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A three-judge U.S. federal appeals court panel indicated Tuesday it is inclined to give the Federal Communications Commission leeway when assessing the agency's decision to bar cable operators from withholding some television programs from competitors through exclusive contracts.

Cablevision Systems Corp. (CVC) challenged the FCC's decision, saying the rule isn't necessary to preserve competition in the paid TV market.

"These are judgments that Congress has delegated to the FCC," said Judge Thomas Griffith during an oral argument at the U.S. Court of Appeals for the District of Columbia Circuit.

"This is going to be reaching for us quite a lot to say [the FCC's] predictive judgment isn't going to be enough," said Chief Judge David Sentelle, referring to the FCC.

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 most recently extended the exclusive contract ban in 2002, saying cable operators continue to dominate paid TV subscribership and retain control over significant programming networks that competitors need.

In a brief to the court, the FCC said some cable operators "own many of the most highly demanded national networks and almost half of all regional programming networks, including nearly half of all regional sports networks."

Cablevision said the market has evolved considerably over the last 17 years with the establishment of satellite TV and the emerging paid TV services offered by phone companies like AT&T Inc. (T) and Verizon Communications Inc. (VZ).

Cablevision may be bolstered in its argument by a decision delivered by the same appeals court earlier this year striking down an FCC rule saying cable operators can't serve more than 30% of subscribers in a single market.

The ruling was a win for Comcast Corp. (CMCSA), which challenged the 30% rule. Agreeing with Comcast, the court pointed to the considerable competition cable operators face from satellite TV and phone companies like Verizon and AT&T.

Arguing for Cablevision Tuesday, attorney Henk Brands said the Comcast decision means the FCC now can't say there isn't enough competition in the paid TV market. Brands is with the Washington D.C. law firm of Paul, Weiss, Rifkind, Wharton & Garrison.

FCC attorney Nandan Joshi said the Cablevision case is different because the commission devoted considerable effort to analyzing the paid TV market before deciding to extend the exclusive contract ban until 2012. "Competition still depends on access to a vast array of programming," he said.

Judge Brett Kavanaugh noted that without the ban, prices for consumers might go up if they are forced to buy both a satellite and cable TV service to view all the sports programming they desire.

-By Fawn Johnson, Dow Jones Newswires; 202-862-9263; fawn.johnson@dowjones.com