Court Upholds FCC Ban|on Exclusive Cable Deals

(CN) - The Federal Communications Commission can continue requiring cable companies to share programming with competitors, the D.C. Circuit ruled.

The federal appeals court in Washington, D.C., rejected a challenge brought by Cablevision Systems and Comcast, which argued that the FCC's decision to extend the statute for another five years was arbitrary and capricious and violated free speech.

In 2007 the FCC extended a ban on exclusive contracts between cable operators and cable-affiliated networks, citing concerns that lifting it would decrease competition from satellite television networks, smaller cable operators and new subscription television companies by limiting their ability to carry movie and sports channels.

On a 2-1 vote, the appellate panel ruled that the agency has the discretion to continue the ban to ensure that cable operators don't refuse to sell programming to competitors.

In many areas, consumers "continue overwhelmingly to subscribe to cable," Judge David Sentelle wrote, and large cable operators often dominate regions, buying out smaller operators.

"Because of this clustering and consolidation, a single geographic area can be highly susceptible to near-monopoly control by a cable company," Sentelle added.

But the court noted that the market has widened since the FCC extended the ban in 2007 and now has fewer cable-affiliate networks and more direct broadcast satellite companies. As the market for subscription television grows, the FCC might decide to scrap the ban.

Dissenting Judge Brett Kavanaugh said the extended ban violates free speech and "is no longer necessary to further competition." Kavanaugh said the statute's original purpose was to prevent bottleneck monopoly cable operators from hindering growth of video programming distributors, but the monopoly power of cable operators "has collapsed" in today's market.

"The rule is essentially a forced-sharing mandate that compels cable video programming networks to share their content with all video programming distributors," Kavanaugh wrote.

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