FCC rules designed to protect independent TV networks from anticompetitive behavior by cable companies survived mostly intact today, as a federal appeals court struck down a legal challenge from Time Warner Cable and the National Cable and Telecommunications Association. The rules have been in place since 1992 (revised in 2011) and allow networks to complain to the FCC if they believe they’ve been unfairly discriminated against or dropped by pay TV providers that have a financial interest in competing programming. Reuters and The Hollywood Reporter mention Bloomberg and the Tennis Channel as networks that have complained about being placed in premium tiers so that they don’t compete directly with the distributors’ own stations.
Increased competition could make the rules unnecessary "in the not too-distant future."
TWC sought to have the legislation overturned on Constitutional grounds, arguing that preventing cable companies from managing independent networks as they see fit is a violation of their right to free speech. Unfortunately for pay TV companies, the court found that the antitrust issues at stake outweighed their First Amendment concerns, although it did concede that increased competition could make the rules unnecessary "in the not too-distant future."
The judge acknowledged that the standstill provision was important
The court also vacated the antiretaliatory "standstill" rule allowing a network to request its existing contract with a distributor be frozen in place temporarily if it’s threatened with retaliation for complaining to the FCC. The judge acknowledged that the standstill provision was important for protecting networks from retribution by distributors, but found that the Commission was in the wrong for establishing the rule outside the Administrative Procedure Act, which governs how government agencies establish new regulations. Time Warner said it was happy with the ruling and that the standstill provision "would have required a distributor to continue carrying a cable network based solely upon the filing of a program carriage complaint," seemingly ignoring the judge’s invitation to the FCC to re-issue the regulation under the APA.
The FCC’s acting chairwoman Mignon Clyburn responded to the ruling as well, saying "these rules remain necessary to prevent anticompetitive conduct by video programming distributors, and they empower consumers to access a rich and diverse mix of programming."