White House drops media rules appeal

The Bush administration signalled on Thursday that it was giving up on its bid to push through controversial new rules on media ownership, after it decided not to appeal against a court ruling that blocked the new policies from being enacted.

The decision will in effect force the Federal Communications Commission, the US media regulator, to restart a lengthy evaluation of the state of US media laws, which govern how big and far-reaching such companies as News Corporation and Viacom the companies behind Fox and CBS respectively should be allowed to expand.

The decision also spells bad news for some of the biggest media groups in the country, including NBC Universal, News Corp, Tribune and Viacom–four groups that were banking on loosening of the media laws.

The FCC said on Thursday that it had recommended to the acting solicitor general that the government not seek an appeal, but did not clarify its reasoning.

The decision not to seek a redress of the ruling is expected to hamper a separate legal challenge by those four companies, which are expected to file on Friday an appeal to the Supreme Court against the earlier decision.

Shaun Sheehan, vice-president at Tribune, said the companies were going ahead with the appeal, even though the chances of a Supreme Court hearing were now lower. The US government had been expected to appeal against the ruling based on questions of jurisdiction a stronger argument than the First Amendment issues likely to be raised by the media companies, according to a person familiar with the matter.

Rules introduced in 2003 by Michael Powell, the now outgoing FCC chairman, would potentially have reshaped the current media landscape by giving such broadcasters as Rupert Murdoch's Fox the right to increase their share of the national audience beyond the current threshold of 39 per cent to 45 per cent. The FCC was dealt a severe blow last year, however, when the Third Circuit Court of Appeals in Philadelphia banned it from implementing the new rules until the agency redrafted them or provided better justification for the limits it chose.

The proposed FCC rules would also have loosened newspaper regulations, making it easier for newspaper companies such as Tribune to own television stations, while making it more difficult for radio groups to expand.

Mr Powell defended the relaxation of media ownership rules at the time by pointing to the changing nature of the media marketplace, in which broadcasters were facing an increasing competitive threat from cable rivals and the internet.

The prospect of more media consolidation met fierce resistance, however, by groups ranging from the National Rifle Association to the National Organisation for Women. Opponents claimed a relaxation of ownership limits would reduce diversity of views in the media.

The government's decision not to appeal against the case was applauded by the FCC's two Democratic commissioners, who opposed the policies favoured by Mr Powell.

“At least for today, the power of the American people triumphed over narrow corporate interests. It's a victory for millions of people who voiced their concern about letting big companies get even bigger,” said Jonathan Adelstein, a Democratic FCC commissioner.

A person familiar with the FCC said the government's decision not to intervene underscored the sensitivity of media-related issues, but did not imply that the Bush administration had altered its stance on deregulation.

The issue will be taken up by the person chosen to replace Mr Powell as FCC chairman. Possible nominees include Kevin Martin, a Republican FCC commissioner, and Rebecca Klein, former head of the Texas public utility commission.