FCC 91-405 Federal Communications Commission Record 7 FCC Red No. 2 
Before the 
Federal Communications Commission 
Washington, D.C. 20554 
MM Docket No. 82-434 
In the Matter of 
Amendment of Part 76, Subpart J, 
Section 76.501 of the Commission's 
Rules and Regulations to Eliminate 
the Prohibition on Common Ownership 
of Cable Television Systems and 
National Television Networks 
SECOND FURTHER NOTICE OF 
PROPOSED RULE MAKING 
Adopted: December 12, 1991; Released: December 30, 1991 
Comment date: March 2, 1992 
Reply comment date: March 17, 1992 
By the Commission: Commissioner Quello concurring 
and issuing a separate statement; Commissioner Duggan 
issuing a separate statement. 
I. INTRODUCTION 
1. This Second Further Notice of Proposed Rule Making 
("Second FNPRA1") invites further comment on our pro­
posal to eliminate Section 76.SOl(a)(l) of our rules, 1 
which prohibits common ownership of cable television 
systems and national television networks (the "network­
cable cross-ownership rule"). 2 In light of the significant 
changes in the video marketplace since the most recent 
comments in this docket were submitted in 1988, we 
believe it is useful to revisit this proceeding and update its 
record. These marketplace changes, which were closely 
examined in a recent Commission staff report,3 include a 
continued decline in the broadcast networks' audiences 
and financial base and the emergence of the cable televi­
sion industry as a more substantial competitive force in 
the production and distribution of video programming. 
1 47 C.F.R. Section 76.501(a)(l) was originally adopted as 47 
C.F.R. Section 74.1131. This rule provides that "(n]o cable tele­
vision system (including all parties under common control) 
shall carry the signal of any television broadcasting station if 
such system directly or indirectly owns, operates, controls, or 
has an interest in ... a national television network (such as ABC, 
CBS, or NBC)." 
2 See Notice of Proposed Rule Making ("Notice"), BC Docket 
No. 82-434, 91 FCC 2d 76 (1982). See also Further Notice of 
Proposed Rule Making ("Further Notice"), BC Docket No. 
82-434, 3 FCC Red 5283 (1988). 
3 F. Setzer and J. Levy, Broadcast Television in a Multichannel 
Marketplace, FCC Office of Plans and Policy Working Paper No. 
26, June 199l. 4 We note that in response to our Notice of Inquiry in MM 
Docket No. 91-221, 6 FCC Red 4951 (1991), seeking comment on 
586 
2. In our earlier notices in this proceeding, we invited 
comment on whether the network-cable cross-ownership 
rule may safely be eliminated and whether its repeal 
would promote increased efficiencies and benefits to the 
public. Through this Second FNPRM, we encourage inter­
ested parties to update the record on this issue. In addi­
tion, we recognize that parties commenting on our prior 
notices have raised serious questions regarding the impact 
of repeal on diversity and competition in the video 
marketplace. As a result, we believe that we should care­
fully consider these concerns to assess their legitimacy and 
to determine whether minimally intrusive regulatory safe­
guards are warranted to alleviate them if we decide to 
relax or repeal the rule. In this regard. we seek comment 
on certain alternative proposals aimed at addressing these 
concerns, and we also invite parties to propose any other 
safeguards or modifications that they consider appropri­
ate.4 
II. BACKGROUND 
3. When adopting the network-cable cross-ownership 
ban in 1970,5 the Commission expressed its concern that 
the television networks, if permitted to own cable systems 
at this critical stage of their development, could poten­
tially thwart the cable industry's growth and inhibit com­
petition. More generally, the Commission also stated that 
"the networks already have a predominant position na­
tionwide through their affiliated stations in all markets, 
their control over network programming presented in 
prime time, and their share of the national television 
audience." 6 Although the Commission did not elaborate 
further on the rule's rationale, its policy concerns were 
illuminated in its discussion of the broadcast-cable cross­
ownership rule, which was simultaneously adopted and 
prohibits common ownership of local television stations 
and cable systems that serve the same area.7 This discus­
sion suggests that the principal concerns underlying the 
network-cable rule were that: (1) the networks could re­
strict the amount of competing programming supplied by 
their cable television systems due to their incentive to 
maximize the audience for their own network program­
ming; (2) cable systems owned by a network could refuse 
to carry the programming of rival networks. thus hinder­
ing the development of new cable networks as well as 
limiting network competition nationwide; and (3) cable 
changes in the state of the video marketplace and the policy 
implications that flow from these changes, several parties have 
already submitted comment on the merits of the networkcable 
cross-ownership rule. We will ·consider those comments in the 
context of this proceeding, but also invite those parties to com­
ment on the specific proposals for modifying the rule described 
below. 
5 Second Report and Order in Docket 18397, 23 FCC 2d 816 
p970), recon. denied, 39 FCC 2d 377 (1973). 
23 FCC 2d at 821. 
7 47 C.F.R. § 76.50l(a)(2).See Second Report and ()rder, 23 FCC 
2d at 819; 39 FCC 2d at 391. The Cable Communications Policy 
Act of 1984 codified the Commission's broadcast-cable cross­
ownership rule but not the networkcable cross-ownership rule. 
See Pub. L. No. 98-549, 98 Stat. 2779 (1984), Section 613(a). 47 
U.S.C. § 533(a). 
7 FCC Red No. 2 Federal Communications Commission Record FCC 91-405 
ownership could enhance the networks' dominance as 
suppliers of television programming, thus limiting the 
diversity of voices in the video marketplace.8 
4. Beginning in 1980, several studies questioned the 
necessity of the network-cable cross-ownership rule and 
emphasized the increasingly competitive nature of the 
video marketplace. These studies included reports by the 
Commission's Network Inquiry Special Staff ("Special 
Staff"),9 the Office of Plans and Policy ("OPP"), 10 and the 
majority staff of the House Subcommittee on Telecom­
munications. Consumer Protection and Finance of the 
Committee ~n Energy and Commerce. 11 We cited these 
studies in our first Notice, issued in 1982, that proposed to 
eliminate the cross-ownership rule in light of the growth 
of the video marketplace and the development of cable 
television services. The comments in response to the No­
tice were mixed, with the National Association of Broad­
casters ("NAB"), the Department of Justice ("DOJ"), the 
three national television networks, and the National Cable 
Television Association ("NCTA") supporting our proposal 
to eliminate the rule. and the Small Business Administra­
tion ("SBA") and several public interest groups opposing 
it. 
5. In 1988, we issued a Further Notice to solicit addi­
tional comments on our proposal to eliminate the rule. 
Given the time elapsed since the Notice, we allowed inter­
ested parties to comment on any intervening develop­
ments or circumstances that might affect our evaluation 
of the network-cable crossownership rule. In particular. 
we noted a report by the National Telecommunications 
and Information Administration ("NTIA"), 12 which con­
cluded that broadcast television networks should not be 
prohibited from owning local cable systems. The Further 
Xotice also observed that significant statutory or regula­
tory changes may have altered the nature of competition 
between the cable and broadcasting industries. including 
the adoption of the 1984 Cable Act. 13 the elimination of 
our "must carry" rules, 14 and the reimposition of our 
syndicated exclusivity rules. 15 Accordingly. we sought spe­
cific comment on whether the opportunity for networks 
to own cable systems in markets containing their affiliated 
stations might adversely influence negotiations for affili­
ation contracts. Considering the absence of must carry, we 
also asked whether a network that affiliates with a local 
station while owning a cable system in the same market 
could undermine the competitive position of other broad­
cast facilities in that market. A summary of the comments 
received in response to the Further Notice is contained in 
Appendix B. 
8 See Notice, 91 FCC 2d at 82. 
9 See New Television 1\"etworks: Entry, Jurisdiction, Ownership 
and Regulation, October 1980. 
1° K. Gordon. J. Levy and R. Preece, FCC Policy on Cable 
Ownership (Staff Report, FCC Office of Plans and Policy), No­
vember 1981. 
11 Telecommunications in Transition: The Status of Competition 
in the Telecommunications Industry, Committee Print 97-V. 97th 
Congress. 1st Session, November 3, 1981. 
12 
"Video Program Distribution and Cable Television: Current 
Policy Issues and Recommendations," NTIA Report No. 88-233, 
June 1988 ("NTIA Report"). 
13 Cable Communications Policy Act of 1984, Pub. L. No. 
98-549, Section 1 et seq., 98 Stat. 2779 (1984). 
14 See Quincy Cable 7V lnc. v. FCC, 768 F.2d 1434 (D.C. Cir. 
587 
III. REQUEST FOR FURTHER COMMENT 
6. The changes in the video marketplace that we de­
tailed in our prior Notices have continued to develop. 
The cable industry is now a robust. independent enter­
prise, with systems and networks offering an increasing 
diversity of programming that competes directly with 
over-the-air broadcast services. In the midst of this steadily 
rising competition, the television networks face a growing 
need to generate additional revenues in response to de­
clining audiences and advertising sources. 16 As discussed 
below, these critical developments have prompted us to 
revisit the issue of whether eliminating our network-cable 
cross-ownership rule would enhance network efficiency 
and generate public benefits.17 
7. We recognize, however, that a number of 
commenters responding to our prior Notices have ex­
pressed concerns that repealing the current restriction 
could undermine competition and diversity in local and 
national video markets. We thus seek to explore those 
concerns in this proceeding to assess their validity, to 
analyze whether they could be satisfactorily addressed by 
imposing minimally intrusive regulatory safeguards, and 
to determine the extent to which the record supports 
relaxing the rule. 
Rule Elimination 
8. We ask commenters first to address whether, in light 
of the significant changes in the video marketplace, the 
network-cable cross-ownership rule should be eliminated. 
In this regard, we note that the near complete dominance 
of the three broadcast networks, which existed when the 
rule was adopted and persisted for many years, has clearly 
diminished and left the networks with the need to adapt 
to a changing economic and competitive environment. 
