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In a decision that could trigger more consolidation in the broadcast industry, a federal appeals court Tuesday struck down two rules limiting ownership of television stations. The U.S. Court of Appeals for the D.C. Circuit voided the Federal Communications Commission’s cable broadcast cross-ownership rule. The so-called CBCO rule prevented a company from owning a cable system and broadcaster in the same market. “We conclude that the commission has failed to justify its retention of the CBCO rule as necessary to safeguard competition,” Chief Judge Douglas Ginsburg wrote for the unanimous three-judge panel. The FCC is not expected to appeal the ruling to the U.S. Supreme Court, which would mean the prohibition is gone for good. The appeals court elected not to send the rule back to the FCC for further review, concluding that the agency would be unlikely to devise any rationale justifying the ban. Consumer advocates supporting the ownership restriction predicted a rush of consolidation as companies took advantage of the court decision. “It’s a catastrophe for the principles of a diverse media, which is necessary for a strong democracy,” said Harold Feld, associate director of the Media Access project, a Washington, D.C.-based advocacy group focused on consumer communications issues. The court also overturned an FCC rule limiting any single broadcaster from owning stations reaching more than 35 percent of the national audience. The appeals court, however, did not void the rule; rather, it sent it back to the FCC. “The commission may yet conclude the rule is necessary to promote diversity at the local or the national level,” the court said. “In sum, we cannot say it is unlikely the commission will be able to justify a future decision to retain the rule.” The rule had already been suspended pending court review, and the suspension is expected to continue until the agency develops new regulations. In July, with the rule not in force, News Corp.’s Fox Television Stations Inc. acquired Chris-Craft Industries Inc., eclipsing the 35 percent ownership cap. The combined companies reach about 41 percent of the national audience. The challenges to the station-ownership cap and the broadcast cross-ownership rule were brought by Fox Television Stations, Viacom Inc.’s CBS unit and General Electric Co.’s NBC division. Copyright (c)2002 TDD, LLC. All rights reserved.

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