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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ********************************* ******************************** FOR IMMEDIATE RELEASE NEWS MEDIA CONTACT: October 8, 1999 Michelle Russo (202) 418-2358 FCC REVISES CABLE HORIZONTAL OWNERSHIP AND ATTRIBUTION RULES New Guidelines Reflect Converging Marketplace and Increasing Competition in Video Programming Washington, D.C. In two separate Report and Orders, the Federal Communications Commission (FCC) today revised its rules on the number of cable subscribers an entity may reach and on the method for identifying attributable cable ownership interests. The new cable horizontal ownership rule maintains a 30 percent limit, but calculates total horizontal ownership by counting nationwide subscribers of cable, direct broadcast satellite (DBS) and other multi-channel video programming distributors (MVPDs), not just cable homes passed. The FCC's revised cable attribution rules track most of the revisions made to the broadcast attribution rules, define the term "affiliate" and eliminate the single majority shareholder exemption. The FCC also modified language related to the definition of an insulated limited partner and changed the waiver standard for directors and officers as they apply to ownership attribution under the cable horizontal ownership limit and channel occupancy rules. The revised rules will best serve consumers because they reflect changes in the converging marketplace while promoting competition in all markets: local telephone, cable and high-speed Internet. The FCC said two significant changes have occurred since the horizontal ownership rules were originally adopted in 1992: DBS has emerged as a significant competitor to cable, and cable companies have begun providing telephony and high-speed Internet service. The new rules reflect the Commission's desire to permit large cable companies to realize the efficiencies of common ownership where consistent with the FCC's ongoing concern for diversity and competition in video programming. The Commission said the changes adopted today meet the challenge of limiting large cable companies' control over the video market, while giving these companies the flexibility to expand into new markets like local telephone and broadband services. Today's actions are taken pursuant to the Commission's statutory obligation to "prescribe rules and regulations establishing reasonable limits on the number of cable subscribers a person is authorized to reach through cable systems owned by such a person, or in which such a person has an attributable interest" as set forth by Section 613 of the Communications Act. Under this Third Report and Order adopting new horizontal ownership rules, cable operators will be permitted to have a 30 percent share of nationwide cable, DBS and other MVPD subscribers. This ownership limit is effectively equal to 36.7 percent of current cable subscribers. The FCC said it was more relevant to include the competitors to cable that have emerged as a result of deregulation and market-based solutions in the industry. Other than increased competition, which the MVPD change takes into account, the Commission found no changes in the marketplace that merited amending the 30 percent limit and also found that MSOs (multiple system operators) continue to have significant market power. The FCC said the attribution rules seek to identify those corporate, financial, partnership, ownership and other business relationships that confer on their holders a degree of ownership or other economic interest, or influence or control over an entity engaged in the provision of communications services such that the holders should be subject to the Commission's regulation. The Report and Order adopted today for the cable attribution rules: · closely tracks the changes in the broadcast attribution rules that the Commission adopted during the Broadcast Attribution Proceeding in August 1999, with some exceptions; · defines the term "affiliate" as applied to the effective competition test and the cable-telco buyout prohibition; and · eliminates the single majority shareholder exemption. For the purpose of the horizontal and channel occupancy limits rules adopted under Section 613 and directed at protecting diversity of programming, the Report and Order also: · modifies the provision that defined a "limited partnership" as attributable if the partner is involved in "media activities" and now requires attribution only if the "limited partner" is involved specifically in "video programming" activities; · modifies the directors and officers attribution rule to allow a waiver if they are not involved in the video programming activities of either company involved. The equity/debt rule will operate as an exception to the nonvoting stock and insulated limited partner exemptions. This new rule will capture interests that confer on their holder a significant amount of influence over an entity that heretofore was not captured. The FCC said that in order to meet its obligation to ensure diversity in video programming, changes were necessary in the definition of the "insulated limited partner exemption." The more precise definition will assist companies in complying with the rules and limits while permitting activities that do not harm programming diversity. The FCC said it would continue its voluntary stay on the horizontal ownership