NEW YORK (CNNMoney.com) -- A federal appeals court struck down the Federal Communications Commission's indecency policy Tuesday, calling the agency's longstanding rules "unconstitutionally vague."
A three-judge panel on the U.S. Second Circuit Court of Appeals said in a 32-page ruling that the FCC's indecency rules created "a chilling effect that goes far beyond the fleeting expletives at issue here."
FCC commissioner Michael Copps said in a statement that the court's decision was "anti-family." He said the FCC's policy was "constitutional and enforceable," but he called on the commission to "immediately to clarify and strengthen its indecency framework."
The appellate court's decision was a major milestone for television and radio broadcasters who have long complained the FCC's rules violated First Amendment rights.
Several years ago, the FCC had levied fines on scripted expletives but had typically been more lenient about accidental profanities uttered during live shows.
But in 2003, U2 singer Bono swore while accepting an award on NBC. The network didn't receive a fine, but the FCC warned that any profanities -- including unscripted ones -- could lead to fines in the future. In the following years, the FCC fined several networks for expletives uttered on live television.
In 2006, Fox Television, NBC Universal and several other broadcasters sued the FCC for what they said was a vague and unevenly enforced policy.
The case went to the Supreme Court, which said in April 2009 the FCC had enacted its policy correctly. But the higher court sent the case back to the Second Circuit Court to decide whether the policy was constitutional.
The FCC policy formed largely from a 1978 Supreme Court decision that allowed the commission to fine a radio station for airing late comedian George Carlin's "Seven Dirty Words" monologue.
"We have always felt that the government's position on fleeting expletives was unconstitutional," Fox Networks said in a statement, adding "the inherent challenges broadcasters face with live television ... must allow for the unfortunate isolated instances where inappropriate language slips through."
Kyle Bass is the founder and chief investment officer of Hayman Capital Management. More
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