U.S. Court Strikes Down Cable Ownership Cap

WASHINGTON: The U.S. Court of Appeals for the D.C. Circuit has struck down a FCC rule that limited a cable company’s market share to no more than 30 percent, a move that could spark a round of mergers and acquisitions in the pay-TV sector.

Cable giant Comcast Corporation has brought the case to the Court of Appeals, taking issue with the FCC rule that was intended to enhance competition in the sector. The court deemed the FCC regulation as "arbitrary and capricious," and noted that the media regulator had "failed to demonstrate that allowing a cable operator to serve more than 30 percent of all cable subscribers would threaten to reduce either competition or diversity in programing."

Pointing to a host of alternative providers, from satellite giant DIRECTV to services from telcos such as Verizon’s FiOS, the court stated: "Cable operators, therefore, no longer have the bottleneck power over programing that concerned the Congress in 1992," when the cap was first put in place.

Responding to the court’s decision, FCC Chairman Julius Genachowski said: “As part of the Cable Act, Congress required the Commission to adopt horizontal ownership limits to enhance effective competition in the cable television marketplace. The FCC staff is currently reviewing the Court’s decision with respect to the limit previously adopted and the Commission will take this decision fully into account in future action to implement the law.”