FCC Won't Contest Ownership-Cap Case

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Washington— The Federal Communications Commission last week decided against asking a federal court here to review a March decision that voided key FCC cable-ownership rules, agency sources said.

On March 2, a three-judge panel of the U.S. Court of Appeals for the District of Columbia ruled that an FCC rule limiting one cable operator to no more than 30 percent of U.S. pay TV subscribers was unconstitutional.

The FCC had until April 16 to seek rehearing from the full D.C. Circuit bench, but decided not to challenge the ruling.

The agency would respond to the March 2 ruling by determining whether it can do a better job of justifying the 30-percent cap, an FCC source said.

"I was pleased to see the [FCC] has decided not appeal that decision," said Republican commissioner Harold Furchtgott-Roth. "I hope it's a signal of not wanting to appeal this further."

Although the FCC refused to pursue the case, the Media Access Project — a public-interest law firm based in Washington — decided to file for rehearing. If the court denies the MAP's request, it would have 90 days to seek U.S. Supreme Court review.

"This decision constitutes a sharp departure from established precedent of this court and the Supreme Court and, as a consequence, is already derailing long-established rules and precedent concerning the legality of media-ownership limits," MAP said in a 15-page brief.

The MAP, which also represents the Consumers Union and the Consumer Federation of America, was referring to legal attacks on the FCC's 35-percent national-audience cap on TV stations, as well as its bans on common ownership of broadcast stations and newspapers in the same market and common TV station/cable system ownership.

In recent weeks, FCC chairman Michael Powell has said it appeared the court would accept only a higher cable-ownership cap. In its opinion, the court said the FCC probably was able to justify a 60-percent limit.

In addition to striking down the 30-percent cap, the D.C. Circuit panel also tossed out a rule that barred cable operators from occupying more than 40 percent of their first 75 channels with affiliated programming.

The court decision was a big break for AT&T Corp., the only cable operator with more than 30 percent of pay TV subscribers.

The MSO faced a May 19 deadline to sell programming or cable systems assets to comply with the FCC's rule. Last month, in response to the court decision, the FCC suspended the May 19 deadline indefinitely.

In a separate filing on April 13, MAP asked the FCC to use its "public-interest" authority to require AT&T to sell its 25- percent stake in Time Warner Entertainment, claiming the company had "irrevocably elected to divest TWE" to comply with the FCC's approval of its acquisition of MediaOne Group Inc last June.

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