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Correspondent
Against the backdrop of a fast-changing, competitive media business, today Comcast [CMCSA
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] and other cable television operators won a small victory, setting the stage for consolidation. Following Comcast's suit to throw out the cap, a U.S. appeals court struck down the Federal Communications Commission's rule that a cable operator can't serve more than 30 percent of U.S. households. This is the second such legal ruling. In 2001 Time Warner Cable (TWC) took issue with the rule, but when the court for D.C. demanded the FCC show justification for the rule, in 2007 the FCC voted to maintain the cap.
The reasoning for dumping a cap speaks to our changing times. Cable carriers face so much competition from satellite TV companies like Dish networks [DISH
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] and DirecTV [DTV
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] and now also from telco offerings like Verizon's FIOS [VZ
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] and AT&T's U-Verse [T
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]. With all these different offerings and so many programming choices, now even a lot of shows available online, it seems the government needn't worry about insufficient competition harming consumers. This is the very reason Sirius and XM Satellite radio were allowed to merge. Yes, together they entirely dominated the satellite radio market. But because there are so many competitors to satellite radio -- traditional radio, iTunes, web radio, you name it. So creating a monopoly has zero affect on consumers other than if anything, lowering prices.
So what's next? Comcast is the only cable company who could actually bump up against that limit, with about 25 percent. Now both Comcast and Time Warner Cable, which has the second-largest marketshare, will be able to continue nation-wide expansion. We can expect some consolidation, perhaps acquisitions of some of the smaller, regional cable companies.
It's still not a done deal. Non-profits that advocate for consumer rights could continue fighting for ownership limits. And FCC Chair Julius Genachowski says it will take the court's decision "fully into account in future action to implement the law." What that means is unclear. Still, this is yet another step to the kind of deregulation that will lead to consolidation as the media landscape becomes more open and more cut-throat.
Questions? Comments?
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