A Federal Communications Commission vote to sunset 20-year-old rules preventing cable systems from having exclusive rights to programming they produce is a "victory for large cable companies," according to an analysis from brokerage firm Stefel Nicolaus. But the size of the win could be determined at the ballot box.
A Republican-led Federal Communications Commission would be "less inclined" to resolve program access disputes against big cable companies, according to the report.
Friday's 5-0 FCC vote opened the door for cable companies that own programming to withhold it from rival pay-TV services, such as satellite, fiber-delivered systems from telecoms AT&T and Verizon, and small cable systems. For example, Cox Communications could decide to make the Travel Channel, which it owns, an exclusive offering for its subscribers. The FCC decision carves out a special exemption for regional sports networks owned by cable systems, to guarantee that professional and cable sports are made available across pay-TV platforms.
Telecom analyst David Kaut of Stefel Nicolaus doesn't expect major moves by cable systems to assert exclusivity over the programming they own as a means of luring consumers to switch to their service from satellite or fiber. "There's a chance that a provider might experiment with something, but if it's not working in the market, they will back off."
The more interesting thing to watch for, Kaut says, is whether large cable systems, especially those that don't have investments in programming, make a push to acquire cable networks. Currently, only two of the top-rated cable networks are affiliated with cable systems.
Right now, Comcast is by far the largest owner of programming among cable systems with a national profile. It is subject to the old program access rules until 2018 as a condition of its merger with NBC. If any of the other big cable systems, such as Time Warner or Cablevision, looks to match Comcast's scope by joining forces with a large programming provider or broadcast network, the FCC conditions attached to such a deal would likely vary depending on which party is in charge.
In their statements on the revision of the program access rules, Republican Commissioners Robert McDowell and Ajit Pai welcomed the move as long overdue. McDowell was concerned that the remaining program access rules could form the basis for a "back-handed attempt to resurrect the exclusivity ban."
On the Democratic side, Commissioners Mignon Clyburn and Jessica Rosenworcel were more cautious in their embrace of the sunset of the program access rules. Rosenworcel wrote that the FCC needs to "keep a watchful eye" on the situation, in case the deregulatory approach doesn't "provide consumers with the safeguards they need and deserve."
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