FCC closes ‘terrestrial loophole’

Move paves way for review of Comcast-NBC merger

WASHINGTON — In a move that helps pave the way for its review of the Comcast-NBC Universal merger, the FCC on Wednesday closed a loophole that has enabled cable TV operators to withhold local sports broadcasts from other TV providers.

It agreed to eliminate what has been called the “terrestrial loophole,” a provision in the 1992 Cable Act that required operators to make programming transmitted by satellite feed available to competitors. Omitted from the statute was any such requirement for programming transmitted by terrestrial feeds, which has become a popular transmission method for local sports broadcasts.

The move by a 4-1 vote was hailed by FCC topper Julius Genachowski as “an important step in promoting competition, empowering consumers and fostering innovation.” He said it levels the competitive playing field so cable operators can’t withhold sports events and other popular programming from rival providers.

The lone dissenter was commissioner Robert McDowell, who said the vote amounted to an illegal rewrite of the statute by the agency and predicted it would be overturned in court. But the majority agreed that the FCC has full authority to rule if a cable operator engages in “unfair acts” regarding terrestrially delivered, cable-affiliated programming.

Genachowski said the action helps realize the promise of a competitive marketplace for video services while also supporting innovation in the video marketplace. “Our new rules are structured to preserve incentives for cable operators to develop innovative programming such as local news networks. The new rules also create a fair process for the commission to adjudicate claims,” he said.

The order comes in advance of the agency’s review of Comcast’s merger with NBC Universal, specifically addressing a competitive issue that was likely to be considered in that proceeding — such as Dish Network’s inability to air Philadelphia sports events coverage owned by Comcast. By closing the loophole in advance, it has effectively taken the issue off the table.

The FCC’s decision to establish a case-by-case review process was viewed as promising news to Cablevision, which owns the rights to high-def sports events at Gotham’s Madison Square Garden.

While we find the legal basis for the decision unfounded, we are pleased that the FCC recognized the value of Cablevision’s local programming strategy and investments,” said the cable firm.

Meanwhile, the Comcast-NBC U merger will come before lawmakers on Feb. 4, when the Senate Judiciary Committee’s antitrust subcommittee has scheduled a hearing with Comcast’s Brian Roberts and NBC Universal’s Jeff Zucker scheduled to testify, along with competitors and consumer advocates. Although the FCC and the Justice Dept. are charged with reviewing the deal, lawmakers have been anxious to sked a series of hearings to highlight concerns about media consolidation.

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