The D.C. Court of Appeals invalidated the market share cap the Federal Communications Commission imposed on the cable industry, calling the measure “capricious and arbitrary” – language as bluntly dismissive as most courts allow themselves to use.
The FCC set up a cap in 2001, which was subsequently overturned in court. The Commission, led at the time by then-Chairman Kevin Martin, re-imposed a cap of 30 percent market share in 2007.
As a practical matter, the only company likely to approach Martin’s cap in the near term was Comcast, which has a market share of about 26 percent. Comcast challenged the 2007 policy.
While the Democratic members of the FCC have engaged in their share of snarkiness regarding former Chairman Kevin Martin, it was Republican commissioner Robert McDowell who saw fit to aim a kick at his former colleague, who earned a reputation for cable-bashing by ramming through measures like the one just overturned.
McDowell wrote: “It was clear in December 2007, when I dissented from the FCC decision to once again impose a 30 percent national cap on cable system ownership, that the effort to re-justify the very same cap that the D.C. Circuit first struck down in 2001 was even more vulnerable to court challenge the second time around. Despite the Commission staff’s best efforts to provide post hoc empirical support for the chosen outcome, the court recognized that the 2007 analysis’ aging data and questionable assumptions sat oddly against the facts about new – and successful – competitors to cable systems in the multichannel video marketplace. It should go without saying that, in the future, outcomes in our proceedings should be driven by the facts and law, rather than the other way around.”
The decision is sure to spark questions about the likelihood of Comcast acquiring other cable companies. In the last few weeks, analysts have taken note of the large store of cash Comcast has accumulated and have speculated about the possibility of Comcast attempting to buy a content company, a la its attempt to buy Disney a few years back.