Back to this week's selection

FCC Ruling Limits Digital TV as Gemstar Signs Deal with Charter


WASHINGTON -- In a key ruling that could limit digital TV offerings, regulators are expected to deny Gemstar-TV Guide's request to force Time Warner Cable to carry its interactive program guide for free.

That's the recommendation of the Federal Communications Commission staff. It's now being reviewed by the four commissioners, officials say.

FCC Chairman Michael Powell and Commissioner Harold Furchgott-Roth, both Republicans, are expected to support the staff proposal. Even if Democrats Susan Ness and Gloria Tristani back Gemstar, that would produce a tie vote that effectively denies the request.

And the result would not likely change if Gemstar petitions again later this year, when Republicans will have a 3-2 majority with a filled vacancy, say people familiar with the matter.

Communications Daily, a trade publication, even suggests that all four commissioners may back Time Warner in a vote expected within weeks.

Gemstar probably did not help its cause on Tuesday when it announced a deal to offer its guide on Charter Communications cable systems in exchange for payment, officials say. Charter will receive 50% of commerce sales and 15% of ad revenue generated by the guide. Gemstar, whose stock rose 4.4% on the news, would not comment.

The feud with Time Warner erupted last year when the cable giant blocked Gemstar signals needed to display its electronic program guide in eight markets, demanding payment for carriage.

Gemstar complained to the FCC, arguing the law requires cable systems to carry for free a local broadcaster's main channel as well as any ''program-related'' material. It argued that its guide is ''program-related.'' Time Warner, purchased last month by America Online, agreed to transmit the signals until the dispute was resolved.

But FCC officials don't believe information on a show -- which comprises just a tiny portion of the guide -- meets the ''program-related'' standard.

That view will likely carry over as the FCC sets ground rules for the nascent digital TV market. Last month, the agency ruled that cable is not obliged to carry both a broadcaster's current analog channel and its new digital channel.

The FCC, however, has yet to decide whether cable systems must accommodate broadcasters who want to use their digital airwaves to ''multicast'' up to six channels instead of using the space for one ultra-sharp ''high-definition'' signal.

The Gemstar position suggests the FCC will be loath to force cable to carry free movie or sports channels competing with HBO or ESPN, options some broadcasters have proposed for multicast. They likely would be unrelated to the broadcaster's main channel.

Such a view ''would limit consumer choice,'' says Dennis Wharton of the National Association of Broadcasters, because broadcasters likely would not create such channels if they can't be seen in the 68% of U.S. homes with cable.

But Dave Beckwith of the National Cable Television Association says cable operators should be able to set channel lineups based on ''market demand.''

Even with a negative FCC ruling, experts say the major networks likely can persuade cable systems to carry their multicast offerings by paying them or by threatening to withhold channels.

The FCC also might be receptive to requiring carriage of multicast channels that offer ''program-related'' material. Example: A network showing a football game and using its extra channels for other camera angles or player statistics.

-Paul Davidson

This article originally appeared in USAToday Online at http://www.usatoday.com/usatonline/20010221/3082938s.htm

Posted on 26 Feb, 2001