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Cable Programmers Sue FCC

Six national cable networks have rekindled the debate over the new Federal Communications Commission (FCC) "must carry" rule by bringing in the First Amendment.

In a suit filed Monday in the U.S. Court of Appeals for the District of Columbia Circuit, those networks -- C-SPAN, Discovery Communications Inc. (Nasdaq: DISCA, DISCB, DISCK), The Weather Channel, TV One, A&E Television, and Scripps Networks -- are challenging the rule, claiming it violates their First Amendment speech rights and gives an "unfair and illegal" advantage to local broadcast stations in securing carriage on cable systems.

The rule will require most cable operators to offer so-called "must carry" broadcast channels in analog and digital formats following the February 2009 digital TV transition.

"Once again, the government has given an unfair advantage to broadcast licensees," says Bruce Collins, corporate vice president and general counsel of C-SPAN, who claims cable programmers have been given "second-class status" in the eyes of the FCC.

"We've got other legal arguments, but the First Amendment argument is pretty strong," he added.

The group of cable programmers is also expected to argue that the FCC, by approving the dual must-carry rule, violated the Administrative Procedure Act and overstepped the authority granted by Congress to regulate programmers.

The rule, which the FCC unanimously approved in September, gives operators the option to offer "must carry" signals in digital format only, provided that all their customers have the necessary equipment such as set-tops. (See FCC OKs Dual TV Carriage Rules.)

RCN Corp. , for example, is trying to achieve the latter option in Chicago. Others, including Verizon Communications Inc. (NYSE: VZ), have made all-digital pledges in order to obtain an "Omnibus" waiver on some set-top models with integrated security. (See RCN Reclaims Analog in Chicago , RCN's All-Digital Challenge, and Verizon & Others Get Their Waivers.)

Although FCC Chairman Kevin Martin originally sought a perpetual must-carry mandate, the agency eventually agreed to a cable-proposed concession to have the ruling expire in 2012. The FCC, however, has reserved the right to review the ruling during its final year.

The FCC and the National Cable & Telecommunications Association (NCTA) declined to comment on the programmer lawsuit. The NCTA, which was key in the discussions that led to the sunset compromise last September, previously said that it did not intend to challenge the FCC order.

The National Association of Broadcasters (NAB) argues that the suit amounts to another attempt by cable to block a successful digital TV transition.

"By reneging on the NCTA commitment to preserve cable carriage of local broadcast stations to all cable customers after February 2009, these programmers threaten to block consumer access to scores of foreign language and religious TV stations all over America," said NAB executive VP Dennis Wharton, in a statement. "We will aggressively fight the pay TV programmers' attempt to dictate terms and conditions of the DTV transition."

As for next steps, arguments and briefings will take place over the next several weeks. Collins believes oral arguments could happen this fall, followed by a resolution early next year, possibly falling close to the date of the DTV transition itself.

The FCC released the order in the public register on Feb. 1. "The first chance we got, we took it," Collins said of the lawsuit's timing.

If the [Law]suit Fits
Legal action brought about by cable interests against the FCC is starting to become a regular occurrence.

Last month, the NCTA filed an emergency motion seeking a stay on an FCC rule concerning contracts between cable operators and multiple-dwelling units (MDUs). (See NCTA Takes MDU Row to Court .)

Comcast Corp. (Nasdaq: CMCSA, CMCSK), meanwhile, is trying to reverse the FCC's decision to disallow a waiver request that would allow the MSO to continue deploying some low-end digital set-top models with baked-in security. (See Comcast Takes CableCARD Battle to Court .)

— Jeff Baumgartner, Site Editor, Cable Digital News

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