DOJ, FCC Officials Discuss Extent of Their Coordination on Comcast/NBCU
The Justice Department and FCC worked very closely together to review Comcast’s purchase of control in NBCUniversal, approved by the government and completed in January, officials from both agencies said during an American Bar Association webcast Wednesday. They laid out some behind-the-scenes interagency work in reviewing the multibillion-dollar deal, with collaboration that a lawyer for Comcast called “unprecedented.” Justice continues oversight of the joint venture Comcast and NBCUniversal created with former NBCU parent General Electric to house all of their programming assets. There are regular meetings of a committee overseeing Comcast’s compliance with terms of the department’s antitrust settlement with the company. That’s according to committee member and DOJ Antitrust Division attorney Yvette Tarlov.
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Curbs on the deal about online video distributor (OVD) access to programming from the combined companies wasn’t necessary, but the coordinated reviews were “helpful,” said the Comcast lawyer, Arthur Burke of Davis Polk. He and others on the webcast said they were expressing their own opinions only. Much of the event sponsored by the ABA’s Mergers and Acquisitions Committee was devoted to discussing how the FCC order approving the deal, and the DOJ consent decree that was signed by a judge this summer, applied to online programmers.
Some reviewing the transaction were “especially concerned” about the deal’s impact “on nascent competition, or OVDs,” said Tarlov. She half-jokingly said that the government “made up new acronyms in this case” for the likes of Amazon, Netflix and Hulu, the broadcast-TV video website partly owned by Comcast. Under the DOJ’s consent decree, Comcast gave up management rights in that website (CD Jan 19 p1). “Hulu is one of the most well-known OVDs today,” and the DOJ didn’t want Comcast to use the stake in the company that it acquired through NBCUniversal to discriminate against others, Tarlov said.
"We expect” that industry will “let us know” if the combined companies don’t abide by the consent decree, Tarlov said. “OVDs also rely on access to high-speed Internet to deliver their programming to customers,” also subject to conditions, she noted. DOJ General Counsel Bob Kramer, Tarlov and “several other persons who are knowledgeable about the investigation” sit on the complaint committee, she said. “We meet regularly to discuss the joint venture’s compliance” and “we've also met on an ad hoc basis, and will do that as necessary,” Tarlov continued. Programmers can report violations to Justice, because the joint venture can’t take certain retaliatory actions against them, she noted.
"DOJ consulted extensively with the FCC, I think, to ensure that our reviews were coordinated and created remedies that were both complementary and consistent,” Tarlov said: “We had regular meetings with FCC staff,” such as lawyers and economists. There were “multiple joint meetings” with Comcast and GE speaking with “joint teams from both the Department of Justice and the FCC,” Burke said. “That may have been unprecedented -- certainly the extent of it was unprecedented -- and certainly it was helpful in coordinating the process."
"We set the standard for how two agencies could work together, as opposed to other transactions I had heard about,” said former FCC Chief Economist Jonathan Baker. The review occurred “without imposing great costs on the parties or delaying the process or providing inconsistent relief,” he said. “We were able to do that notwithstanding” the coordinated review, and “that we have complementary expertise and that we also have different legal standards,” he said. The law professor at American University was named in June a senior economist for the commission to work on the agency’s reviews of AT&T’s plan to buy T-Mobile and the first company’s plan to buy spectrum from Qualcomm. DOJ has sued to block AT&T/T-Mobile.
Questions for DOJ and Comcast about the consent decree by the U.S. District Court judge overseeing the case, who last month approved the settlement, weren’t unexpected, Burke said in response to our question. “There are some things about this decree, as well as its interplay with the FCC order, that are relatively novel or complicated,” he said. “So it’s not surprising the judge would have some questions about how the process works,” he said of Richard Leon. Tarlov reiterated that DOJ expects most OVD requests for mediation of programming licensing disputes would go to the commission, not her agency.
OVDs “don’t really resemble traditional cable or satellite companies” because they're “heterogeneous and pursue different business models,” Burke said. Given the low percentage of TV revenue that NBCUniversal accounts for and its “relatively small market share, there was plenty of other content that an OVD could get to be successful,” he said. “Comcast, as the largest high-speed Internet [provider], was very incentivized to encourage the consumption of online video,” he said. Terms of a consent decree in AOL’s purchase a decade ago of Time Warner lasted five years, versus seven for Comcast/NBCUniversal, “so obviously we'd prefer something shorter,” Burke said: “But the company is committed to compliance.”