rules pending the judicial resolution from the District of Columbia Circuit Court (Daniels v. U.S., Time Warner v. FCC), which is scheduled to hear oral arguments in December 1999 on the constitutionality of the statute and rules. The Commission stated that all parties must comply with the rules within 180 days if the District of Columbia Circuit Court issues a mandate upholding Section 613(f)(1)(A) and the rules. Actions by the Commission October 8, 1999, by Report and Order (FCC 99-288) and by Third Report and Order (FCC 99-289). Chairman Kennard, Commissioners Ness and Powell, with Commissioner Furchtgott-Roth concurring in part, dissenting in part and issuing statements and Commissioner Tristani approving in part, dissenting in part and issuing statements. Report No. CS 99-13 MM Docket No. 92-264 (Cable Horizontal Ownership Rule) CS Docket No. 98-82 (Cable Attribution Rules) -FCC- Cable Services Bureau Contacts: William Johnson, To-Quyen Truong at (202) 418-7200 Cable Horizontal Ownership Rules Summary: Cable operators will be permitted to have a 30 percent share of cable, DBS and other multi- channel video programming distributors (MVPDs) subscribers, which is effectively equal to 36.7 percent of current cable subscribers. Total Horizontal Ownership = Company's MVPD subscribers (cable, DBS, etc.) Nationwide MVPD subscribers (cable, DBS, etc.) · Calculation of the horizontal limits will be based on actual nationwide subscribers of cable, direct broadcast satellite (DBS) and other MVPDs, not cable homes passed. · Calculation of subscribers served will include all cable, DBS and other MVPD subscribers, not just cable subscribers. · The 30 percent horizontal ownership cap will remain the same. · Removes the minority-controlled allowance, given that the allowance has never been utilized and no party filed comments on this issue to argue that the allowance is effective, should be retained or might be beneficial. · Although it denied a petition to lift the stay, the Commission said that all parties must comply with the rules within 180 days if the District of Columbia Circuit Court issues a mandate upholding Section 613(f)(1)(A) and the rules. Additional Information: Section 613 and the FCC's Cable Television and Horizontal Rules 1. 1992 Cable Act required the FCC to set a horizontal ownership limit for cable. 2. Daniels Cablevision challenged the constitutionality of the statute in District Court. 3. District Court agreed that the statute was unconstitutional. 4. FCC appealed to the District of Columbia Circuit Court. 5. FCC adopted 30% as the ownership limit, but stayed enforcement of the rule because of the District Court's ruling. 6. Time Warner challenged the 30% rule as unconstitutional in the D.C. Circuit Court. 7. D.C. Circuit Court consolidated the challenge to the statute (Daniels) and the challenge to the rules (Time Warner). 8. The D.C. Circuit Court is scheduled to hear oral arguments in December 1999. Briefs have been filed on both sides. 9. Time Warner has moved to delay the Court hearing arguments until the FCC issues its new rules. Cable Attribution Rules Summary: Note: There are two sets of rules for attribution standards: "general" cable attribution rules (based on the broadcast attribution standard) and those relating to "program access." Revisions tracked from the Broadcast Attribution Proceeding (August 1999): · Retains the 5% or more active voting stock benchmark. · Raises the passive (institutional) investor voting stock benchmark from 10% or more to 20% or more. · Permits interest holders in limited liability companies to insulate their interests from attribution by using the insulated limited partner criteria. New "Equity/Debt" Rule: · The Report & Order adopts a new "equity/debt" rule that will function in addition to the current attribution rules. · Where an investor holds over 33% of the total assets (debt plus equity, voting or nonvoting) of an entity, that investor will be deemed to have an attributable interest. · The equity/debt rules will operate as an exception to the nonvoting stock and insulated limited partner exemptions. Adoption of definitions for the term "affiliate": · Definitions in this Order are applicable for the effective competition test and the cable-telco buyout prohibition. · For the purposes of the effective competition test, an entity is a "LEC affiliate" (LEC = local exchange carrier) where a LEC holds 10% or more of the voting equity of the MVPD. · For the purposes of the cable-telco buyout prohibition rule, an entity is an "affiliate" if it has a 5% voting interest · The LEC test is not designed to identify potential for influence (like other rules), but it is designed to determine whether there is significant LEC involvement in an affiliate such that the affiliate benefits from the LEC's financial and technical resources. · The cable-telco buyout prohibition is designed to promote competition and diversity, similar to cable/broadcast cross-ownership rule. · Based on different purposes of the LEC test and the cable-telco buyout prohibition, a higher threshold was found to be warranted for the LEC test. Modification of "limited partner insulation exemption": · This exemption applies only to the horizontal ownership and channel occupancy rules. · A limited partner is "insulated" if the partnership certifies that the partner is "not materially involved, directly or indirectly, in the management or operation of the 'video-programming activities' [amends 'media activities'] of the partnership." · The "insulation criteria" include the following: 1. The limited partner cannot act as an employee of the partnership if his or her functions, directly or indirectly, relate to the video-programming enterprises of the company. 