WASHINGTON — In a major setback to broadcasters and their government regulators, a U.S. appeals court Thursday largely barred the Federal Communications Commission's bid to relax media ownership rules.
The 3rd U.S. Circuit Court of Appeals in Philadelphia blocked implementation of FCC regulations that would have allowed companies to own more radio and television stations in the same market, and directed the agency to rewrite the rules.
"The commission falls short of its obligation to justify its decisions to retain, repeal or modify its media ownership regulations with reasoned analysis," the court said in a 218-page opinion approved on a 2-1 vote.
The decision was a victory for an unusual alliance of public interest groups -- including the National Organization for Women and the National Rifle Assn. -- whose supporters flooded the FCC with more than 2 million letters, e-mails and faxes criticizing the regulations.
The opponents of the rules claimed that the changes in ownership limits would lead to further media consolidation -- and a loss of distinct voices.
The decision also was a defeat for FCC Chairman Michael K. Powell, who had championed the rules governing the ownership of newspapers, radio and television stations only to see them come under relentless attack from Congress. Just this week, the Senate took steps to unravel the ownership rules, passing a measure to block them for one year.
The FCC and the Bush administration must now decide whether to appeal the decision to the Supreme Court and risk further public ire or undertake a lengthy rewriting of the rules that could drag well past the November elections, risking the possibility that the process could be commandeered by a new administration.
Powell called the court's action "deeply troubling" and said it would throw the media industry into chaos as newspapers and broadcasters seek to compete in an environment that now includes the Internet as well as cable and satellite television and radio.
"This has created a clouded and confused state of media law," Powell said.
Industry executives and analysts warned that the development would have a chilling effect on media mergers, potentially affecting large companies such as Tribune Co. and Hearst Corp. along with smaller broadcasters such as Raycom Media Inc.
"The door is closed for another year or two for a lot of deals," said Blair Levin, a telecommunications analyst for the investment firm Legg Mason Inc.
