Ch 10 Structural Limitations

Week 6: Emerging Video Marketplace II
o Fundamental Concerns
• The Communications Act of 1934, Title II, Wired Communications; common carrier provisions – telephone companies may not select content; they only transmit the message; content may be put on medium under system of rates and tariffs.
Ancillary jurisdiction: FCC could regulate cable as a function of broadcast regulation b/c cable could affect broadcast’s health and well-being and that broadcasters may not be able to act in the public interest per Communications Act of 1934.
Rule: cable systems with 3500 subscribers or more should act as broadcasters and provide local programming in areas. Broadcasters challenged this; FCC said cable systems were required to carry local programming.
• FCC would later drop requirement that cable carry original programming.
• HBO case affirmed cable system First Amendment rights; out of this case came the importation of distant signals (WGN, WTBS) into cable markets.

o Protecting Program Suppliers
• The FCC devised rules that proposed national subscriber and channel occupancy limits with respect to points A) and B). The FCC declined to provide input on point C)
• Note. Whatever the FCC does will be challenged in court. (i.e. provisions do not survive judicial review)
• Note. The FCC’s decisions on A) and B) entered district court in Time Warner v. FCC.

o Time Warner Entertainment v. FCC (240 F. 3d 1126 (D.C. Cir. 2001)
• Based on 1992 Act, FCC crafted rules preventing cable companies from owning more than 30% audience share of broadcast market. The District Court of Appeals overturned limit – b/c it felt rules were created in arbitrary manner.
• Feb. 2002 – Dist. Court strikes down FCC rule baring broadcast station from owning another station in the broadcast market
• There has been a lack of consolidation between broadcast and cable TV companies in the same market.

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