On Thursday, the U.S. Court of Appeals for the Third Circuit in Philadelphia rejected Federal Communications Commission rules that would have allowed one company to own a newspaper and broadcast stations in the same market and upheld the FCC’s decision to retain its other local broadcast ownership restrictions.

While the court approved most of a 2008 order on broadcast ownership and other rules, it said it would not affirm the newspaper/broadcast cross-ownership rule, stating that the commission failed to meet the notice and comment requirements of the Administrative Procedure Act.”

The court also instructed the FCC to better consider how its rules will affect and can promote ownership by women and people of color.

“Today’s decision is a sweeping victory for the public interest,” said Corie Wright, policy counsel of Free Press, a national nonprofit working to reform the media. “In rejecting the arguments of the industry and exposing the FCC's failures, the court wisely concluded that competition in the media – not more concentration – will provide Americans with the local news and information they need and want.”

Current commission members praised the decision.

“This decision is a huge victory for the millions of Americans who have gone on record demanding a richer and more diverse media,” said Commissioner Michael J. Copps. “The Third Circuit has brought into clear focus the shortfalls of two previous FCCs on media ownership and their lackluster performances in encouraging more minority and female ownership of our broadcast outlets.”

He said he was pleased that the 2008 newspaper-broadcast cross-ownership rule, which would have opened the door to more consolidation and less news, has now been returned to the commission.

Commissioner Mignon L. Clyburn also lauded the decision, saying it “sends the important message that ownership diversity remains an important aspect of the overall media ownership regulatory framework.”

She added, “As the court noted, the current commission has taken steps towards gathering updated studies on ownership diversity as part of its 2010 Quadrennial Review proceeding. I hope this court decision will serve to encourage all of us at the commission to take a laser like focus on the necessary and long awaited need for robust ownership studies and thoughtful recommendations to advance diverse voices in America's media market place."

The case, Prometheus Radio Project v. FCC, represents the second time the Third Circuit has denied FCC attempts to relax its media ownership rules, according to a statement from Free Press. The first was in 2004, when the same panel of judges struck down then-Chairman Michael Powell’s attempts to loosen media ownership limits.

The current case stems from an FCC decision under then-Chairman Kevin Martin in 2007 to lift the 35-year-old ban on newspaper/broadcast cross-ownership.

The FCC action prompted court challenges from public interest groups, including Free Press, seeking to encourage more competition and diversity in the media industry, as well as from big media corporations that wanted all of the media ownerships rules thrown out.

The court vacated the FCC’s decision to relax the ban on common ownership of local broadcast stations and newspaper located in the same market, finding that the commission’s rule-making procedures were highly irregular and failed to give the public adequate notice and opportunity to weigh in.

The court also determined that record evidence supports the FCC’s decision not to relax any of the other media ownership rules.

“Today the court confirmed that the FCC’s media ownership rules are not only constitutional but necessary to preserve competition, as well as to promote diverse sources of news and information for the American people,” said Wright, who argued the case along with Andrew Jay Schwartzman of Media Access Project, on behalf of Prometheus Radio Project, Media Alliance, the Office of Communication of the United Church of Christ and Free Press. The Georgetown Institute for Public Representation also provided legal counsel for the public interest groups.

The court blasted the FCC for its repeated failure to consider the impact of its rules on media ownership opportunities for women and people of color. It took the FCC to task for ignoring research presented by Free Press showing that media concentration makes it harder for new entrants and underrepresented groups to become broadcast media owners.

“Innovative and creative media entrepreneurs deserve the opportunity to serve local communities – but they can’t break through when large corporations have a lockdown on local media markets,” said Wright.

Free Press said the court’s findings are key as the FCC embarks on yet another review of media ownership limits this summer.

That proceeding, which was supposed to be completed in 2010, has stalled while the FCC awaited the court’s decision.

“Even though the court upheld the need for media ownership limits, industry groups are still pushing the FCC to eliminate them," Wright said. "It’s not the commission’s job to protect industry profit margins. The FCC cannot ignore the overwhelming evidence that existing media consolidation levels adversely impact the amount and quality of news from diverse sources. Instead it should tighten current ownership limits and promote media diversity, localism and competition.”

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070711 US Court of Appeals FCC Media Ownership Decision