Cable providers miffed by court ruling

Circuit judges uphold 'program access rules'

Major cable providers are expressing disappointment over a court decision requiring that they continue to make their programming available to satellite companies, claiming that it gives an unfair advantage to rivals.

The ruling, Friday by the U.S. Circuit Court of Appeals in Washington, D.C., upheld the so-called “program access rule” that was intended to prevent cable companies from withholding the most desirable channels — particularly sports channels — from competitors.

In a statement, Cablevision likened the ruling to regulations that allowed ABC to temporarily black out the Oscars for 3 million New York households, saying the “program access rules are based on an outdated and obsolete view of the competitive landscape.” In the video marketplace of today, the company added, “These rules do nothing but tilt the playing field in favor of phone companies and broadcasters to the detriment of fair competition and consumers.”

Comcast charged that there is a double standard at work. “We’re disappointed that the court has preserved the current unfairness that allows DirecTV to have exclusives for NFL Sunday Ticket and NASCAR Hot Pass while restricting the exclusives that cable operators may have,” the company said.

But FCC chairman Julius Genachowski praised the ruling, saying, “I’m pleased that the D.C. Circuit Court has confirmed the Commission’s authority to prevent vertically integrated cable companies from denying critical television programming to their competitors and consumers.”

The court’s decision was the latest development that cable operators are pointing to in efforts to press lawmakers or regulators to review what they consider outmoded laws in a fast-changing business.

The rule prevents cable companies from certain exclusive programming pacts. It was set to expire in 2007 before the FCC extended it.

Cable companies had argued that the dramatic changes in the competitive landscape had made the rules outdated, and the FCC took note of the differences in the marketplace from 2002 to 2007.

But it also found that many of the most popular networks were still affiliated with a cable operator, and concluded that conditions had not changed enough to allow the rule to lapse. The court noted that seven of the top 20 networks were affiliated with the four largest cable operators, Comcast, Time Warner, Cox and Cablevision.

In its opinion, filed by Chief Judge David Sentelle, the court said that while the market continues to evolve at a rapid pace, the rule “continues to be necessary.” The court also said the FCC’s decision was “not arbitrary and capricious,” as cablers has charged, and that the FCC’s interpretation of the 1992 statute was “reasonable.”

The “program access rule” has been a focal point of congressional hearings on Comcast’s proposed purchase of a 51% stake in NBC Universal.

Despite its challenge of the rule, Comcast has given indications it is willing to continue to apply it to NBC and Telemundo stations, no matter what happened in the courts.

In a dissent, U.S. Circuit Judge Brett Kavanaugh wrote that the rule “thwarts” the government’s interest in competition, and that its “infringement on the editorial and speech rights of cable operators and cable programmers cannot be squared with the First Amendment.”

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