PATTON B066SllP
ATTGRMlYS AT LAW
June 24, 2010
VIA HAND DELIVERY
Ms. Marlene H. Dortch
Secretary
Federal Communications Commission
445 Twelfth Street, S.W.
Washington, DC 20554
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Re: REDACTED - FOR PUBLIC INSPECTION
III Ihe Maller olAppliealiom olComeasl CO/poralioll, Gel/eral Elalrie Company alld NBC (In;l,erJal,
1l1c.for COIIJelil 10AJJ~RIIU"nJeJ or Transfer COlilrol olLjwlmJ, MB Docket No. 10-56
Dear Ms. Dortch:
On behalf of Bloomberg, L.P., and in accordance with the First and Second Protective
Orders adopted in this proceeding, please find enclosed and original and two copies of the
Bloomberg, L.P.'s Erratum to Petition to Deny and Exhibit 4, redacted for public inspection.
Highly Confidential and Confidential versions of Bloomberg, L.P.'s Erratum to Petition to Deny
and Lxhibit 4 are being filed simultaneously with the Office of the Secretary under separate
cover.
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PATTON BOGGSllP
.II0RHYS Al lU
Ms. Marlcnc H. Dortch
June 24, 2010
Page 2
Two copies of each the Highly Confidential version and Confidential version of the
Bloomberg Erratum to Petition to Deny and Exhibit 4 are being simultaneously delivered to
Vanessa I-,cmme, Industry Analysis Division, i\fedil Bureau, Federal Commurucations
Commission, 445 12th Street, S.W., Washington, D.C. 20554, and a Highly Confidential version
is being~entto the Submitting Parties through counsel.
Very truly yours,
ClJllflJ/:ljor Bloom/JeT?,. L. P.
Enclosure:"
SDC;:rea
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Before the ' o,omrnunlco'l
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FEDERAL COMMUNICATIONS COMMISSION ceoflheS.cr",onll";SSlOIl
qarv
Washington, D.C. 20554 .
In the Matter of
Applications for Consent to the
Transfer of Control of Licenses
General Electric Company.
Transferor,
To
Comcast Corporation,
Transferee
To: The Commission:
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ORIGINAL
Docket No. MB 10-56
ERRATUM TO PETITION TO DENY
BLOOMBERG, L.P. ("Bloomberg"), hereby submits this Erratum to correct
typographical and grammatical errors in its Petition to Deny submitted on June 21, 2010 in the
above-referenced proceeding. The specific corrections are set forth below and in the attached,
corrected Petition to Deny:
I. In the first paragraph of the Executive Summary, Bloomberg removed the
footnote at the end of the second sentence and added the citation to the end of the second
sentence, to read as follows:
GE and Comcast have not met their burden to demonstrate that the application
serves the public interest. 47 V.S.c. § 31O(d).
2. In the first paragraph of the Executive Summary, Bloomberg removed the word
"tier" from the third sentence, to read as follows:
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In the alternative, if the Commission determines to grant the application, it must
require Comcast's acceptance of the conditions set forth in Exhibit I to the
Petition, specifically including but not limited to "neighborhooding" of all
existing business news channels with CNBC, i.e., carriage of the business news
channels on contiguous and adjacent channels wherever tier CNBC is carried. In
the absence of the imposition of such conditions, the Commission would have to
compel the divesture of CNBC if it were to grant the Application.
3. In the second paragraph of the Executive Summary, Bloomberg added to word
"is" to the first sentence, to read as follows:
Bloomberg's television news service, Bloomberg TV®, an internationally
recognized provider of financial news and information, provides 24-hour business
news programming delivered over MVPDs, but is also available online.
4. In the second paragraph of the Executive Summary, Bloomberg removed the
comma between "March" and "2008" in the second sentence, to read as follows:
Comcast will have every incentive available to harm and discriminate against
BTV to protect CNBC, which is estimated to be the second most profitable of
NBC's cable networks, with an estimated profit of $333 million as of March.
2008.
5. In the fifth paragraph of the Executive Summary, Bloomberg added the words "a"
and "do" in the second sentence, to read as follows:
The public interest objectives considered for cable systems in the context of a
review of an application like this Merger specifically include (i) ensuring cable
operators or a group of operators do not impede the free flow of video
programming to the consumer, including news programming, and (ii) cable
operators affiliated with video programmers do not favor such programmers in
determining carriage on their cable systems.
6. In the sixth paragraph of the Executive Summary, Bloomberg removed the words
"bundling of' in the fourth sentence, to read as follows:
In addition, Bloomberg would also be harmed by Corneas!'s ability to bundle both
programming in its negotiations with other MVPDs, which could result in
decisions by other MVPDs not to carry BTV, as well as advertising that would
harm BTV's ability to compete in the sale of advertising aimed at the audience
shared with CNBC.
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7. In the seventh paragraph of the Executive Summary, Bloomberg corrected the
spelling of "MVPD" and added the word "the" to the fifth condition, to read as follows:
Comcast would be prohibited from offering any discount or other inducement to
any MPVPD or other distributor of news content by electronic means on the
condition that such MVPD or distributor provide business news channels less
favorable terms or conditions of carriage.
8. In the first full paragraph on page 3, Bloomberg changed the double quotes to
single quotes in the last sentence, to read as follows:
Indeed, Comcast CEO Brian Roberts has been recently quoted as saying that
"NBC News is the 'single most awesome asset that comes from this deal.'"
9. In the first full paragraph on page 4, Bloomberg added the word "the" to the first
sentence, to read as follows:
The creation of such a combination runs directly contrary to decades of
communications law and policy founded on the principle that the public interest is
served by "the widest possible dissemination of information from diverse and
antagonistic sources."
10. In the second full paragraph on page 4, Bloomberg added the word "of' to the
third sentence, to read as follows:
The vertical integration, complete with the incentive for Comcast to cause
substantial harm to BTV, of CNBC's principal competitor, would threaten the
elimination of the last independent news voice.
11. In the first full paragraph on page 5, Bloomberg replaced "Bloomberg TV" with
"BTV" to the first sentence, to read as follows:
BTV is wholly owned by Bloomberg L.P., an internationally recognized provider
of financial news and information.
12. In the first full paragraph on page 5, Bloomberg added the word "is" to the second
sentence, to read as follows:
BTV provides 24-hour business news programming delivered over MVPDs, but is
also available online.
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13. In the first paragraph on page 6, Bloomberg replaced "multichannel video
programming distributor" with "MVPD" to the third sentence, to read as follows:
BTY is the principal U.S. news and information channel that is not affiliated with
a multichannel network owner, MYPD or other national producer of video
programming.
14. In the first paragraph on page 7, Bloomberg added the word "the" to the tirst full
sentence, to read as follows:
When neighborhooded with CNBC, the hours BTY is watched per week increases
[[_n,relative to average hours watched.
15. [n the last paragraph on page 7, Bloomberg removed the letter "s" from the last
sentence, to read as follows:
These international programs enjoy widespread success. Bloomberg has received
numerous awards for BTY.
16. In the last paragraph on page 9, Bloomberg changed the Exhibit reference to "3"
in the last sentence, to read as follows:
The attached economic report by Dr. Leslie Marx, formerly Chief Economist at
the Commission, concludes that CNBC and BTY are substitutes for one another.
See Exhibit 3.
[7. In the first paragraph on page 13, Bloomberg changed the Exhibit reference to "2"
and added the word "and" to the first full sentence, to read as follows:
Alternatively, the Commission could allay the harm through the imposition of the
conditions proposed in Exhibit 2, specifically including restrictions on the ability
of Comcast to place BTY on channel positions far from Comcast's own CNBC,
restrictions on carriage termination, streamlined resolution of subscriber fee
disputes, restrictions on anti-competitive practices involving sales of bundled
programming and bundled advertising time, and restrictions on degrading,
impeding or discouraging content distribution via the Internet.
18. In heading to the first full paragraph on page 19, Bloomberg changed the
capitalization of the heading, to read as follows:
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There is a long history of federal policy favoring diverse sources of news and
information.
19. In the first paragraph on page 21, Bloomberg changed "BTV" to "Bloomberg" in
the first full sentence, to read as follows:
Bloomberg submits that a continuation of this trend is not in the public interest;
the Commission must ensure that independent news outlets survive and will not
be further harmed by Commission action, including approval of the Transaction.
20. In the second fu II paragraph on page 22, Bloomberg changed "FCC" to
"Commission" in the first sentence, to read as follows:
Competition in the provision of service to the public has long been a central goal
of communications policy. Since its establishment in 1934, the Commission has
been charged with guarding against anti-competitive practices
21. In the first full paragraph on page 25, Bloomberg changed the close quotation
mark reference to an open quotation mark in the first sentence, to read as follows:
As demonstrated in the "Economic Report on the Proposed Comcast NBC
Uni versal Transaction," authored by Dr. Leslie Marx, former Chief Economist of
the FCC (Exhibit 3), the Transaction will result in significant competitive harms
to independent news programming that raise substantial and material questions of
fact as to whether the Transaction is in the public interest.
22. In the first full paragraph on page 27, Bloomberg changed the word "over" to "a
greater than" in the first sentence, to read as follows:
Moreover, Comcast has a greater than over 50% market share of cable
distribution in the top ten major markets, where sophisticated business news
consumers are most densely concentrated.
23. In the second full paragraph on page 28, Bloomberg added the word "the" to the
third sentence, to read as follows:
In her report, Dr. Marx concludes that BTV and CNBC compete in the business
news market.
24. In footnotes on page 32, Bloomberg added the word "at" to footnote 103, to read
as follows:
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Marx Report Appendix at 23.
25. In the third paragraph on page 38, Bloomberg added a hyphen between
"Comcast" and "NBCU" to the first sentence, to read as foHows:
The Marx Report documents both short- and long-term benefits of foreclosure. In
the short term, Comcast-NBCU will increase viewers and advertising revenue for
CNBC without competition from BTV.
