COURT LIKELY TO REMAND 35% TV OWNERSHIP CAP

We were hard-pressed to find anybody in standing-room-only audience at U.S. Appeals Court, D.C., oral argument Fri. on FCC’s 35% TV station ownership cap that thought 3-judge panel would leave rules in place just as they were drafted. Following argument, Legg Mason analyst Blair Levin predicted “the rules are headed for an exit.” Levin, FCC chief of staff under Chmn. Reed Hundt, expressed opinion of most other observers (most of them lawyers): “The court was focused on how to send it back to the FCC rather than whether to send it back.”

Spectators we talked with were nearly unanimous in opinion that 3-judge panel -- Chief Judge Douglas Ginsburg and Judges David Sentelle and Harry Edwards -- would remand case to Commission to conduct rulemaking and with very short time period to report back to court. There also was possibility, as brought up by judges themselves -- who asked many questions, interrupting constantly, of 4 attorneys who made arguments -- court could vacate ownership restrictions outright: “I'm sure that possibility will be discussed in those [judges'] chambers,” attorney who has argued many cases before same court told us.

Seeking repeal of rules were attorneys Edward Warren (for networks) and Paul Capuccio of AOL-Time Warner, who based much of their appeals on First Amendment grounds. (Note: In addition to ownership cap, Time Warner’s appeal of broadcast-cable cross- ownership ban is part of same case, but got no attention in court except from Capuccio.) Warren argued that FCC received “specific directive” from Congress in 1996 legislation to review all of its rules and repeal those no longer necessary, yet agency has “offered only a scant, 5-paragraph directive” in support of 35% cap. There’s nothing in record to justify rules and court should act “forthwith, forthwith” and vacate rule outright, he said.

FCC attorney Grey Pash faced rough time from judges in arguing for retention of rules. He attempted, without much success because of interruptions from bench, to make argument that Commission should properly reconsider rules in its biennial report mandated by Congress. Robert Long of Covington & Burling, also arguing for retention of rules on behalf of Network Affiliates Station Alliance (NASA), urged that FCC not deregulate all at once but go “step-by-step and see what happens.” He said there was nothing in any statute telling FCC to repeal 35% cap.

There was considerable levity during nearly 2-hour argument - - which went well past time allotted because of judges’ questions and comments -- many times nongermane to issue being argued. For instance, in response to comment by Long, Sentelle said, “I think there are many ridiculous statutes” that have been passed by Congress.