Federal appeals court halts implementation of FCC ownership rules

Thursday, September 4th 2003, 12:00 am

By: News On 6

PHILADELPHIA (AP) _ In a break for small media companies fearful of industry consolidation, an appeals court blocked new federal rules that would relax restrictions on how many TV stations a company can own and lift a ban on owning newspapers and broadcast outlets in the same city.

Critics of the Federal Communications Commission rules say the industry overhaul would create a media landscape in which control over what people see, hear and read is in the hands of a few giant companies.

In an emergency stay, the 3rd U.S. Circuit Court of Appeals sided with a coalition of media access groups that claimed its members could suffer irreparable harm if the rules went into effect Thursday as scheduled.

``Given the magnitude of this matter and the public's interest in reaching the proper resolution, a stay is warranted pending thorough and efficient judicial review,'' a three-judge panel concluded Wednesday. The court did not comment on the merits of the Prometheus Project's complaint.

The proposed media shakeup, which would allow a single company to own TV stations reaching 45 percent of American viewers, has stirred fierce debate among an array of groups across the political spectrum.

While the Bush administration has fought hard for the overhaul, many influential Republicans are among its most vocal opponents, saying the rules would stifle competition.

Sen. Byron Dorgan, D-N.D., who, along with Mississippi Republican Trent Lott has been leading a group of senators trying to undo all the FCC changes, said the court's ruling ``will give a boost to our efforts.''

``The ruling recognizes what I hope most of the Senate recognizes: These rules are inappropriate,'' Dorgan said in an interview.

The new ownership rules were approved in June by the majority-Republican FCC on a party-line, 3-2 vote.

However, the House voted overwhelmingly in July to block the FCC and the Senate is to vote next week on a resolution of disapproval for the rules changes, a seldom-used maneuver also called a ``congressional veto.''

To succeed, the resolution needs majority approval in the Senate and House and President Bush's signature or enough votes to override his veto.

Smaller broadcasters and network affiliates are concerned the FCC rules will allow the networks to gobble up more stations and limit local control of programming. Supporters say the changes will help broadcasters grow and compete in a market changed by cable television, satellite broadcasts and the Internet.

An attorney for the Prometheus Project, Samuel L. Spear, praised the decision. He said his clients, who are mostly advocates of low-power community radio stations, believe their ability to broadcast will be hurt by the growth of media conglomerates.

``It just allows the big media companies to grow bigger and to monopolize the industry more,'' Spear said.

The ruling followed a two-hour hearing in which the attorneys for the FCC argued that the rules could go into effect as scheduled without any long-term damage to the groups fighting it. An FCC spokesman said the agency was disappointed by the decision and would continue to defend the new rules in court.

The ownership rules face other challenges.

The National Association of Broadcasters said the changes don't go far enough. The influential industry group filed an appeal last month to block changes to how radio markets are defined and overturn rules that still prevent TV station mergers in some smaller markets.

Blair Levin, a former FCC official who is an analyst with the Legg Mason investment firm, said a delay in the implementation of the new rules will likely have little immediate impact on media companies.

Newspapers and stations that had been contemplating mergers allowed by the looser ownership rules put most of their plans on hold following signals from Congress that it would try to stop the regulations from taking effect, he said.

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