26. In the second fuJI paragraph on page 46, Bloomberg removed a space and added a
semicolon to the first sentence, to read as follows:
In order to avoid this result, the Commission should adopt remedies that
I) prohibit Comcast-NBCU from selling advertising on non-Comcast-owned
business news channels together with advertising on Comcast networks as part of
a bundled sale of advertising by Comcast; 2) prohibit Comcast-NBCU from
offering discounts or other inducements to advertisers that are tied directly or
indirectly to reducing or refraining from advertising purchases on any business
news channel other than CNBC or any other similar Comcast-NBCU-owned
business news channel; and 3) prohibit Comcast-NBCU from offering discounts
or other inducements for bundled advertising purchases that include advertising
on CNBC or other Comcast-NBCU-owned business news channel.
27. In the second full paragraph on page 51, Bloomberg made the word "help" plural
in the first sentence, to read as follows:
Diversity of ownership helps ensure that the public receives unbiased information
in order to participate in the democratic process.
28. In the heading to the first fuH paragraph on page 58. Bloomberg removed the
phrase "IF IT GRANTS THE MERGER APPLICATIONS" from the heading, to read as follows:
IF THE COMMISSION GRANTS THE APPLICATION, IT MUST IMPOSE
CONDITIONS TO PROTECT THE PUBLIC INTEREST.
29. In the heading to the first paragraph on page 61, Bloomberg changed the
capitalization, to read as foHows:
Bloomberg's remedies are a reasonable response to the competitive harm posed
by Comcast's control over the competitor with an 85% share of the business news
market
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30. In the first paragraph on page 62, Bloomberg changed "requirement" to
"requiring" and the capitalization of business news channels in the first sentence, to read as
follows:
Requiring of carriage of particular channels, in this case the business news
channels. in the interest of preservation of diverse, independent sources of news
and information programming is hardly unprecedented.
31. In the first paragraph on page 62, Bloomberg relocated a comma in the second
sentence, to read as follows:
Although the "must carry" rules applied to over-the-air broadcast stations, in
ordering cable systems to carry the local broadcast signals, as well as provide
carriage of leased access stations, Congress specifically intended to "assure the
widest possible diversity of information sources are made available to the public."
32. In the third sentence on page 62, Bloomberg deleted a comma after footnote 164
and inserted a comma before footnote 164, to read as follows.
Moreover, when it imposed the "must carry" obligation, Congress went further
and required placement of channels on the same position as broadcast over-the
air,IM demonstrating that Congress recognized channel placement as a similarly
important objective.
33. In the last full sentence on page 62, Bloomberg deleted a comma after footnote
167 and inserted a comma before footnote 167, to read as follows.
The Commission, in addition to imposing this requirement on cable MVPDs, has
also determined to apply this to DBS operators, 167 with no significant difficulties
encountered by either type of MVPD.
34. In the second full paragraph on page 63, Bloomberg changed the words "Business
News Channels" to "business news channels" in the last sentence, to read as follows:
Taking the next step of carriage that involves neighborhooding, specifically
including the requirement that Comcast carry the Business News Channels on all
tiers where CNBC is carried, is a reasonable way of preventing the competitive
harm that Comcast has the incentive to cause to the business news channels.
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35. In the first full paragraph on page 67, Bloomberg changed the word "internet" to
"Internet" in the second sentence to read as follows:
For BTV, which makes its content available via television and the Internet,
Comcast's proposed "TV Everywhere" could result in BTV being forced to
decide between carriage on Comcast's systems and continuing to provide its
highly valued content to its customers via the internet.
36. In the first full paragraph on page 69, Bloomberg changed the words "from
selling" to "the sale of' in the first sentence, to read as follows:
Accordingly, the Commission should prohibit the sale of advertising on non
Comcast owned Business News Channels such as BTV together with advertising
on affiliated Comcast networks as part of a bundled sale of advertising by
Comcast without the consent of the competing Business News Channel.
37. In the first full paragraph on page 71, Bloomberg deleted the word "or" in the
second sentence, to read as follows:
The Commission must deny the Merger as presently proposed.
38. In the first full paragraph on page 71, Bloomberg inserted the word "so" in the
third sentence, to read as follows:
In the alternative, if it determines to grant the Application it can only do so with
the imposition of the conditions set forth in Exhibit 2 to prevent the anti
competitive harm to BTV, the last independent source of news.
39. In the Summary of Results section in Exhibit 4, Bloomberg corrected I)a. to
ret1ect the changes in the respective chart by replacing "Over" with "Approximately", to read as
follows:
I) Baltimore, MD
a. Approximately 120 channels changed on 8/25/2008
40. In the Summary of Results section in Exhibit 4, Bloomberg corrected a
typographical error in 3)b. by replacing "2008-2003" with "2003-2008," to read as follows:
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2) Chicago, IL
a. More than 60 channels changed on 5/14/2003
b. Small adjustments made throughout 2003-2008 (None after 2(08)
41. In the Summary of Results section in Exhibit 4, Bloomberg corrected 4)a. to
reflect the changes in the respective chart by replacing the phrase, "(5 times in past 5 years)"
with "(3 times in past year)," to read as follows:
4) Denver, CO
a. Changes only made on specific dates (3 times in past year)
42. In the Summary of Results section in Exhibit 4, Bloomberg corrected 6)a. to
reflect the changes in the respective chart by replacing the word, "Five" with "Three," to read as
follows:
6) Miami-Ft. Lauderdale, FL
a. Three instances where more than 30 channels were changed over the past six
years
43. In the Summary of Results section in Exhibit 4, Bloomberg corrected 7)a.i. to
reflect the changes in the respective chart by replacing the word, "more" with "nearly," to read as
follows:
7) New York Market
a. New York Section
i. On June 2, 2010, nearly 60 channels were changed
44. In the Summary of Results section in Exhibit 4, Bloomberg corrected 7)d.i. to
reflect the changes in the respective chart by replacing the word, "Six" with "Five," to read as
follows:
d. New Jersey Part 4
i. Five instances of more than 50 channels being changed in the past 8 years
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June 24, 2010
5103423JJ1
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Respectfully submitted,
.d~dg~hat
~DIazGavm
Kevin J. Martin
Janet Fitzpatrick Moran
Carly T. Didden
Patton Boggs LLP
2550 M St., NW
Washington, DC 20037
(202) 457-6000
REDACTED FOR PUBLIC INSPECTION
General Electric Company,
Transferor,
Applications for Consent to the
Transfer of Control of Licenses
Comcast Corporation,
Transferee
To the Commission:
Docket No. MB 10-56
Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
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To
In the Matter of
PETITION TO DENY
Stephen Dfaz Gavin
Kevin J. Martin
Janet Fitzpatrick Moran
Patton Boggs LLP
2550 M St., NW
Washington, DC 20037
(202) 457-6000
510330702
REDACTED FOR PUBLIC INSPECTION
EXECUTIVE SUMMARY
Bloomberg L.P. ("Bloomberg") submits that the Commission should deny the application
for transfer of control of NBC Universal, Inc. ("NBCU") from General Electric Company
("GE") to Comcast Corporation ("Comcast"). GE and Comcast have not met their burden to
demonstrate that the application serves the public interest. 47 U.S.c. § 310(d). For the reasons
set forth herein, the Commission must deny the Application as filed. In the alternative, if the
Commission determines to grant the application, it must require Comcasl's acceptance of the
conditions set forth in Exhibit I to the Petition, specifically including but not limited to
"neighborhooding" of all existing business news channels with CNBC, i.e., carriage of the
business news channels on contiguous and adjacent channels wherever CNBC is carried. In the
absence of the imposition of such conditions, the Commission would have to compel the
divesture of CNBC if it were to grant the Application.
The Merger, as filed with the Commission, will create a fully vertically and horizontally
integrated communications behemoth that for the first time in the history of the regulation of the
communications industry, will combine under the control of one entity - Corncast -the Nation's
largest multichannel video programming distributor ("MVPO") with 24 million subscribers, two
national television broadcast networks (NBC and the Telemundo Spanish-language network), the
largest broadband service provider, 25 local broadcast stations, numerous cable television
programming networks owned by Comcast (e.g., E! and the Golf Channel) with those of NBC
Universal (e.g., CNBC and the Weather Channel), Universal movie studios and numerous on
line properties.
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Bloomberg's television news service, Bloomberg TV®, an internationally recognized
provider of financial news and information, provides 24-hour business news programming
delivered over MVPDs, but is also available online. Bloomberg employs more than 2300
reporters and editors worldwide, making it among the largest newsgathering organizations in the
world. BTV is the last major source of news independent of either MVPDs or integrated
programmers.
The competitive threat posed by the combination of the Nation's largest MVPD with
CNBC, BTV's principal competitor, and which currently has 85% of the business news market
audience, could not be more apparent: Comcast will have every incentive available to harm and
discriminate against BTV to protect CNBC, which is estimated to be the second most profitable
of NBC's cable networks, with an estimated profit of $333 million as of March 2008.
The Commission has the authority and a duty under the public interest standard to
preserve independent sources of news and information. Promoting diversity of voices in news is
a critical element of the public interest analysis. The public interest objectives considered for
cable systems in the context of a review of an application like this Merger specifically include
(i) ensuring cable operators or a group of operators do not impede the free flow of video
programming to the consumer, including news programming, and (ii) cable operators affiliated
with video programmers do not favor such programmers in detennining carriage on their cable
systems. Such considerations merit special review of the Application because of the potential for
Comcast to cause harm and discriminate agajnst BTV.
