Appeals court sides with Comcast in market-share battle with FCC

The nation's biggest cable operator can now get bigger.

The U.S. Court of Appeals for the District of Columbia Circuit sided with Comcast Corp. and against the Federal Communications Commission on Friday in a closely watched case over how many of the nation's roughly 100 million cable TV subscribers one company should be allowed to serve.

In throwing out the FCC's rules that no cable company can serve more than 30% of the nation's TV marketplace, the court said the regulatory agency did not factor in competition in the form of satellite television in its arguments for why the industry should not be allowed to expand. The court called the existing rules "arbitrary and capricious."

The decision should clear the way for Comcast and other cable operators to expand their holdings. Philadelphia-based Comcast currently has 23.9 million subscribers, reaching 24.8% of the nation's homes with cable TV. In a statement, the company said the decision "affirms that rules must reflect the changing realities of the dynamic video marketplace where today consumers have more choice in video providers and channels than ever before."

Whether there will suddenly be a surge in deals by big cable operators such as Comcast and Time Warner Cable remains to be seen. The industry is already fairly consolidated; six companies control about half the U.S. market.The 30% cap was first put in place by Congress as part of the 1992 Cable Act. In 2001, the District of Columbia Circuit ruled that the cap was unconstitutional. The commission then conducted an inquiry about cable ownership limits and in 2007 again tried to impose the cap, which was again challenged by the industry.

FCC Chairman Julius Genachowski said the agency was reviewing the decision and would take it "fully into account in future action to implement the law."

Some industry observers read that to mean the agency might again seek to appeal the ruling. The last challenge was instituted by the commission during the Bush administration, which generally favored deregulation, but then-FCC Chairman Kevin J. Martin took a hard line against the cable industry.

Roger McDowell, a Republican commissioner who in 2007 argued against the regulatory agency's fight to maintain the 30% cap, said in a statement that the changing media landscape made it clear that the FCC's continued defense of the cap wasn't justified.

Trying one more time may lead to the same result for the FCC. In its ruling, Judge Douglas H. Ginsburg said the justification for the cap is "even weaker now" than it was in 2001 when the court previously rejected the regulatory agency's arguments.

If the FCC does back off on trying to reinstate its limits, other advocacy groups might pick up the battle. Media Access Project, a public interest lobbying organization, issued a statement saying, "the fight is not over" and said it would consult with the FCC on whether a Supreme Court review is feasible.


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