Updated 1 p.m.
A federal appeals court in Washington today took a shot at the Federal Communications Commission when it tossed a rule that barred any single cable television operator from serving more than 30 percent of all subscribers. Cable operators, including Comcast Corp., had argued that the restriction blocked their ability to make efficient acquisitions.
In the closely watched case, the U.S. Court of Appeals for the D.C. Circuit held that the FCC had not shown that allowing a cable operator to serve more than 30 percent of subscribers risked reducing “either competition or diversity in programming.” The judges noted in the opinion that there is increasing competition among satellite and fiber optic video providers and that there has been a “dramatic increase” in the number of cable networks and programming.
The court criticized the FCC for failing to take into account new competition after the court remanded earlier litigation to the agency for further review. In 2001, the D.C. Circuit struck down the 30 percent cap, which was first put in place in 1993.
“The Commission’s dereliction in this case is particularly egregious,” because the FCC failed to heed the D.C. Circuit’s earlier direction, wrote Judge Douglas Ginsburg in the appellate court opinion, joined by Judge Brett Kavanaugh and, in part, by Senior Judge A. Raymond Randolph. The 30 percent cap, Ginsburg wrote, “has limited the ability of cable operators to communicate with the public for some 16 years despite our determination eight years ago that a prior version of the Rule was unconstitutional.”
Ginsburg said in the opinion that competition will be safeguarded by generally applicable antitrust laws.
Gibson, Dunn & Crutcher partner Miguel Estrada, who argued the case for Comcast, was not immediately reached for comment. James Carr, counsel for the FCC, declined to comment on the ruling. Jenner & Block partner Mark Schneider, who argued on behalf of the National Cable & Telecommunications Association in support of Comcast, was not immediately reached.
“We are pleased the DC Circuit has vindicated our position," Comcast spokeswoman Sena Fitzmaurice said in a statement. “This important decision affirms that rules must reflect the changing realities of the dynamic video marketplace where today consumers have more choice in video providers and channels than ever before.”