Cablevision Fights Must-Carry Fine

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Washington -- Cablevision Systems Corp. is fighting the
Federal Communications Commission's decision to slap the MSO with a $127,000 fine for
violating the carriage rights of a TV-station affiliate of Univision Communications Inc.

The FCC imposed the fine last month after determining that
in 1998, Cablevision failed to carry the Spanish-language broadcaster -- WXTV of Paterson,
N.J. -- on its assigned channel 41 on 21 of its 38 cable systems in the New York City
region. Cablevision was the first MSO fined for such conduct.

The FCC ordered Cablevision to pay the fine within 30 days
or file a response showing why the fine should not be imposed or should be reduced.

Cablevision is asking the FCC to reconsider, claiming that
the agency failed to take into account that the MSO and WXTV were engaged in talks to find
the broadcaster a channel position other than channel 41 on which it could be uniformly
carried throughout the region, furthering Univision's marketing goals.

"The record demonstrates that the parties discussed
numerous alternative channel positions for WXTV at various times throughout the
negotiations," Cablevision said in a 13-page response.

Cablevision said that another part of the equation ignored
by the FCC was the occurrence of high-level talks that involved possible carriage of
Univision's Galavision cable network aimed at Hispanic viewers.

"WXTV was not clearly focused on obtaining channel 41
for its uniform channel position until late 1998. Unit that time, it had willingly engaged
in discussion concerning carriage on various alternative channel positions,"
Cablevision said, calling the fine "arbitrary and capricious."

Cablevision and Univision tossed around various channel
slots for WXTV when the MSO discovered that carriage of the broadcaster on channel 41 on
all qualified systems would require $4 million in re-engineering costs. The FCC,
Cablevision said, ignored this cost burden and other factors in its ruling.

"When the overall context of the discussions between
the parties is considered, it is clear that Cablevision always acted in good faith and
within its rights, and the imposition of a forfeiture is unwarranted," Cablevision
said.

Cablevision's New York City-area, with 2.8 million
subscribers, is the largest such grouping in the U.S., company spokeswoman Kate Murphy
said.

In its fight with WXTV, Cablevision asked the FCC to hold
that the mandatory carriage of local TV stations was a taking of private property without
compensation in violation of the Fifth Amendment. But the agency declined to take a stand,
suggesting it was inappropriate to be raising such a claim seven years after the law took
effect.

"A refusal to rule on Cablevision's constitutional
claim based on an argument that Cablevision should not have 'delayed' in raising it would
have no basis in law and constitutes a clear abuse of discretion," the MSO said.

Cablevision's gained a little ground on the Fifth Amendment
issue. FCC commissioner Harold Furchtgott-Roth said in a statement that the FCC's
unwillingness to rule paid "silent tribute to the strength of that claim,"
adding that must-carry represented "a permanent, physical occupation of the cable
operator's property -- and thus a per se taking of that property."

Cablevision issued the following statement regarding its
intent to pursue the Fifth Amendment claim, perhaps in court, with respect to the WXTV
case: "We hope the commission sees the wisdom of our arguments and that we don't need
to take it any further."

In the past, the cable industry has downplayed the Fifth
Amendment issue, deciding instead to challenge the 1992 must-carry law under the First
Amendment's free speech protections. But the Supreme Court ruled in 1997 that mandatory
carriage of local TV signals was a permissible action by Congress.

More recently, the cable industry, led by the National
Cable Television Association, has been emphasizing the Fifth Amendment in the context of
digital must-carry requirements. The FCC is contemplating whether to force cable systems
to carry both analog and digital TV signals during the transition to digital, which is
supposed to terminate in 2006 in markets where 85 percent of households have digital
receivers or set-tops.

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