Comcast, DoJ May Revisit Part of Consent Decree After Rare Rebuke From Judge

Comcast and Justice can either redo the arbitration provision in the consent decree and then likely get Leon’s okay, or go back to court to try to argue it shouldn’t be changed, said antitrust lawyers who watched the Comcast-NBCUniversal deal. The latter approach might further raise his ire, they said. Spokeswomen for Comcast and DOJ had no comment. The court reporter for Leon said the transcript of the hearing won’t be available until next week.

Judges can decide not to approve a consent decree, and the last time that happened in a high-profile case was in 1994 when Judge Stanley Sporkin of the same court in Washington rejected a DOJ settlement with Microsoft, said antitrust specialists. None could recall any instance when a judge wouldn’t sign off on a consent decree in an acquisition, as Leon reportedly said he was considering. They said that’s probably because Sporkin was reversed by the U.S. Court of Appeals for the D.C. Circuit. “There have been a few instances, one being the Microsoft antitrust case,” said Professor Andrew Gavil of Howard University of consent decree rejections: “And that’s partly why it doesn’t happen very often,” because the D.C. Circuit reversed Sporkin.

Fairness hearings where a jurist hears about the consent decree usually are a pro forma affair, with the government granted great latitude to demonstrate it should be approved, said communications and antitrust lawyers. “The noise in the fairness hearing is not irrelevant, and it actually is significant,” said Gavil. “The judge sort of communicates his discomfort with some provision, and by essence in doing that he’s inviting the parties to fix it,” he continued. “It’s rare that the parties call the court’s bluff, just as it’s rare for a court to throw out the settlement.” Leon is “in essence inviting the parties to make him more comfortable by revising the settlement,” Gavil added.

Comcast and Justice likely will be amenable to changing the consent decree, if that’s what it takes to get Leon’s approval, said an antitrust lawyer who represents companies in other cases. “I can’t believe that they'd insist on their version, if the arbitration appealability was his only sticking point.” The American Antitrust Institute was the sole entity to express concerns about the OVD arbitration terms, according to a filing last month by the U.S. It responded to public comments on the settlement.

If Comcast/NBCUniversal and an OVD can’t reach a deal for the combined company to license its broadcast, cable or film content for distribution, the OVD can ask Justice to submit the dispute to an arbitrator. The arbitrator would engage in “baseball-style arbitration,” where each side makes their best offer and the referee picks one, the U.S. filing to Leon said. The court under the Tunney Act has a role that’s “limited to reviewing the remedy in relationship to the violations that the United States has alleged in its complaint, rather than to” build its own case, the government said. It cited the D.C. Circuit’s Microsoft decision from 1995. In 2004 amendments to the act, the U.S. said that “Congress made clear its intent to preserve the practical benefits of utilizing consent decrees in antitrust enforcement."

At the FCC late Wednesday, Comcast filed a response to Bloomberg’s complaint the cable operator violated terms of the agency’s order approving the NBCUniversal deal. The media company contends the cable operator should put its financial-news channel in adjacent slots to other such networks, including those owned by NBCUniversal, whenever Comcast puts four or more networks in such neighborhoods. Comcast said the condition is meant to apply to the creation of neighborhoods after the NBCUniversal deal was approved by the commission, and that four channels don’t make a neighborhood. “Bloomberg’s Complaint is based on an arbitrary and baseless definition of a news neighborhood,” one that “was neither supplied nor endorsed by the” FCC and is “entirely Bloomberg’s invention,” the cable operator said in docket 11-104 (http://xrl.us/bk3gph). “Four news channels account for only a small fraction of the news channels Comcast carries.” Cable headends carrying Bloomberg TV in major markets have an average of 15.4 to 24.5 news channels, Comcast said.

Bloomberg noted that the FCC expressed concerns on the importance of news not owned by the combined companies, in okaying the deal. “Despite these strongly worded concerns, Comcast is not obeying clearly defined conditions,” Bloomberg government’s affairs head Greg Babyak said in a written statement. “Comcast continues to assert that `now’ does not mean ‘now’ and that their programming neighborhoods are not neighborhoods,” he added of the future-looking versus currently applied definition of that condition. Bloomberg’s confident the FCC members “will enforce this condition, not only because of the critical role of independent programming and especially independent sources of news, but also because the integrity of the merger review process demands it,” Babyak added.

The Media Bureau should send the dispute to an administrative law judge if the bureau doesn’t deny the complaint entirely, Comcast said. The ALJ ought to consider whether there’s an industry standard for news neighborhooding, how many news networks Comcast has on its systems and which other types of channels, and TV stations guaranteed carriage, would need to be moved to make room for Bloomberg TV. “What would be the cost of burdens of such relocations on customers and displaced channels (including the collateral consequences of cascading relocations,” Comcast asked. “The Bureau must separately consider the complex question of any appropriate remedy here, if and when that were to become relevant, because the Condition and Order are ambiguous on key elements of that issue,” the company said. “This large collection of unanswered questions suggests that the Commission never intended to adopt Bloomberg’s broad, open-ended application.”