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Policy

Comcast Merger Gripes Reach a Crescendo

12/13/2010 12:01 AM Eastern

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.

September