It’s no secret that media companies are pretty worried about the repercussions of letting Comcast and Time Warner Cable merge. But what is a big secret are the agreements that those companies have with Comcast and TWC right now. They’re so secret, in fact, that networks are refusing to share any data with the FCC because they’re afraid their rivals might benefit from it. And that’s a problem, because without that data, the FCC is missing one of the key tools it should have in its toolbox as it evaluates the merger.
The FCC has been asking companies to share contract and negotiation information to help them make an informed decision about the merger, but the networks so far aren’t budging, the Wall Street Journal reports.
The Comcast/TWC deal would give the combined company extraordinary reach around the nation, which in turn would give it both the ability and the incentive to behave in shady, perhaps even extortionate ways with suppliers.
In this case, the suppliers are cable content companies and broadcast networks, like CBS, Fox, Disney, Discovery, Viacom, and Time Warner (not TWC but the other, HBO-and-CNN-owning one). Those companies have expressed strong concerns about their ability to conduct business in good faith (and at reasonable rates) with the impending cable Voltron.
The discussion has essentially descended into name-calling. In an FCC filing, Comcast accused media companies of attempted extortion; several of those companies shot back that Comcast’s tactic of trying to intimidate opposition is “troubling.”
The FCC is tasked with trying to decouple reality from rhetoric, and theoretically acting on the former. In order to evaluate Comcast’s negotiating tactics, the FCC needs to be able to take a look at those negotiations. The Commission can’t determine if Comcast’s behavior is harmful and anticompetitive, or just aggressive and profit-driven, without any actual evidence. And the content companies are deeply unwilling to let the FCC have a look.
Carriage negotiations, and the contracts programming distributors sign with the networks, are as top-secret as anything in the media world gets. We have rough understandings of these deals — research firms, for example, are able to conclude with reasonable accuracy that ESPN costs cable companies about $6 per subscriber per month — but the actual details are kept firmly under wraps.
FCC filings frequently have “confidential” and “highly confidential” information redacted for public viewing, but under the Commission’s current proposal, any relevant third party that has signed the appropriate nondisclosure agreement can view the originals — with all that highly sensitive information intact.
Although to some small degree the content companies may be willing to roll with the mindset that “the enemy of my enemy is my friend” as they stand against Comcast, the fact is that they are all deeply in competition with each other. The concern, therefore, is that if Network A submits their contract and negotiation documents, that rival networks B through Q can read them and learn all that top-secret information.
The WSJ reports that the media companies suggested an alternative strategy, used earlier in the Comcast/NBCU merger. In that case, the Justice Department, currently reviewing the merger for antitrust concerns, would have all of the information and the FCC could access it from there. However, because of the way the FCC merger review process works, it’s not clear whether the Commission would be permitted to take that non-public information into account.
In the end, the broadcasters may just be shooting themselves in the collective foot. They want concessions and guarantees of future good behavior from Comcast, but the FCC can’t help them without information and it’s up to them to give the FCC that information. If they can’t or won’t demonstrate the ways that Comcast throws its clout around, then the FCC may have to assume that all is well.
FCC Asks Media Firms for Details of Comcast Contracts [Wall Street Journal]
by Kate Cox via Consumerist
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