The Federal Communications Commission Thursday proposed a 25% cap on the nationwide market reach of a single cable TV operator, and also proposed a 40% limit on the number of cable channels that may be occupied in a single system by programmers affiliated with a particular multisystem operator.
The 25% national ownership limit, if adopted, would limit expansion opportunities by Tele-Communications Inc., the nation’s No. 1 cable multisystem operator, whose national reach now stands at about 22%.
TCI — because of its ownership stake in all of Ted Turner’s cable webs and other popular channels such as Black Entertainment Television and the Discovery Channel — could also be crimped by the proposed 40% program ownership restrictions on TCI’s systems.
According to information provided to the FCC, TCI owns a portion of 22 cable networks. Because TCI owns small-capacity cable systems with as few as 36 channels, the Denver-based company could be forced to readjust program lineups if the FCC indeed embraces the 40% cap.
Time Warner, Viacom and Liberty Media might also be adversely impacted by the restrictions on so-called “vertically integrated” companies — those firms that own both cable systems and a stake in cable program networks.
However, one cable industry representative who requested anonymity said, “In a 500-channel world, being allowed to own 40% of the channels is not that bad.”
The FCC also proposed including pay channels and “multiplexed” channels in calculating a system’s channel capacity.
As part of the cable reregulation bill passed by Congress last year, the FCC is required to set limits on cable industry concentration by Oct. 5. Agency staffers said a final decision is expected at the FCC’s Sept. 23 meeting.
In its proposal offered Thursday, the agency sought comment on whether cable MSOs or cable program networks owned by minorities or directed at minority audiences should be allowed to exceed the 25% and 40% limits.
The FCC asked whether an ownership interest of 5% or more in a program service should trigger agency enforcement of vertical integration ownership restrictions.