Cablevision, Comcast lose latest battle to toss FCC programming rules
In a blow to the cable industry, an appeals court upheld the Federal Communications Commission's so-called program access rules that prohibit cable operators from withholding programming they own from rival distributors such as satellite television services.
Cable giants Comcast Corp. and Cablevision had been fighting with the FCC to get the rules overturned. The rules were established almost two decades ago at a time when much of the programming in the cable industry was owned by distributors. There was worry that cable operators would keep their content to themselves and that rival services such as DirecTV would not get off the ground. Now, only a handful of major cable distributors own content as well.
However one of those operators -- Comcast Corp. -- is in the process of trying to acquire control NBC Universal, which owns several top cable networks including USA and Bravo. Cablevision also owns programming including the cable network AMC, which has the critical hits "Mad Men" and "Breaking Bad." Time Warner, parent of HBO, TNT and CNN, used to be one of the biggest vertically integrated companies, but last year it spun-off its cable systems into a stand-alone company.
Since the rules were enacted, satellite services such as DirecTV and DISH have emerged as legitimate competitors to cable. Telephone companies including Verizon and AT&T are also actively competing with cable with their own pay TV services. The cable industry has argued that the rules are no longer necessary. Furthermore, Comcast and others feel there is a double-standard in place. DirecTV, they argue, has an exclusive programming deal with the National Football League to offer every game to consumers.
But the D.C. Circuit Court of Appeals said while the media landscape has shifted dramatically since 1992, "cable still controls two thirds of the market nationally."
The setback may be short-lived. The FCC has already it said it plans to phase out the program access rules in 2012 and the court seemed to favor such a move. "We expect that if the market continues to evolve at such a rapid pace, the Commission will soon be able to conclude that the exclusivity prohibition is no longer necessary to preserve and protect competition and diversity in the distribution of video programming."In a statement, Comcast said it was “disappointed that the court has preserved the current unfairness that allows DirecTV to have exclusives for NFL Sunday Ticket and NASCAR Hot Pass while restricting the exclusives that cable operators may have." Comcast said it has no plans to appeal.
Cablevision said the program access rules are "based on an outdated and obsolete view of the competitive landscape" and "tilt the playing field in favor of phone companies ... to the detriment of fair competition and consumers.”
FCC Chairman Julius Genachowski applauded the court's decision. "I’m pleased that the D.C. Circuit court has confirmed the Commission’s authority to prevent vertically integrated cable companies from denying critical television programming to their competitors and consumers,” he said in a statement.
-- Joe Flint
Photo: Comcast CEO Brian Roberts. Credit: Manuel Balce Ceneta/Associated Press.