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FCC Mulls Cable-DBS Cross-Ownership Ban

The Federal Communications Commission is considering rules to restrict the common ownership of cable systems and direct-broadcast satellite carriers —a move opposed by FCC chairman Michael Powell three years ago.

As part of its effort to limit the size of cable operators, the agency last week said it may be necessary to keep cable out of the DBS business to ensure that a cable-DBS combination cannot monopolize the program-acquisition market.

The 68-million-subscriber cable industry controls 77 percent of the pay TV market; with 16 million subscribers, DBS carriers control 18 percent.

The FCC is working to craft cable-ownership rules designed to place limits on how large a single MSO may grow and to limit the number of affiliated cable networks an MSO may carry on its systems.

Under FCC rules overturned by a federal court in March, the agency barred a single MSO from serving more than 30 percent of all U.S. subscribers to cable and other pay-TV providers and from occupying more than 40 percent of the first 75 channels with affiliated programming.

In February 1998, the FCC initiated a cable-DBS cross-ownership rulemaking at a time when PrimeStar Inc. — the medium-power DBS carrier owned by major cable MSOs — was seeking FCC approval to acquire a key DBS license from News Corp. and MCI Communications Corp.

Powell, then an FCC member in the Republican minority, criticized the step as premature. The FCC had the adequate authority to address any cross-ownership problems presented by the PrimeStar deal, he said.

"There might be cause for considering a rule if we were seeing numerous cable-DBS combinations, and if we were seeing anti-competitive effects, and if we saw that our existing powers were insufficient to address these problems. But that is not the case," Powell wrote in a statement dissenting from the cable-DBS probe.

The FCC's interest in barring cable-DBS combinations didn't move past the proposal stage. Three months after the agency's plan surfaced, the Justice Department filed an antitrust suit to block the PrimeStar deal, and the company called off the transaction in October.