Caveat in Notice Signals More Transparent Comcast-NBCU Review

An unusual caveat in a notice formally starting FCC review of Comcast’s purchase of control of NBC Universal signals the agency is trying to be more transparent and efficient, antitrust experts and cable lawyers said. All issues with the deal should be flagged in initial filings, said an agency public notice released Thursday. The regulator has tried to take such a stance before, but hasn’t spelled it out formally, those who reviewed the notice said.

The notice sets up a process that should be more efficient for staffers reviewing the transaction, the parties to it and opponents, by discouraging people from proposing conditions or other changes to the deal at the last minute, antitrust and industry lawyers said. It essentially forces everyone to make their case in written comments, which are due May 3, and not in subsequent lobbying meetings, they said. Responses to comments and oppositions to petitions are due June 2, replies June 17.

"To allow the Commission to consider fully all substantive issues regarding the Application in as timely and efficient a manner as possible, petitioners and commenters should raise all issues in their initial filings,” a boldfaced portion of the notice said. It’s page 5 at http://xrl.us/bgy476. “A party or interested person seeking to raise a new issue after the pleading cycle has closed must show good cause why it was not possible for it to have raised the issue previously,” the document said. “Submissions after the pleading cycle has closed that seek to raise new issues based on new facts or newly discovered facts should be filed within 15 days after such facts are discovered. Absent such a showing of good cause, any issues not timely raised may be disregarded by the Commission."

The document purports to operate in a different way than the commission has with some previous reviews of major transactions, communication attorneys said. They and commission and industry officials said such wording in a public notice is rare and couldn’t recall any recent examples. This “is the start of a process we expect to last several months,” a Comcast spokeswoman said. “This now begins the formal FCC process and review.” A Media Bureau spokeswoman declined to comment.

Deal curbs and “all kinds of other facts and concerns” have been brought up late in other FCC merger reviews, said lawyer Paul Feldman of Fletcher Heald, which represents subscription-video providers not involved in the deal. “The interesting question will be does the commission decide to apply this approach more broadly to rulemaking proceedings.” The wording of the notice seems aimed at increasing transparency, said an industry executive. In some past transaction reviews, “there’s a sense that people held things back,” thinking “'I'm really going to fire away once we get to the ex parte-type discussions,” said antitrust expert Michael Hazzard of Arent Fox. “If you can really set the parameters of the proceeding through the comment and reply cycle ... then the ex parte process just becomes kind of a winnowing down.” It’s “positive for the industry,” the merging companies and opponents alike, he said.

It’s “unusual in that that’s how the process is supposed to work all the time and I think what the commission is doing here is reminding everybody is that’s how its supposed to work,” said cable lawyer Steve Effros, not involved in the proceeding. “This seems to me goes right along with the efforts that they've engaged in with the broadband plan to explain the rules to everybody, `yes, we want transparency, but we also want substantive comments but we also want them on time so the process doesn’t overtake the decision.’ If this is what it sounds like, they could have said it in any proceeding, the fact that they did it in NBCU-Comcast just makes it high profile.” The language seems to address “criticisms that too much of substance has happened in ex parte presentations and that merger reviews take too long,” said Professor James Speta of Northwestern University, who teaches antitrust law. “There’s been a lot of commentary and a fair bit of criticism at the length, extent and nature of the ex parte process in which very important issues are raised and dealt with in ex parte presentations as opposed to in the comment process directly."

The commission’s transaction review team is believed to be continuing its early-on review of the deal, and executives from the merging companies haven’t recently visited the eighth floor, said an agency official. The staffers and those from the Justice Department are closely cooperating on the deal’s review, said a media industry executive. Justice has asked Comcast and NBC Universal for additional information on the transaction, as is typical in such reviews. Issuance of the commission notice began after Comcast, NBC Universal and General Electric, NBCU’s parent, submitted an economic analysis of the deal, a version with proprietary parts blacked out which was made public this week, an agency official said.

"Examination of the available evidence supports the conclusion that the proposed Comcast/NBCU/GE joint venture does not pose a significant threat of foreclosure,” wrote economists Mark Israel and Michael Katz. “Application of the Commission staff model, together with a comprehensive analysis that takes into account factors not readily captured by a narrow application of that model, supports the conclusion that foreclosure by withholding retransmission rights to NBC broadcast stations’ signals is very unlikely.”