Comcast Merger Gripes Reach a Crescendo

Protests Grow Louder as Review of NBCU JV Deal Winds Down

By John Eggerton -- Multichannel News, 12/13/2010 12:01:00 AM

Washington — As the clock ticks down for the completion of the Comcast- NBC Universal deal, the drumbeat of protest from its opponents — including a veteran cable critic and those represented by a former Federal Communications Commission chairman — grows louder.

By some of its comments, Comcast appeared to signal that the process was down to figuring out which conditions would be placed on the $13.75 billion deal to combine the No. 1 U.S. cable operator’s national programming assets with NBCU, a unit of General Electric, and which of those terms Comcast would be able to accept. (Comcast would control 51% of the resulting JV.)

COMCAST HINTS AT TERMS

In meetings with FCC staffers, according to documents at the agency, Comcast has been talking about the difficulties of an online programming access condition and an arbitration process for online distribution, including if it were to be applied to national programming networks, as Rep. Henry Waxman (D-Calif.), the House Energy & Commerce Committee chairman, called for last week.

Comcast agreed to accept at least one online condition as part of the deal, though it was roundly criticized as containing too many caveats to be meaningful.

The caveats are that “Comcast should have the right, consistent with industry practice, to require that unaffiliated content suppliers not provide their programming for free over the Internet during an initial window”; that it “should also have the right to obtain from content suppliers parity treatment with other distributors, online or otherwise”; and that “Comcast should be able to negotiate for a limited period of exclusivity for promotional programming.”

“This does not fix the problem, since it leaves several big loopholes,” said Andrew Schwartzman of the Media Access Project, which has been pushing for online conditions. “Comcast can still insist on [most-favored-nation] clauses, which could restrict the terms of such an offering. It could also impose temporary exclusivity and other time-based restrictions short of an absolute prohibition on carriage.”

Comcast’s agreement to the condition came in a response to arguments by online streaming site Ivi TV that the MSO’s contracts with cable networks are “the only impediment” to its video-programming distribution model and have prevented various nets from dong business with Ivi. Comcast said Ivi’s claims are “without merit.”

Comcast was fighting back on several fronts in response to what felt more and more like last-ditch efforts to condition a deal whose approval was imminent.

The American Cable Association, which represents smaller, independent cable operators, signaled as much. Its three top executives, including president and CEO Matt Polka, said they thought the deal was going through.

But Comcast was taking no chances. It shot back at modem maker Zoom Telephonics, which two weeks ago said in an FCC complaint that Comcast’s modem certification process was really meant to discourage competition to its leased modems. Deal critics latched onto Zoom’s complaint as evidence of the need for conditions.

Comcast asked the FCC to dismiss the complaints on the grounds that Zoom had omitted Comcast’s various proposed solutions to the problem, including a fast-track self-certification process for Zoom’s retail modems at no extra cost.

Comcast also fired back at Internet backbone-services company Level 3 Communications’ complaint that Comcast was violating FCC network-openness guidelines by charging for Level 3’s boost in traffic after it struck a deal to deliver bandwidth-heavy Netflix online video.

Another signal the government was wrapping up its review was the FCC’s receipt of letters from top House Democrats who will soon be in the minority. Waxman and Rep. Ed Markey (D-Mass.), the former House Communications Subcommittee chairman, sent letters to FCC chairman Julius Genachowski asking for program-access, carriage and online conditions, saying they were necessary if the deal goes through.

Both included network-neutrality provisions among their must-haves for the deal, which one highly placed FCC source said would likely be part of the agency’s draft, mirroring the proposals in the draft network-neutrality item now circulating among the commissioners.

Comcast said it was continuing to work with the FCC on the issues raised by Waxman.

MARTIN RESURFACES

A longtime Comcast nemesis — former FCC chairman Kevin Martin — surfaced again in the form of a Washington Post advertisement by the National Coalition of African American Owned Media, as well as the Zoom complaint.

The NCAAOM ad called on President Obama to make the FCC condition the merger on Comcast’s promising that 10% of its channel lineup would be occupied by 100% African-American-owned networks, and to promise not to lay off any employees.

NCAAOM president Stanley Washington, a vocal opponent of the deal, said his organization was preparing to file a lawsuit against the FCC for gross negligence in “not protecting African-Americans in media.”

Comcast has pledged to add 10 independent networks, with at least four of those with majority, though not 100%, African American control. (Another four of those would have Hispanic majority ownership.)

But that isn’t enough as far NCAAOM is concerned.

Now a partner with law firm Patton Boggs, Martin, a Republican who headed the FCC during the George W. Bush administration, was enlisted by NCAAOM to help make its case for conditions on the deal, and is listed on the About Us section on the organization’s Web site.

Martin was also one of the attorneys on the Zoom complaint, a point Comcast made in its response. Zoom president Frank Manning told Multichannel News that he approached Martin because “he was unlikely to have a conflict that would preclude him from representing Zoom.”

Martin has also been representing financial media firm Bloomberg LP, also a deal opponent, as part of the Patton Boggs team.