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Bloomberg presses FCC on Comcast merger compliance

by Ira Teinowitz in Washington | Published April 11, 2012 at 9:22 AM

Bloomberg LP and consumer groups are stepping up their attack on Comcast Corp. for refusing to place Bloomberg's cable news channel adjacent to other news channels, a move they insist is required by a condition the Federal Communications Commission placed on its 2011 approval of Comcast's deal for control of NBC Universal.

They are also suggesting that Bloomberg's difficulty dealing with Comcast raises big doubts about regulators' use of behavioral conditions to resolve antitrust complaints. "We think the evidence is that behavioral conditions do not work," said Joel Kelsey, a policy adviser for Free Press.

Kelsey and other consumer group leaders questioned whether Bloomberg's complaint suggests regulators should avoid any similar behavioral conditions in the future. They questioned whether similar enforcement problems were likely to surface if regulators try to use similar kinds of behavioral conditions in resolving issues about Verizon Wireless' agreement to buy advanced wireless spectrum from major cable providers. That deal includes a side agreement in which Verizon and the cable companies agree to sell each others services.

Gigi Sohn, president-CEO of Public Knowledge, said the failure of the FCC to act "calls into questions whether the agency is capable of enforcing [behavioral conditions] on this or any other merger."

Bloomberg, whose cable news channel competes with NBC Universal's CNBC, won what appeared to be a victory when the FCC conditioned the Comcast-NBCU deal on a provision that Bloomberg argues would ensure its channel wouldn't be disadvantaged if enforced properly.

The FCC stipulated that "if Comcast now or in the future carries news and/or business news channels in a neighborhood, Comcast must carry all independent news and business news channels in that neighborhood."

The dispute could have implications beyond the Comcast deal and even the FCC. The Department of Justice in recent years has imposed behavioral conditions on several mergers, including Ticketmaster Entertainment Inc.'s 2010 acquisition of concert venue operator Live Nation Inc. and Google Inc.'s purchase of ITA Software Inc. This dustup could put compliance with those merger approval under more scrutiny as well.

The current disagreement is basically over the meaning of two words in the FCC order: "now" and "neighborhood."

Comcast argues that it did not have a cluster of news channels at the time of the merger and has not created one since and therefore is not obligated to move Bloomberg TV adjacent to pre-existing instances where a few other news channels were side-by-side.

Bloomberg on Tuesday said the FCC did indeed obligate Comcast to move Bloomberg's channel adjacent to other news channels on the original lineups and that subsequent moves of competitors' news channels make it all the more obligated to give Bloomberg equal treatment. "We need a passport to get to the news neighborhood," said Greg Babyak, Bloomberg's head of government affairs. "We are over 100 channels away."

Bloomberg's complaint with the FCC filed on Tuesday argues that FCC inaction has effectively shortened a condition of the merger. "The neighborhood condition was intended to last for seven years. By continuing to engage in tactics that maintain that 'now does not mean now,' Comcast has effectively shortened this merger condition by more than one year," Bloomberg said.

Bloomberg first complained to the FCC about Comcast's compliance in June 2011.

It also said that its 14-month-long battle over the meaning of the term "now" raised major issues on other conditions in the deal intended to ensure independent programmers receive fair access to Comcast and NBC Universal. "If an independent programmer cannot prevail on the meaning of 'now' under conditions more favorable to independent programmers than the norm -- conditions to which Comcast has specifically agreed -- it is hard to imagine circumstances in which an independent programmer could ever prevail in a dispute with Comcast," Bloomberg said. "Indeed, if such an interpretation were to be accepted, it is also hard to imagine how anyone could reasonably rely on merger conditions to protect the public interest in future mergers before the Commission."

Sena Fitzmaurice, a Comcast spokeswoman, rejected the accusations.

"Bloomberg continues to willfully misinterpret the 'neighborhooding' condition," she said. "Comcast does not 'neighborhood' news channels in the way Bloomberg seeks to be repositioned. Bloomberg is not entitled to any relief pursuant to its threatened complaint. And its continued rehashing of the same arguments it has previously made smacks of desperation.

"If Comcast is forced to do what Bloomberg wants the FCC to mandate, millions of customers will be subject to disruption and confusion required by massive channel realignments across the country, all to benefit an already thriving, $30 billion media company. It is hard to imagine a more anti-consumer result that would be less in the public interest."

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