According to the recent OPP Working Paper, the net­
works are experiencing a significant reduction in advertis­
ing revenue. their traditional base of economic support, 
that will force the networks either to reduce their costs 
and "downsize" their operations, or to develop supple­
mentary revenue streams. 18 
9. One potential means of both reducing costs and 
increasing revenues would be for the networks to enter 
the cable television business. The networks would appear 
well-equipped to compete in the cable industry, given 
their experience and expertise in selling national advertis­
ing, acquiring and distributing programming, producing 
news programming, and working with a diverse group of 
local affiliates. Moreover, allowing the networks into cable 
would enable them to take advantage of the benefits that 
1985), cert. denied, 106 S. Ct. 2889 (1986); and Century Commu­
nications v. FCC, 835 F.2d 292 (D.C. Cir. 1987), cert. denied, 486 
U.S. 1032 (1988). 
15 See Report and Order in Gen. Docket No. 87-24, 3 FCC Red 
5299 (1988). 
16 See Report and Order, MM Docket No. 90-162, 6 FCC Red 
3108, 3134 (1991). See also OPP Working Paper No. 26. 
17 The potential benefits and anticompetitive consequences of 
vertical integration in the video marketplace are discussed more 
completely in the ,l\'otice and the studies referenced therein. See 
fn. 2, supra. 
18 See fn. 3, supra. 
FCC 91-405 Federal Communications Commission Record 7 FCC Red No. 2 
accrue from vertical integration into both cable system 
ownership and television programming services -- benefits 
that we recently detailed in our July 1990 Report to 
Congress on the status of competition in the cable in­
dustry.19 
10. The increased revenues that may flow from network 
entry into cable system ownership also could benefit affili­
ate stations that depend on a network's programming and 
economic resources. In this fashion, any efficiencies re­
sulting from network-cable cross ownership might im­
prove the quality and diversity of programs available to 
the public from affiliate television stations. We further 
note that independent television stations could benefit 
from the diversity of network fare because of their reli­
ance upon off-network syndicated programming. Nonethe­
less, we recognize that these stations have raised serious 
concerns in the past about the possibility of repealing or 
relaxing the rule. 
11. In addition to providing new opportunities for the 
television networks, permitting network-cable integration 
could produce efficiencies that accrue to the benefit of 
cable subscribers. We note that we have recently taken a 
series of actions in which we emphasized the need to 
encoura¥ie greater competition to cable television 
systems. ° Clearly, the television networks are some of the 
most likely potential entrants into cable delivery. Accord­
ingly, in evaluating the continuing validity of the net­
work-cable cross-ownership restriction, we believe we 
should rigorously analyze the competitive effects on both 
broadcast and cable services that may flow from eliminat­
ing this rule. In this regard, commenters are invited to 
address in particular any public interest or competition 
concerns that may be raised if a cable multiple system 
operator (MSO) were to acquire a broadcast television 
network. 
12. We stress that any repeal of the network-cable cross 
ownership restriction would not be designed to provide an 
artificial boost to the networks' competitive position. 
Rather, in light of the fundamental support that the net­
works provide to the free, over-the-air broadcast system, 
we seek to remove undue barriers to their continued 
competitive vitality. In this regard, we observe that the 
decline of a number of significant industries has been 
exacerbated by regulations that failed to keep pace with 
marketplace changes. We thus emphasize the value of 
carefully scrutinizing government rules that prevent cer­
tain sectors of an industry from entering into related 
activities, particularly when the industry is as dynamic as 
the video communications marketplace. 
Alternatives for Rule Modification and Safeguards 
13. In undertaking a thorough reexamination of the 
network-cable crossownership rule in this proceeding, we 
recognize that some parties have raised valid questions 
concerning the impact that repeal of the rule may have 
19 See Report in MM Docket No. 89-600, 5 FCC Red 5008-5010 
F99o). 
0 See e.g., Second Report and Order in Gen. Docket No. 90-54, 
FCC 91-302, released October 25, 1991: Order on Reconsider­
ation in Gen. Docket No. 90-54, FCC 91-301. released October 
25. 1991; and Further Notice of Proposed Rule Making, First 
Report and Order, and Second Further Notice of Inquiry, in CC 
Docket No. 87-266, FCC 91-334, released November 22 1991 21 ' • See 47 C.F.R. § 76.501 (a)(2). See also 47 C. F. R § 73.658. 
588 
on competition and diversity. We thus believe that it is 
appropriate to consider more fully the concerns raised by 
various commenters in response to the Further Notice. As 
discussed in Appendix B, the commenters that opposed 
eliminating the network-cable cross-ownership rule con­
tended that: (1) networks could discriminate against non­
affiliates with respect to cable carriage; (2) networks 
would gain undue leverage over their affiliates in their 
contractual and program clearance negotiations; (3) net­
works would promote national rather than local program­
ming and divert funds from news and public affairs 
programming; (4) networks might bypass their local affili­
ates and deliver their programming directly through their 
cable systems; (5) networks still dominate the video 
marketplace and could hamper the development of com­
petitive cable networks; or (6) a major cable MSO could 
acquire a network and create an excessive concentration 
of media control. We seek comment on the merit and 
significance of these concerns in the current video 
marketplace. Parties may also wish to consider the extent 
to which other existing rules -- such as the local broadcast 
station-cable cross-ownership rule or our regulations 
limiting network control over network affiliates -- might 
ameliorate some of the enumerated concerns.21 In addi­
tion, to the extent the updated record establishes that 
these or other concerns warrant relaxing, but not com­
pletely repealing, the rule, we seek comment on a variety 
of options, described below, that would permit cross­
ownership of broadcast networks and cable systems sub­
ject to various constraints. Parties may consider the 
proposals individually or in certain combinations, and are 
also encouraged to present alternative suggestions. 
14. Network ownership of cable systems in "large" or 
"competitive" markets, including where second competitive 
cable systems exist. This option, first, would allow net­
works to own cable systems in large markets under the 
theory that permitting network entry only in such mar­
kets might pose the least potential threat to diversity and 
competition. In exploring this option. we seek comment 
on the appropriate definition for "large" markets. For 
example, we could use market rankings such as the top 
10, 25, or 50 markets. Second, with respect to the "com­
petitive" market approach, we could permit network own­
ership of cable systems based upon the availability of a 
certain number of television broadcast signals in the com­
munity. 22 As another means of measuring the level of 
competition. we could also allow networks to operate 
cable systems where they would provide a second or 
"competing" cable service or. more broadly. at least a 
second or "competing" multichannel competitor. This 
provision would mitigate competitive concerns and offer 
procompetitive benefits because two or more 
multichannel competitors would seek to offer service to 
subscribers in the same community. 23 We also seek com-
22 Compare Report and Order, MM Docket No. 90-4, 6 FCC 
Red 4545 (1991). Compare also Report and Order, MM Docket 
No. 87-8, 6 FCC Red 4212 (1991). 
23 We also observe that the limited number of competing cable 
systems may cause this option to create only a few initial 
opportunities for network ownership. 
7 FCC Red No. 2 Federal Communications Commission Record FCC 91-405 
ment on whether markets should satisfy both the "large" 
and the "competitive" conditions before we would permit 
network-cable cross-ownership. 
15. We note that a network-owned cable system might 
encounter sufficient competition under these options to 
discourage any attempt to discriminate against local 
broadcasters. In addition. these options would afford an 
opportunity for us to monitor and evaluate the results of 
relaxing the rule. However. the options would restrict the 
networks' flexibility to enter those markets where they 
could realize the greatest efficiencies through cross-owner­
ship of cable systems. 
16. Network ownership of cable systems up to a national 
subscriber limit. This option would allow networks to 
acquire cable systems up to some national aggregate sub­
scriber limit. Under this option, networks could take 
advantage of economies attainable through owning mul­
tiple cable systems, but not without some limit on their 
participation in the cable marketplace nationwide. We 
seek comment on the appropriate national subscriber lim­
it we might use (e.g., 10%, 15%, or 25% of all subscribers 
nationwide) if this option were adopted. We also note that 
we recently expressed our general opposition to limits on 
the horizontal growth of cable MSOs in our July 1990 
Report to Congress on competition in cable television. 24 
We thus seek comment on the merits of nonetheless 
applying such restrictions only with respect to broadcast 
network cross-ownership. 
17. Network ownership of cable systems subject to must 
carry and discrimination safeguards. This option would 
allow networks to own cable systems subject to (1) man­
datory carriage of all or most local stations, and (2) a 
prohibition of favoritism toward affiliates through car­
riage, channel position, and technical quality. Network 
ownership of cable systems subject to these safeguards 
arguably would meet the dual goals of capturing the 
benefits of network entry while directly addressing the 
discrimination concerns raised by local broadcast stations. 
In addition. the safeguards may not impose an undue 
burden upon networks, given that a network-owned cable 
system would have an incentive to provide local broad­
casting services without discrimination in order to remain 
competitive. However. we are concerned about the pros­
pects of tailoring new must carry rules to resolve objec­
tions raised in previous court decisions.25 In this regard, 
we seek comment on a viable legal rationale for man­
datory carriage of local broadcasters under such a rule. 
We also ask for comments on whether to (i) require 
network-owned cable systems to "freeze" the existing 
channel lineup, (ii) include on-channel protection for 
local signals, or (iii) adopt a non-bypass safeguard that 
prohibits a network from refusing to affiliate in any mar­
ket where it owns a cable system and has previously 
affiliated with a local broadcast station.26 
IV. CONCLUSION 
18. In this Second FNPRM, we reexamine the network­
cable cross-ownership rule and we seek further updated 
comments on the merits of eliminating the rule. We also 
offer a number of possible modifications to the existing 
24 See fn. 19, supra. 
25 See fn. 14, supra. 
26 The subject of mandatory signal carriage rules as applied on 
589 
rule in response to various concerns raised regarding 
possible anticompetitive practices by networks as owners 
of cable systems. In addition, we seek other comments or 
suggestions from interested parties with respect to the 
continued necessity of the network-cable cross-ownership 
rule. 
