Opinion ID: 103
Heading Depth: 3
Heading Rank: 2

Heading: Decisionmaking Process

Text: Petitioners' second contention is that the Commission did not rely on substantial evidence when it concluded that vertically integrated cable companies would enter into competition-harming exclusive contracts if the exclusivity prohibition were allowed to lapse. Noting that conclusions based on FCC's predictive judgment and technical analysis are just the type of conclusions that warrant deference from this Court, we disagree with petitioners' characterization of the 2007 Order. It is true that the MVPD market has transformed substantially since the Cable Act was enacted in 1992. However, as described above, the transformation presents a mixed picture. While cable no longer controls 95 percent of the MVPD market, as it did in 1992, cable still controls two thirds of the market nationally. In designated market areas in which a single cable company controls a clustered region, market penetration of competitive MVPDs is even lower than nationwide rates. 2007 Order at ¶ 55, 22 F.C.C.R. at 17,830. The amount and diversity of programming has expanded rapidly, giving MVPDs more programming options even if one network were unavailable to them because of an exclusive contract. However, the four largest cable operators are still vertically integrated with six of the top 20 national networks, some of the most popular premium networks, and almost half of all regional sports networks. The Commission believes the ability and incentive for vertically integrated cable companies to withhold must-have programming remains substantial enough to require the further extension of the exclusivity prohibition. We must defer to the Commission's analysis. It is also true that the Commission's calculations on the likelihood of future withholding appear susceptible to questions about their predictive power. What is true about Comcast SportsNet Philadelphia may not be equally true for all regional networks and even less true for national networks, yet the Commission still used that one station as the basis for much of its analysis. But predictive calculations are a murky science in the best of circumstances, and the Commission naturally has no access to infallible data about the nature of contracts that do not exist. [W]e do not sit as a panel of referees on a professional economic journal, but as a panel of generalist judges obliged to defer to a reasonable judgment by an agency acting pursuant to congressionally delegated authority. City of Los Angeles v. U.S. Dep't of Transp., 165 F.3d 972, 977 (D.C.Cir.1999). The Commission has recognized and analyzed complicated pictures of the MVPD market both current and projected. These data qualify as substantial evidence for arbitrary and capricious review. The Commission's decision does not run counter to the evidence, nor is it implausible or irrational. See Mount Royal Joint Venture, 477 F.3d at 753; Center for Auto Safety v. Peck, 751 F.2d 1336, 1373 (D.C.Cir.1985). In short, it is not arbitrary and capricious. We anticipate that cable's dominance in the MVPD market will have diminished still more by the time the Commission next reviews the prohibition, and expect that at that time the Commission will weigh heavily Congress's intention that the exclusive contract prohibition will eventually sunset. Petitioners are correct in pointing out that the MVPD market has changed drastically since 1992. We expect that if the market continues to evolve at such a rapid pace, the Commission will soon be able to conclude that the exclusivity prohibition is no longer necessary to preserve and protect competition and diversity in the distribution of video programming. Petitioners' last criticism of the 2007 Order is that the Order failed to narrow the exclusivity rule to apply only to certain types of cable companies or certain types of programming. While the current rule includes a procedure for obtaining an exemption from the prohibition on a case by case basis, petitioners claim that this procedure is not sufficient to save the rule from being invalid because it still prohibits more exclusive contracts than is absolutely necessary to preserve and protect competition and diversity in the market. During the notice and comment period for the 2007 Order, petitioners offered several suggestions for narrowing the rule, each of which the Commission rejected. It was not arbitrary and capricious for the Commission to reject these suggestions and decide instead to adhere to Congress's statutory design. Because we hold that the Commission was reasonable in its conclusion that the prohibitionin its original formcontinues to be necessary, we also hold that the Commission was reasonable to keep the same prohibition in that same form. For the reasons set forth above, the petitions for review are Denied.