FCC, DOJ Seen Cooperating On Comcast-NBCU Review Information
The FCC and Justice Department likely will soon begin working out ways to cooperate on sharing information given to them by Comcast and NBC Universal as part of those companies’ merger of cable and broadcast networks, government and industry officials predicted. DOJ said earlier this month that it, not the FTC, will review Comcast’s agreement to buy control of NBC Universal (CD Jan 8 p6). The agencies are expected by the companies and observers to take a year to review the transaction before approving it (CD Dec 14 p2).
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Comcast still is expected by commission and industry officials to apply for FCC approval later this month, probably between Jan. 22 and 29. Comcast expects to request DOJ approval of the deal “very soon,” said a company spokeswoman. A spokesman for NBC Universal didn’t reply to a message seeking comment. Filing applications with those agencies will start a process in which they'll both need to work closely together to share information -- especially confidential documents filed by the companies with DOJ, commission and industry officials said.
With no application yet before the agencies, staff work on such efforts doesn’t appear to have been completed yet, commission officials said. That’s typical, they said. At the FCC, the Media Bureau’s Industry Analysis Division and Office of General Counsel’s transaction team will spearhead the deal’s review, a commission official said. There are plenty of previous deals where the two agencies worked together to serve as a guide for cooperation in the Comcast and NBC Universal transaction, the person said. DOJ and FCC spokeswomen declined to comment.
“This is really a big umbrella over everything else that the FCC, DOJ and Congress are tackling this year,” said analyst Scott Sleek of Pike & Fischer. “Everybody is expecting this to bleed into everything else -- pretty much every other telecom policy issue -- including net neutrality and the broadband plan and the quadrennial review of media ownership rules.” For antitrust review, “I think there will be a lot of focus on the control of programming” both for traditional channels and online content, Sleek added.
“The deal merger is going to get approved by DOJ,” predicted antitrust specialist Michael Hazzard, an attorney at Arent Fox. “The only question is ‘degree of difficulty,’ and that’s going to depend on market definition. A broad market definition will get the merger done relatively quickly and relatively inexpensively. A narrow market definition will make obtaining approval very time consuming and very expensive. The FCC will approve it too, but I suspect we will see some conditions that may relate to the ‘open Internet’ -- formerly known as net neutrality -- program access, and perhaps, broadband deployment.”
It’s assumed that DOJ will make both a first and second request for information from the merging companies, so the deal won’t be allowed to occur during the Hart-Scott-Rodino waiting period, a media-industry executive not involved in the transaction said. After Comcast and NBC Universal make their initial filing, the department has 30 days to issue a second request for information, said antitrust attorney Christopher Kelly of Mayer Brown. “It’s extremely likely that DOJ will do so, given the magnitude and prominence of the deal and the difficult and -- to DOJ, anyway -- interesting competitive issues the deal poses,” he added. “Compliance with a second request in a deal like this could easily take two or three months.”
After antitrust review begins, DOJ has a series of loose deadlines to meet, said George Hay, a professor of antitrust law at Cornell University. “There are time limits on the process, but in fact they're pretty plastic when it comes to a transaction like this.” After the companies file the initial Hart Scott Rodino paperwork, the DOJ has 30 days to decide whether it wants more information and make what’s known as a second request, he said. “There’s a clock, but the clock only begins to tick again after the parties have complied with the second request, and that can take months.”
If the government decides it needs more time to complete the review, companies typically allow it, Hay said. “It’s not at all uncommon for the government to say, ‘We really need more time, and if you want to have any chance of this to get through, we're going to have a little more time.’ And the parties will almost inevitably accede to that request.”
The DOJ’s review of mergers is typically apolitical as professional staff do most of the work, said Luke Froeb, former chief economist for the FTC and now professor at Vanderbilt’s Owen School of Management. DOJ staff will produce a lawyer’s memo and an economist’s memo on the deal, he said. “The attorney memo will say ’the merger is anticompetitive or not anticompetitive for these reasons and if we go to court, this is how the case would look.'” The economists’ memo doesn’t address the legal implications but looks at how the merger will affect consumers, he said. “Those memos go up the chain of command to the chief economist an the chief attorney who are political appointees, and then the assistant attorney general will decide.”
At that point, top DOJ officials rarely overturn their staff, Froeb said. “It’s unusual for the management or the political appointees who are at the top of the antitrust division to go against their staff,” he said. When they do, “it carries a bit of a cost, in terms of reputation.”