AT&T seems to be one step closer to being let off the hook on its promise to sell major cable systems, a pledge it made to win government approval to buy MediaOne Group last year.
Late Friday, the four FCC commissioners appeared ready to suspend the company's May 19 deadline for selling enough cable investments to get below the 30% cap on one company's share of pay-TV subscribers, industry sources said.
The commissioners seemed convinced that their hand was forced by a March 2 District of Columbia federal appeals court decision striking down the cable cap. The FCC is currently amending its cable ownership limits to account for the decision.
"The D.C. circuit tore the guts out of the FCC's divestiture order," said Precursor Group analyst Scott Cleland. "This means AT&T no longer is a forced cable seller and, if it is financially able, could be a buyer again."
Although many industry players believe the court's decision calls into question the viability of other FCC ownership limits, particularly the 35% cap on a broadcast company's household reach, the commission refused to go that far on Friday and denied Viacom's petition for a suspension of its May 4 deadline for identifying stations it plans to sell to comply with the broadcast cap.
The suspension of AT&T's deadline is one more indication of Powell's pledge to deregulate the industry. Viacom's request was turned down, however, because the FCC still has not decided whether the court decision extends beyond the cable industry cap.
Viacom asked the FCC to delay its divestiture deadline, arguing that "there is a substantial likelihood" the broadcast cap will be thrown out for violating station owners' free-speech rights, a similar argument to the one that got cable ownership limits tossed. Viacom's CBS, like Fox and NBC, is challenging the broadcast cap in the same court that threw out the cable limits. Absent an FCC delay, Viacom said, it would ask the court to impose one.
Viacom's audience reach now stands at 41%, thanks to its acquisition of CBS last year.
With chances for relaxation of the broadcast ownership cap increasing, network affiliates opposed to such a move have asked the FCC to investigate whether the Big Four nets violated regulations barring them from gaining too much control over affiliates' operations.