V. ADMINISTRATIVE MATTERS 
A. Regulatory Flexibility Analysis 
19. As required by Section 603 of the Regulatory Flexi­
bility Act, the FCC has prepared an initial regulatory 
flexibility analysis (IRFA) of the expected impact of these 
proposed policies and rules on small entities. The IRFA is 
set forth in Appendix A. Written public comments are 
requested on the IRFA. These comments must be filed in 
accordance with the same filing deadlines as comments on 
the rest of the Second Further Notice of Proposed Rule 
Making, but they must have a separate and distinct head­
ing designating them as responses to the regulatory flexi­
bility analysis. The Secretary shall cause a copy of this 
Second Further Notice of Proposed Rule Making; including 
the initial regulatory flexibility analysis, to be sent to the 
Chief Counsel for Advocacy of the Small Business Ad­
ministration in accordance with Section 603(a) of the 
Regulatory Flexibility Act, Pub. L. No. 96-354, 94 Stat. 
1164. 5 U.S.C. Section 601 et seq. (1981). 
B. Ex Parte 
20. This is a non-restricted notice and comment rule­
making proceeding. Ex parte presentations are permitted, 
except during the Sunshine Agenda period. provided they 
are disclosed as provided in the Commission's rules. See 
generally 47 C.F.R. Sections 1.1202, 1.203, and 1.206(a). 
C. Comment Dates 
21. Pursuant to applicable procedures set forth in Sec­
tions 1.415 and 1.419 of the Commission's Rules, 47 
C.F.R. Sections 1.415 and 1.419, interested parties may 
file comments on or before March 2, 1992, and reply 
comments on or before March 17, 1992. To file formally 
in this proceeding, you must file an original plus five 
copies of all comments, reply comments, and supporting 
comments. If you want each Commissioner to receive a 
personal copy of your comments, you must file an origi­
nal plus nine copies. You should send comments and 
reply comments to Office of the Secretary, Federal Com­
munications Commission, Washington, D.C. 20554. Com­
ments and reply comments will be available for public 
inspection during regular business hours in the Dockets 
Reference Room of the Federal Communications Com­
mission, 1919 M Street, N.W., Washington, D.C. 20554. 
D. Ordering Clauses 
22. Authority for this proposed Rule Making is con­
tained in Sections 4(i) and (j), and 303 of the 
Communications Act of 1934, as amended. 
a more general basis is under review in our Report and Order 
and Second Further Notice of Proposed Rule Making in Docket 
90-4, 6 FCC Red 4545 (1991). 
FCC 91-405 Federal Communications Commission Record 7 FCC Red No. 2 
For further information on this proceeding, contact 
James Coltharp, Policy and Rules Division, Mass Media 
Bureau, (202) 632-6302. 
590 
FEDERAL COMMUNICATIONS COMMISSION 
Donna R. Searcy 
Secretary 
APPENDIX A 
Initial Regulatory Flexibility Analysis 
Pursuant to the Regulatory Flexibility Act of 1980, the 
Commission finds: 
I. Reason for action. The proposals under consideration 
will modify or eliminate the existing prohibition on cross­
ownership between cable television systems and national 
television networks. The Commission believes that, in its 
current form, this prohibition is no longer necessary in 
terms of its original purposes and that possible cost bene­
fits attributable to cross-ownership are being needlessly 
forgone by continuation of the rule in its entirety. 
II. Objectives. The objective of this action is to elimi­
nate unnecessary regulation, thus permitting the 
marketplace to operate more freely and efficiently. In 
particular, networks may benefit by their ability to own 
cable systems, and cable systems may benefit through 
being owned by networks. 
III. Legal basis. The proposed Rule Making action is 
authorized by Sections 1. 2. 3. 4(i) and (j), 303, 307, 308, 
309 and 403 of the Communications Act of 1934. as 
amended. 
IV. Reporting, recordkeeping and other compliance re­
quirements. No recording, record keeping or reporting 
requirements for cable television operators are involved. 
Depending on the proposed action, however, it may 
eliminate the need for possible Commission compliance 
actions or waiver proceeding related to the existing rule. 
V. Federal rules which overlap, duplicate or conflict 
with this rule. None. 
VI. Description, potential impact and number of small 
entities affected. The proposals under consideration are 
not expected to have a significant impact on most small 
cable systems. However. to the extent that networks pur­
chase existing small cable systems, the systems may benefit 
from the expertise of the network, or from the possible 
infusion of additional capital into the cable system. To the 
extent that networks choose to purchase large cable sys­
tems or that large cable systems choose to purchase net­
works, there should be little or no direct impact on small 
business entities. 
VII. Any significant alternatives m1mm1zmg impact on 
small entities and consistent with stated objective. Several 
of the proposals under consideration minimize the impact 
on small entities. 
7 FCC Red No. 2 Federal Communications Commission Record FCC 91-405 
APPENDIX B 
SUMMARY OF COMMENTS TO 
THE FURTHER NOTICE 
1. Supporting Comments. In response to the 1988 Further 
Notice, the networks. cable operators, and NTIA filed 
comments in support of eliminating the rule. These 
commenters emphasized the cable industry's strength in 
the current video marketplace as well as the benefits of 
vertical integration. Specifically, the three networks ar­
gued that their power has diminished since 1970, when 
the rule was adopted, and that they have no incentive to 
engage in anticompetitive behavior. They maintained that 
eliminating the rule would not restrict the amount or 
diversity of cable programming, nor would it hinder the 
development of new cable networks. They also asserted 
that permitting network ownership of cable systems would 
not distort network relations with local affiliates, and 
networks would not exclude local broadcast stations from 
their cable systems. According to the networks, such 
anticompetitive practices could cause financial losses and 
would encourage both competitive entry and federal inter­
vention. 
2. NCTA and other commenters claimed that the ban 
on network ownership of cable systems is no longer nec­
essary because the rule already has served its purpose. 
They argued that the strength of the cable industry would 
prevent broadcast networks from hindering the further 
development of cable systems, and further asserted that 
such networks lack the financial resources to purchase 
enough cable systems to accumulate a market share that 
would raise competitive concerns. Proponents of network 
ownership also contended that the benefits of vertical 
integration -- in particular. the opportunity to avoid trans­
action costs in obtaining programming -- outweigh any 
anticompetitive risks. For instance, the investment of 
many cable operators in Turner Broadcasting and CSPAN 
has contributed to the expanding supply of cable pro­
gramming. Furthermore, these commenters noted that 
there is no evidence in the cable industry to indicate that 
multiple system operators ("MSOs") favor their own pro­
gramming to the exclusion of unaffiliated programming. 
3. With respect to the two concerns raised in the Fur­
ther Notice regarding the potential for anti-competitive 
practices. proponents of eliminating the rule argued that 
networks are unlikely to deny carriage to local broadcast 
signals because the public generally demands access to all 
local channels. Indeed. the local network affiliates are the 
most popular stations in every market. Consequently, net­
works engaging in a "bypassing" strategy would risk losing 
a large number of cable subscribers in exchange for a few 
additional broadcast viewers. rendering the strategy un­
profitable. Similarly, these parties asserted that networks 
have no incentive to threaten to drop their own local 
affiliates in the course of affiliation negotiations. Indeed, 
networks rely on strong local viewership to attract na-
Zi New York City recommended that we implement regulatory 
safeguards to ensure that network ownership of cable systems 
does not lead to unacceptable media concentration levels in a 
particular cable television viewing area, and stated that we 
591 
tional advertising, and the time and cost of cultivating 
affiliate relationships would make it economically un­
reasonable to drop a local affiliate. 
4. NTIA and New York City supported our proposal to 
delete the networkcable cross-ownership rule, but asserted 
that certain safeguards are necessary to ensure that net­
works operating cable systems do not discriminate against 
competitors or reduce the level of competition or diver­
sity in a particular market.2 i For example, NTIA proposed 
that the Commission establish a system for reviewing 
petitions challenging specific network proposals to acquire 
cable systems in smaller markets where (i) there is a high 
cable penetration rate, and (ii) the network-owned cable 
system would serve an area substantially equivalent to its 
affiliate's coverage area.28 The Wireless Cable Association 
also supported removing the cross-ownership restriction, 
but not before the Commission adopts rules to ensure that 
vertical integration does not preclude the establishment of 
alternative video distribution methods to coaxial cable. 
5. Opposition Comments. Opposing commenters includ­
ed the Motion Picture Association of America, Inc. 
("MPAA"), the three network affiliate associations ("Af­
filiates"), Association of Independent Television Stations, 
Inc. (''INTV"), Association of National Advertisers, Inc. 
("ANA"), Turner Broadcasting System, Inc. ("Turner"), 
Group W, Fisher Broadcasting Inc. ("Fisher"), Arizona 
Television Company ("Arizona"), Brechner Management 
Company ("Brechner"), Holston Valley Broadcasting Cor­
poration ("Holston"), and the U.S. Catholic Conference 
("USCC"). These parties argued for retention of the rule 
based on concerns that, given the absence of must carry 
rules. network cable operators could refuse to carry cer­
tain broadcast and cable signals. 
6. For example, the Affiliates stated that cable systems 
provide the final transmission path to viewer homes. and 
a network that controls this path currently has no govern­
ment-imposed obligation to carry the signal of its local 
affiliate or any of its competitors. As a result, the Affili­
ates claimed, network-owned cable systems would have 
complete discretion to discriminate against local and dis­
tant stations that carry programming and advertising in 
competition with the networks. The Affiliates alleged that 
such discrimination would not only inhibit competition 
in the sale of local programming and advertising, but it 
would also restrict the diversity of programming and ad­
vertising services available to subscribers of network­
owned cable systems. 
