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CU Anticipates Court Will Overturn FCC Rules

Wednesday, Feb. 11, 2004
Contact: Susan Herold
Chris Murray, 202-462-6262

Consumer Advocates Anticipate Appellate Court Will Overturn FCC Media Ownership Rules

Today’s Legal Arguments Show Commission Used Irrational Reasoning, Bad Data

(Philadelphia) – Based on today’s (Feb. 11) compelling Third Circuit Court of Appeals argument that the Federal Communication Commission used irrational reasoning and faulty information in creating its lax media ownership rules, consumer advocates anticipate the court will overturn the new rules and prevent further consolidation of local media.
“We believe the Court recognizes the incredible importance of diversity and localism in our media, and we have demonstrated today that the FCC failed to uphold those important goals by creating rules that are the death knell to independent and local media,” said Gene Kimmelman, director of public policy for Consumers Union, publisher of Consumer Reports.
“These new rules allow newspapers and local TV stations to merge in 90 percent of our local markets, and the case made today by our attorneys shows the FCC’s reasoning for allowing those mergers simply does not make sense,” Kimmelman added.
Attorneys for consumer and advocacy groups who filed the legal challenge argued that to meet its obligation to promote diversity and localism under the Communications Act, the FCC should have based the rules on independent media ownership and local news. But instead, the Commission ignored that criteria and focused on the number of media outlets, rather than who owns those outlets, in developing the rules.
Also, in creating its “Diversity Index” – which determines where local newspaper-TV mergers would be permitted – the FCC acknowledged the importance of local news, but ignored the real facts about where people actually turn to get local news. The FCC’s data improperly tripled the importance of radio and the Internet for local news and halved the importance of newspapers, allowing for mergers in more markets than good data would have allowed. Indeed, a national survey of media usage conducted in January by CU and Consumer Federation of America found that newspapers are the most important and frequent source of local news for 61 percent of people, while the FCC gave newspapers only a 29 percent weight.
“The fact that the FCC so dramatically underestimated the importance of local newspapers in creating rules that will radically change the nation’s media landscape shows how illogical the Commission’s actions are,” Kimmelman added.
Under the Diversity Index in the New York City area, for example, Dutchess Community College TV, Multicultural Radio Broadcasting Inc. and Shop at Home TV each has been given more weight under the Index than the New York Times.
Last June, the FCC announced sweeping changes to media ownership rules, including an end to the prohibition on newspaper-TV mergers in most local markets and an increase in the national broadcast ownership cap from 35 percent of the national audience to 45 percent. The FCC formulated the news rules and the Diversity Index on which they were based behind closed doors, and failed to solicit public input on the mechanics of the Index as is required by the Administrative Procedures Act.
In August, attorneys for the Media Access Project petitioned the Third Circuit Appeals Court to throw out the FCC’s media ownership rules on the grounds they would cause irreparable harm, and the court issued a stay of the rules on Sept. 3 until it could review their impact. Congress also is considering legislation to overturn the FCC rules. Last session, the Senate passed a measure to overturn all of the rules, and in January a bill was signed into law rolling back the FCC national ownership cap to 39 percent from 45 percent. Both chambers currently are considering legislation to reinstate the prohibition on newspaper-local TV mergers.
“It is painfully apparent that the FCC ownership rules serve only one purpose – to help big media get bigger in every instance,” Kimmelman said. “We are very hopeful the Court will reject these irrational rules and send the FCC back to develop rules that will truly protect diversity and localism in our media.”