2. The limited partner may not serve, in any material capacity, as an independent contractor or agent with respect to the partnership's video-programming enterprises. 3. The limited partner may not communicate with the licensee or general partners on matters pertaining to the day-to-day operations of its video-programming business. 4. The rights of the limited partner to vote on the admission of additional general partners must be subject to the power of the general partner to veto any such admissions. 5. The limited partner may not vote to remove a general partner except where the general partner is subject to bankruptcy proceedings, is adjudicated incompetent by a court of competent jurisdiction, or is removed for cause as determined by a neutral arbiter. 6. The limited partner may not perform any services for the partnership materially relating to its video-programming activities, except that a limited partner may make loans to or act as a surety for the business. 7. The limited partner may not become actively involved in the management or operation of the video-programming businesses of the partnership. Directors and Officers Attribution Rule: · For the purposes of the horizontal and channel occupancy limits rules, directors and officers shall be attributable, subject to a waiver if they are not involved in the video activities of either the appointing entity or the cable systems at issue. Changes to the Cable Attribution Rules Summary Chart Old "general" cable rules New "general" cable rules Old "program access" type rules New "program access" type rules Voting Equity 5% or more is attributable 5% or more is attributable 5% or more is attributable 5% or more is attributable Non-voting Equity Not attributable, regardless of amount Not attributable, regardless of amount 5% or more is attributable 5% or more is attributable Equity (nonvoting and voting) plus debt ("ED") Rule did not exist Attributable if own over 33% of total assets of a company Rule did not exist Attributable if own over 33% of total assets of a company Single Majority Shareholder Exception This exception is allowed where qualified This exception is eliminated This exception does NOT apply This exception is eliminated Passive (Institutional) Investor 10% or more voting equity is attributable 20% or more voting equity is attributable 10% or more voting equity is attributable 20% or more voting equity is attributable Officers and Directors Attributable Attributable (see amendment) Attributable Attributable (see amendment) Trustees Attributable Attributable Attributable Attributable De Facto Control Attributable Attributable Attributable Attributable Limited Partner Insulation Exemption This exception is allowed where qualified This exception is allowed where qualified (see amendments), unless ED This exception does NOT apply This exception does NOT apply October 8, 1999 PRESS STATEMENT OF WILLIAM E. KENNARD, CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION, ON CABLE ATTRIBUTION RULES AND HORIZONTAL OWNERSHIP LIMITS Well, it's baseball season and although I'm not much of a fan, I do know that both the New York Yankees and the New York Mets are in the playoffs. The other day someone even explained to me the meaning of a "Subway Series." So imagine for a moment that the Yankees decided to join forces with the Mets and consolidate into one team. That wouldn't seem right, since if you put those two teams together they would simply overwhelm the competition. But suppose the Yankees and the Mets wanted to consolidate in order to field a basketball team instead. Well, I don't think anyone would complain that the combination of the Yankees and the Mets would have an unfair advantage in the NBA. Well, that is my analogy for what's going on with cable companies today. If the big cable companies want to consolidate with each other just to increase their dominance in their core cable business, that would be troublesome for competition, just like if the Yankees and the Mets formed a combined baseball team. But if cable companies want to enter into arrangements with each other to pursue new competitive ventures, like local phone service and high speed internet access, that's no threat to competition. Indeed, it could be a boon for competition. So how do we keep big cable in check when it comes to their core business where they are the entrenched incumbents, while still giving them room to grow and compete in new areas and thus bring more choice to consumers? This is a tricky issue, but it's one we should welcome because it means that the 1996 Telecommunications Act is working, as incumbents in one industry take on incumbents in another industry. And to some extent it shows the tension between the Cable Act that Congress passed backed in 1992, and the more sweeping changes in the 1996 Act. Back in 1992, Congress was concerned that a cable operator could become so big, that its choice of which cable channels to put on its own cable systems would dictate programming choices for the whole country. So Congress told us to put a cap on the number of subscribers a single cable company could