FCC Weighing Cable-DBS Ownership Ban

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In a move opposed three years ago by Federal Communications Commission
chairman Michael Powell, the FCC is considering rules that would restrict the
common ownership of cable systems and direct-broadcast satellite carriers.

As part of its effort to place limits on the size of cable operators, the FCC
said last week that it may be necessary to keep cable out of the DBS business in
order to ensure that a cable-DBS combination could not monopolize the
program-acquisition market.

With 68 million subscribers, cable operators control 77 percent of the pay TV
market. With 16 million subscribers, DBS carriers control 18 percent.

The FCC is working on crafting cable-ownership rules designed to place limits
on how large one MSO may grow and on how many affiliated cable networks an MSO
may carry on its systems.

Under FCC rules overturned in federal court in March, the FCC barred one MSO
from serving more than 30 percent of subscribers to cable and other pay TV
providers and from occupying more than 40 percent of the first 75 channels with
affiliated programming.

In February 1998, the FCC initiated a cable-DBS cross-ownership rulemaking at
a time when PrimeStar Inc. -- the medium-power DBS carrier owned by major cable
MSOs -- was seeking FCC approval to acquire a key DBS license from News Corp.
and MCI Communications Inc.

Powell -- then an FCC member in the Republican minority -- criticized the
step as premature, adding that the commission had the adequate authority to
address cross-ownership problems, if any, presented by the PrimeStar deal.

'There might be cause for considering a rule if we were seeing numerous
cable-DBS combinations, and if we were seeing anti-competitive effects, and if
we saw that our existing powers were insufficient to address these problems. But
that is not the case,' Powell wrote in a statement dissenting from the cable-DBS
probe.

The FCC's interest in barring cable-DBS combinations went no further than the
proposal stage. Three months after the FCC's proposal surfaced, the Department
of Justice filed an antitrust suit to block the PrimeStar deal, and the company
called it off in October.

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