7. According to Fisher, broadcast stations "live or die" 
based on reaching an affiliation agreement with one of the 
networks. If the rules were repealed, Fisher asserted, a 
broadcast station could not negotiate an affiliation agree­
ment at arms-length with a network because of the persis­
tent threat that the network's cable system could drop the 
station. Thus. Fisher claimed that an affiliate would have 
to accept any affiliation offer from a network, even at an 
unreasonably low payment, and attempt to survive by 
cutting back on budgets reserved for news and local pro­
gramming. 
should urge Congress to enact statutory must carry rules to 
prevent anticompetitive behavior by networks as cable oper­
ators. 
28 Under this proposal, petitioners would bear the burden of 
demonstrating that the proposed acquisition is not in the public 
interest. 
FCC 91-405 Federal Communications Commission Record 
8. The opponents of eliminating the rule also argued 
that networks could discriminate in the competition for 
advertising dollars, creating an inherent conflict of inter­
est between a network and its own affiliates. According to 
Group W, network acquisition of cable systems would 
cause the networks to compete with their own affiliates 
for local advertising dollars, with the networks maintain­
ing an unfair advantage due to their size and power. 
Although networks may argue that they have no intention 
of engaging in such discriminatory practices, Group W 
urged the Commission to act carefully and allow cross­
ownership only upon a strong showing that no harm will 
occur. 
9. Still other commenters asserted that allowing net­
works to own cable systems would signal the demise of 
free television programming currently available to virtu­
ally all American households. Arizona contended that 
networks owning cable systems would ultimately conclude 
that their interests are best served by gradually shifting 
their budget and best programming over to their cable 
systems. As a result, affiliate stations would have less 
funds available for local programming and news, causing 
many viewers that remain dependent upon free television 
to receive an inferior product. Arizona concluded that the 
Commission should retain the rule due to great potential 
for public harm. In an alternative scenario, MPAA 
warned that eliminating the rules would allow large cable 
MSOs to purchase a television network, although MPAA 
and other opponents to network ownership believed that 
the networks were still primarily dominant in the video 
market. 
592 
7 FCC Red No. 2 
7 FCC Red No. 2 Federal Communications Commission Record FCC 91-405 
Concurring Statement of 
Commissioner James H. QueUo. 
In the Matter of: Amendment of Part 76, 
Subpart J, Section 76.501 of the Commission's 
Rules and Regulations to Eliminate the 
Prohibition on Common Ownership of Cable 
Television Systems and National Television 
Networks. 
Generally, I am in favor of receiving 
comments on important matters affecting the 
broadcast and cable industries, so I can support 
issuing this Second Further Notice of Proposed 
Rulemaking. However, since this Notice comes 
so soon after the Commission received input in 
the Future of Television Inquiry, some have 
suggested that it represents at least a tentative 
conclusion to relax or repeal the network-cable 
cross-ownership rule. My vote should not be so 
interpreted. While I am willing to consider 
proposals to change the rule, my guiding principle 
will be the probable effect of such action on the 
maintenance of free over-the-air television. 
To the extent some view this Notice as the 
preliminary announcement of an impending 
change in the rules, I would caution my fellow 
Commissioners to ensure that any new rules are 
consistent with the Commission's other policies, 
particularly those adopted recently. This concern 
also is most pressing when the Commission 
alters some of its rules as a result of changes in 
the video marketplace, but not others. 
Such a lack of consistency was a major reason 
the Court of Appeals struck down "must-carry" 
rules in 1985. For example, the Court found the 
Commission's failu(e to question the 
assumptions underlying must-carry rules to be 
"in sharp contrast to [its] treatment of several 
other components of the regulatory framework." 
Quincy Cable 1V, Inc. v. FCC, 768 F.2d 1434, 
1442 (D.C. Cir. 1985), cert. denied, 476 U.S. 1169 
(1986). In particular, the Court noted that "the 
Commission eliminated the distant-signal­
carriage and syndicated-exclusivity rules," both 
of which were premised on the same regulatory 
interest as must-carry - "protect[ing] broadcast 
television from competition from the expanding 
cable industry." Id. While marketplace changes 
and Commission actions over the past few years 
have enhanced the need to reimpose some type of 
must-carry rules,1 the need for consistency in 
Commission policy remains constant 
593 
For this reason. it is imperative that the 
Commission is mindful of its overall policies as 
it reviews the comments in this proceeding. For 
example, can the Commission reconcile a 
majority's :recent conclusion that "the networks 
continue to benefit from historical structural 
advantages"2 with the Notice's statement that 
"the near complete dominance of the three 
broadcast networks ••. has clearly diminished"? 
Notice at 1 8. Is it 'consistent for the 
Commission to retain significant financial 
interest and syndication restrictions while 
concluding in this Notice that marketplace 
changes "will force the networks either to reduce 
their costs .•. or develop supplementary revenue 
streams"? Id. 
Similarly, can the Commission justify 
allowing greater venical integration through 
network-cable combinations in light of its 1990 
conclusions that "vertically integrated MSOs 
have the ability to limit competition to 
particular programming services" and that "most 
cable operators have the ability to deny or 
unfairly place conditions on a programming 
service's access to the cable communities they 
serve"?3 The Commission recently reaffirmed 
the principle that the main competition to cable 
television is a complement of over-the-air 
broadcasting signals. Reeaxamination of the 
Effective Competition Standard for the 
Regulation of Cable Television Basic Service 
Rates, 6 FCC Red. 4545 (1991). Is it consistent 
for the Commission to permit the primary 
competitors in local video distribution markets 
to merge? 
Finally, it is significant that the policy 
purposes underlying the network-cable 
restrictions are closely related to those for the 
more general broadcast-cable cross-ownership 
ban. See Notice at t 3. Of course, the broadcast­
cable restrictions have not been targeted for 
retirement. obviously because these rules were 
codified in the Cable Act See Notice at , 3 & 
n.7. But to relax or repeal one of the rules while 
the other remains in place might create a serious 
imbalance in the Commission's policies. 
I ask these questions not because I have firm 
opinions on the probable answers but because I 
believe the Commission must address these issues 
in addition to those raised in the Notice. I also 
believe that presumption favors the continuation 
of rules that were enacted to promote diversity in 
FCC 91-405 Federal Communications Commission Record 7 FCC Red No. 2 
local video markets. This is unlike the situation 
in the financial interest and syndica.tion 
proceeding where I have said that changes in the 
media marketplace create a presumption in favor 
of repeal. That proceeding involved national and 
international markets for programming in which· 
there are many alternative buyers. By sharp 
contrast, the question of cross-ownership affects' 
local video markets, in which the cable operator 
has the potential to act a8 a bottleneck or 
gatekeeper. The 1990 Cable Report found that 
local cable operators have the ability to engage in 
anticompetitive practices; the question now 
facing the Commission is whether allowing 
cross-ownership will create an added incentive 
for them to do so. 
This brings us full-c~le to the question of 
safeguards, which are discussed prominently in 
the Notice. Certain of the alternatives, such as 
limiting cross-ownership to large markets or 
imposing national subscriber limits, may not 
address the problem of local bottlenecks. Other 
options, such as must carry, recently have been 
criticized inside the Commission,4 raising again 
the question of consistency. 
I will review the comments filed in this 
proceeding carefully and will . attempt to assess 
what effect any rule change will have on free 
over-the-air television. · Ultimately, it is the 
Commission's responsibility in the public 
interest to answer that question, which this 
proceeding squarely presents. 
1 >.. this Notice recognizes, the relative fortunes 
of the broadcasting and cable industries have shifted 
radically over the past few years. Not only have there 
been marketplace changes,· but the Commission has 
reimposed certain regulations such u syndicated 
exclusivity rules. Su NM~nl of Parts 73 and 76 
of tM Commi11ion' 1 Rulu Relating to Program 
Excluivity in tlw Cable and Broadcait lndu.rtriu, 3 
FCC Red. 5299 (1988), ajf d United Video, Inc. v. 
FCC, 890 F.2d 1173 (D.C. Cir. 1989). See also 
Rceuaminatio" of th• Effective Competition 
Standard/or the Regidalion of Cable Television Basic 
Service Rate1, 6 FCC Red. 4545, 4564-66 (1991) 
(i11uing Second FurtMr Notice of Proposed 
R 1demaking on whether to reimpose carriage 
requirements as part of effective competition 
standard). 
2EvallUJlion of the Syndication and Financial 
Interest Rule1, 6 FCC Red. 3094, 3109 (1991), 
594 
modified,_ FCC Red._ (1991), appeal pending 
No. 91-2350 (7th Cir.). 
3competition, Rate Deregulation and tM 
Commirsion' s Policiu Relaling to IM Pr""ision of 
Cable Televi1ion Suvice, S FCC Red. 4962. , 127 
(1990). Indeed. with respect to the anticompetitive 
practices described in the Cable Report, the 
Commiuion found that "the record in this proceeding 
indicates that some [cable systems] have [engaged in 
auch tactics]." 
4see ReetJJUJlll&ination of t"4 Effective Comp­
etition Standard for the Reg1dation of Cable 
Televi.rion Basic Suvice Ratu, 6 FCC Red. at 4575-
76 (Septrate Statement of Chairman Alfred C. Sikes). 
FCC 91-405 Federal Communications Commission Record 7 FCC Red No. 2 
Before the 
Federal Communications Commission 
Washington, D.C. 20554 
MM Docket No. 82-434 
In the Matter of 
Amendment of Part 76, Subpart J, 
Section 76.501 of the Commission's 
Rules and Regulations to Eliminate 
the Prohibition on Common Ownership 
of Cable Television Systems and 
National Television Networks 
SECOND FURTHER NOTICE OF 
PROPOSED RULE MAKING 
Adopted: December 12, 1991; Released: December 30, 1991 
Comment date: March 2, 1992 
Reply comment date: March 17, 1992 
By the Commission: Commissioner Quello concurring 
and issuing a separate statement; Commissioner Duggan 
issuing a separate statement. 
