(CN) – Comcast won its appeal of a Federal Communications Commission decision to cap its cable-TV market share at 30 percent. The D.C. Circuit vacated the limit, allowing Comcast to expand.
“We hold that the 30% subscriber limit is arbitrary and capricious because the Commission failed adequately to take account of the substantial competition cable operators face from non-cable video programming distributors,” Judge Ginsburg wrote.
The FCC set the cap in 1993, when there were far fewer networks and satellite television operators. It claimed the cap was needed to ensure that smaller programming networks could enter the market even if they weren’t picked up by one or more of the larger cable operators.
The court reviewed a version of the 30 percent rule in 2001, and instructed the agency to reconsider the cap based on the increasing market share of direct broadcast satellite companies, such as DirecTV and Dish Network.
On remand, the FCC again determined that no cable operator could serve more than 30 percent of all subscribers.
Comcast challenged the latest version of the rule and won on appeal.
The federal appeals court in Washington, D.C., said the FCC all but ignored the competitive impact of direct broadcast satellite companies, despite its instructions in 2001.
“In sum, the Commission has failed to demonstrate that allowing a cable operator to serve more than 30% of all cable subscribers would threaten to reduce either competition or diversity in programming,” Ginsburg wrote.
The three-judge panel acknowledged that courts are usually hesitant to vacate an agency rule, but called the FCC’s “dereliction” in this case “particularly egregious.” The agency’s failure to heed the court’s direction was a “major failing” that required vacatur, the court concluded.