News

FCC Resists Paxson Court Ploy

1/02/2005 7:00 PM Eastern

Washington— Paxson Communications Corp.’s attempt to elbow its way onto cable systems through an unusual court maneuver is meeting resistance from the Federal Communications Commission.

Paxson, dismayed by years of alleged agency inaction on digital-television issues, has asked a federal court to force the FCC to rapidly bring clarity to the regulatory picture.

But the commission — in a recent rebuttal that assigned a number of flaws to Paxson’s argument — told the court Paxson backed itself into a legal corner. It also said the broadcaster was fully capable of escaping without reliance upon court mandates that would represent a departure from the normal policymaking process.

D.C. CIRCUIT PLEA

As a result, the FCC requested Dec. 22 that the U.S. Court of Appeals for the D.C. Circuit reject Paxson’s petition that would give the FCC just one month to issue new policies on cable carriage of DTV signals.

The policies sought by Paxson would require cable companies to carry every digital service that a TV station can cram into its bandwidth. Today, that’s about five or six channels.

Paxson’s proposal would also require cable operators to carry one service in downconverted analog format and the others in digital, for viewing by cable subscribers with DTV sets or digital set-tops.

In 2001, the FCC tentatively rejected the idea of forcing cable to carry analog and digital signals during the transition to all-digital broadcasting — and it unequivocally limited cable carriage to a single DTV programming stream after the transition, rejecting Paxson’s so-called multicast carriage mandate. The cable industry applauded that outcome.

According to the FCC, Paxson created a procedural problem for itself by failing to take the agency to court promptly after adoption of the DTV rules in 2001. Instead, Paxson asked the commission to reconsider its action, a procedural step that blocks the company from taking the FCC to court while the reconsideration request is pending.

Lowell Paxson, the company’s chairman and CEO, said he viewed the FCC’s court filing as “a very weak response” that did not adequately explain why the agency has not acted on reconsideration petitions.

The FCC’s filing reflected the views of agency chairman Michael Powell, but not the majority of its five members, Paxson added. Powell supported the 2001 rules, including the ban on multicast carriage.

“[Powell] doesn’t know how to change his vote and he won’t bring it to a vote, because he knows he’ll lose,” Paxson said in an interview last week.

FCC: HE HAS REMEDY

After putting carriage issues on the back burner, the FCC turned to other facets of the transition, such as mandatory installation of digital tuners in nearly all new TV sets by July 2007 and imposition of the broadcast flag to bar rampant Internet piracy of DTV signals.

Evidently, Paxson has a way to cut the Gordian knot. The FCC told the court that Paxson could get out of its legal predicament by “withdrawing its petition for reconsideration” and then fighting the agency in court on the substance of the DTV rules.

But Paxson tried the next best thing, filing a writ of mandamus that called on the D.C. Circuit to force the FCC to act on the reconsideration petitions within 30 days.

The FCC told the court that “mandamus is not available in such circumstances where [Paxson] has an adequate remedy at law.”

Paxson said he did not believe that he could withdraw his reconsideration petition and go to court. He said his lawyers would explain why in a court filing this week.

Paxson’s mandamus petition was unusual, because the pattern is that the FCC adopts rules and aggrieved parties go to court seeking reversal. Parties that choose reconsideration generally can’t seek court review at the same time.

Cable carriage is essential to Paxson.

Owner of 60 TV stations linked together as Pax TV, the West Palm Beach, Fla.-based Paxson relies exclusively on the 1992 law that requires cable to carry qualified TV stations.

While Paxson’s business model rests on the so-called must-carry rules, the vast majority of TV stations — about 80%, the FCC says — negotiate their way onto cable systems.

PAXSON: RIGHTS DENIED

Nevertheless, Paxson’s mandamus petition asserted that by sitting on the reconsideration petitions, the FCC was denying TV stations their full digital carriage rights granted by Congress and frustrating their transition to all-digital broadcasting.

The FCC replied that the multicasting issue was settled in 2001 and was therefore not an “unresolved question.”

Regarding dual carriage, the FCC said the record continues to be fed by broadcasters and cable companies about the burdens and benefits of mandatory carriage, disproving Paxson’s notion that the record was established many years ago.

“The FCC does not await the cessation of … presentations before completing rulemaking proceedings. But it is misleading for Paxson to assert that the record … was 'complete’ when the formal comment period ended,” the FCC said.

Although Paxson said he never advocated dual must-carry, the cable industry maintains that Paxson’s plan is tantamount to dual carriage because one DTV stream must be carried in analog.

In the end, Paxson may prevail at the FCC. Agency staff members have prepared a plan that would end broadcasters’ DTV transition on Dec. 31, 2008.

The plan calls for granting DTV stations multicasting must carry rights on cable systems starting in 2009.

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