US FCC eyes plan to limit cable companies' size

By Peter Kaplan

WASHINGTON, Nov 30 (Reuters) - The U.S. Federal Communications Commission is moving toward resurrecting a proposal that would limit the size cable operators could reach on a nationwide basis, sources said on Friday.

FCC Chairman Kevin Martin has enough support on the five-member commission to pass a measure that would bar cable companies from owning systems that have more than a 30-percent share of U.S. multichannel video subscribers, according to one FCC source.

Analysts at Stifel Nicolaus said in a research note that Martin is aiming for a vote on the cable ownership cap no later than the commission's next meeting on Dec. 18.

The proposal could affect merger deals among large cable operators like Comcast Corp (CMCSA.O), Charter Communications CHTR.O and Cablevision (CVC.N), Stifel Nicolaus said.

But Stifel Nicolaus said the FCC could have a difficult time defending the 30-percent cap in court. The move comes six years after a federal appeals court threw out an identical FCC rule on the grounds that the agency did not have enough evidence to justify it.

Comcast issued a statement saying there was still no justification for 30-percent ownership cap and noted that the FCC had approved merger deals among the largest telephone carriers in recent years.

"In an era of increased and intensifying competition among telephone, satellite and cable companies, the case for a cap is even weaker than when the courts rejected it six years ago," Comcast Executive Vice President David Cohen said in a statement.

One FCC source said the idea of a cable ownership cap had been subjected to further agency study over the last six years, along with two rounds of public comments. The FCC could use that data to try to build a better case for the ownership cap, this source said. (Editing by Tim Dobbyn)