As set forth in the Petition and the accompanying Economic Report of Dr. Leslie Marx,
the transaction as proposed would adversely affect Bloomberg by giving Comcast the incentive
11
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and ability to prefer CNBC in channel position and to exclude unaftiliated programmers like
BTV from channel positions close to CNBC In addition, Comcast would have the incentive and
ability to require competitors of CNBC to be carried on less widely subscribed tiers or to refuse
to carry BTV and other competitors all together. Further, the Merger increases the ability and
incentive of Comcast, a major Internet provider and one which has already demonstrated its
ability to restrict or degrade service, to place restrictions on the online distribution of network
programming as a condition of carriage. In addition, Bloomberg would also be harmed by
Comcast's ability to bundle both programming in its negotiations with other MVPDs, which
could result in decisions by other MVPDs not to carry BTV, as well as advertising that would
harm BTV's ability to compete in the sale of advertising aimed at the audience shared with
CNBC
In the event that the Commission were to grant the Application, the harm can only be
alleviated by the imposition of strict conditions on the merger:
1. Comcast must "neighborhood" all existing business news channels, i.e.,
placement of BTV and other business news channels on channel positions
contiguous and adjacent to CNBC
2. Comcast is required to carryall existing business news channels on all platforms
on which it carries CNBC
3. Comcast must carry BTV and other business news channels on the same tier of
service as CNBC at each channel position where CNBC is carried.
4. Comcast would be prohibited from selling advertising on non-Comcast owned
business news channels together with advertising on affiliated Comcast networks
as part of a bundled sale of advertising by Comcast without the consent of the
owner of the unaffiliated business news channel.
5. Comcast would be prohibited from offering any discount or other inducement to
any MVPD or other distributor of news content by electronic means on the
ill
5103307.02
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condition that such MVPD or distributor provide business news channels less
favorable terms or conditions of carriage.
6. Comcast would be prohibited from imposing any restriction, limitation or
disincentive on the ability of competing Business News Channels to offer their
content on other platforms, including but not limited to the Internet.
7. Comcast would be prohibited from offering to any MVPD or requiring any
MVPD to accept any combination of NBCU's and Comcast's network
programming, as a condition of receiving more favorable licensing terms than
Comcast offers on an "a la carte" basis.
8. Comcast would be prohibited from diminishing or degrading the terms or level of
service or quality of signal delivery of any business news channel on any of its
content-distribution platforms (e.g. cable, Internet, mobile devices) without the
consent of the owner of the competing business news channel.
9. Comcast must provide business news channels like BTV with non-discriminatory
terms of carriage, including the provision of subscription fees.
10. There would be established an accelerated arbitration procedure to resolve such
claims.
IV
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Table Of Contents
I. INTRODUCTION 1
A. Bloomberg History, Recent Investments and Hires 5
B. BTV is the Last Independent Source of News and Information 6
II. BLOOMBERG HAS STANDING TOPETITION TO DENY THE
APPLICATION 8
A. Bloomberg L.P. has Standing as a Competitor 8
I. Bloomberg L.P. is a Direct and Current Competitor to NBC
Universal 9
2. The Comcast-NBCU Merger will Directly Injure Bloomberg L.P 11
3. Bloomberg's Injury is Fairly Traceable to the Application and
Re~ressableby the Commission 12
B. Bloomberg has Standing as a Listener 13
III. THE PUBLIC INTEREST STANDARD AND RELATED OBJECTIVES OF
THE ACT 15
A. Standard of Review 15
I. The Commission must review the merger to determine if it is in the
public interest. 15
2. For cable mergers, the Commission should also consider whether
the merger will impede the free flow of video programming 18
B. Promoting a Diversity ofViewpoints in Programming, Particularly in
News Programming, is a Critical Element of Public Interest Analysis 19
I. There is a long history of federal policy favoring diverse sources of
news and information 19
2. Diversity of news sources requires a competitive playing field , 20
C. Promoting Competition in Programming, Particularly in News
Programming, is a Key Part of Public Interest Analysis 22
IV. THE MERGER WILL RESULT IN SPECIFIC COMPETITIVE HARM BY
PROVIDING COMCAST-NBCU THE INCENTIVE AND ABILITY TO
HARM AND DISCRIMINATE AGAINST INDEPENDENT NEWS
PROGRAMMERS 25
A. Discriminatory Channel Placement 29
I. Neighborhooding 29
2. Tier Placement.. 33
3. Refusal of Carriage 37
B. Restrictions on Internet Distribution ofBTV .41
I. Restricting Access to BTV over the Internet .42
2. Degrading Internet Access 43
C. Discriminatory Payment Terms 44
D. Disadvantaging BTV's Ability to Obtain Advertisers .45
E. Foreclosing Carriage by Other MVPDs 46
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V. THE COMMISSION MUST DENY THE MERGER BECAUSE THE
APPLICANTS HAVE NOT DEMONSTRATED THAT THE PROPOSED
TRANSACTION SERVES THE PUBLIC INTEREST AND THE HARMS
OUTWEIGH THE BENEFITS 50
A. The Transaction Would Reduce the Number of Independent News
Sources, thereby Reducing Viewpoint Diversity, and May Impede the
Free Flow of Video Programming 51
B. The Transaction Would Reduce Diversity in Ownership and Their
Commitment to Independence Does Not Mitigate That Concern 53
C. The Transaction Results in Significant Competitive Harms and
Would Impair, Rather than Promote, Competition 54
I. The Commission may condition its consent to a transaction in
order to address competition-related concerns 56
VI. IF THE COMMISSION GRANTS THE APPLICATION, IT MUST
IMPOSE CONDITIONS TO PROTECT THE PUBLIC INTEREST 58
A. The Commission has authority to impose conditions to address public
interest considerations 58
I. Neighborhooding of independent business news programming 59
2. Competing business news programming must be carried on the
same tier as CNBC. 60
3. Bloomberg's remedies are a reasonable response to the competitive
harm posed by Comcast's control over the competitor with an 85%
share of the business news market. 61
4. The Commission should require mandatory carriage and non
discriminatory terms and conditions of carriage for independent
news networks on Comcast digital platforms 66
5. The Commission must prohibit any restriction, limitation or
disincentive on the ability of alternative business news networks to
offer their content on other platforms, including the Internet. 67
a. Ban Limitations on TV Everywhere 67
b. Protect Internet Access 67
6. The Commission should prohibit Comcast from bundling
advertising time on competing business news networks with
advertising time on Comcast-owned networks 68
7. The Commission should prohibit bundling for carriage of
programming by Comcast 70
VII. CONCLUSION 71
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Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In the Matter of
Applications for Consent to the
Transfer of Control of Licenses
General Electric Company,
Transferor,
To
Comeast Corporation,
Transferee
To the Commission:
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Docket No. ME 10-56
I. INTRODUCTION
PETITION TO DENY
Bloomberg L.P. ("Bloomberg"), pursuant to Section 309(d) of the Communications Act
of 1934, as amended (the "Communications Act"),' and Section 73.3584
2
of the Commission's
Rules,3 hereby petitions to deny the above-captioned application for transfer of control of NEC
Universal, Inc. ("NECU") from General Electric Company ("GE") to Comcast Corporation
("Comcast")
4
, 47 U.S.c. § 309(d) (2006 & Supp. Ill).
2 This Petition extends to all of the licenses and authorizations included in the Application.
3 47 C.P.R. § 73.3584 (2009).
4 See Applications for Consent to the Transfer of Control of Licenses, General Electric
Company, Transferor, to Comcast Corporation, Transferee, Public Notice, ME Docket No. 10-
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There are substantial and material questions of fact as to whether grant of the Comcast-
NBCU Transaction will serve the public interest, in particular by permitting one company to own
the single largest video distribution platfonn in the U.S. and also control the editorial content of a
substantial portion of the news programming available in the United States. The proposed
combination will create a fully vertically and horizontally integrated communications behemoth
that for the first time in the history of the regulation of the communications industry, will
combine under the control ofone entity - Comcast -the Nation's largest multichannel video
programming distributor ("'MVPD") with 24 million subscribers, two national television
broadcast networks (NBC and the Telemundo Spanish-language network), the largest broadband
service provider, 25 local broadcast stations, numerous cable television programming networks
owned by Comcast (e.g., E! and the Golf Channel) with those of NBC Universal (e.g., CNBC
and the Weather Channel), Universal movie studios and numerous on-line properties.
Specifically, the proposed merger would harm the public interest by granting Comcast-
NBCU the ability and incentive to cause harm to, and discriminate against, independent
programmers in order to restrain competition. This discrimination threatens imminent injury to
independent programmers -- particularly independent news programmers -- and this will
negatively affect the viewing public.
The Commission must deny the Application as currently proposed. In the alternative, if
the Commission were to grant the Application, it must insist upon strict and enforceable
conditions on the Merger - in addition to and independent of present mechanisms such as the
56, DA 10-457 (Mar 18,2010) (hereinafter, the applications referred to therein, "Application"
and the transaction referred to therein, the "Transaction" or the "Merger").
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program carriage rules - to prevent Comcast from acting in ananti~competitivemanner to
protect its substantial interest in NBC Universal's programming. If the Commission does not
adopt such conditions, the Commission should require divestiture of CNBC.
Of particular concern is the area of news and information programming. Following
consummation of the Merger, one entity will control several major news outlets including NBC
News, MSNBC, CNBC, the Spanish-language Telemundo news programming and the Weather
Channel, as well as regional news channels such as New England Cable News. The news
programming networks are critical to the Merger. Of these programming networks, CNBC is the
second most profitable property in the Transaction.
5
Indeed, Comcast CEO Brian Roberts has
been recently quoted as saying that "NBC News is the 'single most awesome asset that comes
from this deal. ",6
Bloomberg's television news service, Bloomberg Television® ("BTV"), the only
worldwide 24-hour business and financial television network, is a party "likely to be financially
injured" by the proposed combination
7
Grant of the Application will provide Comcast the
ability to, and create substantial incentives for, Comcast to acutely harm and discriminate against
5 Andrew Edgecliffe Johnson, CNBC Profits From A Crisis,
http://cacheUt.comJcms/s/0/58992544-0b77-1Idf-8232-00144feabdcO,sOI=I.html?SID=google
(last visited June 4, 2010) ("NBC Universal does not disclose such numbers, but CNBC is
reputed to have become its second-most lucrative channel after USA Networks, with an
operating profit of between $300m and $400m. As such, it serves as a microcosm of what
Comcast sees in NBC Universal").
6 Joe Flint, Comcast CEO Brian Roberts Says Cable Gets Bum Rap and he likes
'Californication', LA TIMES, May 11,2010, available at
http://latimesblogs.latimes.comJentertainmentnewsbuzz/20I0/05/comcast-ceo-brian-roberts-says
cable-gets-bum-rap-and-he-likes-californication.html.
