Washington — Who's going to win a headline war, Comcast Corp. or patriotic-sounding The America Channel?
The answer comes out in a few months, after the federal government finishes scrubbing the $17.6 billion takeover of bankrupt Adelphia Communications Corp. by Comcast and Time Warner Inc.
Whenever a big cable merger needs to get through the regulatory gauntlet, marketplace disputes have a way of rising up and becoming matters that, at least to cable critics, must be resolved before the deal can be approved.
The Adelphia merger is no different as The America Channel (TAC), DirecTV Inc., EchoStar Communications Corp. and an array of public-interest groups have asked the Federal Communications Commission to apply conditions to the deal. Federal Trade Commission approval is also required.
Florida-based TAC has been bargaining for carriage with Comcast for months, but Comcast has refused to sign a deal. A startup that has yet to launch on any pay TV platform, TAC is promising “family-friendly cable programming that celebrates America, its communities, unsung heroes and ordinary people who accomplish the extraordinary.”
TAC insists that without a Comcast carriage deal, it can't make it in the business. Failure to reach a carriage deal has prompted TAC to hurl all kinds of accusations at Comcast, chief among that the No. 1 MSO, with 21.5 million subscribers, discriminates against independent programmers with novel ideas because those networks represent a threat to Comcast's business model.
In a July 21 letter to TAC, Comcast senior vice president and general counsel Arthur Block said claims of discrimination were bogus and Comcast was prepared to defend itself at the FCC.
“Today, there are about 70 million [pay TV] households that Comcast does not serve. Surely, you cannot blame Comcast for the America Channel's inability to obtain carriage on the [pay TV providers] that serve those households!” Block wrote to TAC legal advisor Kathleen M.H. Wallman, a top lawyer in the Clinton White House.
This week, TAC is planning to file documents with the FCC intended to show that Comcast has a pattern and practice of providing carriage terms and conditions to affiliated networks that are seldom doled out to independent programmers. TAC is expected to say that Comcast affiliates not only get carriage commitments but also land spots on widely penetrated analog tiers.
Comcast was expecting that the merger would involve a public relations hiccup or two. In a statement, the company did not issue a point-by-point rebuttal to TAC.
“Consumers will benefit from these transactions because they accelerate the deployment of advanced broadband services such as video on demand, high-speed Internet and voice services. Enhancing our market position will further our ability to provide high-quality customer service, introduce technological innovations and increase competition for voice services,” a Comcast spokesman said.
Meanwhile, DirecTV is demanding guaranteed access to regional sports networks to ensure that Comcast and Time Warner can't obtain exclusive rights.
The satellite-TV provider said Comcast and Time Warner plan to build massive clusters designed to give the MSOs the leverage to control the distribution of regional sports nets.
In that context, DirecTV said the FCC should bar Comcast from withholding Comcast SportsNet in Philadelphia. DirecTV also called for creation an arbitration process when talks over sports channels break down.
DirecTV noted that the cable merger conditions it is supporting are similar to the conditions the FCC imposed on News Corp.'s takeover of DirecTV in late 2003.
The public-interest groups demanded several conditions from the FCC if the merger were not denied, including application of federal program-access rules to cable video-on-demand content and a requirement that the MSOs provide consumers with multiple Internet-access providers or adhere to network-neutrality rules with regard to Internet-content providers.
Media Access Project, a public-interest law firm, filed on behalf of the groups. MAP's clients are: Free Press, Center for Creative Voices in Media, Office of Communication of the United Church of Christ Inc., U.S. Public Interest Research Group, Center for Digital Democracy, CCTV, Center for Media & Democracy, Media Alliance, National Hispanic Media Coalition, The Benton Foundation and Reclaim the Media.