In a novel twist on the program-access debate, Cablevision Systems Corp. claims that federal rules that compel MSOs to sell programming to their pay TV competitors violate the First and Fifth Amendment, and should be eliminated.
In comments to the Federal Communications Commission last Monday, the Bethpage, N.Y.-based MSO said rules that ban program exclusivity in a competitive market are not consistent with First Amendment free-speech rights.
The MSO also said program-access rules run afoul of the Fifth Amendment because cable operators are forced to forfeit property rights and share programming with competitors.
"These serious constitutional infirmities argue strongly against [FCC] re-enactment of the exclusivity ban after its congressionally mandated sunset," Cablevision said.
The First Amendment protects against government restriction on speech; the Fifth Amendment bars the taking of private property for public use without just compensation.
Under federal law and FCC rules, competing pay TV providers are entitled to purchase satellite-delivered networks owned by incumbent cable-system operators. The ban on exclusivity sunsets on Oct. 5, 2002, unless the FCC extends it. The agency is conducting a rulemaking to decide whether to push back the deadline.
Cablevision is the country's seventh-largest cable operator, with 3 million subscribers, mostly in New York City and its suburbs. Many of its large national and regional programming interests are held by unit Rainbow Media Holdings Inc.; it also owns sports teams and two regional sports networks in the New York market.
In other comments, Comcast Corp. said the rules were no longer justified because cable's control over programming has declined. Cable competitors such as direct-broadcast satellite providers were not in jeopardy of losing access to "abundant sources of programming," Comcast added.
Comcast Corp. is the No. 3 U.S. cable company, with 8.4 million subscribers. The Philadelphia-based operator has majority ownership of QVC, Comcast SportsNet, The Golf Channel and Outdoor Life Network, as well as a controlling interest in E! Networks.
In its comments, Comcast noted that the program-access rules are likely deterring DBS carriers from investing in their own programming. Neither of the two major DBS carriers — EchoStar Communications Corp. and DirecTV Inc. — has ownership in national or regional programming networks.
"Because DBS operators have developed a heavy dependence on quality programming created by their competitors, they have had little incentive to invest in programming despite their significant and increasing importance in multichannel-video distribution," Comcast said.
Meanwhile, EchoStar and DirecTV — the primary beneficiaries of the program-sale rules — urged the FCC to retain the rules and expand them to include a broader segment of cable-controlled programming.
Without the rules, DirecTV said it would be at risk of losing access to 45 cable networks, including CNN, HBO and the Discovery Channel.
EchoStar said allowing the rules to sunset would "give the incumbent cable operators a weapon … to undermine the most meaningful competitors they have."
Both DirecTV and EchoStar advocated support for extending the rules to cover terrestrially delivered cable networks, such Comcast SportsNet, the Philadelphia regional sports channel that Comcast won't sell to satellite carriers.
SMALL OPS NEED IT
Small cable operators, led by the American Cable Association, also urged the FCC to extend the rules. It claimed the viability of small operators hinges on continued access to cable networks owned by MSOs.
The ACA said its members — 900 cable systems serving 7.5 million subscribers — could lose 30 percent to 42 percent of their analog channels were the rules abolished and networks withheld.
The trade group also asked the FCC to use the program-access proceeding to investigate the four major broadcast networks' retransmission-consent policies. The "Big Four" often use consent as leverage to force small cable operators to carry cable networks they also own.