7 See FCC v. Sanders Bros. Radio Station, 309 U.S. 470, 477 (1940).
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BTV. Specifically, Comcast will be able to maximize its subscriber and advertising revenue for
CNBC at the expense of BTV without the threat of losing MVPD customers.
The creation of such a combination runs directly contrary to decades of communications
law and policy founded on the principle that the public interest is served by "the widest possible
dissemination of information from diverse and antagonistic sources."g The Transaction not only
merges two currently independent news voices, but also creates an entity that will have every
incentive and ability to foreclose other independent sources of news and information. The
Commission can only grant the Application with the imposition of substantial conditions to
prevent anti-competitive practices and conduct by the entity controlled by Comcast. If the
Commission does not adopt such conditions, it should require divestiture of CNBC. In the
alternative to such a condition, it must designate specific operational conditions, as well as
remedies to ensure the enforcement of the conditions, as set forth in Exhibit 2.
The proposed Merger will result in an unprecedented vertically integrated media venture,
which will control a significant amount of programming content. The merged venture will also
have the capacity to substantially harm competitors' programming, particularly in the area of
news. The vertical integration, complete with the incentive for Comcast to cause substantial
harm to BTV, of CNBC' s principal competitor, would threaten the elimination of the last
independent news voice. The Merger, therefore, requires a concomitant, unprecedented level of
g Associated Press v. United States, 326 U.S. 1,20 (1945). The Commission has long held that
the public interest standard obliges it to review the impact of mergers on competition, even those
nominally complying with the various media ownership rules. See generally Applications of
Great Scott Broadcasting, Assignor and Nassau Broadcasting II, L.L.c., Assignee, Memorandum
Opinion and Order, 17 FCC Red 5397, 5398 'Jl2 (2002).
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scrutiny by the Commission. The Commission cannot approve the Merger in the form presently
proposed by GE and Comcast.
A. Bloomberg History, Recent Investments and Hires
BTV is wholly owned by Bloomberg L.P., an internationally recognized provider of
flOancial news and information. BTV provides 24-hour business news programming delivered
over MVPDs, but is also available online. Although BTV was launched in 1994, it was initially
targeted to serve the narrow market of professional investors who were already clients of
Bloomberg's tenninal services. However, beginning about 18 months ago, Bloomberg TV was
redesigned to appeal to a much wider audience. Under its new management, Bloomberg is
taking steps to take full advantage of the company's extensive resources as one of the world's
largest and most respected business news organizations. Bloomberg employs more than 2300
reporters and editors worldwide, making it among the largest newsgathering organizations in the
world. BTV hired Andy Lack, former chairman and CEO of Sony Music Entertainment,
President and COO of NBC, and President of NBC News to head its radio, television, and
interactive divisions. BTV also hired Norman Pearlstein, former top editor of Time and The
Wall Street Journal, to be its chief content officer. BTV also hired an entirely new management
team. As a result, BTV is fast becoming a formidable competitor to CNBC, currently the
dominant provider of televised business news, as well as Fox Business News. Where it has been
able to compete on a level playing field with CNBC, Bloomberg TV has already shown the
ability to tbreaten and in some cases in Europe surpass its longer-established rival. Indeed,
abroad, BTV is already one of the world's largest and most trusted information sources.
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B. BTV is the Last Independent Source of News and Information
BTV is the principal U.S. news and information channel that is not affiliated with a
multichannel network owner, MVPD or other national producer of video programming. BTV is
the last source of independent news, analysis and information, unencumbered by editorial and
content pressures from affiliated MVPDs or national programming networks. As discussed in
greater detail below, the Commission has historically been very concerned about preserving and
advancing independent sources of news and information. In an era of increased media
consolidation, ensuring that the public maintains access to independent sources of news and
information, such as BTV, is critically important to the public interest. Indeed, the opportunity
to express diverse viewpoints lies at the heart of our democracy. As an independent news
source, BTV contributes to a robust marketplace of ideas reflecting varied perspectives and
viewpoints on business news and information. The recent financial crisis and its impact on the
nation as a whole only underscores the need for objective business news and analysis.
C. BTV Success On Satellite and Abroad
Whenever BTV is placed near CNBC, and allowed to compete for viewers fairly, BTV's
viewership significantly increases. For example, in the U.S., BTV has significantly more
viewers when carried on satellite systems, which have channel "neighborhoods" with BTV
placed near CNBC, than on cable systems, where BTV is not. Such placement of BTV on
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channels near to CNBC increases viewership by [[_]]9 When neighborhooded with CNBC,
the hours BTV is watched per week increases [[_JJ, relative to average hours watched. 10 In
fact, when BTV was simulcast in the morning by the USA Network from 2001-2003, which was
prior to NBC's acquisition of USA Network, at which time carriage of BTV was dropped, BTV
occasionally outdrew CNBC during the critical early morning "prime time" hours. I I
Similarly, BTV has significantly higher viewership when it is carried on cable systems in
non-U.S. markets where its channel is neighborhooded with CNBC and similar news
programming. [[
support its wide international viewership, Bloomberg TV broadcasts through Bloomberg Asia,
Bloomberg Europe, and Bloomberg USA.
I3
News bureaus in London, Hong Kong, and Beijing
- to name only a few - broadcast internationally at varying times throughout the day. These
international programs enjoy widespread success. Bloomberg has received numerous awards for
BTV.
14
9 See Exhibit 3, Dr. Leslie M. Marx, Professor of Economics, Duke University and former Chief
Economist, Federal Communications Commission, Economic Report on the Proposed Comcast
NBC Universal Transaction at Appendix at 23 ("Marx Report").
to Marx Report Appendix at 23.
II USA Weekly Report Spreadsheet.
12 [[ JJ
13 Bloomberg Television, http://www.bloomberg.com/medialtv/ (last visited June 4,2010).
14 Bloomberg Television, About Bloomberg, News Awards,
http://about.bloomberg.com/news_awards.html (last visited June 4, 2010).
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II. BLOOMBERG HAS STANDING TO PETITION TO DENY THE APPLICATION
Bloomberg has standing to petition the Commission to deny the Application in the
Comcast-NBCU merger as a party in interest
15
in that it has both "competitor" standing
16
and
"listener" standing. I? As set forth below, BTV satisfies the constitutional threshold elements to
establish standing, viz., whether as a listener or competitor, Bloomberg will suffer an injury-in-
fact that is traceable to the proposed merger/license transfer applications, and a grant of this
Petition to Deny would likely redress BTV's injury.18 BTV's very existence as a viable
independent television network is threatened by the harms that result from the merger. Since
BTV's injuries stem directly from the proposed merger, the resulting harms are neither
hypothetical nor conjectural, but, in fact, concrete and particularized, imminent injuries.
19
A. B1nomberg L.P. has Standing as a Compelitor
Establishing competitor standing requires that "the party seeking to establish standing...
must demonstrate that it is a direct and current competitor whose bottom line may be adversely
15 47 U.S.c. § 309(d).
16 See FCC v. Sanders Bros. Radio Station, 309 U.S. 470, 471-72 (1940).
I7 See Office ofCommc'n of United Church of Christ v. FCC, 359 F.2d 994,1002 (D.C. Cir.
1966).
18 See New World Radio, Inc. v. FCC, 294 F.3d 164,170 (D.C. Cir. 2(02) (citiQg Jersey Shore
Broad. Corn. v. FCC, 37 F.3d 1531, 1535 (D.C. Cir. 1994)); Liberty Prods.. a Ltd. P'ship
WOXL-FM, Biltmore Forest, NC, Letter, 20 FCC Rcd 11987, 11990 (July 7,2005).
19 New World Radio, 294 F.3d at 170 (citing SunCom Mobile & Data Inc. v. FCC, 87 F.3d
1386, 1388 (D.C. Cir. 1996).
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affected by the challenged government action."zo A party has standing if its likely financial
injury concretely results from the challenged action
2l
I. Bloomberg L.P. is a Direct and Current Competitor to NBC Universal
Bloomberg video news service, BTV, is "a direct and current competitor" of the proposed
Comcast-NBCU combination's CNBC. That CNBC and BTV are direct and current competitors
as is clear from their many common characteristics. The attached economic report by Dr. Leslie
Marx, formerly Chief Economist at the Commission, concludes that CNBC and BTV are
substitutes for one another. See Exhibit 3.
22
CNBC describes itself as "the recognized world leader in business news, providing real-
time financial market coverage and business information to more than 340 million homes
worldwide, including more than 95 million households in the United States and Canada.,,2]
CNBC produces and distributes its "Business Day programming weekdays from 5:00 a.m.- 7:00
p.m. ET.,,24 BTV is the only worldwide 24-hour business and fmancial television network. Its
programming is created exclusively by Bloomberg's own Bloomberg News® service
25
As a
result, the approval of the Application will have a direct and imminent effect on the financial
performance of CNBC and BTV. The difference in the effect is critical: unless the conditions to
20 Mobile Relay Assocs v. FCC, 457 F.3d I, 13 (D.C. Cir. 2006) (quoting KERM, Inc. v. FCC,
353 F.3d 57, 60 (D.C. Cir. 2004)); New World Radio, 294 F.3d at 170.
21 New World Radio, 294 F.3d at 170 (citing FCC v. Sanders Bros. Radio Station, 309 U.S. 470,
471-72,477 (1940».
22 Marx Report at 16.
23 CBNC, About CNBC, http://www.cnbc.com/id!l5907487/(last visited May 27, 2010).
24
rd.
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the Transaction outlined herein are imposed, once CNBC has become affiliated with the largest
video programming distributor in the nation, BTV will immediately be placed at a competitive
disadvantage, adversely affecting its bottom line, U
_]]26 Thus, the Merger will result in concrete injury to Bloomberg
27
Upon the closing of the Merger, Comcast, the country's largest MVPD, which has nearly
24 million cable customers,28 would control CNBC. In addition to its cable television content,
CNBC provides online video content, CNBC Mobile content, direct broadcast satellite audio
content, and other services.
