Time for change on media cross-ownership regulation.

• Author: Sturm, John F.

1. INTRODUCTION II. THE REVISED CROSS-MEDIA RULES III. TODAY'S MEDIA MARKETPLACE IV. A LEVEL PLAYING FIELD V. PUBLIC INTEREST BENEFITS VI. THE THIRD CIRCUIT'S DECISION VII. STEPS FOR THE NEW ADMINISTRATION I. INTRODUCTION

   In June 2004, the U.S. Court of Appeals for the Third Circuit remanded to the Federal Communications Commission ("FCC") a long overdue and much needed decision to relax its nearly thirty-year-old absolute ban on newspaper/broadcast cross-ownership. (1) Adopted by the Commission back in 1975, the FCC's so-called newspaper/broadcast cross-ownership ban prohibits the joint ownership of a daily newspaper and either a TV or a radio station in the same local market.

   While total repeal of the blanket ban would have been preferable and fully justified, the modifications adopted by the FCC retained calibrated limitations on cross-ownership in all but the nation's largest markets. The revised rules would have fostered substantial public interest benefits without any serious countervailing harms. Most notably, by permitting newspaper publishers to combine their extensive newsgathering resources with those of broadcasters, the revised rules would have enabled TV and radio stations to provide audiences nationwide with improved news and informational services.

   Although the Third Circuit fully affirmed the Commission's finding that a flat ban on cross-ownership no longer served the public interest, the court decided to remand the new rules based on a misunderstanding of the significance of an analytical tool used by the FCC. The decision represents an unnecessary and counterproductive throwback to an era when consumers had far fewer choices for news and information than they have today. Because the effect of the decision was to put the preexisting cross-ownership ban back in place pending the outcome of the Commission's remand proceeding, the court's decision will needlessly delay important benefits to consumers and impede the ability of newspaper publishers and broadcasters to keep pace with their ever-more-formidable multimedia competitors.

   In order to preserve the ability of daily newspapers and broadcasters to remain competitive in today's environment, the new administration should move quickly and decisively to remedy this situation. Specifically, the new administration should aggressively pursue Supreme Court review of the Third Circuit decision. If the Supreme Court does not provide a prompt remedy, the administration should accelerate the Commission's remand proceeding with respect to the modified cross-media limits so that the outdated and thoroughly discredited ban on newspaper/broadcast cross-ownership finally can be laid to rest.

2. THE REVISED CROSS-MEDIA RULES

   After several unfulfilled promises to reevaluate the outdated restriction, the FCC issued its decision to relax the flat ban on newspaper/broadcast cross-ownership in June 2003. Specifically, as part of a biennial review of all of its broadcast ownership regulations mandated by Congress in the Telecommunications Act of 1996 ("1996 Act"), the FCC replaced the ban with a series of cross-media limits permitting varying levels of cross-ownership depending on the size of the local market at issue. Under the new rules, newspaper/broadcast cross-ownership would have remained prohibited in markets with three or fewer TV stations. In mid-sized...