serve. Then came the 1996 Telecommunications Act and the digital revolution. And now cable companies are getting into local phone service and Internet access too, just as other players in the communications field are branching out of their core areas into new competitive ventures. I think these orders do a great job of refining our 1992 vintage rules to take account of the changes brought on by the 1996 Act. And the refined rules also take account of one other change in the last few years - - DBS. Direct broadcast satellite had not even been launched in 1992. Today it's attracting more and more subscribers every day. It's still not the force that cable is, but it's making a dent, and our refined rules take account of that by measuring a cable operator's market strength in the context of the overall multichannel video industry, and not just vis-a-vis other cable operators. I believe we have struck just the right balance ands I am pleased to support these items. Statement of Commissioner Harold W. Furchtgott-Roth, Concurring in Part and Dissenting in Part In the Matter of Implementation of the Cable Television Consumer Protection and Competition Act of 1992, Review of the Commission's Cable Attribution Rules, CS Docket No. 98-82. I respectfully dissent from the adoption of these cable attribution rules. I agree, however, with certain decisions regarding cable reform. I thus dissent in part and concur in part in this Report and Order. General Attribution Standards The instant cable attribution rules are based primarily on the newly revised broadcast attribution rules. See supra at para. 11 (incorporating by reference the reasoning set forth in the Broadcast Attribution Report and Order). Those rules are, with a few exceptions, imported into the instant context. For the reasons that I gave in my dissent from the broadcast attribution rules, I must also dissent from these counting standards. See Statement of Commissioner Harold W. Furchtgott- Roth, Dissenting in Part and Concurring in Part, In the Matter of the Commission's Regulations Governing Attribution of Broadcast and Cable/MDS Interests, MM Docket No. 94-150; Review of the Commission's Regulations and Policies Affecting Investment in the Broadcast Industry, MM Docket No. 92-51; Reexamination of the Commission's Cross-Interest Policy, MM Docket No. 87-154 (rel. Aug. 6, 1999). In short, I believe that we should have taken these opportunities to simplify our attribution rules, instead of creating additional layers of regulation such as the equity-debt-plus test and reaching into heretofore uncharted areas such as pure debt instruments. With particular respect to the changes in the insulation criteria for partnerships, I am sympathetic to the concerns that motivate the Commission. I would prefer to address policy questions in the substantive rule on the horizontal limit, however, not in the context of the attribution rules. I fear that the "materially involved in programming activities" test will prove too subjective to be efficiently applied and enforced. I am also troubled by the elimination of the single majority shareholder exception. As I made clear in the Broadcast Attribution Order, this rule provides at least some safe harbor to regulated entities in terms of attribution. Against the backdrop of our vastly complicated attribution rules, this exception -- whether or not I would have created it in the first instance -- operates to provide at least one clear instance where interests will not be attributable. Unless we intend to start from scratch and come up with a streamlined attribution system, I think we should retain the single majority shareholder exception. In this regard, I must note, again, a yawning inconsistency between the broadcast item and this one: while we generally adhere to the broadcast attribution framework for cable, the Commission departs from that framework for the single majority shareholder rule in particular. If the policy reasons animating the rule are persuasive in broadcast, then they ought to work equally well here -- especially given that the Commission states that the industries are not so different that different attribution rules are needed, as noted above. I see no rational justification for retaining this exception for broadcasters but repealing it for cable operators, and I do not think the Order provides one. Cable Reform Issues I agree with the Commission's definition of the term "affiliate" for purposes of the LEC effective competition provision of section 623(l). See supra at paras. 120-125. In particular, while the Title I definition does not control in this context, I think it wise to exercise our discretion in light of Congress' definition, as the Commission does. I thus join in this decision. I would have used the same test, however, for purposes of both the competing provider provision of section 623(l) and the cable-telco buy-out rule, cf. supra at paras. 