29
CNBC and BTV are direct competitors in the provision of such
business news and information programming. Like CNBC, BTV is a cable television business
news channel serving audiences in the United States and abroad. Bloomberg provides online
video content, mobile content, broadcast radio content, and direct broadcast satellite audio
content, among other services
30
Both BTV and CNBC provide financial news and analysis.
25 Bloomberg, Bloomberg News, http://about.bloomberg.com!news_television.html(last visited
May 27, 2010).
26 New World Radio, Inc. v. F.C.C., 294 F.3d 164, 170 (D.C. Cir. 2002).
27 As set forth in the attached Declaration of Andrew Lack, CEO of Multimedia of Bloomberg
L.P. (Exhibit 1 hereto), he has personal knowledge of the facts described herein regarding
Bloomberg's standing as a party in interest and the proposed transaction's inconsistency with the
public interest. Applications for Consent to the Assignment and/or Transfer of Control of
Licenses, Adelphia Commc'ns Corp., et aI., Memorandum Opinion and Order, 21 FCC Rcd
8203,8215-16 '11'11 18-20 (2006) ("Adelphia").
28 Comcast, Comcast Corporate Overview,
http://www.comcast.com!corporate/about/pressroom!corporateoverview/corporateoverview.html
(last visited June 4).
29 See generally, CNBC, http://www.cnbc.com.
30 See generally, Bloomberg TV, http://www.bloomberg.com.
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Both feature prominent economists and fmancial analysts. As such, BTV and CNBC compete
intensely with each other for guest speakers and advertisers.
2. The Comcast-NBCU Merger will Directly Injure Bloomberg L.P.
The direct injury takes the form of a competitive disadvantage in terms of carriage on the
Comcast systems, which would become affiliated with CNBC, including: (I) channel positioning
(~,the ability to obtain "neighborhooding,"); (2) tiering, (3) termination of carriage,
(4) limitations on distribution of Internet content, (5) anticompetitive practices involving
bundling of rates to favor CNBC and other Comcast-affiliated cable channels,
(6) anticompetitive practices involving bundling of advertising.
Congress and the Commission have previously recognized the harm that
increased horizontal concentration and vertical integration in the
cable industry have created an imbalance of power between cable
operators and program vendors[;] ... vertically integrated cable
operators have the incentive and ability to favor affiliated
programmers over unaffiliated Rrogrammers with respect to
granting carriage on their systems. I
Courts have recognized future competitive disadvantages resulting from governmental action as
injuries-in-fact.32
31 Implementation of Sections 12 and 19 of the Cable Television Consumer Protection and
Competition Act of 1992, Second Report and Order, 9 FCC Rcd 2642, 2643'11 2 (1993).
32 Adams v. Watson, 10 F.3d 915, 922 (1st Cir. 1993) ("future injury-in-fact is viewed as
"obvious" since government action that removes or eases only the competitive burdens on the
plaintiffs "rivals" plainly disadvantages the plaintiffs competitive position in the relevant
marketplace" (emphasis added)); Baur v. Veneman, 352 F.3d 625, 633 (2d Cir. 2003) ("the
courts of appeals have generally recognized that threatened harm in the form of an increased risk
of future injury may serve as injury-in-fact for Article III standing purposes") (citing Friends of
the Earth, Inc. v. Gaston Copper Recycling, Corp., 204 F.3d 149, 160 (4th Cir. 2000)).
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As the attached economic report makes clear, the competitive injury facing BTV from the
Comcast-NBCU merger is not only a direct injury, but is also a concretely quantifiable and
imminent one. Specifically, the failure to neighborhood BTV with CNBC reduces the
probability of viewing BTV by [[_].33 BTV could lose its access to Comcast viewers
entirely, or lose viewers due to an unfavorable channel position on a remote, less viewed cable
tier. Comcast-NBCU's incentive and ability to bundle its programming could foreclose BTV's
carriage on non-Comcast MVPD systems
34
Comcast-NBCU's ability to bundle advertising may
limit access to key advertisers. Comcast's ability to restrict online distribution of cable network
content will significantly damage BTV's ability to serve existing customers and gain new
customers.
3. Bloomberg's Injury is Fairly Traceable to the Application and Redressable
by the Commission
The causal link between the Application and Bloomberg's injury-in-fact is clear. The
proposed transfer of licenses is necessary to facilitate a merger of Comcast and NBCU. Ifthe
Commission grants the Application as proposed, the merger will proceed, leading to the vertical
integration of CNBC into the largest MPVD, Comcast, which has the power to determine
channel position for BTV - indeed, even whether BTV can survive as a competitor to CNBC.
Bloomberg's injuries are redressable through denial of the Application. A denial of the
Application would eliminate the imminent injury facing Bloomberg because the license transfer
33 Marx Report Appendix at 23.
34 See General Motors Corp. and Hughes Electronics Corp and The News Corp., Memorandum
Opinion and Order, 19 FCC Rcd 473. 478 'II 4 (2004) (internal citations omitted) (merger of
content provider with MVPD threatens foreclosure bargaining strategies for programming by
vertically integrated entity) (hereinafter, "News Corp.").
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is a prerequisite to the Comcast-NBCU merger. Alternatively, the Commission could allay the
harm through the imposition of the conditions proposed in Exhibit 2, specifically including
restrictions on the ability of Comcast to place BTV on channel positions far from Comcast's own
CNBC, restrictions on carriage termination, streamlined resolution of subscriber fee disputes,
restrictions on anti-competitive practices involving sales of bundled programming and bundled
advertising time, and restrictions on degrading, impeding or discouraging content distribution via
the Internet.
B. Bloomberg has Standing as a Listener
Aside from standing as a direct competitor to CNBC, Bloomberg also has standing to
petition the Commission to deny the Application as a "listener" or member of the public viewing
NBC broadcast stations.J5 Like competitor standing, a petitioner asserting listener standing
must, in addition to being a listener, also meet the basic requirements for Article III standing.
36
The listener must allege an injury-in-fact, that the injury is remediable and fairly traceable to the
. 37
agency actIOn.
As a resident of a NBC broadcast station service area and a viewer, Bloomberg "can
assert a possible injury to a legally protected interest. .. as 'spokesman' for a station's entire
35 See United Church of Christ, 359 F.2d at 1002. See also the attached Declaration of Andrew
Lack, who resides in Bronxville, New York, a regular viewer of NBC programming. As an
Officer of Bloomberg, his individual listener standing may be imputed to Bloomberg, L.P. itself.
See Application of WGSM Radio, InC., Assignor, et aI., Memorandum Opinion and Order, 2
FCC Red. 4565 'J[ 4 (1987).
36 See supra note 18 and accompanying text.
37
Id.
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audience.,,38 The injury facing a viewer is not based on competitive disadvantages or adverse
effects to the bottom line, but rather "material impairment of [a viewer's] hopes or
expectations.',39 Further, such standing exists when faced with an injury caused by the grant of
an application that seriously impacts the public interest. For example, the D.C. Circuit has
affirmed the granting of standing to a listener on the basis that such listener is injured when grant
of applications would contravene policies underlying the Communications Act and FCC rules
and policies because "the FCC serves (at Congress' behest) as the public's proxy in assuring,
through the apparatus of agency licensure, that media outlets in the same market do not fall into a
small number of closely related hands.,,40
Here, the proposed merger threatens long established Commission policies favoring
independent ownership of news providers." Grant of the Application would ultimately result in
marginalizing or destroying BTV, and further reduce the number of independently owned news
providers, which is contrary to the FCC's long established policies of promoting independently
owned news providers and not in the public interest.
38 Huddy v. FCC, 236 F.3d 720, 722 (D.C. Cir. 2001) (citing United Church of Christ, 359 F.2d
at 1002).
39 Id. at 723 (citing Jaramillo v. FCC, 162 F.3d 675, 677 (D.C. Cir. 1998)).
40 Llerandi v. FCC, 863 F.2d 79, 85 (D.C. Cir. 1988) ("The ultimate point of the duopoly rule is,
after all, to assure (or at least enhance) diversification of viewpoints within the broadcast
industry. That is, the FCC serves (at Congress' behest) as the public's proxy in assuring, through
the apparatus of agency licensure, that media outlets in the same market do not fall into a small
number of closely related hands. Listeners are, by defmition, 'injured' when licenses are issued
in contravention of the policies undergirding the duopoly rule.") (emphasis added).
41See~FCC v. Nat'l Citizens Comm. for Broad., 436 U.S. 775, 784 (1978) ('The
Commission suggested that the proposed [cross-ownership] regulations would serve 'the purpose
of promoting competition among the mass media involved, and maximizing diversification of
service sources and viewpoints"').
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III. THE PUBLIC INTEREST STANDARD AND RELATED OBJECTIVES OF THE
ACT.
A. Standard of Review.
1. The Commission must review the merger to determine if it is in the public
interest.
When the Commission considers applications to transfer licenses in a transaction like the
proposed merger underlying the Applications here, it must "determine whether the transaction
serves the broader public interest.,,42 The rapidly developing telecommunications industry
requires, and the law recognizes, that the "public interest, convenience and necessity,,43 standard
develops with time
44
Nonetheless, there are several overriding considerations which constitute
the Commission's public interest analysis
45
In reviewing the Application, the Commission must determine first whether the
transaction would result in a violation of the Communications Act or of the Commission's rules;
second, whether the transaction would "frustrate or impair" the implementation of the
Communications Act, Commission rules, or the policy objectives thereof; and third, whether the
42 News Corp. at 484 'II 17.
43 47 U.S.C. § 31O(d).
44 Greater Boston Television Corp. v. FCC, 444 F.2d 841, 852 (D.C. Cir. 1970) ("an agency's
view of what is in the public interest may change" when the agency reasonably explains such
changes).
45 Applications for Consent to the Transfer of Control of Licenses and Section 214
Authorizations by Time Warner Inc. and America Online. Inc., Transferors, to AOL Time
Warner Inc., Transferee, Memorandum Opinion and Order, 16 FCC Red 6547, 6555'11 20 (Jan.
