Supreme Court upholds cable ownership limits

The Supreme Court upholds rules limiting a company to 30 percent ownership of the cable TV market, affirming the requirement that AT&T shed millions of subscribers.

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The Supreme Court upheld rules Tuesday limiting a company to 30 percent ownership of the cable TV market, affirming the requirement that AT&T shed millions of subscribers.

Getting under the cap is an issue AT&T has been struggling with ever since it acquired cable company MediaOne, a deal completed last June. As a condition of approval of that acquisition, the Federal Communications Commission insisted that AT&T either let go of about 10 million subscribers, spin off Liberty Media or sell its 25.5 percent stake in Time Warner Entertainment. The company has been struggling to do the latter two options.

The Supreme Court ruled without comment, and AT&T had no comment on the high court's decision.

Time Warner had brought the case to the Supreme Court, arguing that the ownership cap regulation is unconstitutional on First Amendment grounds. Though AT&T declined to enter the case, which attacked the underlying law, the cable giant has joined Time Warner in a separate, ongoing case that attacks the Federal Communication Commission's implementation of the law.

This separate case, also before the Supreme Court, argues that the FCC didn't provide any rationale for the 30 percent cap figure or the attribution rule that says a 5 percent stake in another cable operator means that operator's subscribers count toward the minority stakeholder's cap figure. If the court reaches the conclusion that the FCC did not offer just cause as to why it chose the limits it did, the FCC would be forced to open a new ruling process and seek comment on what the ownership caps should be.

"We're following that case closely," said AT&T spokesman Jim McGann.

AT&T tried last fall to get Congress to lift the ownership cap without success.

However, there may be changing regulatory winds in Washington with Michael Powell as the new FCC chairman. He recently expressed opposition to the ownership caps.

Still, AT&T is obligated under the MediaOne conditions to unload Liberty Media or its Time Warner Entertainment stake. AT&T Chief Executive C. Michael Armstrong told reporters recently that the company is committed to doing both, but it awaits a favorable tax ruling on a Liberty Media spinoff that would spare it penalties.

In addition, with Time Warner the only candidate for purchasing the Entertainment stake, those talks have dragged on. Still, Armstrong was upbeat, saying, "We're in discussions, and they're going very well...We will comply with the FCC requirement."

Time Warner, the nation's second-largest cable provider, declined to comment.