House that pushing a media-consolidation agenda could come back to haunt it in the upcoming presidential election, and former President Bill Clinton, who penned an op-ed for the New York Daily News urging that the FCC's move be overturned, found themselves on the same page.
The court's finding on Thursday highlights what critics had been suggesting all along: that the FCC failed to do its legal homework -- and therefore the explanation it presented for the need to allow radical consolidation by the country's largest media players did not stand up to scrutiny. Critics also complained that the commission's interests were driven more by marketplace ideology than by the country's existing communications laws. Specifically, the court rejected the FCC's assertion that the 1996 Telecommunications Act required the FCC to gradually loosen ownership rules unless evidence could be shown to warrant keeping them in place. The court agreed with FCC critics who insist that the Telecommunications Act requires the opposite: that media ownership rules remain in place unless sufficient evidence is presented that they need to be loosened.
Eager to create new economic efficiencies, media companies such as Viacom, Time Warner and the Tribune Co. have been pressing the FCC for years to relax limits on cross-ownership, such as controlling TV stations and newspapers in the same city. Last June, in a 3-2 vote split along party lines, FCC commissioners voted to allow one corporation to own both the top newspaper and up to three television stations, along with eight radio stations, in the same city in most U.S. markets. They also voted to allow broadcast networks such as Fox and NBC to buy more local television stations nationwide, enabling the networks to reach 45 percent of the national audience, up from the then national cap of 35 percent.
Thursday's appellate court ruling rejected the FCC's decision to allow greater ownership of television and radio stations in the same market. However, the court ruled that the FCC does have the power to lift the prohibition on a company's owning both a newspaper and a television station in the same city. Also, Congress had already passed legislation, signed into law by Bush, that lifted the broadcast cap, but only to 39 percent, instead of the FCC's proposed 45 percent.
Powell and FCC lawyers will soon decide their next move. Kimmelman says the sooner the FCC's rationale for changes in media ownership rules is discarded, the better: "Hopefully we'll never see anything as crazy and ideologically driven from the FCC in the future."