I. INTRODUCTION 
1. This Second Further Notice of Proposed Rule Making 
("Second FNPRA1") invites further comment on our pro­
posal to eliminate Section 76.SOl(a)(l) of our rules, 1 
which prohibits common ownership of cable television 
systems and national television networks (the "network­
cable cross-ownership rule"). 2 In light of the significant 
changes in the video marketplace since the most recent 
comments in this docket were submitted in 1988, we 
believe it is useful to revisit this proceeding and update its 
record. These marketplace changes, which were closely 
examined in a recent Commission staff report,3 include a 
continued decline in the broadcast networks' audiences 
and financial base and the emergence of the cable televi­
sion industry as a more substantial competitive force in 
the production and distribution of video programming. 
1 47 C.F.R. Section 76.501(a)(l) was originally adopted as 47 
C.F.R. Section 74.1131. This rule provides that "(n]o cable tele­
vision system (including all parties under common control) 
shall carry the signal of any television broadcasting station if 
such system directly or indirectly owns, operates, controls, or 
has an interest in ... a national television network (such as ABC, 
CBS, or NBC)." 
2 See Notice of Proposed Rule Making ("Notice"), BC Docket 
No. 82-434, 91 FCC 2d 76 (1982). See also Further Notice of 
Proposed Rule Making ("Further Notice"), BC Docket No. 
82-434, 3 FCC Red 5283 (1988). 
3 F. Setzer and J. Levy, Broadcast Television in a Multichannel 
Marketplace, FCC Office of Plans and Policy Working Paper No. 
26, June 199l. 4 We note that in response to our Notice of Inquiry in MM 
Docket No. 91-221, 6 FCC Red 4951 (1991), seeking comment on 
586 
2. In our earlier notices in this proceeding, we invited 
comment on whether the network-cable cross-ownership 
rule may safely be eliminated and whether its repeal 
would promote increased efficiencies and benefits to the 
public. Through this Second FNPRM, we encourage inter­
ested parties to update the record on this issue. In addi­
tion, we recognize that parties commenting on our prior 
notices have raised serious questions regarding the impact 
of repeal on diversity and competition in the video 
marketplace. As a result, we believe that we should care­
fully consider these concerns to assess their legitimacy and 
to determine whether minimally intrusive regulatory safe­
guards are warranted to alleviate them if we decide to 
relax or repeal the rule. In this regard. we seek comment 
on certain alternative proposals aimed at addressing these 
concerns, and we also invite parties to propose any other 
safeguards or modifications that they consider appropri­
ate.4 
II. BACKGROUND 
3. When adopting the network-cable cross-ownership 
ban in 1970,5 the Commission expressed its concern that 
the television networks, if permitted to own cable systems 
at this critical stage of their development, could poten­
tially thwart the cable industry's growth and inhibit com­
petition. More generally, the Commission also stated that 
"the networks already have a predominant position na­
tionwide through their affiliated stations in all markets, 
their control over network programming presented in 
prime time, and their share of the national television 
audience." 6 Although the Commission did not elaborate 
further on the rule's rationale, its policy concerns were 
illuminated in its discussion of the broadcast-cable cross­
ownership rule, which was simultaneously adopted and 
prohibits common ownership of local television stations 
and cable systems that serve the same area.7 This discus­
sion suggests that the principal concerns underlying the 
network-cable rule were that: (1) the networks could re­
strict the amount of competing programming supplied by 
their cable television systems due to their incentive to 
maximize the audience for their own network program­
ming; (2) cable systems owned by a network could refuse 
to carry the programming of rival networks. thus hinder­
ing the development of new cable networks as well as 
limiting network competition nationwide; and (3) cable 
changes in the state of the video marketplace and the policy 
implications that flow from these changes, several parties have 
already submitted comment on the merits of the networkcable 
cross-ownership rule. We will ·consider those comments in the 
context of this proceeding, but also invite those parties to com­
ment on the specific proposals for modifying the rule described 
below. 
5 Second Report and Order in Docket 18397, 23 FCC 2d 816 
p970), recon. denied, 39 FCC 2d 377 (1973). 
23 FCC 2d at 821. 
7 47 C.F.R. § 76.50l(a)(2).See Second Report and ()rder, 23 FCC 
2d at 819; 39 FCC 2d at 391. The Cable Communications Policy 
Act of 1984 codified the Commission's broadcast-cable cross­
ownership rule but not the networkcable cross-ownership rule. 
See Pub. L. No. 98-549, 98 Stat. 2779 (1984), Section 613(a). 47 
U.S.C. § 533(a). 
7 FCC Red No. 2 Federal Communications Commission Record FCC 91-405 
ownership could enhance the networks' dominance as 
suppliers of television programming, thus limiting the 
diversity of voices in the video marketplace.8 
4. Beginning in 1980, several studies questioned the 
necessity of the network-cable cross-ownership rule and 
emphasized the increasingly competitive nature of the 
video marketplace. These studies included reports by the 
Commission's Network Inquiry Special Staff ("Special 
Staff"),9 the Office of Plans and Policy ("OPP"), 10 and the 
majority staff of the House Subcommittee on Telecom­
munications. Consumer Protection and Finance of the 
Committee ~n Energy and Commerce. 11 We cited these 
studies in our first Notice, issued in 1982, that proposed to 
eliminate the cross-ownership rule in light of the growth 
of the video marketplace and the development of cable 
television services. The comments in response to the No­
tice were mixed, with the National Association of Broad­
casters ("NAB"), the Department of Justice ("DOJ"), the 
three national television networks, and the National Cable 
Television Association ("NCTA") supporting our proposal 
to eliminate the rule. and the Small Business Administra­
tion ("SBA") and several public interest groups opposing 
it. 
5. In 1988, we issued a Further Notice to solicit addi­
tional comments on our proposal to eliminate the rule. 
Given the time elapsed since the Notice, we allowed inter­
ested parties to comment on any intervening develop­
ments or circumstances that might affect our evaluation 
of the network-cable crossownership rule. In particular. 
we noted a report by the National Telecommunications 
and Information Administration ("NTIA"), 12 which con­
cluded that broadcast television networks should not be 
prohibited from owning local cable systems. The Further 
Xotice also observed that significant statutory or regula­
tory changes may have altered the nature of competition 
between the cable and broadcasting industries. including 
the adoption of the 1984 Cable Act. 13 the elimination of 
our "must carry" rules, 14 and the reimposition of our 
syndicated exclusivity rules. 15 Accordingly. we sought spe­
cific comment on whether the opportunity for networks 
to own cable systems in markets containing their affiliated 
stations might adversely influence negotiations for affili­
ation contracts. Considering the absence of must carry, we 
also asked whether a network that affiliates with a local 
station while owning a cable system in the same market 
could undermine the competitive position of other broad­
cast facilities in that market. A summary of the comments 
received in response to the Further Notice is contained in 
Appendix B. 
8 See Notice, 91 FCC 2d at 82. 
9 See New Television 1\"etworks: Entry, Jurisdiction, Ownership 
and Regulation, October 1980. 
1° K. Gordon. J. Levy and R. Preece, FCC Policy on Cable 
Ownership (Staff Report, FCC Office of Plans and Policy), No­
vember 1981. 
11 Telecommunications in Transition: The Status of Competition 
in the Telecommunications Industry, Committee Print 97-V. 97th 
Congress. 1st Session, November 3, 1981. 
12 
"Video Program Distribution and Cable Television: Current 
Policy Issues and Recommendations," NTIA Report No. 88-233, 
June 1988 ("NTIA Report"). 
13 Cable Communications Policy Act of 1984, Pub. L. No. 
98-549, Section 1 et seq., 98 Stat. 2779 (1984). 
14 See Quincy Cable 7V lnc. v. FCC, 768 F.2d 1434 (D.C. Cir. 
587 
III. REQUEST FOR FURTHER COMMENT 
6. The changes in the video marketplace that we de­
tailed in our prior Notices have continued to develop. 
The cable industry is now a robust. independent enter­
prise, with systems and networks offering an increasing 
diversity of programming that competes directly with 
over-the-air broadcast services. In the midst of this steadily 
rising competition, the television networks face a growing 
need to generate additional revenues in response to de­
clining audiences and advertising sources. 16 As discussed 
below, these critical developments have prompted us to 
revisit the issue of whether eliminating our network-cable 
cross-ownership rule would enhance network efficiency 
and generate public benefits.17 
7. We recognize, however, that a number of 
commenters responding to our prior Notices have ex­
pressed concerns that repealing the current restriction 
could undermine competition and diversity in local and 
national video markets. We thus seek to explore those 
concerns in this proceeding to assess their validity, to 
analyze whether they could be satisfactorily addressed by 
imposing minimally intrusive regulatory safeguards, and 
to determine the extent to which the record supports 
relaxing the rule. 
Rule Elimination 
8. We ask commenters first to address whether, in light 
of the significant changes in the video marketplace, the 
network-cable cross-ownership rule should be eliminated. 
In this regard, we note that the near complete dominance 
of the three broadcast networks, which existed when the 
rule was adopted and persisted for many years, has clearly 
diminished and left the networks with the need to adapt 
to a changing economic and competitive environment. 
According to the recent OPP Working Paper, the net­
works are experiencing a significant reduction in advertis­
ing revenue. their traditional base of economic support, 
that will force the networks either to reduce their costs 
and "downsize" their operations, or to develop supple­
mentary revenue streams. 18 
9. One potential means of both reducing costs and 
increasing revenues would be for the networks to enter 
the cable television business. The networks would appear 
well-equipped to compete in the cable industry, given 
their experience and expertise in selling national advertis­
ing, acquiring and distributing programming, producing 
news programming, and working with a diverse group of 
local affiliates. Moreover, allowing the networks into cable 
would enable them to take advantage of the benefits that 
1985), cert. denied, 106 S. Ct. 2889 (1986); and Century Commu­
nications v. FCC, 835 F.2d 292 (D.C. Cir. 1987), cert. denied, 486 
U.S. 1032 (1988). 
