Copyright 2002 Newsday, Inc.

Newsday (New York, NY)…02/20/2002

From LexisNexis

In a ruling consumer advocates say will further concentrate media control, the U.S. Court of Appeals said yesterday that the Federal Communications Commission must reconsider its cap on TV station ownership.

The court also threw out an FCC rule that says a company cannot own a cable TV system and a local broadcast TV station in the same market.

Analysts said that portion of the ruling could pave the way for AOL Time Warner, which owns the WB Network and is the second-biggest cable operator in the country, to own more local stations, including one in New York, or even buy the NBC Network, which General Electric owns. AOL Time Warner now owns one broadcast station, TBS in Atlanta.

The FCC, under chairman Michael Powell, a Republican, is seen as likely to loosen or even eliminate ownership restrictions. The cap, which limited a company to stations reaching 35 percent of the nation's television audience and which already has been exceeded by some owners, was challenged by Fox Television Stations, CBS and NBC.

AOL Time Warner, which had to give up a cable system when Time Warner acquired Turner Broadcasting's TBS, challenged the provision barring both cable and broadcast station ownership.

Yesterday, Paul Cappuccio, the company's general counsel, hailed the court decision and said the rule had "long ago become an anachronism that did not serve the public interest."

Consumer advocates took a very different stance.

"This decision erodes the public's First Amendment rights to have a diversely owned media marketplace," said Jeff Chester, executive director of the Center for Digital Democracy, a Washington-based consumer advocacy group.

Chief Judge Douglas Ginsburg, writing for a three-judge panel of the court in Washington, D.C., said the FCC's decision to retain the ownership cap was "arbitrary and capricious." The FCC said in 2000 any change could affect negotiations between networks and their affiliates, which opposed relaxing the cap.

At the time, Powell, then an FCC commissioner, accused the FCC of refusing to consider fully the "competitive landscape" in retaining the cap. He also disagreed with the FCC on the cross-ownership ban, which it said "promotes competition and diversity."

And the FCC dropped a rule barring a company from owning more than one big station in a local market, an action already shaking up the industry.