126-132, and thus dissent from that decision. Statement of Commissioner Harold W. Furchtgott-Roth, Concurring in Part and Dissenting in Part In the Matter of Implementation of Section 11(c) of the Cable Television Consumer Protection and Competition Act of 1992, Horizontal Ownership Limits, MM No. 92-264. There is much to commend in this Order. I join in the decisions to change the basis of the limit from homes passed to actual subscribers; to include non-cable MVPDs in the limit calculation; to repeal the minority-control allowance; and to retain the stay of these rules pending resolution of related litigation. See Parts IV-V, VII-VIII. I must dissent, however, the Commission's refusal to raise the limit itself from the current rate of 30%. See Part VI. The Level of The Horizontal Ownership Limit I would have raised significantly the relevant rate for cable ownership past the 30% that the Commission today maintains. This rate has been in effect since 1993 and, as the Commission itself has documented in any number of proceedings, the increase in competition in the multichannel video programming market -- assuming that is even the right market, as opposed to all video programmers, the actual terminology of the statute -- has been at least substantial, if not explosive. The statute directs us to take account of these changes. See 613(f)(2)(E) (Commission should "reflect the dynamic nature of the communications marketplace"). This Order even acknowledges these intervening competitive developments in the context of the decisions to change the limit calculation. See supra at paras. 28-30. I do not think we can take notice of increased competition for purposes of those ancillary decisions but close our eyes to that same fact in the context of the limit itself. Increased competition either exists or it does not, and the fact of that competition is logically relevant to the calculation of the limit and the limit itself. Even if one were not willing to admit increased competition since 1993, changes within the cable industry itself -- most significantly, the expansion of channels due to upgrades -- mitigate a cable operator's potential for market power. Furthermore, the Commission just a few months ago concluded that growth in the communications industry warranted loosening of the broadcast ownership rules. See generally Review of the Commission's Regulations Governing Television Broadcasting, Television Satellite Stations Review of Policy and Rules, MM Docket Nos. 91-221, 87-8 (rel. Aug. 6, 1999). I would think that some deregulation -- in particular, revising upward the section 11(c) cap -- would have been equally appropriate for the cable industry. In the attribution Report and Order adopted today, the Commission concludes that "the cable industry's ownership and management structures do not in any relevant way differ from those of the broadcast industry." Review of the Commission's Cable Attribution Rules, CS Docket No. 98-82, at para. 11 (adopted Oct. 8, 1999). While I disagree with that statement (the many differences between these particular industries, and thus their ownership and management, are patent, at least to me), I note it in order to highlight the incongruity of the Commission's reasoning in these related decisions. Apparently, the industries are similar enough that we should use the same attribution rules, but when it comes to deregulation, they should not be treated equally. This makes little sense to me. Part of what contributes to the Commission's view that the limit cannot go any higher than 30% is a fundamental misunderstanding of the premise of section 613(f). The Commission approaches the statute as if it were the "Reasonable Guarantee of Success for Cable Networks Act." Hence, its analysis of the appropriate percentage limit starts with the number of subscribers it takes to launch a new network. But the Act is not meant affirmatively to ensure that new cable networks have some minimum chance of success in the marketplace. Rather, its plain language reflects an intent to prevent cable operators from "unfair[ly] imped[ing] . . . the flow of video programming from the programmer to the consumer." 47 U.S.C. section 613(f)(2)(A). A cable network can fail to get off the ground for infinite reasons other than the exercise of monopsony power by cable operators. The statute is not meant to create a minimum chance of success for one group, but to prevent specific anticompetitive behavior by a different group. We thus should be focusing on what it means for a cable operator or operators to "unfairly impede" the flow of programming, but this Order never does that. Moreover, the "flow" with which the statute concerns itself is of "video programming," not just cable network or even MVPD programming. "Video programming" is a statutorily defined term, see id. section 611(20) ("'video programming' means programming provided by, or generally considered comparable to programming provided by, a television broadcast station"), which includes vastly more than just cable network programming. When many paths exist for distributing video programming to consumers -- which there are -- cable operators' ability to impede anything is drastically undermined. Finally, the constitutional concerns raised by the statute -- grave enough that a federal judge has deemed it violative of the First Amendment, see Daniels Cablevision v. United States, 835 F. Supp. 1 (D.D.C. 1993) -- also mitigate in favor of a more generous approach to the limit in order to mitigate the direct burdens on speech imposed by these regulations. A higher subscriber rate, while it might not solve the First Amendment problem, would at least alleviate some of the burden created by the limit. But these rules impose as heavy a burden on speech as the previous ones. The Calculation Of The Horizontal Ownership Limit The foregoing said, I do concur in the separate decisions to base the limit on actual subscribers