Issue: 1) The horizontal limits set by the FCC interferes with cable companies’ speech rights by restricting the number of viewers to whom they can speak. 2) The vertical limit set by the FCC restricts their ability to exercise their editorial control over a portion of the content they transmit.1
Judgment: The courts reversed and remanded the FCC decisions on horizontal and vertical limits. This includes the FCC’s refusal to exempt cable operators subject to effective competition from the vertical limits, for further proceedings. They also reversed and remanded the elimination of the majority shareholder exception and the prohibition on sale of programming by an insulated limited partner.
Reasoning: The FCC failed to show a risk of collusion inadequately to support the 30% limit and made little attempt to identify other anticompetitive behavior. The courts also found that the FCC was unable to prove that the vertical limits imposed on cable companies was not burdening substantially more speech than necessary. The courts decided that the 30% horizontal limit was in excess of the FCC’s statutory authority. They believed a 60% limit, for example, would allow for enough of an open field even if the programmer was rejected by the largest company in the market.
The FCC had ruled that cable companies could not expand beyond 30% market share vertically or horizontally. The Supreme Court ruled that the FCC’s reasoning for determining the numbers for vertical and horizontal market limits were poorly argued. The Supreme Court stated that the FCC was out of its statutory jurisdiction when it decided a 30% horizontal market limit. The Supreme Court stated that a larger market cap of 60% would still allow for enough competition in the market and ease burdens on how companies ran their business.