15 See Report and Order in Gen. Docket No. 87-24, 3 FCC Red 
5299 (1988). 
16 See Report and Order, MM Docket No. 90-162, 6 FCC Red 
3108, 3134 (1991). See also OPP Working Paper No. 26. 
17 The potential benefits and anticompetitive consequences of 
vertical integration in the video marketplace are discussed more 
completely in the ,l\'otice and the studies referenced therein. See 
fn. 2, supra. 
18 See fn. 3, supra. 
FCC 91-405 Federal Communications Commission Record 7 FCC Red No. 2 
accrue from vertical integration into both cable system 
ownership and television programming services -- benefits 
that we recently detailed in our July 1990 Report to 
Congress on the status of competition in the cable in­
dustry.19 
10. The increased revenues that may flow from network 
entry into cable system ownership also could benefit affili­
ate stations that depend on a network's programming and 
economic resources. In this fashion, any efficiencies re­
sulting from network-cable cross ownership might im­
prove the quality and diversity of programs available to 
the public from affiliate television stations. We further 
note that independent television stations could benefit 
from the diversity of network fare because of their reli­
ance upon off-network syndicated programming. Nonethe­
less, we recognize that these stations have raised serious 
concerns in the past about the possibility of repealing or 
relaxing the rule. 
11. In addition to providing new opportunities for the 
television networks, permitting network-cable integration 
could produce efficiencies that accrue to the benefit of 
cable subscribers. We note that we have recently taken a 
series of actions in which we emphasized the need to 
encoura¥ie greater competition to cable television 
systems. ° Clearly, the television networks are some of the 
most likely potential entrants into cable delivery. Accord­
ingly, in evaluating the continuing validity of the net­
work-cable cross-ownership restriction, we believe we 
should rigorously analyze the competitive effects on both 
broadcast and cable services that may flow from eliminat­
ing this rule. In this regard, commenters are invited to 
address in particular any public interest or competition 
concerns that may be raised if a cable multiple system 
operator (MSO) were to acquire a broadcast television 
network. 
12. We stress that any repeal of the network-cable cross 
ownership restriction would not be designed to provide an 
artificial boost to the networks' competitive position. 
Rather, in light of the fundamental support that the net­
works provide to the free, over-the-air broadcast system, 
we seek to remove undue barriers to their continued 
competitive vitality. In this regard, we observe that the 
decline of a number of significant industries has been 
exacerbated by regulations that failed to keep pace with 
marketplace changes. We thus emphasize the value of 
carefully scrutinizing government rules that prevent cer­
tain sectors of an industry from entering into related 
activities, particularly when the industry is as dynamic as 
the video communications marketplace. 
Alternatives for Rule Modification and Safeguards 
13. In undertaking a thorough reexamination of the 
network-cable crossownership rule in this proceeding, we 
recognize that some parties have raised valid questions 
concerning the impact that repeal of the rule may have 
19 See Report in MM Docket No. 89-600, 5 FCC Red 5008-5010 
F99o). 
0 See e.g., Second Report and Order in Gen. Docket No. 90-54, 
FCC 91-302, released October 25, 1991: Order on Reconsider­
ation in Gen. Docket No. 90-54, FCC 91-301. released October 
25. 1991; and Further Notice of Proposed Rule Making, First 
Report and Order, and Second Further Notice of Inquiry, in CC 
Docket No. 87-266, FCC 91-334, released November 22 1991 21 ' • See 47 C.F.R. § 76.501 (a)(2). See also 47 C. F. R § 73.658. 
588 
on competition and diversity. We thus believe that it is 
appropriate to consider more fully the concerns raised by 
various commenters in response to the Further Notice. As 
discussed in Appendix B, the commenters that opposed 
eliminating the network-cable cross-ownership rule con­
tended that: (1) networks could discriminate against non­
affiliates with respect to cable carriage; (2) networks 
would gain undue leverage over their affiliates in their 
contractual and program clearance negotiations; (3) net­
works would promote national rather than local program­
ming and divert funds from news and public affairs 
programming; (4) networks might bypass their local affili­
ates and deliver their programming directly through their 
cable systems; (5) networks still dominate the video 
marketplace and could hamper the development of com­
petitive cable networks; or (6) a major cable MSO could 
acquire a network and create an excessive concentration 
of media control. We seek comment on the merit and 
significance of these concerns in the current video 
marketplace. Parties may also wish to consider the extent 
to which other existing rules -- such as the local broadcast 
station-cable cross-ownership rule or our regulations 
limiting network control over network affiliates -- might 
ameliorate some of the enumerated concerns.21 In addi­
tion, to the extent the updated record establishes that 
these or other concerns warrant relaxing, but not com­
pletely repealing, the rule, we seek comment on a variety 
of options, described below, that would permit cross­
ownership of broadcast networks and cable systems sub­
ject to various constraints. Parties may consider the 
proposals individually or in certain combinations, and are 
also encouraged to present alternative suggestions. 
14. Network ownership of cable systems in "large" or 
"competitive" markets, including where second competitive 
cable systems exist. This option, first, would allow net­
works to own cable systems in large markets under the 
theory that permitting network entry only in such mar­
kets might pose the least potential threat to diversity and 
competition. In exploring this option. we seek comment 
on the appropriate definition for "large" markets. For 
example, we could use market rankings such as the top 
10, 25, or 50 markets. Second, with respect to the "com­
petitive" market approach, we could permit network own­
ership of cable systems based upon the availability of a 
certain number of television broadcast signals in the com­
munity. 22 As another means of measuring the level of 
competition. we could also allow networks to operate 
cable systems where they would provide a second or 
"competing" cable service or. more broadly. at least a 
second or "competing" multichannel competitor. This 
provision would mitigate competitive concerns and offer 
procompetitive benefits because two or more 
multichannel competitors would seek to offer service to 
subscribers in the same community. 23 We also seek com-
22 Compare Report and Order, MM Docket No. 90-4, 6 FCC 
Red 4545 (1991). Compare also Report and Order, MM Docket 
No. 87-8, 6 FCC Red 4212 (1991). 
23 We also observe that the limited number of competing cable 
systems may cause this option to create only a few initial 
opportunities for network ownership. 
7 FCC Red No. 2 Federal Communications Commission Record FCC 91-405 
ment on whether markets should satisfy both the "large" 
and the "competitive" conditions before we would permit 
network-cable cross-ownership. 
15. We note that a network-owned cable system might 
encounter sufficient competition under these options to 
discourage any attempt to discriminate against local 
broadcasters. In addition. these options would afford an 
opportunity for us to monitor and evaluate the results of 
relaxing the rule. However. the options would restrict the 
networks' flexibility to enter those markets where they 
could realize the greatest efficiencies through cross-owner­
ship of cable systems. 
16. Network ownership of cable systems up to a national 
subscriber limit. This option would allow networks to 
acquire cable systems up to some national aggregate sub­
scriber limit. Under this option, networks could take 
advantage of economies attainable through owning mul­
tiple cable systems, but not without some limit on their 
participation in the cable marketplace nationwide. We 
seek comment on the appropriate national subscriber lim­
it we might use (e.g., 10%, 15%, or 25% of all subscribers 
nationwide) if this option were adopted. We also note that 
we recently expressed our general opposition to limits on 
the horizontal growth of cable MSOs in our July 1990 
Report to Congress on competition in cable television. 24 
We thus seek comment on the merits of nonetheless 
applying such restrictions only with respect to broadcast 
network cross-ownership. 
17. Network ownership of cable systems subject to must 
carry and discrimination safeguards. This option would 
allow networks to own cable systems subject to (1) man­
datory carriage of all or most local stations, and (2) a 
prohibition of favoritism toward affiliates through car­
riage, channel position, and technical quality. Network 
ownership of cable systems subject to these safeguards 
arguably would meet the dual goals of capturing the 
benefits of network entry while directly addressing the 
discrimination concerns raised by local broadcast stations. 
In addition. the safeguards may not impose an undue 
burden upon networks, given that a network-owned cable 
system would have an incentive to provide local broad­
casting services without discrimination in order to remain 
competitive. However. we are concerned about the pros­
pects of tailoring new must carry rules to resolve objec­
tions raised in previous court decisions.25 In this regard, 
we seek comment on a viable legal rationale for man­
datory carriage of local broadcasters under such a rule. 
We also ask for comments on whether to (i) require 
network-owned cable systems to "freeze" the existing 
channel lineup, (ii) include on-channel protection for 
local signals, or (iii) adopt a non-bypass safeguard that 
prohibits a network from refusing to affiliate in any mar­
ket where it owns a cable system and has previously 
affiliated with a local broadcast station.26 
IV. CONCLUSION 
18. In this Second FNPRM, we reexamine the network­
cable cross-ownership rule and we seek further updated 
comments on the merits of eliminating the rule. We also 
offer a number of possible modifications to the existing 
24 See fn. 19, supra. 
25 See fn. 14, supra. 
26 The subject of mandatory signal carriage rules as applied on 
589 
rule in response to various concerns raised regarding 
possible anticompetitive practices by networks as owners 
of cable systems. In addition, we seek other comments or 
suggestions from interested parties with respect to the 
continued necessity of the network-cable cross-ownership 
rule. 
