• by Erik Sass  @eriksass1, April 7, 2009

Robert McDowell, one of five commissioners on the Federal Communications Commission, wrote a letter urging the Third Circuit Court of Appeals in Philadelphia to expedite a legal decision regarding a challenge to new media cross-ownership rules approved by the FCC in December 2007. McDowell noted the growing number of newspapers on the brink of financial collapse, suggesting that broadcasters might rescue some beleaguered dailies.

The Third Circuit Court of Appeals said last month it may delay adjudication of a case in which the Media Alliance, a nonprofit citizens' watchdog group, is challenging the legality of the FCC's revision of rules governing the concentration of local media ownership.

The revision loosened FCC rules dating to 1965 that prevent a single company from owning both a TV or radio station and newspaper in the same market in the top 20 media markets. The Media Alliance wants the revision canceled -- essentially repeating the outcome of its 2003 challenge to a similar FCC revision, also heard by the Third Circuit Court.

The loosening of the restrictions on cross-ownership of media properties was initially approved by a controversial 3-to-2, party-line vote in the FCC, and was subsequently criticized by members of the House and Senate who oppose further media consolidation.

Supporters of the rule revision say it would simply eliminate inconsistency in markets where cross-ownership is already common. In recent years, companies like News Corp. and Tribune have been allowed to own broadcast and newspaper properties in violation of the 1965 rule after receiving waivers from the FCC. In the case of News Corp., Rupert Murdoch received a waiver allowing him to buy the New York Post because it was considered a "failing" newspaper at the time.

Supporters say a rule revision could benefit even more newspapers.

McDowell, one of three Republicans who voted in favor of the revision, urged a quick decision because of the "grave economic situation," which has already forced several big regional dailies to close. Likewise, Kevin Martin--the previous Republican chairman of the FCC--positioned the cross-ownership rule revision as a measure to "forestall erosion of local news coverage."

However, Jonathan Adelstein, a Democratic commissioner, argued that "given that the newspapers are in tough shape and the broadcasters are in tough shape, it doesn't seem like joining up two industries that have declining revenues, many of which are on the verge of bankruptcy, is going to save either one of them."

Indeed, local TV and radio broadcast stations would seem to have enough to deal with, without taking on newspapers' problems.

In 2008, local radio ad revenue fell 10% to $13.6 billion, and the declines accelerated over the course of the year with a 13% drop in the fourth quarter, according to the RAB. Broadcast TV revenues slipped 0.4% in 2008, with a 6.4% drop in the fourth quarter, including a 3.4% drop in local ad revenues, according to the TVB.