11, 2001) ("AOL").
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transaction "promises to yield affirmative public interest benefits.,,46 The Commission's policy
is shaped by Congress and deeply rooted in a preference for competitive processes and
outcomes.
47
Under this public interest standard, the Commission has the authority and duty to
preserve independent sources of news and information. The "public interest evaluation under
Section 31O(d) necessarily encompasses the 'broad aims of the Communications Act,' which
includes, among other things, preserving and enhancing competition in relevant markets,
ensuring that a diversity of voices is made available to the public, and accelerating private sector
deployment of advanced services.,,48
The Commission must consider whether the Transaction would "frustrate implementation
or enforcement" of the federal communications policies. These policies and objectives include
the preservation of robust and independent sources of news and information programming,
prevention of anti-competitive behavior by MVPDs and preservation of competition in the
programming markets affected by a proposed merger. In other words, the Commission considers
whether the proposed merger "could result in public interest harms by substantially frustrating or
impairing the objectives or implementation of the [Communications] Act and related statutes.',49
46 rd.
47 News Com. at 484 'I[ 14.
48 Application of EchoStar Communications Comoration, General Motors Corporation, and
Hughes Electronics Corporation, Transferors, and EchoStar Communications Corporation,
Transferee, Hearing Designation Order, 17 FCC Rcd 20559, 20575 'I[ 26 (2002) (hereinafter
"EchoStar").
49 Adelphia at 8217 'I[ 23.
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This review does not occur in a vacuum. Broadly, the Commission considers
developments of technology, changes in the communications marketplace, and future trends in
the industry.50 More narrowly, the Commission considers not only the specifics of the individual
license transfer applications, but also "all relevant issues raised by the transactions that in [the
Commission's] judgment may significantly affect the public interest.,,51
The Commission's review is a balancing act. The Commission must "weigh the potential
public interest harms of the proposed transaction against public interest beneflts[.],,52 The
Commission should not approve the merger unless it finds that the transaction, on balance, serves
the public interest and convenience.53
With respect to each element of the public interest review, the Applicants carry the
burden of proof.
54
They must demonstrate by a preponderance of the evidence that the
transaction will advance the public interest.
55
That is to say, the stronger weight of evidence
before the Commission regarding the proposed transaction must demonstrate that it, on balance,
h bl
" 56
serves t e pu IC [fiterest.
50 Id. at 8218 'j[ 24.
51 Id. at 8220 'Il28.
52 AOL at 6554 'j[ 19.
53 I
,Jl, 'j[22.
54 Adelphia at 8218 'j[ 24; News Corp. at 483 'j[ 15; AOL at 6554 'j[ 19.
55 47 V.S.c. §§ 308, 31O(d); Adelphia at 8218 'j[ 24; News Corp. at 483 'j[ 15; AOL at 6554 'j[ 19.
56 See, e.g.. Applications for Consent to the Transfer of Control of Licenses and Section 214
Authorizations from Tele-Communications, InC., Transferor to AT&T Corp., Transferee,
Memorandum Opinion and Order, 14 FCC Rcd 3160, 3168-70'j['j[ 11-15 (1999) (hereinafter
"AT&T-TCI Order").
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The burden is on Comcast and GE to demonstrate that the merger would serve the Public
Interest.57 As set forth herein, the Applicants have not met that burden.
2. For cable mergers, the Commission should also consider whether the
merger will impede the free flow of video programming.
The public interest objectives for cable systems include ensuri\1g "that no cable operator
or group of cable operators can unfairly impede... the flow of video programming from the
video programmer to the consumer;" and that "cable operators affiliated with video programmers
do not favor such programmers in determining carriage on their cable systems.,,58 Thus, when
the Commission is undergoing its traditional public interest analysis it should consider these
public interest objectives.
Indeed, Congress' concern regarding unfairly impeding the flow of video programming
to consumers stems, in part, from the increased vertical integration ofcable operators and
programmers.59 The Commission has noted that increased vertical integration can lead
"programmers to favor affiliated over non-affiliated operators in the distribution of video
programming" and "unfairly impede the flow of video programming to consumers.,,60 Thus,
"[i]n analyzing MVPD transactions, the Commission... examiners] whether the transactions are
57 47 V.S.c. §§ 308, 31O(d).
58 47 V.S.C. § 533(f)(2)(A), (B).
59 Adelphia at 8224 'l! 34.
60 Id.
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likely to contravene Commission policy goals by analyzing the potential effects the transactions
may have on MVPD competition and on the flow of video programming to consumers.,,61
n. Promoting a Diversity of Viewpoints in Programming, Particularly in News
Programming, is a Critical Element of Public Interest Analysis.
I. There is a long history of federal policy favoring diverse sources of news
and information.
Public interest analysis includes "ensuring that a diversity of voices is made available to
the public.,,62 The Commission must preserve viewpoint diversity in news programming to
ensure that the public interest is well served. To preserve that diversity in news programming,
the Commission should be mindful of a transaction's impact on independence in news
programming. The First Amendment "rests on the assumption that the widest possible
dissemination of information from diverse and antagonistic sources is essential to the welfare of
the public, that a free press is a condition of a free society.,,63
To promote competition and improve viewpoint diversity, the Commission's media
ownership rules limit the number and types of same-market media outlets in which a company
may hold an interesl,64 In adopting its ownership rules, the Commission concluded "that the
proposed [cross-ownership] regulations would serve 'the purpose of promoting competition
among the mass media involved, and maximizing diversification of service sources and
61 Id. at 8234 'II 60 & n.220 (noting that "these goals are embodied in various statutory
provisions, including § 613(f)... of the 1992 Act").
62 News Corp at 483-84 'II 16.
63 Associated Press v. United States, 326 U.S. 1,20 (1945).
64
47 C.F.R. §73.3555(c), (d).
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viewpoints.",65 Although the FCC eliminated the cross-ownership rules, it has retained its
ability to review these public interest harms.
66
Thus, the Commission recognizes the
significance of these harms and the need to address them in reviewing a merger
67
Here, Comcast will control two national news networks (NBC News and Telemundo),
MSNBC and CNBC, the dominant business news channel, as well as news and information
programs like the Weather Channel and regional news channels. Business news has become
even more important during the recent U.S. and European financial crises. The adverse effect of
the Merger is even more pronounced because only CNBC, Fox, and BTV provide such focused
programming. If the Commission approves the Transaction, BTV will be the only such
independently owned news outlet remaining.
2. Diversity of news sources requires a competitive playing field.
The migration of advertising revenue from traditional models to new distribution
platforms has already strained independent news sources. The Commission must take steps to
ensure that a diversity of voices will remain after the Transaction. It must address any potential
harm to news programmers that might occur as a result of the Merger.
Financial difficulties are forcing independent news outlets of all types to reduce costs,
resulting in less news being available to consumers. These financial difficulties impact
65 Nat'l Citizens. 436 U.S. at 784; 2006 Ouadrennial Regulatory Review - Review of the
Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of
the Telecommunications Act of 1996, Report and Order and Order on Reconsideration, 23 FCC
Red 2010 'II 84 ("cross-ownership rules aim to maintain a vibrant marketplace of ideas to ensure a
diversity of editorial content") ("Media Cross Ownership Order").
66 Adelphia at 8234 'II 60.
67
Id.
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independent sources of business news. For example, newspapers have eliminated separate
business sections and reduced resources devoted to coverage of economic and financial issues.
68
Bloomberg submits that a continuation of this trend is not in the public interest; the Commission
must ensure that independent news outlets survive and will not be further harmed by
Commission action, including approval of the Transaction.
Approval of the Transaction will vertically integrate the largest MVPD with the major
business news provider, CNBC. This combination will further reduce the shrinking number of
independent news sources.
69
Moreover, the combination of distribution and content will
endanger and possibly foreclose independent voices.
Given the difficulties experienced by independent news organizations, ensuring access to,
and a level playing field for, independent news sources is increasingly important to the public
68 This has included prominent, national newspapers like The Washington Post. Eric Krangel,
Washington Post Bids Goodbye to its Business Section, THE WASHINGTON POST, March 13,
2009, available at http://www.businessinsider.com/washington-post-bids-good-bye-to-its
business-section-2009-3 (last visited June 4, 2010); Marion Geiger, Downsizing: Washington
Post Cuts Its Daily Business Section, THE WASHINGTON POST, March 16,2009, available at
http://www.editorsweblog.orglnewspaper/2009/03/downsizing_the_washington_post_cuts_its.ph
p (last visited June 4, 2010).
69 "Even with all the promise of new media, we need to remember that without content, there is
nothing to aggregate, and without intelligent debate on critical issues stemming from insightful
journalism, the promise of a smart phone is short-circuited. So far, new media has not replaced
what we've lost by way of traditional media's decline. Most indicators show three-quarters or
more of the news, delivered to the public in all forms, originates from traditional media-
newspapers and broadcast. So we confront a two-pronged challenge--ensuring that the broadband
of the future can support the information infrastructure which democracy requires and, for the
years immediately ahead, stemming the hemorrhage of contemporary journalism." Press
Release, Commissioner Michael J. Copps on the FCC Launch of Initiative to Examine the Future
of Media and Information Needs of Communities in A Digital Age, Jan. 21, 2010, available at
http://hraunfoss.fcc.gov1edocs_pubIic/attachmatchIDOC-295856A I.pdf.
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interest. In evaluating this Merger, the Commission must consider whether its approval would
reduce the availability of such independent sources of news.
Combinations like that proposed in the Merger not only combine two potential voices
into one, but also have the effect of tilting that playing field against independent sources of news
like BTV. Indeed, when faced with similar concerns, Congress has gone so far as to impose
requirements on MVPDs to carry particular stations so as to "assure the widest possible diversity
of information services to the public.,,70
C. Promoting Competition in Programming, Particularly in News
Programming, is a Key Part of Public Interest Analysis
Competition in the provision of service to the public has long been a central goal of
communications policy. Since its establishment in 1934, the Commission has been charged with
guarding against anti-competitive practices.
