U.S. appeals court declines to block TV ownership rule change

WASHINGTON (Reuters) - A U.S. court on Thursday declined to block the Federal Communications Commission from easing Obama-era limits on local television ownership, which could have prevented Sinclair Broadcast Group Inc from buying assets of Tribune Media Co, one of the largest U.S. TV station operators.

The U.S. Court of Appeals for the District of Columbia declined to issue an emergency order blocking the FCC’s vote in April to reverse a 2016 order limiting the number of television stations some broadcasters can buy. Critics said in a court filing that failing to block the FCC rule “will usher in a wave of media consolidation.”

Andrew Jay Schwartzman, a Georgetown University law professor representing a coalition of groups that had sued, said the decision was “extremely disappointing. But the case is far from over, and we feel that we have a strong case once it is fully briefed and argued.”

Shares in Tribune rose 5.6 percent to $41.23 on the news, while Sinclair was up 3.3 percent to $36.00.

Sinclair said in a statement it was “pleased that the court denied the motion for an emergency stay of a rule that had been in effect for decades.”

As part of the $3.9 billion deal, Sinclair has said it may still have to sell certain of its stations, such as those in St. Louis and Salt Lake City, to comply with FCC regulations.

Under rules adopted in 1985, stations with weaker over-the-air signals could only be partially counted against a broadcaster’s ownership cap. But last year, the FCC, under Democratic President Barack Obama, said those rules were outdated after the 2009 conversion to digital broadcasting, which eliminated the differences in signal strength. It revoked the rules in September.

In April, the FCC voted to undo the Obama change.

FCC Chairman Ajit Pai also said he plans to take a new look at the current overall limit on companies owning stations serving no more than 39 percent of U.S. television households.

FCC Commissioner Mignon Clyburn, a Democrat, called the vote in April a “huge gift for large broadcasters with ambitious dreams of more consolidation.” She said it “will have an immediate impact on the purchase and sale of television stations.”

U.S. broadcasting and publishing group Meredith Corp spokesman Art Slusark said in April the vote “may open up the opportunity for more acquisition opportunities.” Its shares rose 1 percent on Thursday.

Reporting by David Shepardson; Editing by Dan Grebler and Tom Brown