Appeals Court Issues Mixed Decision on Cross-Ownership

By: E&P Staff What are the likely ripple effects of Thursday's federal court ruling on cross-ownership? According to a Merrill Lynch report: "The good news is that cross-ownership is not being unilaterally barred; the bad news is that the scenario where it will be permitted was not defined."

If the rules are rewritten, it could force newspaper companies that own TV stations, like Tribune Co. and Gannett Co., to sell their TV assets. In addition, newspaper companies are now in limbo, putting any plans for expansion on hold.

As for any financial ramifications, Merrill Lynch said, "cross-ownership has yet to be a proven panacea for improved revenue or costs. From a strategic perspective, it is hard to deny the thought that having more to sell to an advertiser increased the likelihood of success."

The Third Circuit Court of Appeals in Philadelphia said Thursday that the FCC could repeal rules that ban companies from owning both a newspaper and a television station in the same city.

But the court "did not touch a previous court order preventing the commission from carrying out that decision," according to The New York Times, essentially telling the FCC is needs to redraft its current rules on cross-ownership.

The court faulted the FCC for not providing a thorough argument for cross-ownership, including giving the Internet too much weight, giving equal market share to stations that don't compare, and not providing enough notice to the public.

John Sturm, president and CEO of the Newspaper Association of America, said in a statement about the decision that the "NAA is disappointed with the court decision to remand the FCC's new cross-media rules, but is pleased the court found that the FCC's repeal of the old 1975 across-the-board ban on newspaper ownership of broadcast stations is fully justified."

The NAA plans to "advocate vigorously the industry's position that no further restrictions are necessary in the upcoming remand proceeding at the FCC," Sturm said.

Eleven national labor organizations, representing more than a half-million media workers, called the decision "an important victory for the public and for diversity of opinion."