71
In the Cable Communications Act of 1984,72
Congress explicitly extended that concern to the cable industry, noting that one purpose of
regulating the cable industry is to "promote competition in cable communications....'.73
The Supreme Court has likewise acknowledged the integral nature of competition to the
public interest under the Communications Act. "[T]he Court has repeatedly emphasized the
Commission's duty and authority under the Communications Act to promote... competition
70 Cable Television Consumer Protection and Competition Act of 1992 House Report, H.R. Rep.
No. 102-628, LEXSEE 102 H RPT 628 at *35 (1992).
71
47 U.S.c. §§ 151,20I.
72 Pub. L. No. 98-549, 98 Stat. 2780 (1984).
73 Id. (codified as amended at 47 U.S.c. § 521(6)); see also News Corp at 483-84 'j[ 16 ("public
interest evaluation... necessarily encompasses the broad aims of the Communications Act, which
includes, among other things, preserving and enhancing competition in relevant markets")
(internal quotations omitted).
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among media voices[.],,74 To that end, the Court has noted that "the Government's interest in
eliminating restraints on fair competition is always substantial, even when the individuals or
entities subject to particular regulations are engaged in expressive activity protected by the First
Amendment.,,75
The Telecommunications Act of 1996 (" 1996 Act") made enhancing competition a
central goal of telecommunications regulation.
76
The Communications Act, the 1996 Act and
Commission precedent require the Commission to consider the competitive impact of a
transaction in its public interest analysis
77
The "broad aims of the Communications Act"
include "a deeply rooted preference for preserving and enhancing competition in relevant
markets... [and] ensuring a diversity of information sources and services to the public[.]"78 The
Commission's competitive analysis, therefore, includes "traditional antitrust principles.,,79 The
Commission must also consider a variety of other factors, including:
? regulatory policies that govern interactions of industry players;
74 AOL at 6556 'l! 23 (200 I).
75 Turner Broad. Sys.. Inc. v. FCC, 512 U.S. 622, 664 (1994).
76 Telecommunications Act of 1996 Preamble, Pub. L. No. 104-104, 110 Stat 56 (1996).
77 Adelphia at 8218 'I[ 25; Application of AT&T Wireless Servs.. Inc. and Cingular Wireless
Corp. for Consent to Transfer Control of Licenses and Authorizations. et. al., Memorandum
Opinion and Order, 19 FCC Rcd 21522,21544 'l! 41 (2004) ("Our public interest evaluation
necessarily encompasses the 'broad aims of the Communications Act,' which include, among
other things, a deeply rooted preference for preserving and enhancing competition in relevant
markets, accelerating private sector deployment of advanced services, ensuring a diversity of
license holdings, and generally managing the spectrum in the public interest") (hereinafter
"AT&T/Cingular").
78 News Corp. at 3277-78 'J[ 23.
79 Id. at 3278 'J[ 24.
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? whether a transaction will reduce existing competition;
? whether the transaction will decrease the market power of dominant
firms in the relevant communications market; and
? the transaction's effect on future competition
80
The Commission has, "[i]n setting its licensing policies... long acted on the theory that
diversification of mass media ownership serves the public interest[.],,81 To implement these
policies, the Commission should "promote diversity of program and service viewpoints [and]
prevent undue concentration of economic power.,,82
A merger must enhance competition in order to meet the public interest standard
83
The
Commission uses the Horizontal Merger Guidelines issued by the Department of Justice and the
Federal Trade Commission as a starting point to analyze the potential competitive harms of the
d
. 84
propose transactIOn.
In general, competitIOn depends on consumers having choices
among products or services that are fairly good substitutes for each
other. If consumers have such choices, a single provider cannot
raise its prices above the 'competitive' level because consumers
will switch to a substitute. The level of competition depends on
what products or services are substitutes for each other (product
market), where those products are available (geographic market),
what firms produce them (market participants), and what other
firms might be able to produce substitutes if the price were to rise
(market entry). ...Mergers raise competitive concerns when they
80 Id. at 3278-79 'J[25.
81 Nat'l Citizens, 436 U.S. at 780.
82
Id.
83 News Corp 483-84 'J[16; Applications of NYNEX Corp., Transferor and Bell Atl. Corp.,
Transferee, Memorandum Opinion and Order, 12 FCC Rcd 19985, 20000-0 I'J[29 (1997).
84 Id.; U.S. Dept. of Justice, Horizontal Merger Guidelines, available at,
http://www.justice.gov/atr/public/guidelines/horiz_book/hmg I.html.
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reduce the availability of substitute choices (market concentration)
to the point that the merged firm has a significant incentive and
ability to engage in anticompetitive actions, such as raising prices
or reducing output, either by itself or in coordination with other
firms (market power.)85
As demonstrated in the "Economic Report on the Proposed Comcast NBC Universal
Transaction," authored by Dr. Leslie Marx, former Chief Economist of the FCC (Exhibit 3),
the Transaction will result in significant competitive harms to independent news programming
that raise substantial and material questions of fact as to whether the Transaction is in the public
interest.
While the Applicants bear the burden of proof here, BTV, as set forth below,
affirmatively demonstrates that the proposed transaction is not in the public interest.
IV. THE MERGER WILL RESULT IN SPECIFIC COMPETITIVE HARM BY
PROVIDING COMCAST-NBCU THE INCENTIVE AND ABILITY TO HARM
AND DISCRIMINATE AGAINST INDEPENDENT NEWS PROGRAMMERS
The proposed merger would harm the public interest by granting Comcast-NBCU the
ability and incentive to harm and discriminate against independent programmers. This
discrimination threatens imminent injury to independent programmers and will negatively affect
the viewing public.
NBC Universal owns CNBC, the dominant business news network in the United States,
in addition to NBC News, MSNBC, and regional sports networks. CNBC currently attracts more
than 85% of the viewers and revenue in the business news programming market. CNBC is the
85 AT&T/Cingular at 21552 'l! 57.
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only business news channel that registers on the Neilson ratings. Only two other business news
networks exist-Fox and BTV - and of those, only BTV is independent. CNBC is a critical
piece of the Transaction because its high advertising revenue makes it the second most profitable
of NBC's cable networks, with an estimated profit of $333 million as of March, 2008.
86
Comcast is the largest cable operator in the United States with close to 24 million
subscribers, 15.7 million high-speed broadband customers, and 7.4 million voice customers
87
Comcast already owns 18 cable channels
88
and has attributable interests in an additional 14
channels. 89 After the Transaction, Comcast will own 10 regional sports networks, two broadcast
networks, 25 owned and operated broadcast television stations, 54 cable networks (owned and in
which it holds attributable interests), 32 online video properties, Universal Studios, and Focus
Features. It also controls iNDEMAND,9o the dominant video on-demand/pay-per-view provider,
which distributes content to cable and Internet protocol television operators nationwide
9I
Application at 17, 19.
88
Application at 19-21.
86 Jessi Hempel, CNBC Feels Your Pain, CNNMoney.com, Apr. 3, 2008, available at
http://money.cnn.com/2008/03/31/news/companies/cnbc_pain.fonune/ (last viewed May 29,
2010) ("profits have increased 36% to $333 million since Hoffman joined, according to media
research fIrm SNL Kagan"); Andrew Edgecliffe Johnson, CNBC Profits From A Crisis, FT.com,
January 27,2010, available at http://cachef.ft.com/cms/s/0/58992544-0b77-lldf-8232
00144feabdcO,sOI=l.html?SID=google (last visited June 4,2010) ("NBC Universal does not
disclose such numbers, but CNBC is reputed to have become its second-most lucrative channel
after USA Networks, with an operating profit of between $300m and $400m. As such, it serves
as a microcosm of what Comcast sees in NBC Universal").
87
89
Id.
90 Application at 20.
91 See iN DEMAND, http://www.indemand.com/about/ (last visited June 21, 2010).
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Moreover, Comcast has a greater than 50% market share of cable distribution in the top
ten major markets, where sophisticated business news consumers are most densely concentrated.
The markets include Chicago, Philadelphia, San Francisco, Boston, Detroit, Seattle-Tacoma,
Miami-Ft. Lauderdale, Denver, Pittsburgh, Baltimore, West Palm Beach, Harrisburg and
Jacksonville.
92
Comcast holds a 45% market share in Washington, DC, and other signifIcant
markets.
The resulting combination will grant Comcast control over significant business news
programming assets and distribution in key business news markets. As a merged entity,
Comcast-NBCU will have both the power and a compelling incentive to favor CNBC and to
deprive competing news programmers of the level playing field for viewers and advertisers.
Bloomberg is particularly concerned about Comcast-NBCU's ability and incentive to harm and
discriminate against independent news operators because CNBC is the second most profitable
network in the NBCU portfolio, and Comcast's CEO, Brian Roberts, has said that NBC News is
the "single most awesome asset that comes from this deal," and that "NBC News will help define
Comcast.,,93
92 An Examination of the Proposed Combination of Comcast and NBC Universal before the
House Energy and Commerce Subcommittee on Communications, Technology and the Internet,
Feb. 4, 2010 (Mark Cooper - "In its cable franchise territories, the market share of Comcast in
these two vital distribution platforms [video distribution and broadband Internet service
provider] exceeds 50 percent, allowing it to acquire one of the nation's premiere video content
producers will radically alter the structure of the video marketplace triggering a bevy of anti
competitive effects that will result in higher prices and fewer choices for consumers.")
93 Joe Flint, Comcast CEO Brian Roberts Says Cable Gets Bum Rap and he likes
'Californication', LA TtMES, May 11,2010, available at
http://latimesblogs.latimes.com/entertainmentnewsbuzz/20IO/OS/comcast-ceo-brian-roberts-says
cable-gets-bum-rap-and-he-likes-californication.html.
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Comcast has a lengthy history of issues involving claims of discrimination against
independent programmers and has been the subject of numerous program carriage complaints
94
A recent complaint noted, "Comcast's president, Stephen Burke, says that Comcast views its
own networks as 'siblings' but other networks as 'strangers' .....95 Comcast's incentive to harm
and discriminate against programming rivals is particularly acute in the case of BTV, which is a
disruptive challenger to CNBC's long-established dominant position.
