Charter/TWC/BHN Review Begins; FCC Issues Protective Order Rules
The FCC began review of Charter Communications buying Bright House Networks and Time Warner Cable, adopting protective order rules Friday. The controversial rules were the hurdle to be cleared before the informal 180-day shot clock started. The rules were adopted 3-2 two weeks ago, and Commissioners Mike O'Rielly and Ajit Pai strongly criticized them in dissents released Friday.
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The agency set a Nov. 2 deadline for comments or opposition in docket 15-149 on the proposed $89.1 billion set of deals, with a Nov. 12 deadline for replies. "With the start of the FCC shot clock the official comment phase of the review process begins," Charter said in a statement Friday.
Chairman Tom Wheeler said in August that the shot clock on Charter/TWC/BHN would start after new protective rules were in place (see 1508060055). Those new rules follow a U.S. Court of Appeals for the D.C. Circuit ruling earlier this year that the agency's dealing with video programming confidential information in Comcast's now-abandoned purchase of TWC and of AT&T's now-completed takeover of DirecTV was "substantively and procedurally flawed" (see 1505080053). O'Rielly and Pai also objected to the FCC's similar policy in the Comcast/TWC and AT&T/DirecTV proceedings.
Under the new rules, participants in the proceedings will be able to review competitively sensitive and confidential information submitted by their competitors -- an arrangement that had been criticized by some parties in docket 15-149. "While we are very sensitive to the competitive concerns of parties whose information may be before us, we find that our protective orders are sufficient to protect the confidentiality of even highly competitively sensitive information and that the risk of competitive injury is therefore minimal," the FCC said in its order, likening the process to tariff proceedings, where supporting cost data "historically has been available for public inspection." The law generally has held that petitioners wanting to deny a petition "generally must be afforded access to all information submitted by licensees," the FCC said. "Basic notions of fairness generally require that materials that are available to some participants in the proceeding should be available to all."
The agency waved off fears of competitive harm. It said the protective orders "limit disclosure to counsel and outside experts who are not involved in competitive decision making or involved in a business relationship with the submitting party, and they limit the use of the information to the current proceeding."
NAB has "concerns related to the FCC allowing outside parties to have access to confidential programming contracts," a spokesman said.
The new rules open the door to "innumerable parties, even those not seeking Commission approval of a transaction, [facing] potentially irreparable harm when information they thought would be protected is disclosed," O'Rielly said in dissent. "Sign-in sheets and restricting disclosure to non-decisionmakers will not contain the damage because there is no way for a person who sees such information to 'unremember' it either when engaging with the Commission in future proceedings or in future interactions within the hypercompetitive and sometimes small media and telecommunications business world. It is a wild over-reach that hopefully will be reviewed and rejected by the courts or Congress."
The policy is an FCC-sanctioned back door to giving outside parties a look at confidential programming agreements, as well as a major revision on commission policies on treatment of confidential commercial information in all manner of proceedings, Pai said in his partial dissent. "In order to set the stage for disclosing highly confidential programming contracts to parties with whom programmers must negotiate distribution agreements, the Commission is prepared to inflict a large amount of collateral damage along the way."
The "one bright spot" of the new order is that companies objecting to disclosure of their internal information "will receive basic due process," Pai said, because they can appeal any Media Bureau rejection of objections to the FCC and even bring the matter before a judge before the confidential information will be released. That is the one part of the protective order Pai voted for.