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Martin Preps For New Cable Ownership Fight

Washington – After batting just .250 at Tuesday night’s public meeting, Federal Communications Commission Kevin Martin has decided to slap more pine tar on his regulatory bat in preparation for taking another huge swing at big cable.

Martin, FCC and industry sources said Wednesday, has told the other FCC members to be prepared to vote Dec. 18 on rules that would reinstate cable system ownership limits, which have lain dormant since 2001 after a federal appeals court held that the agency’s cable restrictions were unconstitutional. The FCC’s old rule barred one cable company from serving more than 30% of pay-TV subscribers nationally.

If Martin were able to revive the 30% cap, Comcast, with 26.1 million subscribers or 27% market share under FCC attribution rules, could probably add Cablevision, with 3.1 million subscribers, and fit under the cap. But a deal to buy Charter’s 5.3 million subscribers probably wouldn’t fit. A 30% cap wouldn’t pose an immediate business risk to Time Warner Cable, which has 13.3 million subscribers, or about 14% of the 96.9 million pay-TV subscriber universe.

The effort to codify a 30% cap now when the FCC has so much else to do – such as managing the shut off of analog TV signals in early 2009 – could strike some as a misuse of agency resources, especially when FCC officials can block any large cable transaction without a 30% rule on the books. The agency, for example, refused to allow DirecTV and EchoStar to merge in 2002 even though it had no satellite horizontal ownership rules on which to rely.

On Tuesday, Martin had four cable-hostile regulations ready to go. In the end, two had to be scrapped and a third dealing with cable-subscriber penetration nationally was transformed into a harmless fact-finding mission, which could result in raising more questions than answers. Martin’s lone victory, which no other FCC Republican supported, was a ruling to slash cable leased access rates by 75%.

Martin is also hoping to revive at the Dec.18 meeting one of the items jettisoned Tuesday night. That regulation would grant compulsory cable carriage rights to a handful of government-selected “designated entities” – a catch-all term that usually refers to minority and religious groups, plus small businesses – but only after these entities have secured voluntary spectrum leasing deals with local digital TV stations.