rather than homes passed, see supra Part IV, and to include non-cable MVPDs in the calculus, see id. Part V. Those decisions make common sense, in that they acknowledge the expanded range and intensity of competition to cable. They also provide some effective relief to cable operators and allow them some room to grow as the MVPD market further develops. Ultimately, however, the cleaner and more straightforward approach would have been to simply raise the limit itself. Moreover, I would have increased the limit to a greater extent than do these changes to the formula. I support them, however, to the extent they provide some benefit to regulated entities. The Minority Control Allowance I also concur in the decision to repeal the minority control allowance. See id. Part VII. As I noted in the Notice of Proposed Rulemaking, this facially race-based provision is presumptively violative of the Equal Protection Clause. See Separate Statement of Commissioner Harold W. Furchtgott-Roth, Second Memorandum Opinion and Order on Reconsideration and Further Notice of Proposed Rulemaking, In re Implementation of Section 11(c) of the Cable Television Consumer Protection and Competition Act of 1992: Horizontal Limits (rel. June 26, 1998) (discussing application of strict scrutiny to the allowance). Although the Commission chooses to repeal these regulations for reasons of practicality, it makes no attempt to defend the constitutionality of this rigid numerical preference and its supposed connection to programming content in light of either the record in this proceeding or relevant judicial precedent. That is probably wise, because the task is near impossible, legally speaking. Administrative Stay Of The Rules Finally, I concur in the decision to continue the stay of these rules pending resolution of the related litigation in the Court of Appeals for the D.C. Circuit. See supra Part VIII. October 8, 1999 STATEMENT OF COMMISSIONER GLORIA TRISTANI, DISSENTING IN PART In the Matter of Implementation of the Cable Television Consumer Protection and Competition Act of 1992, Implementation of the Cable Act Reform Provisions of the Telecommunications Act of 1996, and Review of the Commission's Cable Attribution Rules, CS Docket Nos. 98-82 and 96-85 I dissent from the majority's decision to modify the insulation criteria for limited partnerships and to narrow the attribution standard for officers and directors. These changes are ill-conceived, arbitrary and will prove unworkable in practice. First, the majority departs from established precedent without adequate explanation. In adopting the broadcast attribution standard for purposes of Section 613, the Commission found: [T]he objectives of the broadcast attribution model are consistent with our goals in establishing ownership standards for subscriber limits. In this regard, the broadcast attribution rules focus on ownership thresholds that enable a broadcast licensee to influence or control management or programming decisions. We believe these same issues are also relevant to addressing the concerns at issue in this proceeding relating to the ability of cable operators to unduly influence the programming marketplace. Just last year, the Commission reiterated these views on reconsideration. Thus, the Commission has repeatedly recognized that it is one entity's ability to influence or control the management or programming decisions of another entity that implicate the concerns of Section 613. The majority, however, acts as if it is writing on a blank slate by ignoring the ability to influence or control a partnership's management and focusing only on programming-related decisions. The majority does not claim that the broadcast criteria, affirmed by the Commission only two months ago, are wrong. But nor does the majority attempt to explain why our prior precedent is wrong i.e., why the broadcast attribution criteria really do not address the same issues regarding influence and control over management and programming decisions at issue here. Indeed, the majority would find any such attempt difficult, since, in enacting Section 613, Congress expressed many of the same competition and diversity concerns that underlie our broadcast ownership rules. The arbitrariness of the majority's decision is further evidenced by its failure to apply its new rules across-the-board. As noted above, the majority does not argue for a change in the broadcast attribution rules. Nor does the majority change the attribution criteria that apply to our other cable rules -- including the cable/SMATV cross-ownership ban, the cable-telco buy-out prohibition, and the competing provider prong of the effective competition test that apply the broadcast attribution standard. Nor does the majority explain, if programming decisions are the only concern under Section 613, why it restricts its decision to limited partnerships rather than applying it to all corporate structures. For instance, the majority does not explain why we should continue to attribute the interests of passive institutional investors, if those investors remove themselves from programming-related activities. If the attribution rules are changed for purposes of limited partnerships under Section 613, logically either the same revisions should apply to these other rules, or a good reason must be advanced why they should not. The majority does neither. Finally, I fear that the majority's belief that "programming