DOJ Sent Many Data Demands on Comcast-NBCU, Executives Say

The so-called civil investigative demands (CIDs) appear to have been sent out in several batches, and some responses have recently been submitted to DOJ’s Antitrust Division, the executives and lawyers said. That office, with the FCC, is reviewing the multibillion dollar deal (CED June 17 p5). Some recipients said they regard the information demands as excessive because of the detail sought, sometimes down to the ZIP-code level, and the various years covered.

The CIDs went to small and large cable operators, broadcasters, providers of Internet video over set-top boxes known as over-the-top content, and other companies, lawyers and executives said. Those providing information to Justice probably include the three Bells, major cable operators Time Warner Cable and Cablevision and “broadcast/media conglomerates” CBS, Disney, News Corp., Viacom and Time Warner Inc., analysts at Stifel Nicolaus wrote investors Thursday. Some companies with operations where Comcast has no cable systems and NBC Universal no TV stations got CIDs -- surprising recipients who didn’t expect to get them because they don’t view themselves as competing with the companies or being directly affected by the deal, a communications attorney said. “Most of us were kind of surprised by the breadth of companies that were swept in."

About 30 Justice lawyers are assigned to working on the deal, the lawyer said. The staffers, who send the data demands, generally have been amenable to narrowing the scope of the requests or getting information in different electronic formats than the CIDs envisioned, the lawyer and others said. That’s typical for Justice, which works with CID recipients to get their cooperation, said antitrust lawyers not involved in the case. Once the department deems a demand fulfilled, it issues a certificate of compliance, an industry lawyer said. “Our investigation is ongoing, we're looking at the proposed transaction” of Comcast-NBC Universal, said a department spokeswoman. She declined to discuss the examination.

"It costs a lot of money and time” to respond to CIDs, said an executive. “We have to have outside lawyers, notify programmers, send legal letters.” Responding involves going through archived information to produce e-mails and data, he added. That’s “not to say the DOJ isn’t sympathetic to that, but the amount of time, effort and expense has been kind of significant,” the executive said.

Other recipients are companies trying to start businesses using elements of the broadcast or cable business models, a communications attorney said. Some CIDs seek information on a local level and are “incredibly extensive,” he said. Based on what’s been asked, “I suspect they would intend to impose more onerous obligations than have been volunteered so far” by Comcast and NBC Universal. Other industry lawyers and antitrust experts said the CIDs point up areas of interest to Justice but don’t signal whether the department will try to block the deal. Approval by Justice and FCC with conditions has been widely expected (CED Feb 8 p4).

Some companies welcome responding to CIDs, seeing them as an opportunity to discuss a deal that affects them without doing so voluntarily and risking business relationships with the merging companies, some lawyers said. “Plenty of times in antitrust investigations the companies prefer to have a compulsory investigation because then they have to respond,” said an antitrust lawyer who works on communications issues. “Though they don’t like the expense involved, and they can talk with DOJ about narrowing requests, at times it can actually be welcomed."

Justice has much latitude regarding deadlines to reply and the amount of information demanded, similar to how the discovery process works, said Professor Andrew Gavil of Howard University, who teaches antitrust law. The department has much motivation to work with CID recipients to maximize cooperation, he said. “They want to be reasonable. They understand that although they have this authority to compel people to respond, they are going to get more help” when they're cooperative, he said. “In general they are going to try to negotiate."

By limiting CIDs, the department ensures it doesn’t “swamp their own boat with more information than they can handle, or to have to wait too long to get it,” said antitrust lawyer Christopher Kelly of Mayer Brown, not involved in Comcast-NBC Universal. “In general, DOJ doesn’t want to punish CID recipients -- they aren’t a punitive tool.” Documents sought might include paperwork or presentations where new businesses or strategic plans are discussed and the department likely is examining what might come of vertically integrating different businesses, Kelly said. “Competitors are going to have a lot of real-time market information that is going to be tremendously relevant to how the DOJ sizes up the market.”