ACA Unveils NBCU Conditions

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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