Ferree Seeking Probe of Press Leak

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A senior Federal Communications Commission official is seeking an
investigation into press leaks about proposals to amend cable-ownership rules,
an FCC source said Friday.

Kenneth Ferree, chief of the Media Bureau, became troubled when he saw news
accounts that his staff was proposing to relax cable-ownership limits, a
commission source said.

Investigations into the disclosure of nonpublic information are typically
conducted by the FCC's Office of Inspector General. At least one past probe cost
an agency staff member his job, while others ended inconclusively because
journalists would not reveal their sources.

The FCC is proposing new cable-ownership rules, the grip of which would vary
depending on a cable company's programming interests and geographic clustering,
FCC sources said.

The proposals call for allowing a single cable company to serve up to 45
percent of all pay TV subscribers if the company has limited
programming-ownership stakes and does not dominate many local markets.

However, cable systems vertically integrated with programmers that own large
clusters in large urban areas might have to comply with a 30 percent cap.

Word of the FCC's cable moves first appeared in USA Today Dec. 12 and
in at least two trade publications later that day.

FCC sources cautioned that details of the plan were still fluid and subject
to change, including the percentage caps. Another FCC source said the Media
Bureau has not made any formal recommendations to the five commissioners.

Under federal law, the agency is required to adopt cable-ownership rules to
ensure that a cable company does not impede the flow of video programming to
consumers.

In March 2001, a panel of the U.S. Court of Appeals for the D.C. Circuit
overturned the FCC's cable-ownership rule, which barred one cable company from
controlling more than 30 percent of pay TV subscribers. The court also reversed
an FCC rule that barred cable operators from occupying more than 40 percent of
their first 75 channels with affiliated programming.

In the past, the National Cable & Telecommunications Association has
stressed that the FCC needed to adjust its ownership-attribution rules. The NCTA
is concerned that a cable company could bump into a 30 percent or 45 percent
limit based on owning as little as 5 percent of another cable firm's stock.

The trade group has said the commission needed to focus more on management
control than on percentage investment levels.

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