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You Must Share Channels, Court Tells Cable Companies

Admits cable has lost market share, but not enough

Cable systems that hope competition from satellite and phone company rivals could be eased by locking up rights for channels they own have been dashed. At least for now.

A divided three-judge U.S. Court of Appeals for the District of Columbia Friday morning upheld the Federal Communications Commission’s that require cable companies to share with competitors channels they own or even partially own.

Most of the channels affected are regional sports channels, but some cable systems own several national channels, too. And they could soon own far more if Comcast’s deal for NBC Universal goes through.

The rules were initially implemented more than a decade ago, and extended for five years in 2007. Cable systems challenged the extension, arguing that they violated the First Amendment and were outdated because cable systems have lost market share to satellite and phone-company competitors.

On a 2-to-1 decision, the judges sided with the FCC. The ruling said that while cable systems indeed have lost market share, they still control a majority of the market for cable.

But the judges warned that if cable systems continue to lose market share, the FCC may lose its justification for extending the rule again.

FCC chairman Julius Genachowski praised the decision.

“The commission’s program access rules have played a vital role in making diverse and attractive video programming available to cable and satellite TV viewers,” he said in a statement. “I’m pleased that the D.C. Circuit court has confirmed the commission’s authority to prevent vertically integrated cable companies from denying critical television programming to their competitors and consumers.”

The decision drew praise from consumer advocates and disappointment from cable systems.

Parul P. Desai, vice president of the Media Access Project, a public interest law firm that represents consumer groups, said in a statement said the court correctly found that cable systems  “have sufficient market power to withhold programming from their competitors. “Exclusive contracts for must-have programming, combined with cable’s significant market power, would have a disastrous impact on competition and consumer welfare,” he said.

On the other side, Comcast said in a statement: “We’re disappointed that the court has preserved the current unfairness that allows DirecTV to have exclusives for NFL Sunday Ticket and NASCAR Hot Pass while restricting the exclusives that cable operators may have, but it is welcome that the court — majority and minority alike — recognize that the marketplace of today is vastly more competitive than in 1992 and that rules and regulations must keep pace with marketplace changes.”

Said a statement from Cablevision: “Like the must-carry and retransmission consent regime that allowed ABC to blackout the Oscars for 3 million New York households this week, the program access rules are based on an outdated and obsolete view of the competitive landscape. In today’s highly competitive video marketplace, these rules do nothing but tilt the playing field in favor of phone companies and broadcasters to the detriment of fair competition and consumers.”

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