The Federal Communications Commission is planning to launch proceedings this week that could pave the way for additional consolidation in the cable TV industry by raising the cap on cable ownership.
In an effort to check the clout of individual cable operators, FCC regulations barred systems from reaching more than 30 percent of the nation’s subscribers to multichannel TV.
But at a public meeting Sept. 13, the FCC is planning to launch proceedings expected to raise the cap enough to give operators room to grow. The FCC proceeding, according to a source, will also seek comment on a rationale for a rule that will satisfy the courts.
That’s critical because the U.S. Appeals Court in Washington threw out the cap and other FCC cable ownership rules earlier this year, holding that the agency hadn’t provided adequate justification for its regulations.
“The FCC is looking to establish a solid basis upon which to base a future rule,” a source familiar with the issue said.
Another FCC rule the court axed, which will be addressed in the FCC’s proceeding, barred operators from filling more than 40 percent of their channel capacity with programming they own.
In its original arguments before the court, the Clinton administration’s FCC contended that the caps were necessary to prevent big cable companies from dominating the industry. But AT&T and Time Warner-the cable industry’s largest operators-sued, and the court came down on the industry’s side.
The decision came as somewhat of a surprise because the same court last year held that the statute compelling the FCC to set the caps is constitutional.
In its decision striking down the caps, the court said, “Constitutional authority to impose some limit is not authority to impose any limit imaginable.”
Among other things, the court said the FCC had not paid sufficient heed to cable’s competition from the satellite TV industry.
Lifting the 30 percent cap would be a particular boon to AT&T because in the wake of its acquisition of MediaOne it has interests in systems reaching 37.4 percent of the nation’s multichannel TV subscribers, if its investments in Time Warner Entertainment systems are included.