US broadcast and newspaper groups have seen their immediate hopes of looser media ownership rules dashed by the Supreme Court.

The Federal Communications Commission must now try for a second time to ease restrictions, which, say media groups, fail to address the nation's expanding cable TV, satellite broadcasting and internet markets.

The Supreme Court upheld a ruling by a lower court which judged the FCC's first attempt at relaxing ownership rules as unjustified. The proposed change would have allowed a single company to own TV stations and a newspaper in the same area and to own more TV and radio stations in a single market.

However, critics, including Congress, say the proposals would encourage mergers and stifle diversity in news and entertainment.

The FCC, chaired by Bush-administration appointed Kevin Martin, says it will now re-evaluate ownership restrictions following the court's decision.

Media companies are disappointed says Newspaper Association of America's president and ceo John Strum. His organisation was part of the consortium which appealed to the Supreme Court against the initial ruling. Strum maintains the existing ban on cross-ownership of TV and newspapers is outdated.

However, the Belo Corporation, another consortium member, is optimistic that the FCC will, on review, develop rules that "reflect today's market place".

The Supreme Court's decision was welcomed by the Consumers Union, which said: "It's an enormous victory for those who seek greater diversity in ownership and greater competition in news media."

Data sourced from Financial Times online; additional content by WARC staff