A divided federal appeals court on Friday upheld the Federal Communications Commission's decision to extend a rule that bars cable operators from withholding some television programs from competitors through exclusive contracts.

Cablevision Systems Corp. (CVC) and Comcast Corp. (CMCSA) had challenged the FCC's decision to keep the rule in place, arguing that the prohibition was not necessary to preserve competition in the paid TV market.

The U.S. Court Appeals for the District of Columbia Circuit rejected that challenge in a 2-1 ruling.

The court's majority said it was reasonable for the FCC to conclude that the ban on exclusive contracts between cable operators and affiliated cable programmers continued to be necessary.

The dissenting judge said the ban was no longer justified because of the high level of competition in the market for video programming.

The ban on exclusive contracts for TV programs was set by Congress in 1992. At the time, lawmakers were particularly concerned about cable companies withholding popular programs that they owned from competitors, effectively creating a monopoly.

The FCC extended the ban until 2012.

The case is Cablevision Systems Corp. v. FCC, 07-1425.

-By Brent Kendall, Dow Jones Newswires; 202-862-9222; brent.kendall@dowjones.com
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