Court Restores FCC’s Right to Grant Murdoch Waivers

A federal appeals court Tuesday struck down the controversial law enacted in the last congressional session’s final days that would have forced publisher Rupert Murdoch to sell off a newspaper or television station in Boston and New York.

On a 2-1 vote, the U.S. Court of Appeals here concluded that the measure sponsored by Sens. Ernest F. Hollings (D-S.C.) and Edward M. Kennedy (D-Mass.) was directed like “a laser beam” at Murdoch only and denied him the equal protection of the laws.

The ruling, with two Reagan appointees voting in the majority, does not upset the so-called cross-ownership rule of the Federal Communications Commission, which prohibits one company from owning a newspaper and a television station in the same city. Instead, it merely restores to the agency the authority to grant Murdoch temporary waivers to give him more time to comply with it.

The decision comes too late to save Murdoch’s ownership of the tabloid New York Post. Under pressure from the law, which barred another waiver, he sold the Post for $37 million to New York developer Peter S. Kalikow earlier this year.

However, it does relieve the immediate pressure on him to sell either the Boston Herald or station WFXT-TV in Boston. His current waiver for those properties would have expired June 30, and he is now expected to request another.

Murdoch was the only publisher who was operating under such extensions when the law was passed.

At issue in the case was a brief amendment quietly inserted into a huge budget bill at 2:30 a.m. last Dec. 22. It prohibited the FCC from “extend(ing) the time period of current grants of temporary waivers to achieve compliance” with the cross-ownership rule.

The existence of the Hollings-Kennedy amendment was not revealed until after the Christmas recess, and it set off a political uproar, particularly in New York and Boston. The conservative publisher, among others, charged that Kennedy was engaged in a “vendetta” against him because his newspapers had regularly attacked Kennedy for his liberal stands.

In response, Kennedy and Hollings complained that the Reagan appointees to the FCC were ignoring the cross-ownership rule and giving preference to the conservative publisher.

“The fundamental question is whether Rupert Murdoch is entitled to thumb his nose at the law,” Kennedy said on the Senate floor in defense of the amendment. “The agency (FCC) has been captured lock, stock and barrel by Murdoch, and it was long past due for Congress to step in.”

Reluctantly complying with the Dec. 22 amendment, the FCC denied Murdoch further waivers of the rule, and the publisher took the case to the U.S. Court of Appeals for the District of Columbia.

In his opinion, Judge Stephen F. Williams said the Constitution “requires evenhanded treatment of all applicants” before the FCC. Recounting the statements by Hollings and Kennedy on the Senate floor, Williams concluded that the amendment was not evenhanded but rather “strikes at Murdoch with the precision of a laser beam.” He was joined by Judge Laurence Silberman.

Judge Spottswood Robinson III dissented from Tuesday’s ruling, saying that Congress acted legally in seeking “to protect the cross-ownership rule from circumvention or erosion.”

In a statement, Kennedy predicted that if the decision is appealed, the Supreme Court will reverse it. “Unfortunately, Judges Williams and Silberman seem to be making a habit of striking down acts of Congress with which they disagree,” Kennedy said.

Officially, the FCC was the loser in the case (News America Publishing vs. FCC, 88-1037) since it was required to defend the law before the court, but FCC General Counsel Diane S. Killory said she was pleased with the outcome.

“The court has demonstrated that Congress does not have a free hand when it comes to regulating the broadcast industry,” Killory said. She said it would be up to the agency’s commissioners to decide whether to appeal the case to the Supreme Court.

The FCC enacted the cross-ownership rule in 1975 to prevent domination of a news market by a single company, and it was unanimously affirmed by the Supreme Court in 1978. In recent years, the FCC has had second thoughts about the rule and had considered proposals to narrow or overturn it.