Metropolitan Council of NAACP Branches v. Federal Communications Commission

46 F.3d 1154, 310 U.S. App. D.C. 237, 76 Rad. Reg. 2d (P & F) 1604, 1995 U.S. App. LEXIS 1539
CourtCourt of Appeals for the D.C. Circuit
DecidedJanuary 27, 1995
DocketNos. 93-1471, 94-1039
StatusPublished
Cited by4 cases

This text of 46 F.3d 1154 (Metropolitan Council of NAACP Branches v. Federal Communications Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Metropolitan Council of NAACP Branches v. Federal Communications Commission, 46 F.3d 1154, 310 U.S. App. D.C. 237, 76 Rad. Reg. 2d (P & F) 1604, 1995 U.S. App. LEXIS 1539 (D.C. Cir. 1995).

Opinion

Opinion for the Court filed by Circuit Judge SENTELLE.

SENTELLE, Circuit Judge:

The Metropolitan Council of NAACP Branches, the Caucus for Media Diversity, and various individuals (hereinafter “appellants”), appeal from a decision of the Federal Communications Commission (“FCC” or “Commission”) granting Fox Television Stations, Inc. (“Fox”) a permanent waiver of its ban on the cross-ownership of TV stations and newspapers in the same market in rela[1157]*1157tion to the reaequisition of the New York Post newspaper by Fox’s principal, Rupert Murdoch. They argue that the FCC acted in an arbitrary or capricious manner, that its decision was not supported by the record, and that certain FCC commissioners should have recused themselves. Because we conclude that none of their arguments is meritorious, the Commission’s decision is affirmed.

I. BACKGROUND

Fox, which is controlled by Murdoch, acquired a TV station in New York City in 1986. At the time, Murdoch also owned the New York Post (“the Post”). He was granted two years to divest his interest in the Post so as to satisfy the FCC’s rule, 47 C.F.R. § 73.3555(d) (1994), prohibiting common ownership of a broadcast station and a daily newspaper in the same market. See Health and Medicine Policy Research Group v. FCC, 807 F.2d 1038 (D.C.Cir.1986). In 1988, Murdoch sold the Post to real estate developer Peter Kalikow, although Murdoch’s company remained contingently liable for some of the Post’s obligations. Kalikow declared personal bankruptcy in August 1991. He and his bankruptcy creditors committee sought to sell all or part of the Post and conducted negotiations with various groups throughout 1992, without success. In February 1993, real estate developer Abraham Hirschfeld agreed to purchase the Post. Pursuant to the terms of the agreement, Kalikow ended his search for other buyers until the court in his personal bankruptcy proceeding ordered the recommencement of solicitation as a precondition of its approval of the Hirschfeld contract. Several potential purchasers expressed interest at this time, but none found the Post’s financial condition acceptable. See generally Fox Television Stations Inc., 8 F.C.C.R. 5341 (1993).

In March 1993, the bankruptcy court granted Hirschfeld operational control of the Post based in part on his pledge to invest $3 million in the newspaper. Hirschfeld then fired the Post’s editor-in-chief and several other editors, resulting in a revolt against him by the remaining editorial staff. As these events unfolded, it became apparent that Hirschfeld would not be able to complete the purchase of the paper, and Kalikow put the Post’s parent company, New York Post Co., into bankruptcy. The Post’s circulation began to drop, as did its advertising sales and its ability to obtain production supplies, pay taxes, and provide employee benefits.

As the Post’s condition deteriorated, various officials, including then-Governor Mario Cuomo, asked Murdoch to repurchase the paper. Other potential bidders also expressed interest at this time. Champion Holding Company (“Champion”) expressed its interest in obtaining the Post and attempted to tender a $1,000,000 check to the bankruptcy court, which the court did not accept because offers from other bidders were not before the court at that time. Champion drew up a memorandum of understanding with the New York Post Company’s Vice President Steven Bumbaca to purchase the Post’s assets for $7,400,000, which would be signed after approval by the Post’s committee of unsecured creditors and upon evidence of authorization of Bumbaca to execute the memorandum on behalf of the Post. The creditors committee deemed Champion’s offer unacceptable, however, due to a deficient purchase price, reliance on “unrealistic union concessions,” and insufficient amounts of working capital. The committee notified Champion that the committee was not interested in Champion’s offer, and, although Champion told the committee that its interest continued, it ultimately withdrew its offer three months later, in June 1993.

On March 29, 1993, Murdoch’s company executed a management agreement for the Post, which was approved by the court in the corporate bankruptcy. Murdoch agreed to assume management of the paper, conditioned, among other things, upon his obtaining a permanent waiver of the FCC’s ban on cross-ownership and negotiating new agreements with the Post’s labor unions. The agreement provided for its termination on June 1, 1993, although Murdoch’s company retained the right to put off termination for an additional thirty days in the event Fox had not yet obtained a waiver from the FCC.

Fox’s request for a permanent waiver rested primarily on two grounds: first, that no other viable purchaser had demonstrated a [1158]*1158willingness to undertake the large financial burden of revitalizing the Post or shown the managerial and editorial skills needed to operate in New York’s competitive news environment; and second, that application of the cross-ownership rule here would disserve the underlying policy of diversity and instead result in elimination of a competitive voice. Appellants, Champion, and others opposed Fox’s request for a permanent waiver. Appellants questioned whether the FCC has the power to grant permanent waivers under the cross-ownership rule because Congress provided in Pub.L. No. 102-395, 106 Stat. 1846 (1992), that appropriated funds may not be used to repeal or reexamine the rules and policies established to administer the cross-ownership rule.

They also pressed for a hearing on alleged misrepresentations by Fox and on the particulars of the alleged inability to sell the newspaper and of Murdoch’s offer. Champion claimed that Murdoch was not the only viable purchaser for the Post and described its offer to buy the paper. Some commenters, who appear in this appeal as intervenors, argued that preserving the Post would not help diversity because its demise would free up advertising funds that could go to minority-owned papers and also suggested that if Murdoch was eliminated, minority businesspersons might buy the paper. These individuals and other groups also claimed that the Post had a policy of attacking the black community and argued that its demise would therefore be beneficial to diversity.

The FCC considered Fox’s waiver request in an expedited process and, in a declaratory ruling adopted June 29, 1993, granted the permanent waiver by a two-to-one vote. Fox Television Stations Inc., 8 F.C.C.R. 5341 (1993). The FCC stated that the “unique and severe financial situation of the Post that apparently confronts the bankruptcy court ... warrants our immediate attention,” and concluded that a quick decision would minimize any conflict with the objectives of bankruptcy law, which are equality of distribution among creditors, a fresh start for debtors, and efficient administration of cases. Id. at 5343-44. The FCC reasoned that its decision on Murdoch’s eligibility best served the public interest by allowing the bankruptcy court to consider the full complement of eligible bidders for the Post.

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46 F.3d 1154, 310 U.S. App. D.C. 237, 76 Rad. Reg. 2d (P & F) 1604, 1995 U.S. App. LEXIS 1539, Counsel Stack Legal Research, https://law.counselstack.com/opinion/metropolitan-council-of-naacp-branches-v-federal-communications-commission-cadc-1995.