TV-Newspaper Ownership Limits Left Intact By High Court

The U.S. Supreme Court left intact decades-old limits on ownership of broadcast stations and newspapers, refusing to hear media-industry appeals that might have led to a wave of acquisitions.

Tribune Co. and other media companies argued that the Federal Communications Commission rules, some of which date to 1941, don’t make sense in an age of cable television and the Internet. The companies challenged the rules on free-speech grounds.

“It was a long shot,” Shaun Sheehan, a vice president of Chicago-based Tribune, said in an interview. “We knew it was a long shot. We’ll pursue relief from this antiquated restriction in any venue we can find.”

The court didn’t comment as it turned away the companies, including Media General Inc. (MEG), which owns daily newspapers and a television station in the Tampa, Florida, area after selling 63 newspapers to Warren Buffett’s Berkshire Hathaway Inc. (BRK/B) Some companies own a broadcast station and daily newspaper in the same city under exceptions to the rules established in 1975.

The FCC, which must periodically review media-ownership regulations, has proposed keeping some limits in a rulemaking begun in December.

“We look forward to prompt consideration” by the agency, Ray Kozakewicz, a spokesman for Richmond, Virginia-based Media General, said in an e-mailed statement. “Consumers in markets of all sizes are better served by the higher-quality local news and content achievable through common ownership of media properties.”

Neil Grace, an FCC spokesman, declined to comment.

‘Severely Hampered’

The rules limit local broadcasters’ ability to compete with cable and satellite-TV companies, and broadcasters are disappointed with the high court’s action, Dennis Wharton, a spokesman for the National Association of Broadcasters, a trade group, said in an e-mailed statement.

“Broadcasters remain severely hampered and singularly constrained by outdated restrictions that prevent them from joining forces with newspaper publishers,” petitioners including Tribune and News Corp. (NWSA)’s Fox Television Stations argued in court filings.

President Barack Obama’s administration and the FCC defended the limits, arguing that the media companies “ask the court to overrule a number of its precedents and radically alter longstanding communications policy.”

The agency voted in 2007 to relax the cross-ownership restrictions for the 20 largest U.S. markets, which include New York, Los Angeles and Chicago. Other rules limit how many television and radio stations an owner may amass in a market.

Rush of Acquisitions

A Supreme Court ruling favoring the media industry would have meant a flurry of consolidation and let some companies sidestep demands by regulators that they sell stations, said Andrew Schwartzman, a Washington-based communications lawyer and adviser to Free Press, a group that opposes media consolidation.

“There would be an immediate rush of acquisitions of multiple numbers of TV stations in markets throughout the country, and it would relieve publishers of divestiture obligations in a number of markets,” Schwartzman said.

The appeals raised issues connected to those the court passed up a chance to decide in a June 21 ruling on broadcast indecency. The court said Fox and ABC television stations couldn’t be punished for airing profanity and nudity a decade ago, though the court didn’t decide whether broadcasters can continue to be subjected to fines for on-air indecency while cable networks and satellite are exempt.

In the ownership case, the media companies targeted longstanding Supreme Court decisions that give the FCC special power to regulate over-the-air television and radio because of the limited number of broadcast frequencies.

Scarce Spectrum

Media companies said that so-called scarcity doctrine has outlived any logic it might have had at the time.

“In light of the technological revolution of the past generation, the scarcity doctrine cannot possibly be justified now,” Media General, which owns 18 TV stations, said in its separate appeal. “For one thing, technology has vastly expanded the available broadcast spectrum. In addition, the line between broadcast and other media platforms has largely vanished.”

The companies also contended that newspaper owners are unconstitutionally singled out by the ban on cross-ownership.

A federal appeals court upheld many of the restrictions in July, while telling the FCC to revisit its decision to relax the broadcast-newspaper cross-ownership limits. Newspaper and broadcast companies say the agency didn’t go far enough in easing restrictions.

The cases are Media General v. FCC, 11-691; Tribune Co. v. FCC, 11-696, and National Association of Broadcasters v. FCC, 11-698.

To contact the reporters on this story: Greg Stohr in Washington at gstohr@bloomberg.net; Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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