V. ADMINISTRATIVE MATTERS 
A. Regulatory Flexibility Analysis 
19. As required by Section 603 of the Regulatory Flexi­
bility Act, the FCC has prepared an initial regulatory 
flexibility analysis (IRFA) of the expected impact of these 
proposed policies and rules on small entities. The IRFA is 
set forth in Appendix A. Written public comments are 
requested on the IRFA. These comments must be filed in 
accordance with the same filing deadlines as comments on 
the rest of the Second Further Notice of Proposed Rule 
Making, but they must have a separate and distinct head­
ing designating them as responses to the regulatory flexi­
bility analysis. The Secretary shall cause a copy of this 
Second Further Notice of Proposed Rule Making; including 
the initial regulatory flexibility analysis, to be sent to the 
Chief Counsel for Advocacy of the Small Business Ad­
ministration in accordance with Section 603(a) of the 
Regulatory Flexibility Act, Pub. L. No. 96-354, 94 Stat. 
1164. 5 U.S.C. Section 601 et seq. (1981). 
B. Ex Parte 
20. This is a non-restricted notice and comment rule­
making proceeding. Ex parte presentations are permitted, 
except during the Sunshine Agenda period. provided they 
are disclosed as provided in the Commission's rules. See 
generally 47 C.F.R. Sections 1.1202, 1.203, and 1.206(a). 
C. Comment Dates 
21. Pursuant to applicable procedures set forth in Sec­
tions 1.415 and 1.419 of the Commission's Rules, 47 
C.F.R. Sections 1.415 and 1.419, interested parties may 
file comments on or before March 2, 1992, and reply 
comments on or before March 17, 1992. To file formally 
in this proceeding, you must file an original plus five 
copies of all comments, reply comments, and supporting 
comments. If you want each Commissioner to receive a 
personal copy of your comments, you must file an origi­
nal plus nine copies. You should send comments and 
reply comments to Office of the Secretary, Federal Com­
munications Commission, Washington, D.C. 20554. Com­
ments and reply comments will be available for public 
inspection during regular business hours in the Dockets 
Reference Room of the Federal Communications Com­
mission, 1919 M Street, N.W., Washington, D.C. 20554. 
D. Ordering Clauses 
22. Authority for this proposed Rule Making is con­
tained in Sections 4(i) and (j), and 303 of the 
Communications Act of 1934, as amended. 
a more general basis is under review in our Report and Order 
and Second Further Notice of Proposed Rule Making in Docket 
90-4, 6 FCC Red 4545 (1991). 
FCC 91-405 Federal Communications Commission Record 7 FCC Red No. 2 
For further information on this proceeding, contact 
James Coltharp, Policy and Rules Division, Mass Media 
Bureau, (202) 632-6302. 
590 
FEDERAL COMMUNICATIONS COMMISSION 
Donna R. Searcy 
Secretary 
APPENDIX A 
Initial Regulatory Flexibility Analysis 
Pursuant to the Regulatory Flexibility Act of 1980, the 
Commission finds: 
I. Reason for action. The proposals under consideration 
will modify or eliminate the existing prohibition on cross­
ownership between cable television systems and national 
television networks. The Commission believes that, in its 
current form, this prohibition is no longer necessary in 
terms of its original purposes and that possible cost bene­
fits attributable to cross-ownership are being needlessly 
forgone by continuation of the rule in its entirety. 
II. Objectives. The objective of this action is to elimi­
nate unnecessary regulation, thus permitting the 
marketplace to operate more freely and efficiently. In 
particular, networks may benefit by their ability to own 
cable systems, and cable systems may benefit through 
being owned by networks. 
III. Legal basis. The proposed Rule Making action is 
authorized by Sections 1. 2. 3. 4(i) and (j), 303, 307, 308, 
309 and 403 of the Communications Act of 1934. as 
amended. 
IV. Reporting, recordkeeping and other compliance re­
quirements. No recording, record keeping or reporting 
requirements for cable television operators are involved. 
Depending on the proposed action, however, it may 
eliminate the need for possible Commission compliance 
actions or waiver proceeding related to the existing rule. 
V. Federal rules which overlap, duplicate or conflict 
with this rule. None. 
VI. Description, potential impact and number of small 
entities affected. The proposals under consideration are 
not expected to have a significant impact on most small 
cable systems. However. to the extent that networks pur­
chase existing small cable systems, the systems may benefit 
from the expertise of the network, or from the possible 
infusion of additional capital into the cable system. To the 
extent that networks choose to purchase large cable sys­
tems or that large cable systems choose to purchase net­
works, there should be little or no direct impact on small 
business entities. 
VII. Any significant alternatives m1mm1zmg impact on 
small entities and consistent with stated objective. Several 
of the proposals under consideration minimize the impact 
on small entities. 
7 FCC Red No. 2 Federal Communications Commission Record FCC 91-405 
APPENDIX B 
SUMMARY OF COMMENTS TO 
THE FURTHER NOTICE 
1. Supporting Comments. In response to the 1988 Further 
Notice, the networks. cable operators, and NTIA filed 
comments in support of eliminating the rule. These 
commenters emphasized the cable industry's strength in 
the current video marketplace as well as the benefits of 
vertical integration. Specifically, the three networks ar­
gued that their power has diminished since 1970, when 
the rule was adopted, and that they have no incentive to 
engage in anticompetitive behavior. They maintained that 
eliminating the rule would not restrict the amount or 
diversity of cable programming, nor would it hinder the 
development of new cable networks. They also asserted 
that permitting network ownership of cable systems would 
not distort network relations with local affiliates, and 
networks would not exclude local broadcast stations from 
their cable systems. According to the networks, such 
anticompetitive practices could cause financial losses and 
would encourage both competitive entry and federal inter­
vention. 
2. NCTA and other commenters claimed that the ban 
on network ownership of cable systems is no longer nec­
essary because the rule already has served its purpose. 
They argued that the strength of the cable industry would 
prevent broadcast networks from hindering the further 
development of cable systems, and further asserted that 
such networks lack the financial resources to purchase 
enough cable systems to accumulate a market share that 
would raise competitive concerns. Proponents of network 
ownership also contended that the benefits of vertical 
integration -- in particular. the opportunity to avoid trans­
action costs in obtaining programming -- outweigh any 
anticompetitive risks. For instance, the investment of 
many cable operators in Turner Broadcasting and CSPAN 
has contributed to the expanding supply of cable pro­
gramming. Furthermore, these commenters noted that 
there is no evidence in the cable industry to indicate that 
multiple system operators ("MSOs") favor their own pro­
gramming to the exclusion of unaffiliated programming. 
3. With respect to the two concerns raised in the Fur­
ther Notice regarding the potential for anti-competitive 
practices. proponents of eliminating the rule argued that 
networks are unlikely to deny carriage to local broadcast 
signals because the public generally demands access to all 
local channels. Indeed. the local network affiliates are the 
most popular stations in every market. Consequently, net­
works engaging in a "bypassing" strategy would risk losing 
a large number of cable subscribers in exchange for a few 
additional broadcast viewers. rendering the strategy un­
profitable. Similarly, these parties asserted that networks 
have no incentive to threaten to drop their own local 
affiliates in the course of affiliation negotiations. Indeed, 
networks rely on strong local viewership to attract na-
Zi New York City recommended that we implement regulatory 
safeguards to ensure that network ownership of cable systems 
does not lead to unacceptable media concentration levels in a 
particular cable television viewing area, and stated that we 
591 
tional advertising, and the time and cost of cultivating 
affiliate relationships would make it economically un­
reasonable to drop a local affiliate. 
4. NTIA and New York City supported our proposal to 
delete the networkcable cross-ownership rule, but asserted 
that certain safeguards are necessary to ensure that net­
works operating cable systems do not discriminate against 
competitors or reduce the level of competition or diver­
sity in a particular market.2 i For example, NTIA proposed 
that the Commission establish a system for reviewing 
petitions challenging specific network proposals to acquire 
cable systems in smaller markets where (i) there is a high 
cable penetration rate, and (ii) the network-owned cable 
system would serve an area substantially equivalent to its 
affiliate's coverage area.28 The Wireless Cable Association 
also supported removing the cross-ownership restriction, 
but not before the Commission adopts rules to ensure that 
vertical integration does not preclude the establishment of 
alternative video distribution methods to coaxial cable. 
5. Opposition Comments. Opposing commenters includ­
ed the Motion Picture Association of America, Inc. 
("MPAA"), the three network affiliate associations ("Af­
filiates"), Association of Independent Television Stations, 
Inc. (''INTV"), Association of National Advertisers, Inc. 
("ANA"), Turner Broadcasting System, Inc. ("Turner"), 
Group W, Fisher Broadcasting Inc. ("Fisher"), Arizona 
Television Company ("Arizona"), Brechner Management 
Company ("Brechner"), Holston Valley Broadcasting Cor­
poration ("Holston"), and the U.S. Catholic Conference 
("USCC"). These parties argued for retention of the rule 
based on concerns that, given the absence of must carry 
rules. network cable operators could refuse to carry cer­
tain broadcast and cable signals. 
6. For example, the Affiliates stated that cable systems 
provide the final transmission path to viewer homes. and 
a network that controls this path currently has no govern­
ment-imposed obligation to carry the signal of its local 
affiliate or any of its competitors. As a result, the Affili­
ates claimed, network-owned cable systems would have 
complete discretion to discriminate against local and dis­
tant stations that carry programming and advertising in 
competition with the networks. The Affiliates alleged that 
such discrimination would not only inhibit competition 
in the sale of local programming and advertising, but it 
would also restrict the diversity of programming and ad­
vertising services available to subscribers of network­
owned cable systems. 
7. According to Fisher, broadcast stations "live or die" 
based on reaching an affiliation agreement with one of the 
networks. If the rules were repealed, Fisher asserted, a 
broadcast station could not negotiate an affiliation agree­
ment at arms-length with a network because of the persis­
tent threat that the network's cable system could drop the 
station. Thus. Fisher claimed that an affiliate would have 
to accept any affiliation offer from a network, even at an 
unreasonably low payment, and attempt to survive by 
cutting back on budgets reserved for news and local pro­
gramming. 
should urge Congress to enact statutory must carry rules to 
prevent anticompetitive behavior by networks as cable oper­
ators. 
28 Under this proposal, petitioners would bear the burden of 
demonstrating that the proposed acquisition is not in the public 
interest. 
