Yesterday’s decision by the Justice Department not to appeal a court ruling that blocked a relaxation of media ownership rules hit home inside some of the nation’s largest media operations, and reporters covering the story took due notice.

Chicago Tribune writer Ameet Sachdev described the decision as a “setback” for media monoliths, including the one that owns his newspaper:

In particular, Chicago-based Tribune had counted on further deregulation to lift a ban on cross-ownership of TV stations and newspapers in the same market. In 2000, Tribune acquired Times Mirror Co., which gave it newspapers in New York, Los Angeles and Hartford, Conn. — markets where it already owned TV stations. Tribune’s ownership of the Chicago Tribune and WGN-Ch. 9 in Chicago is allowed because it predates the cross-ownership rule.

Sweeping regulations approved by the FCC in 2003 would have given Tribune its wish. Without clarity on such arrangements, Tribune will likely have to get exemptions when it goes to renew licenses for the stations in question in 2006 and 2007.

In short, when Tribune Co. acquired Times Mirror, it was betting on the come — taking a gamble that limits on cross-ownership would be loosened. As of today, that looks like a bad bet.

FCC Commissioner Jonathan Adelstein, who had opposed the rule changes, told Sachdev: “It’s a victory for millions of people who voiced their concern about letting big media companies get even bigger. It signals how badly the FCC failed to comply with the law.”

At the New York Times, reporter Stephen Labaton characterized the Bush administration’s decision not to appeal the matter to the Supreme Court as “a final slap to Michael K. Powell,” the departing chairman of the FCC, who had strongly advocated the changes. Labaton also noted his own company had a stake in the issue:

Relaxation of the rules had been advanced by most of the broadcast television networks and many large media companies, including the News Corporation, Tribune, the Gannett Company and The New York Times Company.

When the FCC issued its new, looser ownership rules last year, critics — including both Democrats and Republicans in Congress — claimed there was already too much media consolidation and not enough diversification, and warned that softer regulations would lead to a further decline in news coverage. Networks and media companies argued in turn that the growth of alternative forms of media — especially on the Internet — had given people more sources of news than ever, and further described the interlopers as stiff competition for both TV stations and newspapers.

The FCC’s new moves toward deregulation were challenged by a group of small broadcasters, and last June a federal appeals court in Philadelphia ordered the commission to reconsider them. Although the media conglomerates could still pursue their appeal to the Supreme Court, without the backing of the government they “have little chance of success,” according to Labaton.

Powell’s departure from the FCC in March, as well as the expected resignation of his fellow commissioner and ally Kathleen Abernathy, means that everything is up for grabs in the court-ordered rules reconsideration. Brian Blackstone of Dow Jones Newswires quoted a joint statement by two Democratic members of the commission, Adelstein and Michael Copps: “The commission should seize this second chance to do the right thing.”

It’s too early to say whether the court ruling will be just a speed bump or a real barrier to further media consolidation. Still, those of us who get paid to worry out loud about media outlets falling into all too few corporate hands are three for three lately — the initial court ruling itself, the Justice Department decision not to challenge it, and the forthright way in which several newspapers affected prominently mentioned their own corporate masters’ roles in the case.

Susan Q. Stranahan

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Susan Q. Stranahan wrote for CJR.