Something Doesn't Add Up
I guess the FCC’s decision to come up with a calculation to justify its cable ownership cap, then actually not use the number it produced, was OK.
I know about giving due deference to the expertise of regulatory agencies, so I guess this was some of that expertise in action. But I was still surprised by the FCC order released Monday, which outlined its decision to reinstate the 30% cap on the number of multichannel video subscribers one cable operator is allowed to reach.
According to the FCC, its new formula produced a .28, "which reflects that as long as the largest cable operator does not serve more than 28 percent of all MVPD subscribers, that operator cannot significantly undermine the viability of a programming network by refusing to carry the network," the FCC said.
The commission was under instructions from a court to justify its 30% cap or change it.
OK, then it sounds like that 28% should be the number, otherwise why have the formula. I mean, the FCC went to the trouble of establishing a national number for video subs (95,784,478), and a "minimum viable scale" of 19,030,000, though I am not quite sure what that one is, and a subscriber penetration rate calculated to the ten thousandth (0.2742). But when it came up with a number, it didn’t exactly use it.
"Based on this calculation, we conclude that a horizontal limit of 30 percent will best serve the public interest," said the FCC.
"As noted above, the Commission first established a 30 percent horizontal ownership limit in 1993. In 1999, the Commission revised the method by which horizontal ownership was calculated, but retained a 30 percent ownership limit. Although that limit was subsequently remanded by the court, the Commission has continued to apply the 30 percent limit in merger reviews since that time and the media marketplace has continued to operate under this requirement.
"Therefore, for consistency, we adjust the limit slightly upward, from 28 percent to 30 percent. This small upward adjustment is unlikely to cause harm. We do not believe this minor adjustment will adversely affect our ability to provide the protection the statute requires. Moreover, this adjustment will have no affect on the largest cable operator in the market today because it would satisfy either a 28 percent or 30 percent limit. For these reasons, we set a 30 percent horizontal limit."
OK, I got it. They are setting a 30% limit. But I come back to the line "which reflects that as long as the largest cable operator does not serve more than 28 percent of all MVPD subscribers, that operator cannot significantly undermine the viability of a programming network by refusing to carry the network." The converse of that, which in this case is not a tennis shoe, would be that an operator who does serve more than that "can significantly undermine…" etc. etc.
But that is not what the FCC is saying. It is saying that 30%, which is more than 28% where I went to school, is fine, for the sake of consistency.
But "for the sake of consistency" isn’t much of an argument in and of itself. For the sake of consistency, for example, baseball players should continue taking steroids.
Hasn’t the FCC provided ammunition for those challenging the calculation and the decision? (Comcast is first in line).