APPEALS COURT REMANDS ‘VOICES’ PORTION OF FCC OWNERSHIP RULES

U.S. Appeals Court, D.C., in decision Tues., remanded FCC’s TV station local ownership limits to Commission for reconsideration of its decision not to include newspapers, cable and other media outlets in its definition of “voices.” However, court refused to overturn rules entirely, rejecting arguments by Sinclair Bcst. that they violated First Amendment and that requirement for 8 independent voices in market was arbitrary. FCC officials said only that they still were studying decision. NAB Pres. Edward Fritts said same thing.

FCC “failed to demonstrate that its exclusion of nonbroadcast media from the 8 voices exception is ‘necessary in the public interest,'” appeals court said in unanimous decision. It said “deficiency” in agency’s rationale for “voices” definition was “underscored” by fact that Commission included other media in its voices definition for media cross-ownership rules. In that case, Commission decided to relax cross-ownership rules based on growth in other media. “Having found for purposes of cross-ownership that counting other media voices ‘more accurately reflects the actual level of diversity and competition in the market,’ the Commission never explains why such diversity and competition should not also be reflected in its definition of voices for the local ownership rule,” said Judge Judith Rogers, who wrote decision (CD Jan 15 p3).

“The court’s decision validates what we have been saying all along -- that the rules governing television ownership are outdated, without basis and anticompetitive,” Sinclair CEO David Smith said. He said Sinclair was “evaluating our options” and “hopeful that the FCC and courts will respond in a manner that will allow over-the-air television to remain competitive with other forms of media.” Typically, FCC rules remain in place during remand process.

FCC had used 1997 Roper study indicating TV was main source of news for 70% of households to justify voices requirement. However, court said Roper study didn’t differentiate between broadcast and nonbroadcast TV and FCC’s rulemaking on issue “does not fill the evidentiary gap.”

Court decided not to decide whether 8 was appropriate number of voices per market, but said “on remand the Commission conceivably may determine to adjust not only the definition of ‘voices,’ but also the numerical limit.” It said choosing number of “voices” required was “line drawing” that was due some deference to FCC’s expertise.

Decision did reject several other Sinclair claims, including that FCC should have grandfathered LMAs, and failing to do so was retroactive rulemaking. Even though failure to grandfather “may upset some expectations,” court said, it was consistent with 1996 Telecom Act and “fulfills the public interest in diversity.” Court also dismissed claim that local ownership rules violated 5th Amendment “takings” provision, saying “Sinclair fails to show that it had a reasonable expectation” that LMAs would be grandfathered.

Sinclair claim that ownership limits violated First Amendment were “foreclosed by Supreme Court precedent,” appeals court said, and high court still upholds scarcity rationale for regulating broadcast. It said 8-voice requirement “presents no separate constitutional implications because it imposes no independent burden on speech.”

Judge David Sentelle partially dissented, saying he would have gone further in overturning rules as arbitrary and capricious. Commission can’t “simply cry ‘diversity’ and thus avoid meaningful appellate review,” he said: “Purporting to promote ‘diversity’ does not give the agency a free pass.” Sentelle said Commission failed to determine “how much diversity is enough” and should define diversity goal, including “explain the distinctions between programming diversity and viewpoint diversity, rather than simply quoting boilerplate on the ‘elusiveness’ of diversity.” Sentelle said FCC “failed to justify affirmatively the need for any duopoly rule, with or without and 8 voices exception,” so he would vacate entire rule. Third member of panel was Judge Stephen Williams.

Although it supports diversity, Media Access Project considers decision “not all bad,” Deputy Dir. Cheryl Leanza said. She conceded it was “small setback” for duopoly rules, but said court rejected Sinclair’s other “over-reaching” arguments and “re-emphasized” Supreme Court decisions supporting scarcity rule and latitude FCC had in supporting diversity. “Certainly, the court decision does not direct or imply the FCC should scale back the rules,” Leanza said, instead merely require that Commission explain rationale for decision. She also said that if agency changed definition of “voices,” it also could change number of voices required, noting that 20 voices were required under cross-ownership rules. Leanza said remand “could well force Chairman Powell to justify his ownership decisions on his own analysis and their own merits. He can’t blame the court, he must step up and take responsibility for his decisions.”

Court decision will result in “many more TV duopolies in medium and small markets,” Paxson Chmn. Lowell Paxson predicted.