While the distance between Philadelphia and Washington is less than 140 miles down Interstate 95, the federal appeals courts in the two cities are worlds apart when it comes to proposed rules on media mergers. And with the legal battle over the Federal Communications Commission's controversial limits on mergers one step closer to fruition, media companies and consumer groups are eagerly watching where the challenge will land next.
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Media companies and consumer groups have been dueling it out, for now, in the 9th Circuit in San Francisco. A lottery process has authorized that court to decide which court will receive all the appeals in a consolidated case. As of Thursday, that court has all the briefs it needs to produce a decision on which court will get the case.
In theory, it shouldn't matter which venue gets the case, but the two circuits with the most experience in media ownership issues have opposite leanings on media consolidation and deregulation. The last major ruling on FCC ownership rules came from the 3rd Circuit Court of Appeals in Philadelphia, which in 2004 struck down the agency's attempt that year at deregulation. The D.C. Circuit has generally favored loosening media ownership rules, insisting that was the clear intent of the Telecommunications Act of 1996. Corporate groups are pushing to bring the case to D.C. while consumer groups want to send it back to Philadelphia.
On Thursday, public interest law firm Media Access Project submitted its final reply in the 9th Circuit jurisdictional case. Media companies and consumer groups have been fighting over whether FCC Chairman Kevin Martin's December 2007 deregulatory rulemaking is a new step -- what companies would like to believe -- or a follow up one responding to the 3rd Circuit in Philadelphia. In his reply brief, MAP president Andrew Schwartzman points out that the 3rd Circuit retained jurisdiction over whatever revised media rules the FCC produced. "Contrary to the Media Parties' assertions, the passage of time does not magically convert the remand proceeding into a different case," Schwartzman wrote.
After today media owners and consumer groups must wait while the 9th Circuit makes its decision, which could take as little as a couple weeks or as long as two months. The decision of which court or panel of judges receives the case will factor heavily into the outcome. A D.C. court will likely uphold the new media merger rules and argue that even they are too restrictive. But the court in Philadelphia, even if it is more supportive of the consumer group position, may still choose to uphold the FCC's new looser deal rules. Martin did not produce such a megaderegulation package as his predecessor. It's very possible the 3rd Circuit will uphold Martin's rule, which would allow media companies to own newspapers and broadcasters in the same market in many large and possibly smaller communities in the U.S. - Ron Orol
Ron Orol is a Washington-based reporter for The Deal and author of Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World.
