FCC Close on Time Warner-Gemstar

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Cable-industry insiders are expecting a decision by the Federal
Communications Commission -- possibly this week -- on the long-simmering dispute
between Time Warner Cable and Gemstar-TV Guide International Inc. on mandatory
cable carriage of electronic program guides.

Gemstar, the dominant on-screen navigation provider, is seeking a ruling from
the FCC that cable operators are required to carry EPGs embedded in the
vertical-blanking interval of analog broadcast signals under the commission's
cable must-carry rules.

Time Warner wants the FCC to rule that EPGs are not entitled to such carriage
and that cable operators are entitled to remove them from the analog
broadcast-video signal.

The issue exploded in March 2000 when Gemstar filed a complaint at the FCC
accusing Time Warner of illegally stripping the EPG on nine cable systems in
eight states. Time Warner subsequently reversed its decision to allow the agency
to settle the dispute.

About 13 months after filing the complaint, Gemstar asked the FCC to withdraw
the complaint, but Time Warner countered by requesting that the commission
reject Gemstar's offer and issue a ruling.

A big issue will be the scope of the FCC's decision -- whether the agency
will limit its ruling to EPG carriage in the analog context or issue a broad
ruling that also deals with EPGs embedded in TV stations' digital bit
streams.

In January, the FCC ruled that cable operators were required to carry under
digital must-carry rules qualified TV stations' primary video and
program-related material.

But the commission indicated that an EPG that provided information on a range
of channels -- not just information tailored to the channel being shown -- would
fall outside the definition of 'program-related' and would not be entitled to
mandatory cable carriage.

On Nov. 27, Gemstar chairman and CEO Henry Yuen sent a letter to FCC chairman
Michael Powell saying that he was 'deeply concerned' that the agency was about
to rule in favor of Time Warner.

He offered to fly to Washington, D.C., to brief Powell personally on how a
decision supporting Time Warner would bring 'significant harm to millions of
innocent consumers.'

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