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FCC Limits on Media Ownership Draw Fire

Two media conglomerates are pushing the D.C. Circuit to chuck dated federal regulations that bar them from owning newspapers, radio stations or other outlets in the same market.

WASHINGTON (CN) – Two media conglomerates are pushing the D.C. Circuit to chuck dated federal regulations that bar them from owning newspapers, radio stations or other outlets in the same market.

The Federal Communications Commission conceived the cross-ownership prohibition, as it is known, in 1975, but the rule has faced challenges as media platforms evolve and expand.

Attorneys at the D.C. firm Wilkinson Barker Knauer brought the latest challenge on Dec. 28, filing separate petitions with the D.C. Circuit on behalf of the Scranton Times and Bonneville International.

The 2-paragraph petitions are largely identical, urging the federal appeals court to review a 199-page order the FCC published in November 2016 to keep the rules in place.

In defense of its decision, the FCC points to the workshops it conducted for over a year to study the effects of maintaining the rule. The commission also says its decision relied on 11 peer-reviewed, economic-impact studies, conducted by outside researchers and FCC staff.

Rep. Greg Walden introduced legislation to eliminate the cross-ownership ban in December.

An Oregon Republican, Walden called for an investment in "original journalism" and slammed the regulation as a "relic of the disco era."

Walden, the latest chair of the House Energy and Commerce Committee, noted a change is necessary given the "intense competition" newspapers face from cable and internet sources.

Rep. John Yarmuth also supports the two-paragraph bill, H.R. 6474, citing problems in the modern media landscape.

"As we've seen the rise in fake news and its consequences, it is increasingly important that we do all we can to protect legitimate sources of news," Yarmuth, a Kentucky Democrat, said in a statement. "This legislation would give media entities the flexibility they need to compete and grow in this challenging marketplace."

A week after the introduction of H.R. 6474, Ted Wheeler, the FCC chairman appointed by President Barack Obama, announced his resignation.

News Media Alliance, a nonprofit watchdog for media rights, offered its full support of the bill in an interview Wednesday, welcoming the bipartisan effort by the House.

“We are very pleased with the leadership of Reps. Walden and Yarmuth and other co-sponsors of the bill,” said Danielle Coffey, vice president of public policy at the alliance. “This is a significant signal to other bodies of government. Regardless of whether it’s Congress, the FCC or the courts that ultimately reverses [former FCC chairman Ted Wheeler’s] decision to maintain the ban, we are hopeful that investment and collaboration will finally be permitted between newspapers and broadcasters.”

Both the Pennsylvania-based Scranton Times and the Utah-based Bonneville International note that they operate “broadcast stations in several markets, including radio stations commonly owned with a same-market daily newspaper.”

Calling the FCC's order arbitrary, capricious and unconstitutional, the companies allege violations of the Communications Act of 1934 and the Telecommunications Act of 1996.

Signed into law by President Bill Clinton, the Telecommunications Act is seen as the Communications Act’s Internet Age successor.

Updated to include regulations applicable to internet services inside of the broadcasting spectrum, the legislation gives clear dictates regarding permissions for media companies to engage in cross-ownership practices.

The FCC says the 1996 law was aimed to "let anyone enter any communications business - to let any communications business compete in any market against any other."

The FCC did not return a phone call or email seeking comment. Given the incoming deregulation-friendly Republican-majority Congress, ownership restrictions are expected to ease.

President-elect Donald Trump has so far selected three men to help guide the FCC transition: Jeff Eisenach, Mark Jamison and David Morken. All lean conservative, and Eisenach and Jamison both opposed net-neutrality regulations openly and aggressively.

Eisenach is an economist who once worked for Verizon and for the American Enterprise Institute, a conservative think tank. Jamison once lobbied for telecom giant Sprint and now heads the public utility research center at the University of Florida.

Morken meanwhile has no record of criticizing net neutrality or the FCC. A self-proclaimed entrepreneur, Morken co-founded the no-contract phone-plan provider Republic Wireless.

Coffey at News Media Alliance said the cross-ownership rules are due for an update, noting that the “directive given by Congress when the ban was created was that it must be reviewed every four years to prove that it still serves its original purpose: competition, localism and diversity.”

The FCC simply “failed to make its case” for this when voting in November to continue the rule.

The Scranton Times declined to comment on its petition. Bonneville International, which is owned by the Church of Latter Day Saints, did not return a call for comment.

Both firms are represented by Kenneth Satten at Wilkinson Barker Knauer.

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