Time Warner Loses High Court Appeal

Tuesday, February 20th 2001, 12:00 am

By: News On 6

WASHINGTON (AP) â€” Cable television giant Time Warner Entertainment Co. lost a Supreme Court appeal Tuesday that tried to keep the government from limiting the number of customers the largest companies can serve.

The court, without comment, turned down the company's argument that such limits â€” intended to preserve diverse cable TV programming â€” violate the Constitution's First Amendment free-speech protection.

The company had also challenged the government's authority to limit the number of channels a cable system can fill with networks in which it has a financial interest.

The provisions were part of the 1992 Cable Television Consumer Protection and Competition Act. The law also allowed cable TV rates to be regulated and barred cable companies from being granted exclusive franchises.

In enacting the law, Congress found that cable operators had ``undue market power'' over consumers and video programmers.

Congress also found that system operators often share ownership with cable networks and have an incentive to include those networks in their channel lineups. For example, cable operator Viacom owned MTV, Showtime and Nickelodeon, cable operator TCI had a financial interest in American Movie Classics, the Discovery Channel and QVC Networks.

The actual limits set by the Federal Communications Commission are being challenged in a separate case. The FCC said each cable operator could serve no more than 30 percent of the nation's subscribers, and cable systems could fill no more than 40 percent of their channels with affiliated programming.

In Tuesday's case, Time Warner challenged Congress' authority to set such limits.

The U.S. Circuit Court of Appeals for the District of Columbia upheld them, saying Congress did not favor one type of speech over another. ``It merely expressed its intention that there continue to be multiple speakers,``the court said.

In appealing to the Supreme Court, Time Warner's lawyers said the limits ``are textbook violations of free speech'' similar to limiting the number of copies a newspaper can print or limiting the space a newspaper can fill with its own editorial content.

The limits should be subject to the strictest level of free-speech inquiry, the company's lawyers said.

Justice Department lawyers said cable TV is a ``dominant nationwide video medium'' and the rules were intended to keep companies from exercising monopoly power.

In 1997, the justices upheld another provision of the 1992 law that required cable systems to set aside up to one-third of their channels for local broadcast stations. Cable companies had argued the law violated their free-speech rights by forcing them to carry stations they would rather drop.

The case is Time Warner Entertainment Co. v. Federal Communications Commission, 00-623.

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On the Net: For the appeals court ruling: http://www.uscourts.gov/links.html and click on District of Columbia Circuit.