FCC 91-405 Federal Communications Commission Record 
8. The opponents of eliminating the rule also argued 
that networks could discriminate in the competition for 
advertising dollars, creating an inherent conflict of inter­
est between a network and its own affiliates. According to 
Group W, network acquisition of cable systems would 
cause the networks to compete with their own affiliates 
for local advertising dollars, with the networks maintain­
ing an unfair advantage due to their size and power. 
Although networks may argue that they have no intention 
of engaging in such discriminatory practices, Group W 
urged the Commission to act carefully and allow cross­
ownership only upon a strong showing that no harm will 
occur. 
9. Still other commenters asserted that allowing net­
works to own cable systems would signal the demise of 
free television programming currently available to virtu­
ally all American households. Arizona contended that 
networks owning cable systems would ultimately conclude 
that their interests are best served by gradually shifting 
their budget and best programming over to their cable 
systems. As a result, affiliate stations would have less 
funds available for local programming and news, causing 
many viewers that remain dependent upon free television 
to receive an inferior product. Arizona concluded that the 
Commission should retain the rule due to great potential 
for public harm. In an alternative scenario, MPAA 
warned that eliminating the rules would allow large cable 
MSOs to purchase a television network, although MPAA 
and other opponents to network ownership believed that 
the networks were still primarily dominant in the video 
market. 
592 
7 FCC Red No. 2 
7 FCC Red No. 2 Federal Communications Commission Record FCC 91-405 
Concurring Statement of 
Commissioner James H. QueUo. 
In the Matter of: Amendment of Part 76, 
Subpart J, Section 76.501 of the Commission's 
Rules and Regulations to Eliminate the 
Prohibition on Common Ownership of Cable 
Television Systems and National Television 
Networks. 
Generally, I am in favor of receiving 
comments on important matters affecting the 
broadcast and cable industries, so I can support 
issuing this Second Further Notice of Proposed 
Rulemaking. However, since this Notice comes 
so soon after the Commission received input in 
the Future of Television Inquiry, some have 
suggested that it represents at least a tentative 
conclusion to relax or repeal the network-cable 
cross-ownership rule. My vote should not be so 
interpreted. While I am willing to consider 
proposals to change the rule, my guiding principle 
will be the probable effect of such action on the 
maintenance of free over-the-air television. 
To the extent some view this Notice as the 
preliminary announcement of an impending 
change in the rules, I would caution my fellow 
Commissioners to ensure that any new rules are 
consistent with the Commission's other policies, 
particularly those adopted recently. This concern 
also is most pressing when the Commission 
alters some of its rules as a result of changes in 
the video marketplace, but not others. 
Such a lack of consistency was a major reason 
the Court of Appeals struck down "must-carry" 
rules in 1985. For example, the Court found the 
Commission's failu(e to question the 
assumptions underlying must-carry rules to be 
"in sharp contrast to [its] treatment of several 
other components of the regulatory framework." 
Quincy Cable 1V, Inc. v. FCC, 768 F.2d 1434, 
1442 (D.C. Cir. 1985), cert. denied, 476 U.S. 1169 
(1986). In particular, the Court noted that "the 
Commission eliminated the distant-signal­
carriage and syndicated-exclusivity rules," both 
of which were premised on the same regulatory 
interest as must-carry - "protect[ing] broadcast 
television from competition from the expanding 
cable industry." Id. While marketplace changes 
and Commission actions over the past few years 
have enhanced the need to reimpose some type of 
must-carry rules,1 the need for consistency in 
Commission policy remains constant 
593 
For this reason. it is imperative that the 
Commission is mindful of its overall policies as 
it reviews the comments in this proceeding. For 
example, can the Commission reconcile a 
majority's :recent conclusion that "the networks 
continue to benefit from historical structural 
advantages"2 with the Notice's statement that 
"the near complete dominance of the three 
broadcast networks ••. has clearly diminished"? 
Notice at 1 8. Is it 'consistent for the 
Commission to retain significant financial 
interest and syndication restrictions while 
concluding in this Notice that marketplace 
changes "will force the networks either to reduce 
their costs .•. or develop supplementary revenue 
streams"? Id. 
Similarly, can the Commission justify 
allowing greater venical integration through 
network-cable combinations in light of its 1990 
conclusions that "vertically integrated MSOs 
have the ability to limit competition to 
particular programming services" and that "most 
cable operators have the ability to deny or 
unfairly place conditions on a programming 
service's access to the cable communities they 
serve"?3 The Commission recently reaffirmed 
the principle that the main competition to cable 
television is a complement of over-the-air 
broadcasting signals. Reeaxamination of the 
Effective Competition Standard for the 
Regulation of Cable Television Basic Service 
Rates, 6 FCC Red. 4545 (1991). Is it consistent 
for the Commission to permit the primary 
competitors in local video distribution markets 
to merge? 
Finally, it is significant that the policy 
purposes underlying the network-cable 
restrictions are closely related to those for the 
more general broadcast-cable cross-ownership 
ban. See Notice at t 3. Of course, the broadcast­
cable restrictions have not been targeted for 
retirement. obviously because these rules were 
codified in the Cable Act See Notice at , 3 & 
n.7. But to relax or repeal one of the rules while 
the other remains in place might create a serious 
imbalance in the Commission's policies. 
I ask these questions not because I have firm 
opinions on the probable answers but because I 
believe the Commission must address these issues 
in addition to those raised in the Notice. I also 
believe that presumption favors the continuation 
of rules that were enacted to promote diversity in 
FCC 91-405 Federal Communications Commission Record 7 FCC Red No. 2 
local video markets. This is unlike the situation 
in the financial interest and syndica.tion 
proceeding where I have said that changes in the 
media marketplace create a presumption in favor 
of repeal. That proceeding involved national and 
international markets for programming in which· 
there are many alternative buyers. By sharp 
contrast, the question of cross-ownership affects' 
local video markets, in which the cable operator 
has the potential to act a8 a bottleneck or 
gatekeeper. The 1990 Cable Report found that 
local cable operators have the ability to engage in 
anticompetitive practices; the question now 
facing the Commission is whether allowing 
cross-ownership will create an added incentive 
for them to do so. 
This brings us full-c~le to the question of 
safeguards, which are discussed prominently in 
the Notice. Certain of the alternatives, such as 
limiting cross-ownership to large markets or 
imposing national subscriber limits, may not 
address the problem of local bottlenecks. Other 
options, such as must carry, recently have been 
criticized inside the Commission,4 raising again 
the question of consistency. 
I will review the comments filed in this 
proceeding carefully and will . attempt to assess 
what effect any rule change will have on free 
over-the-air television. · Ultimately, it is the 
Commission's responsibility in the public 
interest to answer that question, which this 
proceeding squarely presents. 
1 >.. this Notice recognizes, the relative fortunes 
of the broadcasting and cable industries have shifted 
radically over the past few years. Not only have there 
been marketplace changes,· but the Commission has 
reimposed certain regulations such u syndicated 
exclusivity rules. Su NM~nl of Parts 73 and 76 
of tM Commi11ion' 1 Rulu Relating to Program 
Excluivity in tlw Cable and Broadcait lndu.rtriu, 3 
FCC Red. 5299 (1988), ajf d United Video, Inc. v. 
FCC, 890 F.2d 1173 (D.C. Cir. 1989). See also 
Rceuaminatio" of th• Effective Competition 
Standard/or the Regidalion of Cable Television Basic 
Service Rate1, 6 FCC Red. 4545, 4564-66 (1991) 
(i11uing Second FurtMr Notice of Proposed 
R 1demaking on whether to reimpose carriage 
requirements as part of effective competition 
standard). 
2EvallUJlion of the Syndication and Financial 
Interest Rule1, 6 FCC Red. 3094, 3109 (1991), 
594 
modified,_ FCC Red._ (1991), appeal pending 
No. 91-2350 (7th Cir.). 
3competition, Rate Deregulation and tM 
Commirsion' s Policiu Relaling to IM Pr""ision of 
Cable Televi1ion Suvice, S FCC Red. 4962. , 127 
(1990). Indeed. with respect to the anticompetitive 
practices described in the Cable Report, the 
Commiuion found that "the record in this proceeding 
indicates that some [cable systems] have [engaged in 
auch tactics]." 
4see ReetJJUJlll&ination of t"4 Effective Comp­
etition Standard for the Reg1dation of Cable 
Televi.rion Basic Suvice Ratu, 6 FCC Red. at 4575-
76 (Septrate Statement of Chairman Alfred C. Sikes). 
7 FCC Red No. 2 Federal Communications Commission Record 
SEPARATE STATEMENT 
OF COMMISSIONER ERVIN S. DUGGAN 
In the Matter of Common Ownership of Cable Television 
Systems and National Television Networks (MM Docket 
No. 82-434) 
As I have said before in other contexts, it is appropriate 
that the Commission periodically examine its rules to 
determine whether our oversight remains consisten~ with 
the public interest. Perhaps nowhere is this process of 
review more critical than in the rapidly changing world 
of broadcast and cable television. 
I have noted several times since June 1990 that the 
prohibition on cross-ownership of cable systems and na­
tional television networks is, in my judgment, ripe for 
reexamination. The rule springs from an era when the 
balance of economic power in the video marketplace was 
decidedly different. Asking whether these restrictions con­
tinue to advance the best interests of the viewing public 
seems quite fitting when we consider the vastly changed 
industry. 
Let me be clear, however. that to ask the question does 
not predetermine the answer. I enter this proceeding com­
pletely open to the arguments on all sides. I am interested 
in the possible improvements that might arise if the rule 
were relaxed or repealed. I am also concerned about the 
impact of any change on local affiliates and independent 
stations. I look forward to receiving comments on these 
issues and will pay particular heed to the discussion of 
safeguards that we might adopt if the rule indeed changes. 
595 
FCC 91-405