News

TW Hopes for Full FCC

4/14/2006 8:00 PM Eastern

Atlanta— Time Warner Inc.’s top executive hopes a Republican majority emerges at the Federal Communications Commission before the company needs to ask the agency to finish its review of the acquisition of bankrupt Adelphia Communications Corp.

“We felt it would be wise and probably in the best interest of us to have a full FCC panel to consider the merger. That may not be the case at the end of the day, but we’re hoping that it is,” chairman and CEO Richard Parsons said at a National Show press conference here April 10.

Time Warner and Comcast Corp. have agreed to pay $17.6 billion in cash and stock to acquire Adelphia’s 5 million subscribers. In addition to FCC approval, the deal needs the blessing of a bankruptcy court.

Last week, Adelphia filed a new reorganization plan designed to allow the merger to go through before all creditor disputes had been resolved.

At the FCC, satellite providers DirecTV Inc. and EchoStar Communications Corp. have repeatedly alleged that Comcast and Time Warner will emerge from the deal with so much regional market clout that the two will be able to tie up the rights to critical sports networks that carry the local teams. The two satellite carriers have asked the FCC to ban exclusive contracts involving Comcast or Time Warner and regional sports networks.

NO MARKET DOMINATION

The two cable firms have rejected market-domination claims by noting that sports programming exclusivity has been the exception and that cable operators do not have access to NFL Sunday Ticket because DirecTV alone has rights to that attractive package of out-of-market professional football games.

The Federal Trade Commission approved the Adelphia merger in February without conditions, but that agency has a 3-2 Republican majority. The FCC — evenly divided 2-2 between Republicans and Democrats since March 2005 — has had the cable deal under review for more than 300 days, making it one of the most prolonged pay-TV mergers in recent FCC history.

Last month, FCC chairman Kevin Martin said he has told every company with a pending merger that it could elect to have the FCC process the deal now with four commissioners or wait until a fifth commissioner had been seated.

Comcast chairman and CEO Brian Roberts, at the same press conference with Parsons, indicated that the timing of FCC action on the Adelphia deal was the agency’s prerogative.

“I don’t think it’s really up to us. I think it’s up to the FCC to act when they choose to act,” Roberts said.

After touring the show floor last week, Martin told a reporter he had nothing to report on the deal. FCC Democrat Jonathan Adelstein, also at the show, said he had nothing to say, either.

Adelstein, though, met privately last Monday with Roberts and two other Comcast officials, who reiterated that the Adelphia merger should be approved without regional sports programming conditions, according to an April 11 letter Comcast filed at the FCC.

President Bush has nominated Republican attorney Robert McDowell for the FCC, but Sen. Mary Landrieu (D-La.) is blocking McDowell’s confirmation — and all other non-military and judicial White House nominations — until the White House commits another $6 billion to rebuild Louisiana levees destroyed by Hurricane Katrina.

Parsons said that if McDowell is not confirmed within three or four weeks, Time Warner would need to ask the FCC to proceed with four commissioners.

“We’ll bring it to the FCC before zero hour, which is when the bankruptcy court is ready to act,” he said. “If there is no five, we’ll have to go with four.”

Last fall, the FCC approved SBC Communications Inc.’s merger with AT&T Corp., but it required the new company (now AT&T Inc.) to comply with Internet-nondiscrimination rules for two years. AT&T, also for two years, has to offer digital subscriber line service to consumers on a standalone basis. Verizon was nailed with the same conditions in order to acquire MCI Inc.

Martin didn’t think any conditions were necessary, but facing a politically divided FCC, SBC and Verizon had to accommodate the concerns of Adelstein and FCC Democrat Michael Copps.

'WE’LL TAKE OUR CHANCES’

Asked if Time Warner could accept similar conditions, Parsons said, “We’ll have to take our chances and see what happens.”

On Capitol Hill, Comcast and Time Warner are lobbying to remove Internet nondiscrimination, also called network neutrality, provisions from a telecommunications legislation.

On July 31, Time Warner and Comcast can walk away from the Adelphia deal if has not been approved by the FCC and the bankruptcy judge.

Parsons said he expects the bankruptcy proceedings to end “on or before the drop-dead date.”

Mike Farrell contributed to this report.

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