In a further deregulatory action aimed at helping the shrinking fortunes of the three major television networks, the Federal Communications Commission yesterday unanimously overturned a 22-year prohibition against networks' owning cable TV systems.
The 5-0 decision, which followed the FCC's promise last year to conduct a thorough review of decades-old regulations governing television networks and local stations, is designed to give the networks new areas in which to expand in the face of growing competition from cable.
But in response to fears from local broadcasters that allowing network ownership of cable TV systems could result in "discriminatory conduct," the FCC also imposed caps on how many cable TV subscribers a network could acquire. Such discriminatory conduct could include a network giving favorable cable channel positions to its own local stations at the expense of competitors.
Consumer advocates also are concerned that allowing cross-ownership could further limit the programming available on free television.
Cross-ownership rules were adopted by the FCC in 1970 to curtail the networks' overwhelming dominance in the video marketplace and to protect the then-nascent development of cable television.
Networks have been allowed to own cable channels such as ESPN or CNBC but have not been allowed to own the more-lucrative systems that distribute cable programs to homes, which are usually monopolies in their service areas.
But cable television now reaches more than 60 percent of all television households in the country, and some cable networks, such as Home Box Office, attract more viewers on some nights than do ABC, CBS or NBC. Furthermore, the part-time Fox network has cut into traditional network viewership and could threaten further erosion when it expands next year to seven nights a week.