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By Lydia Beyoud
Nov. 17 — A seemingly tangential issue to the proposed mergers of some of the nation's largest communications companies now appears to be taking center stage in the Federal Communications Commission's antitrust reviews, according to the latest round of court filings between media content companies and the FCC.
The FCC filed Nov. 17 an opposition to media content groups' emergency motion for stay of a Nov. 10 FCC order that would allow third parties to review the video programming contracts as a part of the FCC's merger review process.
The groups seeking the stay include CBS Corp., Twenty-First Century Fox Corp., Viacom Inc. and others. A federal court granted their motion for temporary stay while it reviews the docket filings.
Both sides agree that the confidential video programming information between the content companies and the merger parties—AT&T Inc.-DirecTV and Comcast Corp.-Time Warner Cable Inc.-Charter Communications Inc.—are critical, but for different reasons.
“These transactions, taken together, are both large in size and important for their potential impact on internet broadband access and video programming,” the FCC said in its filing.
Thus, the information contained in the companies' programming contracts “is likely to be highly relevant to the Commission's review of the proposed transactions” and to third-party commenters who may be able to bring salient information to the agency's attention.
At the same time, the media companies, joined in a Nov. 17 petition for intervention by the National Association of Broadcasters, said that the wide-ranging and highly sensitive information is too vital to their businesses to be disclosed. Many of the content companies in the suit, including CBS, the Walt Disney Channel and Twenty-First Century Fox, belong to the NAB.
The FCC said it recognized that the information contains “highly sensitive information that is central to the contracting parties' (including both the [merger] Applicants' and third parties') business strategies,” but added that “such information reflecting the applicants' business strategies is also ‘critical to a full and effective review' of the proposed mergers, and that making the information available to third parties” is necessary to provide an appropriate balance among the legitimate interests of the applicants, contracting parties, and the Commission in safeguarding competitively sensitive information and the need to make such information available to encourage meaningful participation by other parties in the proceedings.
The commission's lawyers said the content companies wouldn't be able to demonstrate a likelihood of success on the merits of their petition for stay, and wouldn't suffer irreparable harm if a stay is not granted.
Instead, the FCC said the petitioners' “overheated rhetoric” shows their concern that they wouldn't derive any benefit from the proposed mergers “because of the asserted effects of the mergers in lowering the prices they receive for their programming.” Consequently, the FCC said, the petitioners are seeking to delay the FCC's review.
The media companies said in previous filings that their request for stay shouldn't delay the agency's review procedure, but the merger parties, joined by the American Cable Association, which represents small- and mid-sized multichannel video programming distributors that also negotiate with the media companies, have said the petitioners' actions have brought the process to a standstill.
The ACA filed a Nov. 17 motion for leave to intervene and a response in opposition to the emergency motion for the stay. Comcast, Time Warner and Charter also filed a joint opposition to the stay on Nov. 17.
The FCC said the petitioners' opposition to the modified protective orders the commission issued to protect their sensitive information could affect future merger reviews.
“If Petitioners are correct, and the possible risk of an unauthorized disclosure despite all the safeguards of the protective orders here is sufficient to overturn the Commission's determination in this case, then it is difficult to see how protective orders could serve as a useful tool against unauthorized disclosure of sensitive information in any instance,” the FCC said.
It added that a stay of the order pending appeal would “materially disrupt” the FCC's current merger review schedule, which projects for the two reviews to be completed in early spring 2015.
Currently, the agency's informal merger review “shot clock” for the Comcast-TWC-Charter merger is at 85 days and at 76 days for the AT&T-DirecTV merger. “Delay would inevitably prolong the regulatory uncertainty associated with the applicants' business plans, and thereby disserve the public interest,” it said.
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