New York ? A federal appeals court on Thursday largely reversed a landmark set of rule changes from the Federal Communications Commission that would have allowed companies to own more radio and television stations in the same market.

The decision by the U.S. Court of Appeals for the Third Circuit marked a major setback to the FCC’s efforts to deregulate media ownership rules and a victory for public interest groups that had opposed the measures.

The rule changes have been the subject of much debate about the concentration of media ownership ever since they were announced in June 2003. The plaintiffs against the FCC said the rules would limit the diversity of voices on the airwaves, while the FCC said the old rules had become outdated.

In their 2-to-1 decision, the judges threw out rules that would have allowed greater ownership of television and radio stations in the same market. However, they also found that the FCC was within its rights to repeal a blanket prohibition on companies owning both a newspaper and a television station in the same city.

“This is a big, big win for diversity,” said Andrew Jay Schwartzman, CEO of the Media Access Project, a Washington, D.C.-based public interest law firm that led the lawsuit against the FCC.

“The court recognized that debate and democratic values are more important than letting big media corporations grow bigger,” Schwartzman said. “It’s especially important that the court has told the FCC to remove its deregulatory thumb from the scales.”

FCC chairman Michael Powell called the court’s decision “deeply troubling” and said it “hampers the flexibility of the agency to protect the American public.”