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3rd Circuit Blockbuster: New radio market defs good to go

The 3rd Circuit Court in Philadelphia, which remanded much of the FCC's historic 6/2/03 media ownership rulemaking back for modification or justification, is allowing the FCC to proceed with implementation with certain sections of it which the Court found to be acceptable. Key among them is the switch from contour to Arbitron-geographical radio market definitions.

Court Judge Thomas L. Ambro wrote, "Inasmuch as we held in our Opinion and Judgment of June 24, 2004, that certain changes to the local ownership rule proposed by the Federal Communications Commission... - - specifically, using Arbitron Metro markets to define local markets, including noncommercial stations in determining the size of a market, attributing stations whose advertising is brokered under a Joint Sales Agreement to a brokering station's permissible ownership totals, and imposing a transfer restriction... - - are constitutional and/or consistent with [Administrative Procedure Act] ... and [Telecom 1996], the foregoing motion by the Commission is granted to the extent that it requests a partial lifting of the stay to allow the Approved Changes to go into effect."

However, numerical caps remain subject to the modification or justification requirement.

A motion by The Tribune Company for a partial lifting of the stay on cross-ownership rules was denied.

Tribune had argued that the stay on new cross-ownwership rules should be lifted since the Court indicated it did not have any problem with a newspaper and broadcast facility operating under common local ownership.

However, the Court said the proposed rules "are not supported sufficiently as required..." This apparently refers to the failure of the FCC to justify any of its numerical cap rulings.

RBR observation:

Nobody at the FCC Media Bureau was available for comment late Friday afternoon. However, when the stay was imposed in September 2003, the FCC put a brief hold on station trading in order to remodify transaction forms, which had in turn already been modified over the summer to reflect the 6/2/03 ruling.

The first, or rulemaking freeze lasted a couple of months; the second, the stay freeze was very brief. We will not be surprised to see another brief freeze while the FCC gets its forms in order.

The court ruling should not affect any existing station clusters, but would be applied to any new proposed transactions as soon as modified forms are available. However, as the Court indicated, it would prevent resale of a completely intact grandfathered cluster.