ANALYSTS DOUBT SUCCESS OF CONSUMER GROUPS’ SUPREME COURT BID
Industry analysts expressed doubts that consumer groups would be successful with their challenge to FCC rules capping number of subscribers cable companies could reach (CD Aug 6 p9). Analysts said it was unlikely U.S. Supreme Court would take case, but if it did, justices were likely to affirm ruling of U.S. Appeals Court, D.C., that overturned cap. Andrew Schwartzman of Media Access Project, which appealed to Supreme Court on behalf of Consumer Federation of America and Consumers Union, acknowledged high court was unlikely to take case, especially since FCC and Justice had bowed out. “We are not overly optimistic,” Schwartzman said. Nevertheless, public’s interest merits appeal, he said.
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Analyst Keith Kennebeck of Strategis Group pointed to appeals court’s finding that FCC rules violated companies’ First Amendment rights. Court also faulted Commission for not taking DBS into account. Kennebeck said Mon. he believed DBS eventually would become major market competitor, but overbuilders weren’t competitive now.
FCC and Justice chose not to challenge Appeals Court ruling, signaling Bush Administration’s and FCC Chmn. Powell’s previously stated interest in less govt. intervention (CD April 5 p2). Analysts said “deregulatory climate” didn’t bode well for cap, nor did atmosphere in marketplace, such as Comcast’s recent unsolicited bid for AT&T Broadband. “The potential Comcast-AT&T Broadband merger is a sign of a new wave of consolidation. I think that this merger will most likely happen,” Kennebeck said. Analysts predicted top MSOs, through mergers, would be whittled down to 4 or 5 in coming years.
Schwartzman said analysts’ predictions supported MAP’s argument that high court must act to ensure “diversity of opinions” in media.
Former FCC Chief of Staff Blair Levin, now analyst for Legg Mason, said one option was for Commission to renounce any cap and instead let Justice handle mergers and acquisitions under antitrust provisions. However, Congress intended in 1992 Cable Act that FCC should have power to act in public interest, so that agency would be left to have “a profound impact” on future media deals, Levin said. FCC Cable Bureau Chief Kenneth Ferree has said new ownership rules would be proposed within 2 months(CD July 26, p4).
Senate Commerce Committee Chmn. Hollings (D-S.C.) and Democratic-controlled Senate have shown interest in pressing for new regulation, but analyst Patti Reali of Gartner Dataquest said she doubted Democrats would prevail: “With Powell and the Bush Administration, I just don’t see more regulation coming.”
Appeals Court in March struck down FCC’s 30% cap on number of national cable subscribers on cable systems owned by one MSO (CD March 5 p1). Ruling also voided FCC horizontal ownership rule that said programming in which MSO had interest should fill no more than 40% of channels on cable systems. Court said FCC pulled numbers “out of thin air.”