WASHINGTON, March 24 (Reuters) - The U.S. Supreme Court appeared divided on Tuesday over a challenge to a campaign finance law by a conservative group in a case that could open the door to fewer restrictions on political advertising.
The group, Citizens United, released a 90-minute documentary film "Hillary: The Movie" in January 2008 when Hillary Clinton, then a New York senator, was running for president. She now is secretary of state in President Barack Obama's administration.
Citizens United released the movie to theaters and for store sales on DVD. The group also wanted to broadcast the movie on cable television video-on-demand but that was rejected by a federal court.
The court ruled the movie clearly was intended to influence people to vote against Clinton and thus was covered by the campaign finance law's ban on the airing of ads or "electioneering communications" right before an election.
The Supreme Court, with a 5-4 conservative majority, appeared divided while hearing arguments in the case.
A ruling in the case is expected by the end of June. The impact could depend on how broadly or narrowly the court rules on the question of political advertising.
Liberal justices said the movie was a form of advocacy designed to sway voters and thus was covered by the law while conservatives questioned whether the government regulation went too far in violation of constitutional free-speech rights.
Conservative Chief Justice John Roberts asked a hypothetical question of whether the government under the law could ban a book critical or supportive of a political candidate before the election.
The liberal justices said the movie was filled with criticism of the former first lady, raising questions about her fitness and qualifications to be president and effectively urging people not to vote for her.
"If that isn't an appeal to voters, I can't imagine what imagine what is," Justice Ruth Bader Ginsburg said.
Justice Stephen Breyer also seemed to believe the law applied to the documentary. He said he had watched the film and added, "it is not a musical comedy," a remark that prompted laughter in the courtroom.
Theodore Olson, the attorney arguing for the conservative group, said participation in the political process was one of the most fundamental guarantees of the Constitution's First Amendment.
Justice Anthony Kennedy, who often casts the decisive vote on the court, said that if there was no difference between the film and a 60-second political ad, then the part of the law regulating communications by corporations or labor unions right before an election might be struck down.
Justice Antonin Scalia seemed concerned the law violated free-speech rights, drawing a distinction between broadcast political ads, which most listeners probably do not want to hear, and this case involving video on demand and listeners who want to receive the material.
Editing by Cynthia Osterman