activities" can be neatly cordoned off from other management functions is illusory. In the real world, the ability to influence a partnership's core business activities inevitably involves the ability to at least indirectly affect the various activities, such as programming, in which the partnership is involved. Until today, the Commission has always recognized this common sense proposition. In particular, the Commission has always recognized that the potential influence of officers and directors is significant, and should be attributable to a broadcaster or cable operator whenever these individuals' duties relate to the media activities of the company. Now, however, we are putting officers and directors in the untenable position of determining, on the fly, whether a particular budgetary or marketing decision improperly involves them in "programming-related activities." Worse, the public's right to the competition and diversity benefits of Section 613 depends on them making the right decision. The public interest should not hang by so thin a reed. For these reasons, I dissent from today's decision to the extent it amends our attribution rules governing limited partnerships, officers and directors. October 8, 1999 STATEMENT OF COMMISSIONER GLORIA TRISTANI, DISSENTING IN PART In the Matter of Implementation of Section 11(c) Of the Cable Television Consumer Protection and Competition Act of 1992 Horizontal Ownership Limits MM Docket No. 92-264 I would have lifted the Commission's voluntary stay of its horizontal ownership rules. While the stay may have done little harm in 1993, when it was imposed, it now constitutes a serious threat to the orderly enforcement of our rules and an abdication of our responsibility to implement Congress' express statutory directives. In the 1992 Cable Act, Congress provided that the Commission "shall . . . conduct a proceeding" to establish horizontal ownership limits. In 1993, shortly before the Commission issued its rules, the district court found the horizontal ownership provision of Section 613 unconstitutional on its face. Importantly, the district court judge stayed the effect of his ruling, thereby permitting the Commission to adopt and enforce horizontal ownership rules. Nevertheless, when the Commission adopted its rules shortly thereafter, it voluntarily suspended enforcement pending outcome of the Daniels appeal. The Commission has not always been so quick to abandon Congress' mandates. For instance, although a district court judge found Sections 271-275 of the Communications Act to be an unconstitutional bill of attainder, the Commission continued to enforce those provisions under circumstances similar to those here, until the appellate court eventually reversed the lower court decision. It has now been seven years since Congress expressly directed the Commission to establish horizontal ownership rules, and six years since the Commission opted to ignore that directive on its own motion. In 1993, the Commission's decision made little practical difference: no cable operator was close to the 30% limit and appellate review of the Daniels decision could be expected well before the limit was breached. Times have changed. Now we are faced with the real possibility -- indeed, the virtual certainty, if all pending transactions are approved -- that a single cable operator, AT&T, will be significantly over the 30% cap, even under the liberalized rules being adopted today. Moreover, concentration issues will be squarely before us when we consider AT&T's proposed acquisition of MediaOne -- a decision that will likely come before the D.C. Circuit rules on the Daniels appeal. Without enforceable rules, the Commission will not be able to address the Section 613 ownership issue at the time of the merger review, but, assuming the merger is approved, will have to wait until the D.C. Circuit acts. Not to worry, the majority says: if the D.C. Circuit upholds the horizontal ownership limits, AT&T and others will be required to come into compliance within 180 days of the decision. The majority's assurances give me little comfort because I do not believe its admonition about divestitures will ever be enforced. This is not a criticism of the Commission, but a recognition of administrative reality. It is much easier to enforce rules on a going-forward basis than to reverse established "facts on the ground." Ultimately, to the extent that the Commission is forced to grant waivers or grandfather ownership interests that violate our rules, Congress' purposes in enacting Section 613 will be eviscerated. It might be different if the Commission believed there were a substantial likelihood that it would lose on appeal, or if there were some reason to believe that the 30% cap had grown stale. But on August 13, 1999, the Commission filed a brief in the D.C. Circuit describing at length how, under the applicable standard established in the Supreme Court's Turner decisions (which the Daniels court did not have the benefit of), the horizontal ownership provisions and the Commission's implementing rules are clearly constitutional. Nor is the 30% cap out-of-date: today's Order reaffirms the 30% cap based on a fresh record. In the end, the issue of lifting the stay boils down to whether the Commission is serious about implementing Congress' express directive to establish reasonable horizontal ownership limits. Today's decision indicates that it is not.