Ops Say FCC Program-Cost Quiz Difficult

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Washington -- Cable operators said last week that
responding to the Federal Communications Commission's request for programming-cost
data going back to 1994 won't be an easy job.

One Washington cable lobbyist said some of the information
that the FCC is seeking was not retained in company records.

Joe Waz, Comcast Corp.'s vice president and
public-policy counsel, said the questions were "incredibly complex," and Comcast
might need clarifications from the agency.

The FCC sent a two-page programming-cost survey May 15 to
the top six cable-system operators, which serve about 70 percent of all cable subscribers
combined. The six have until June 12 to file responses. The FCC estimated that each
company would need 40 hours to collect the necessary data.

"I can tell you that interested parties here have
already taken about 10 hours to sort through the questions and to discuss what they
mean," Waz said.

Ellen East, director of public relations for Cox
Communications Inc., said the questions do not appear to be seeking commercially sensitive
data.

"At first blush, it doesn't look like
there's anything in there that would be proprietary or sensitive information, but we
are taking a close look at that to make sure."

The FCC sent 12 questions seeking specific information
about programming costs and company revenue derived from sources other than subscription
payments since 1994.

Without mentioning ESPN's eight-year, $4.8 billion
National Football League contract, the FCC specifically asked about the impact of
"recent sports-distribution rights agreements" on programming costs and retail
cable rates going forward.

The questions, according to cable attorneys, were designed
in part to determine whether cable-owned programmers were charging more than unaffiliated
cable programmers.

FCC chairman William Kennard has said that he wants to
examine whether FCC rules that allow programming-cost increases to flow through to
subscribers were being exploited by cable operators that own networks. And Kennard wants
to determine whether programming costs should be offset by advertising and other revenue
sources before being passed through to consumers.

The questions "are obviously pointed in that
direction," said Paul Glist, a cable attorney with Cole, Raywid & Braverman.
"They would love to imagine a world in which sports salaries could be passed through
to advertisers, and viewers would never have to pay another cent for it."

One MSO source who received the FCC survey said an internal
company analysis found no correlation between programming ownership and higher programming
costs. In fact, the analysis showed that unaffiliated-programming costs represented a
greater portion of the increase than affiliated-programming costs.

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