ACA Balks At News Corp. Merger Relief

Small Op Group Calls Timing ‘An Obvious Campaign To Suppress Scrutiny’

By Ted Hearn -- Multichannel News, 5/1/2008 1:28:00 PM

Washington – A trade group for small cable operators had harsh words last Thursday for News Corp.’s effort to escape Federal Communications Commission competitive conditions imposed in late 2003, when the company acquired nearly 40% of DirecTV.

In a filing at the FCC, the American Cable Association accused News Corp of “lack of candor and manipulation of [FCC] processes” because News Corp. didn’t seek relief until after the FCC approved the transfer of News Corp.’s DirecTV stake to Liberty Media Corp.

ACA called News Corp.’s timing “an obvious campaign to suppress scrutiny of an issue of decisional significance.”

News Corp. senior vice president of corporate affairs and communications Teri Everett did not immediately respond to a reporter’s email and phone call.

When News Corp took effective control of DirecTV early in 2004, the FCC imposed several conditions sought by small cable companies based on concerns that News Corp.’s control of a major pay-TV provider and nearly three dozen Fox TV stations could be used as leverage to squeeze small cable providers.

The FCC insisted that until January 2010, News Corp. had to enter compulsory arbitration on the licensing of News Corp-owned regional sports networks [RSNs]. The FCC condition allowed any pay-TV distributor to trigger arbitration.

The FCC also required News Corp. to enter arbitration with pay-TV distributors to resolve disputes on the carriage of News Corp.-owned TV stations.

In March, News Corp. petitioned the FCC to remove the conditions 20 months early because the basis for them had been eliminated through the transfer of DirecTV to Liberty Media.

“In short, the justification for the RSN and [retransmission consent] conditions have evaporated,” News Corp. said in its petition for relief.

ACA slammed News Corp. for not seeking relief while the DirecTV-Liberty transaction was pending at the FCC, which the agency approved Feb. 25, following a 369-day deliberation.

“News Corp. has no legitimate argument for not disclosing earlier its plan to seek modification of the conditions. There is no question that potential modification of the conditions was an issue of decisional significance to the Liberty/DirecTV transaction,” ACA said.

ACA urged the FCC not to act on News Corp.’s request until after the agency had finished its rulemaking focused on the wholesale cable programming market and retransmission-consent practices of local TV stations.