Cable Ownership to High Court?

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Consumer groups are asking the Supreme Court to review a lower-court decision
that struck down national limits on the size of cable companies.

The groups -- led by the Consumer Federation of America, the Consumers Union
and the Center for Media Education -- filed their petition Aug. 2. The
Department of Justice, meanwhile, declined to take the case to the high
court.

The consumer groups said the lower court's ruling was flawed because it
failed to show appropriate deference to the Federal Communications Commission,
which adopted the ownership rules, and it failed to respect the predictive
judgment of Congress on media regulation.

The groups also said the lower court's decision would, if allowed to stand,
lead to the invalidation of nearly every FCC media-ownership regulation.

'The court's decision demonstrably tilts the scale in favor of the cable
operator and, indeed, any entity challenging the FCC's structural media
regulations,' the consumer groups said in the 33-page court petition.

In March, a panel of the U.S. Court of Appeals for the District of Columbia
Circuit said an FCC rule restricting cable-system ownership violated the First
Amendment.

The rules said a cable operator could not serve more than 30 percent of
subscribers to cable, direct-broadcast satellite and other providers of
multichannel pay TV. The United States has 87.5 million pay TV subscribers,
putting the cap at about 26 million.

The court also struck down as a First Amendment violation an FCC rule that
said cable operators could not occupy more than 40 percent of their first 75
channels with affiliated programming.

In another key decision, the court voided an FCC ownership-attribution rule,
which stated that if a limited partner sold programming to the partnership, all
of the partnership's subscribers were attributable to both the general partner
and the limited partner.

This rule caused the FCC to attribute all of Time Warner Entertainment's
approximately 11 million cable subscribers to AT&T Corp., even though
AT&T owned 25 percent of TWE.

The court tossed these rules back to the FCC. W. Kenneth Ferree, chief of the
commission's Cable Services Bureau, has ordered his staff to craft new ownership
proposals that will be released in a notice of proposed rulemaking in a few
months.

The DOJ's decision was not a big surprise. Several months ago, FCC chairman
Michael Powell said he preferred not to appeal the ruling, which caused the
agency to suspend asset-sale merger conditions on AT&T in connection with
AT&T's merger with MediaOne Group Inc.

'There is no interest of the United States dramatically implicated by the
cable decision. I think it's a case you can't win in the Supreme Court,' Powell
told reporters in Las Vegas in April.

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