FCC Will Try Again On Ownership Limits

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Washington— The Federal Communications Commission — which was dealt a major legal setback six months ago — is planning to take another crack at crafting cable-system ownership rules that can withstand court scrutiny.

At its public meeting on Sept. 13, the FCC is scheduled to launch a rulemaking designed to place some kind of limit on the number of subscribers one cable company may serve. The agency has struggled with this since 1993.

The old FCC rule — which barred a cable operator from serving more than 30 percent of all U.S. pay TV subscribers —- was tossed out on First Amendment grounds by a panel of the U.S. Court of Appeals for the District of Columbia Circuit on March 2. AT&T Corp. and Time Warner Entertainment L.P. had challenged the cap in court.

The FCC, in conjunction with the Justice Department, declined to appeal the case. However, consumer groups and public-interest groups have asked the Supreme Court to hear an appeal seeking reversal of the D.C. Circuit's ruling.

The agency is also planning to modify two other rules struck down in court. One barred operators from occupying more than 40 percent of their first 75 channels with affiliated programming.

The second dealt with the manner in which the FCC counted minority investments in cable systems toward the 30 percent cap. The agency said that if a limited partner sold programming to the partnership, all of the subscribers in that partnership were attributable to both the general and the limited partner.

In July, FCC Cable Services Bureau chief W. Kenneth Ferree said he and his team wanted to ensure that any new rules they were able to convince commissioners to approve would be sustainable in court.

"Given the court's rhetoric in the decision, we want to be very careful to support whatever we do the next time around and not have the court sending something back with the kind of language that we saw in the last decision," Ferree said.

When the 30-percent cap was in effect, only AT&T Broadband had a compliance problem. Pursuant to the FCC's order approving AT&T's purchase of cable operator MediaOne Group Inc. in June 2000, AT&T faced a May 19 deadline for divesting either subscribers or programming interests.

But after the court decision came down in March, the FCC suspended the MediaOne merger conditions.

On its own, AT&T has taken several steps to put itself on track to meet the 30 percent cap, including its Aug. 10 spinoff of Liberty Media Corp.

The FCC is also scheduled to launch a rulemaking to consider whether to relax or repeal a rule that bans the common ownership of a newspaper and a broadcast property in the same market.

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