CAN FCC CHAIRMAN MARTIN GO WHERE NO CHARIMAN HAS GONE BEFORE?

Implications: Cable companies will continue to lose subscribers to AT&T and Verizon. They will have to share more of their programming with their competitors on nondiscriminatory terms and the FCC will scrutinize their deals much more closely than it has in the past. Comcast will be barred from acquiring any other cable companies, while AT&T maybe able to acquire Echostar making it even more competitive against cable. Martin will continue to push for a la carte programming which destroys the cable business model.  Increasing the pressure may cause cable to negotiate some type of a la carte compromise.  For broadcasters this "pro- consumer" agenda may mute some of the opposition to eliminating   the ban on  multiple media outlet ownership in major markets, thus providing some relief to Tribune and possibly expediting their merger.  Expect greater restrictions on cable companies ability to expand. Finally, it isn't clear how much of this will with stand court scrutiny.

Analysis: The implications are clear. Martin will spend a great deal of the remainder of his lame duck term re regulating cable. He intends to re- write the horizontal attribution rules to limit the amount a cable company can own to 30% of the national market. When I was Chief of the Bureau we attempted to do the same thing and were reversed by the court. The Commission has voided exclusive contracts, and under the never legally tested 70/70 rule will attempt to mandate an a la carte programming measure that shatters cable’s business model and may have negative implications for big programmers like Viacom. Winners would be AT&T, Viacom, RCN and smaller programmers.

All of the above issues have been looked at by both Republican and Democratic Chairman and they have found no legal basis to proceed in the manner that Martin apparently has chosen to proceed. It is clear that Martin is willing to push to envelop to re-regulate cable and in the short term he may be successful, however, it is questionable