FCC Chief Says Cable TV May Become Re-Regulated

Alfred Sikes, chairman of the Federal Communications Commission, said at a Los Angeles hearing on the cable television industry that some re-regulation of cable is likely unless the monopoly position of system operators in most markets is ended.

His remarks, during a break in the daylong proceedings at City Hall, came amid speculation that the commission will ask Congress to curtail cable operators’ freedom to set prices or will otherwise seek to limit industry practices when it files a long-expected report on deregulation in July.

“If the monopoly (in local service areas) persists, there’ll be more regulation than there is today, yes,” Sikes told reporters.

At Monday’s session, more than two dozen witnesses from cable companies, film studios, broadcast stations and local governments gave sharply conflicting views of the cable industry’s practices since it was largely deregulated under a 1984 federal law.

City officials from Los Angeles, Beverly Hills, Thousand Oaks and Oakland said they faced a rising chorus of consumer complaints about higher prices and poor service.

“Lincoln freed the slaves. We would like you to free us from the gouging cable TV companies,” Beverly Hills Mayor Maxwell Salter said in recounting his city’s long-running disputes with Century Communications, which operates the only cable system in Beverly Hills.

Several cable officials, however, said deregulation had led to an explosion in program services such as Cable News Network, the ESPN sports network and the Discovery Channel and that such programming could be destroyed by re-regulation.

“Cable has done more (for black audiences) than broadcast has been able to do in over 20 years,” said Robert Johnson, president of Black Entertainment Television, a network formed with financial support from Denver-based Tele-Communications Inc.

Separately, the commission is considering proposals to subject more systems to rate regulation by widening the legal definition of competition in cable. Currently, cities are permitted to regulate local cable rates only when their areas receive fewer than three broadcast TV signals.

On Monday, FCC Chairman Sikes repeatedly queried witnesses about the likely viability of a second cable system, or of so-called wireless alternatives to cable in various areas.

Wireless cable uses microwave bands to distribute programming to homes and is operating in some cities, including Cleveland. But wireless operators complain that they are denied access to programs that are routinely available to cable franchisees.

George Ring, chairman of Cross Country Telecommunications, said his company is launching such a system to serve a 2,800-square-mile area largely in San Bernardino County. But “we are being denied equal access to programming,” Ring complained.

While the Los Angeles hearing was supposed to focus on program supply to cable companies, no clear consensus emerged among witnesses from big studios and independent production companies as to what measures, if any, authorities should take to contend with the increased “vertical integration” of companies such as TCI and Time Warner Inc. Those companies own both cable systems and interests in production units.

Several independent Hollywood producers--those whose companies are not owned by major studios--argued that cable operators should be barred by law from owning an interest in programs, much as big broadcasters such as CBS, ABC and NBC are barred from owning an interest in the shows they produce.

Marcy Carsey, whose Carsey-Werner Co. produces “The Cosby Show” and “Roseanne” for NBC, said her company has been unwilling to produce shows for cable TV because cable networks insist on owning the syndication and other rights to the programs, rather than leaving the producer free to profit from them after a first showing on cable.

“Cable is a closed business. You do it their way creatively or financially, or don’t come at all,” Carsey said of her attempts to produce for cable.

At least some of the commission’s four members, however, appeared skeptical of the claims that program diversity would be served by making it easier for Hollywood to produce for the medium.

Edward Bleier, a Warner Bros. TV official, strongly argued that cable re-regulation would damage what he called an “adolescent” industry. Since Time Inc. bought Warner Communications Inc. last summer, the resulting company has owned not only the nation’s second-largest cable operation but also the Warner Bros. studio and the HBO pay TV service.

Under questioning by the commission, however, MCA Inc. general counsel Robert Hadl complained that his company’s recent films, including “Born on the Fourth of July” and “Back to the Future, Part II,” may not be seen on pay TV at all because Time Warner’s HBO unit was “not interested in buying” from MCA since the merger.

Spokesmen for HBO and for Warner Bros. declined to comment.