Hyde Bill Would Nix Exclusive Cable Contracts3/29/1998 7:00 PM Eastern
Washington -- House Judiciary Committee chairman Rep.Henry Hyde (R-Ill.) last week introduced a bill that would effectively barexclusive contracts between programmers and cable operators with "market power."
In addition, the bill would also jeopardize contracts thatinclude volume discounts for large MSOs, unless the discounts could be justified by a"demonstrable cost differential."
Ameritech New Media, the cable-operatordivision of Chicago-based Baby Bell Ameritech Corp., applauded introduction of the bill.
ANM president Deborah Lenart, in a prepared statement, saidshe was pleased that the bill "has addressed this critical consumer issue and createda framework that will encourage competition."
Torie Clarke, spokeswoman for the National CableTelevision Association, said the NCTA supports current law and furtherlegislation is unnecessary.
"We have seen no evidence of any need for suchlegislation," Clarke said.
The bill is certain to stir controversy with the HouseCommerce Committee, which has jurisdiction over cable law.
"There will obviously be a turf fight over thislegislation," said Ken Johnson, spokesman for Rep. Billy Tauzin (R-La.), chairman ofthe Telecommunications Subcommittee. "We have to be vigilant in our opposition."
While stopping short of an outright ban on exclusivity, theHyde bill is structured so that the legal penalty for entering into an exclusive contractwould far outweigh any potential gain.
"I suspect that the intent is to do that," aWashington, D.C., cable attorney said.
Under the bill, a cable operator taken to court for anexclusive contract would have to bear the legal burden of showing that it did not havemarket power and that the contract was not a violation of antitrust law.
"Unless you can make out the case, you areguilty," the cable lawyer said.
The Sherman Antitrust Act, passed in 1890, prohibitsagreements in restraint of trade, monopolies and attempts to monopolize markets. Tripledamages can be assessed for violations.
"I support the sentiment that there needs to be toughenforcement of anti-competitive practices," said Gene Kimmelman, Washington, D.C.,office co-director of the Consumers Union. "This moves us a step closer towardCongress jumping back in and dealing with cable-industry excesses."
As written, the bill would apparently prevent MSNBCfrom signing an exclusive deal with Tele-Communications Inc., forexample, but it would not interfere with exclusive programming deals entered into bydirect-broadcast satellite carriers, which presumably do not have market power.
Hyde introduced the bill with the support of hispanel's ranking member, Rep. John Conyers Jr. (D-Mich.), and of Rep. Rick Boucher(D-Va.).
"We have provided strong incentives through theantitrust laws to ensure that viable competition to incumbent cable operators canflourish," Boucher said in a statement.