TWE Wants Ownership-Rule Rehearing

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Washington-Time Warner Entertainment is seeking a rehearing by the full U.S. Court of Appeals for the District of Columbia Circuit on a decision by a panel of that court to uphold a law capping cable-system ownership.

On May 19, the three-judge panel held that the 1992 law was constitutional, promoting competition in the cable-programming-acquisition market in a content-neutral fashion consistent with First Amendment rulings by the Supreme Court.

The panel's decision prompted the Federal Communications Commission to reinstate its rules, which cap one cable operator at no more than 30 percent of cable, direct-broadcast satellite and other pay TV subscribers.

The FCC enforced the rule against AT & T Corp. in its review of the MSO's $44 billion buyout of MediaOne Group Inc. The commission is forcing AT & T to decide by Dec. 15 whether to shed various programming interests, 9.7 million subscribers, or its 25.5 percent stake in TWE to comply with the cap.

Time Warner Inc. owns the rest of TWE, which includes most Time Warner Cable systems, Home Box Office and the Warner Bros. studio.

AT & T, meanwhile, is challenging the 30 percent rule in the same court, but a decision is unlikely to be handed down before the Dec. 15 deadline. Oral arguments in the case are scheduled for Oct. 17.

In reviewing TWE's request for rehearing, the D.C. Circuit court can reject it with or without asking for a response from the FCC. If rejected, TWE still has the right to appeal the case to the Supreme Court.

In a 16-page petition filed July 3, TWE said the panel used the incorrect standard of review in assessing the First Amendment impact of the cable-ownership limit.

Saying that the law had a content-based purpose-namely, to advance the interests of "unorthodox or unpopular speech" and to promote program diversity on cable-TWE said the law should have been examined under the most exacting standard: strict scrutiny.

Under strict scrutiny, the government seldom wins because the standard requires a compelling interest with a narrowly tailored remedy that is the least restrictive burden on protected speech.

The Supreme Court recently applied strict scrutiny in striking down a provision of the Telecommunications Act of 1996 that effectively banished adult cable programming to the overnight time slot.

TWE is also seeking rehearing on a second provision of the 1992 Cable Act upheld by the panel, which requires cable operators to set aside 60 percent of their channels for unaffiliated programmers.

"Whenever government suppresses speech for the purpose of enhancing content diversity within a medium, strict scrutiny is triggered," TWE said.

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