FCC Delays Cable Reform as US Media Row Escalates

28 July 2003

America’s Federal Communications Commission has delayed a vote on the relaxation of cable ownership law as the row escalates over its previous reforms.

The five FCC members were due to vote this month on a draft recommendation agreed earlier this year. However, the watchdog’s chairman Michael Powell last week ordered further revisions to the plan.

Some observers suspect Powell may be putting off the cable vote until the dispute over deregulation of other media has died down. Last week the House of Representatives dramatically approved a bill reversing the FCC’s plan to raise the broadcast ownership cap from 35% of national reach to 45% [WAMN: 24-Jul-03].

“Politically, the danger would be attracting more criticism of an out-of-control FCC bent on allowing greater consolidation,” commented David Kaut, an analyst at Legg Mason.

The exact content of the FCC’s cable reforms are not known, but – as with other media outlets – the emphasis is on deregulation.

It is thought that the plans would allow cable firms to reach up to 45% of cable and satellite households across the US. This is a significant rise on the current maximum of 30%, which in 2001 was struck down by an appeals court on the basis that the watchdog had failed to justify it.

However, unlike the proposed 45% broadcast ownership limit, the cable cap would be flexible. The FCC could still block mergers if the resulting company served fewer than 45% of homes, or allow combinations in excess of the threshold.

This would mean each merger would have to be judged on its merits. For example, the FCC might seek to block a deal that handed a single company too much power over programming, even though its reach was below 45%.

At present, only Comcast is anywhere near breaching the existing ownership cap, serving 29% of total US cable subscribers. Second-placed Time Warner Cable lags on 12.2%, followed by Charter (7.3%), Cox (7.1%) and Adelphia (5.9%). This contrasts with the broadcast sector, where both Viacom and News Corporation are already in excess of the current limit of 35%.

When the cable reforms finally do come to a vote, approval is far from guaranteed. Republican FCC member Kevin Martin is known to have concerns with a case-by-case approach and could scupper the plan if he and the two Democrat commissioners vote against it.

Data sourced from: USA Today; additional content by WARC staff