FCC Sends Mixed Signals

Federal regulatory agency stands accused by one of its own of serving corporate interests over its mandate to serve the public interest—when it comes to cable ownership limits.

by ISP-Planet Staff [March 21, 2001]

The Federal Communications Commission issued an order suspending its mid-May deadline for AT&T Broadband to divest some of its cable television assets and comply with the FCC's cable ownership limits.

AT&T had been under deadline to divest some of its cable holdings by June 6, as part of the regulatory agency's conditional approval of its $44 billion acquisition of MediaOne Group last year.

The FCC revised its position on the AT&T sell-off after the U.S. Court of Appeals for the District of Columbia Circuit issued its opinion in Time Warner Entertainment v. FCC on March 2, which overturned the FCC's cable ownership caps on First Amendment grounds.

The FCC voted 3-to-1 last week to suspend the timetable for AT&T to reduce its 42 percent share of the U.S. cable market to below the 30 percent ownership limits.

Elastic limits

FCC Chairman Michael Powell issued a statement in which he noted that when the Appellate Court issued its decision in Time Warner v. FCC, it raised serious constitutional questions about the agency's horizontal and vertical ownership rules.

"The rule was not the sole basis on which the Commission imposed conditions on the license transfer in the AT&T-Media One transaction," Powell said. "However, the Commission unquestionably relied on substantially similar rationale, pulled from its adoption of the rule, which the Court found constitutionally suspect.

"Given that fact, it is only prudent for the Commission to suspend its enforcement of the condition until it has adequate time to carefully consider the impact of the Court's decision on the condition," Powell added.

Dangling boundaries
Powell said that the FCC's action should not be read as eliminating cable ownership caps altogether, but only as suspension of the FCC's established benchmarks for compliance, pending further consideration of cable ownership rules in the U.S.

In a separate statement Commission Susan Ness emphasized Powell's point—that the FCC action is a suspension, not an elimination of the conditions originally imposed upon AT&T's acquisition of MediaOne.

"I am deeply concerned about increasing levels of concentration across the media industries," Ness said. "The Commission should remain vigilant in promoting diversity in the media marketplace."

Disemboweled populace
The lone voice of dissent, Commissioner Gloria Tristani issued a scathing condemnation of the suspension order.

"It eviscerates the public interest protections secured by the Order approving the AT&T-MediaOne merger," Tristani said. "Notwithstanding the D.C. Circuit Court's decision regarding our cable horizontal ownership limits ... this action is premature and unjustified."

Tristani added that the the Commission's action once again sends the signal that it cares more about the interests of large corporations than it does about maintaining a vibrant and diverse marketplace of ideas.

Dissimilar deal
Meanwhile, the FCC refused to lift ownership limits on Viacom Inc., which had filed a petition with federal regulators to suspend its cable ownership cap that was part of its acquiring CBS, Inc. in May 2000. Viacom's acquisition brought the company's national reach to 41 percent, so the FCC ordered Viacom to come into compliance with its 30 percent cable ownership limits within 12 months.

Viacom argued its case in a petition to the FCC citing the recent U.S. Court of Appeals decision.

"Denial of interim relief would inflict irreparable injury on Viacom by causing the company to lose unique and irreplaceable assets,'' the petition stated as it pleaded for a stay of the FCC cable limit order.

Viacom intends to file with the U.S. Court of Appeals for the District of Columbia for a stay motion, setting the stage for the court to potentially override the fundamental premise guiding federal regulators intervention in future cable acquisitions—for a second time this year.

—End