ACA Unveils NBCU Conditions

By Mike Farrell -- Multichannel News, 8/23/2010 12:01:00 AM

The American Cable Association, the Washington-based lobbying group for nearly 900 small cable operators across the country, last Thursday (Aug. 19) released its proposed conditions for the pending Comcast NBC Universal joint venture, seeking to level the playing field between the proposed distribution and programming conglomerate and small cable operators.

The ACA recommendations are just that — the Federal Communications Commission is not obligated to adopt them — and are among several that have been filed by other organizations with the agency since December when the JV was announced. ACA mapped out a series of JV conditions that it recommended stay in place for nine years. While some of the conditions are standard for such large media mergers & acquisitions, including program access rules requiring programming be available to all multichannel video programming distributors (MVPDs), others appear to be breaking new ground. Among the proposed conditions are:

• Comcast/NBCU should not be allowed to bundle its owned-and-operated television stations or its regional sports networks in carriage agreements;

• A most favored nation clause that would prohibit Comcast/NBCU from pricing TV stations or RSNs to small operators more than 5% above the best price it offers other MVPDs; and

• Some disputes would be resolved through “baseball style” arbitration, where each party submits a price it believes represents fair value for the programming, and an arbitrator picks one of the two. Smaller operators with 125,000 subscribers or less would also receive a form of low-cost traditional arbitration in any carriage disputes and would be allowed to carry the disputed network as the process continued.

On a conference call with reporters, ACA CEO Matt Polka said the conditions would protect small and large operators alike, providing unprecedented transparency in negotiations and reversing the trend of what had been ineffective conditions placed on past large media deals.

“We’re suggesting this range of conditions simply because this merger is unprecedented in terms of [the] programming and distribution dominance that will result in the marketplace,” Polka said. “In our view, as we’ve said in the past, this merger will undermine competition, greatly escalating the price of cable and broadcast channels that pertinent rivals, including many of our members, much purchase to remain in business.”

Still, Polka said he was not opposed to a deal. “We expect that this is a process that will go forward where both the DOJ and the FCC will consider conditioning the merger,” Polka said.

ACA also mapped out conditions that are geared to help strengthen the bargaining position for the National Cable Television Cooperative, the buying consortium that represents about 27 million cable subscribers across the country. According to the ACA conditions, Comcast/NBCU would be required to negotiate with NCTC on a goodfaith basis and, depending on the number of NCTC members participating in the negotiation, would be required to offer the co-op a price equal to that offered a single MVPD of similar size. NCTC also would receive the benefit of baseball-style arbitration in a dispute.

While ACA said the conditions are transaction-specific, some industry observers said that the proposals are similar to what it has been asking from the federal government regarding several other issues, including program access and retransmission consent.

Miller Tabak media analyst David Joyce said that, if accepted, the ACA conditions could lead to a new way of negotiating programming carriage.