APPEALS COURT STAYS MEDIA OWNERSHIP RULES
PHILADELPHIA -- A 3-judge panel of the 3rd U.S. Court of Appeals here late Wed. stayed the effective date of the FCC’s new media ownership rules, indicating that the level of public interest, scrutiny and controversy over the rules warranted the action. However, Judge Thomas Ambro said during oral argument earlier in the day that the court should give significant weight to the notion that cases involving important and difficult public issues might merit such an extraordinary stay. Reacting to the order, an FCC spokesman said: “While we are disappointed by the decision by the court to stay the new rules, we will continue to vigorously defend them and look forward to a decision by the court on the merits.” The rules were due to take effect today (Thurs.). It remained unclear whether those who sought a stay ultimately would be successful in overturning the rules.
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During the argument, the judges questioned whether there was any imminent harm that would be stopped by a stay, with Ambro saying 57 radio transactions and 7 TV deals were pending. But FCC Gen. Counsel Jacob Lewis said he had no reason to believe those applications wouldn’t pass under the old rules since he believed they simply were routine applications. Andrew Schwartzman of the Media Access Project (MAP), on behalf of the Prometheus Radio Project, said they wouldn’t be routine for the communities involved and it would be “practically impossible” for the agency to force divestitures if companies were to go ahead with transactions and then the agency’s rules were overturned. While Lewis said MAP had an alternative remedy of challenging individual transactions, Schwartzman said the agency had indicated it wouldn’t allow parties to litigate policy in individual transactions.
Brands told the panel that Schwartzman and his supporters had failed to exhaust remedies before the FCC and should have done so before petitioning the court. Specifically, Brands said MAP should have asked the FCC for a stay, something the judges asked about as well. Schwartzman indicated that such a petition before the agency would be futile since Chmn. Powell had indicated he wouldn’t grant one. But Brands argued that no one actually had filed a legal petition for a stay, so Powell couldn’t consider whether such a request contained legally defensible arguments. A letter by FCC Comrs. Adelstein and Copps didn’t constitute such a formal petition, Brands said. Lewis said that while such a petition might exist, he was unaware of any pending agency action on a stay. The judges then questioned whether they actually could remand the case before them to the agency with a specific order that the FCC respond by a date certain. Attorneys for all sides indicated the court had the power to do so, although once again Schwartzman argued that such a move would be an exercise in futility.
On the question of whether MAP and its supporters had a likelihood of success on the merits, Schwartzman didn’t go into great detail but gave a couple of examples of what he said were inconsistencies and errors in the rules. He cited the “diversity index” and the decision to count noncommercial radio stations for the purposes of local ownership as examples of instances where the FCC had failed to give public notice that it was considering such a move. He also pointed to the use of a UHF discount for the purposes of national ownership but the lack of a discount for purposes of local ownership as “fundamentally inconsistent.”
Lewis and Attorney Hank Brands, representing Fox, Viacom/CBS, and NBC, said MAP had failed to make a showing of irreparable harm or to make a strong showing of likelihood of winning on the merits. However, Lewis said granting a stay would harm the agency because it would leave it and its rules “in disarray.” He said that courts traditionally had given the expert agency deference in making policy decisions. Lewis said the notion that those opposed to the rules had been shocked by the agency’s inclusion of noncommercial radio stations in its ownership count had been “overstated” and that the diversity index was merely a tool the agency used to order its thinking. He called it a “logical outgrowth” of the agency’s work on diversity issues, “which were clearly on the table.”
Brands said his clients believed the rules should be “wiped off the books entirely” and those who opposed the rules wanted “to deprive my clients of their victory a little bit longer.” Asked by the judges about possible future deals, or impending harms, Brands said: “The notion that we're going to have major consolidation overnight is… inaccurate… That’s not to say deals won’t occur.” He also said it would be “absurd” for the court to grant a wholesale stay when MAP had the option of asking for a stay on particular rules when they in fact caused a harm. Schwartzman argued that the FCC considered the rules as a package and therefore, the courts should do so as well.
During the argument the judges indicated they would give little if any weight to the argument by Schwartzman that it should consider a stay based on pending congressional action. Although the House has passed a bill that would roll back the media ownership rules, the Senate has yet to act. The judges questioned whether they would want to go down that “slippery slope” because there was no telling whether President Bush might veto the rollback. Chief Judge Anthony Sirica called it “a legally invalid concept,” saying the court couldn’t predict what Congress would do and shouldn’t consider it. Said Judge Julio Fuentes: “You're asking us to factor in laws that have not yet been enacted.” Schwartzman responded: “Yes, but I'm not asking very hard,” drawing chuckles from some in the gallery.
The court is also considering a motion by the networks, supported by the FCC, to transfer the underlying case to the D.C. Circuit, although that wasn’t argued Wed.