GEMSTAR DROPS FCC PETITION IN CABLE MUST-CARRY BATTLE
Gemstar-TV Guide International unexpectedly withdrew its FCC petition for special relief after conceding that Commission was going to rule against company in its long-running cable must-carry struggle with AOL Time Warner and other cable operators (CD Feb 20 p2). In brief submission to agency Wed., Gemstar said it was withdrawing petition immediately “without prejudice as a matter of right,” allowing it to file new petition later if it wants. FCC, which had planned to vote on Gemstar’s petition at its agenda meeting next Thurs., said it would rule on withdrawal after reviewing it. At our deadline, AOL Time Warner couldn’t be reached for comment.
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Gemstar’s move came just over year after it filed for special relief, charging that Time Warner Cable illegally had stripped its electronic program guide (EPG) from vertical blanking interval (VBI) signals of local broadcast stations in at least 9 cable markets. Gemstar, which has signed VBI carriage deals with local broadcasters in each Time Warner market, argued that must-carry rules applied because program guides were closely related to video programming presented by broadcast stations. But Time Warner, which claims right to charge for cable bandwidth use, contended that must-carry rules didn’t apply to such ancillary services as program guides.
In its new filing, Gemstar said it was withdrawing petition because AOL Time Warner and other MSOs had stopped stripping its signal. Time Warner restored Gemstar’s signal to its cable systems last year as it sought federal approval of its takeover by AOL. “We watched with care once the merger was completed,” said Gerard Waldron, Covington & Burling attorney representing Gemstar in case. “There’s been no stripping since then.”
Gemstar said it also was dropping its earlier petition because “issues regarding the role of electronic program guides currently are being raised in other FCC proceedings -- each of which presents in a different factual context questions of program -- and signal -- relatedness and the importance of EPGs to viewers.” As result, company said, “we are persuaded that it is unnecessary at this time to seek Commission resolution of this adjudicative proceeding.” Gemstar said it reserved right to file new petition “should the practice of VBI stripping be resumed by any entity.”
Commission watchers expected FCC to rule against Gemstar after Cable Bureau recommended that agency reject petition in draft order. FCC also signaled its thinking on EPGs in analog must-carry case when it tentatively rejected dual cable carriage of analog and digital broadcast signals in its Jan. DTV must-carry order. In section buried deep within that order, Commission concluded that “program guide data that are not specifically linked to the video content of the digital signal being shown cannot be considered program-related, and, therefore, are not subject to a carriage requirement.” At best, sources said, Commission would have split 2-2 on petition, essentially ruling in AOL Time Warner’s favor.
Industry observers expect Gemstar, instead of seeking free must-carry status on cable systems, to pursue negotiated carriage agreements with MSOs. Indeed, it has pursued exactly that strategy in last 2 months, signing long-term deals with Charter, Comcast and, most recently, Cogeco Cable in Canada. Among others, Gemstar is negotiating pact with AOL Time Warner but no agreement has been reached.