In her report, Dr. Marx concludes that BTV and CNBC compete in the business news
market
96
The Marx Report also establishes that the business news advertising market, which is
predominantly affluent adult males, is a highly valued, hard-to-reach audience segment that
advertisers value highly. Ultimately, the Marx Report finds that TV business news programming
networks constitute a relevant antitrust product market. Combining CNBC's more than 85%
market share with Comcast's 50% or greater MVPD market share in major U.S. cities where
business news has a high concentration of viewers, the Transaction poses a significant
downstream threat to BTV's existence.
94 See NFL Enters. LLC v. Comcast Cable Commc'ns, LLC, Program Carriage Complaint, File
No. CSR-7876-P (May 6, 2008); TCR Sports Broad. Holding, L.L.P. v. Comcast Corp., Program
Carriage Complaint, File No. 8001-P (Aug. 7, 2008); see also Dish Network L.L.c. v. Comcast
Corporation, et aI., Arbitration Demand (Am. Arbitration Ass'n Jan. 27,2010).
95 Justin Rohrlich, Cable Wars Get Litigious, MINYANVILLE, Jan. 8, 2010, available at
http://www.minyanville.com/husinessmarkets/articles/cable-cablevision-comcast-hulu-scripps
time/1/8/2010/id/26281 (last visited June 20, 2010).
96 The Marx Report found that while carriage of general news channels had no significant
negative effect on the carriage of BTV, the presence of CNBC on the basic or expanded basic
tier had a significant negative effect on the carriage ofBTV on that tier. Likewise, carriage of
BTV significantly decreases the carriage of CNBC on the same tier. Marx Report at 22.
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BTV submits that, absent an order to divest CNBC or adoption of stringent conditions,
the Merger will result in discrimination against independent programmers in the following areas:
channel placement discrimination, discrimination in payment terms, degradation or restriction of
consumers' Internet access to independent programmers' content, foreclosure in advertising, and
foreclosure of carriage by other MVPDs. The Marx Report supports BTV's concerns by
detailing significant economic harms that may result from the merger in all of these areas. An
in-depth discussion of the harmful effects this transaction will have on the public interest and on
BTV is set forth below.
A. Discriminatory Channel Placement
I. Neighborhooding
Channel placement on MVPD systems contributes significantly to maintaining and
increasing viewership. "Neighborhooding" is the industry practice of placing channels of the
same genre adjacent to one another in the system's channel line-up. Modern distribution systems
such as DirecTV, Dish, FiOS, and U-Verse cluster together children's programs, shopping,
cooking, and, most importantly, business news and 24-hour cable news channels in the same
channel "neighborhood." Other MVPDs are expected to adopt neighborhooding as they
transition to digital technology.97 If the Transaction had not been proposed, BTV would have
expected to be neighborhooded with other business news channels as Comcast neighborhooded
97 For example, Time Warner has begun such transitions. For example, Time Warner has
announced that in North and South Carolina it is rearranging its digital channels into categories
by programming type, placing the general news and business news together. Time Warner Cable
Press Release: "TV Made Easy: Time Warner Cable Launches New Theme-Based Channel
Lineup," March 26, 2010. Time Warner is also doing so in various Wisconsin systems.
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all of its systems. Absent this merger, it would have been in Comcast's financial interest to
neighborhood BTV. Indeed, with Bloomberg's recent efforts to improve and differentiate BTV's
business news product, it would have been in Comcast's own financial interest to offer its
customers BTV on a channel position near CNBC. As a result of the Transaction, however,
Comcast will have a new incentive not to implement this pro-consumer development on its
systems in order to disadvantage networks like BTY that compete with Comcast-owned
networks like CNBC.
The importance ofchannel position has been recognized not only by industry, but also by
Congress. "A cable system has a direct financial interest in promoting those channels on which
it sells advertising or owns programming... there is an economic incentive for cable systems to
deny carriage to [competing] local broadcast signals, or to reposition broadcast signals to
disadvantageous channel positions, or both." 98 This incentive is exacerbated by "[i]nterlocking
ownership of cable operation and programming interests[.]"99 "Other factors being neutral, cable
operators prefer to carry the programming of affiliated programmers in whose advertising
revenue they share ...,,100
http://www.timewamercable.com/wisconsinllearn/new digital lineup.html, accessed June 20,
2010.
98 Cable Television Consumer Protection and Competition Act of 1992 , H.R. Rep. No. 102-628,
LEXSEE 102 H RPT 628 at *93 (1992).
99 Turner Broad., supra, 910 F. Supp. at 753.
100
Id.
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The 1992 Cable Act specifically recognized the importance of channel placement in a
number of contexts.101 For example, MVPDs are required to carry certain local broadcast
stations at particular channel positions.I0
2
As noted above, BTV's significant success on international cable systems is related to
neighborhooding. The Marx Report also documents BTV's success when neighborhooded on
U.S. satellite MVPDs. Absent the merger, BTV would have expected Comcast to neighborhood
its channel line-up quickly to compete with other MVPDs, and that such a transition would be
fostered by Comcast's conversion to digital cable. Now, however, Comcast will have a
significant competitive reason to leave BTV in less favorable channel positions. Absent
conditions to the Merger, Comcast will have the ability and incentive to permanently strand BTV
at a competitively disadvantageous location in the channel line-up.
Control over the channel line-up is a powerful tool to unfairly favor affiliated channels
and disadvantage competitors. Comcast-NBCU wiJl be able to discriminate with respect to
channel placement, thereby placing BTV at a significant competitive disadvantage. As
demonstrated in the Marx Report, the effect of neighborhoods, and the exclusion from
neighborhoods, is significant. The Marx Report finds proximity to CNBC increases the
101 Cable Television Consumer Protection and Competition Act of 1992, H.R. Rep. No. 102
628, LEXSEE 102 H RPT 628 at *47 (1992) ("systems will carry a reasonable complement of
local stations on secure and predictable channel positions"); see also id. at *71.
102 The Cable Act requires that "[e]ach signal carried in fulfillment of the carriage obligations...
under this section shall be carried on the cable system channel number on which the local
commercial television station is broadcast over the air" or on, inter alia, a mutually agreed upon
channel. 47 U.S.c. § 534(b)(6).
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probability that a viewer will watch BTV by [[_no Neighborhoods also increase the number
of BTV hours watched by [[_lJ relative to average hours watched. 103
Moreover, CNBC's location in a neighborhood with BTV decreases the probability it will
be watched by [[.lJ and decreases its hours watched by [[.lJ.
104
With CNBC's viewership
decreasing when placed near BTV, a combined Comcast-NBCU would have every incentive to
place CNBC in more favorable channel position than BTV or retain favorable channel placement
in lieu of moving toward the neighborhood channel placement model that is the industry trend. 105
Comcast has recognized the importance of neighborhooding and used it against its
competition, in other areas, such as sports programming. First it ensured that its own regional
sports channel, Comcast Sports Channel, was placed beside ESPN. When Comcast added
Versus, its own national sports programming channel, to the Washington, D.C. system, it located
it at Channel 7, immediately adjacent to sports channels ESPN-2 (channel 8), ESPN (channel 9),
and Comcast Sports (channel 10), while the main channel of its unaffiliated sports channel
competitor, MASN, remained located at channel 42.
The Marx Report sets forth in detail the specific potential harms that a failure to
neighborhood BTV will cause.\06 The Marx Report demonstrates that Comcast-NBCU would
have the incentive and ability to perpetuate CNBC's channel placement advantages and
implement neighborhooding (if at all) only in a manner that will continue to place BTV in a
103
Marx Report Appendix at 23.
104
Id.
105 Id.
106
Marx Report at 29-31.
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position removed from CNBC and other general news and business news channels. Given the
incentive to place BTV outside the "news neighborhood," away from CNBC, the Commission
should deny the Merger or condition the merger to require neighborhooding. At the very least,
the FCC should prevent Comcast from leaving BTV and other independent competing
programmers in disadvantageous channel positions when Comcast's cable systems create genre-
related neighborhoods. 107 Specifically, if the Cornrnission does not deny the Application, the
FCC should require that, as soon as possible and in no case later than six months after a decision,
Comcast reorganize its channel placement alignment so that business news channels are adjacent
and contiguous to CNBC and any similar Comcast business news channels at each position
where such channel is carried.
2. Tier Placement
For many of the same reasons that neighborhooding is critical to maintaining robust
competition in business news programming, so, too, is tier placement. Tier placement refers to
offering a particular channel in a cable system's basic line up or in a special line-up which
subscribers can add to a basic subscription. The Commission has previously addressed the issue
of tier placement in several contexts. For example, in the context ofcommercial leased access,
the Commission has acknowledged the importance of a channel's placement on tiers with broad
subscriber bases. It required, therefore, that "[c]able operators shall place leased access
programmers that request access to a tier actually used by most subscribers on any tier that has a
107 Leased Cornrnercial Access, Report and Order and Further Notice of Proposed Rulemaking,
23 FCC Rcd 2909, 2917 'j['j[ 16-18 (2007).
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subscriber penetration of more than 50 percent, unless there are technical or other compelling
reasons for denying access to such tiers.',108
The Commission has concluded that tier placement is significant enough that, for
example, it required a cable system to provide a local broadcast station carriage at a time when
the cable system was rebuilding its channel line-up. The Commission underscored the
importance of placing channels on an accessible tier, holding that
KRCA, as a must carry station in Garden Grove Westminster and
Huntington Beach is not required to wait until Paragon completes
its system rebuild in order to be made available to all subscribers in
these communities. Thus, Paragon is required to carry KRCA on a
mutually acceptable channel, on the basic tier, that is available to
all subscribers in its system, which in this case is any channel
between 2 and 46, pending the completion of rebuilding its
systems. By doing so, KRCA will be provided to all of Paragon's
subscribers on the same basis as other signals entitled to mandatory
carriage on the basic tier.
109
A merged Comcast-NBCU would have an incentive to place unaffiliated channels on
tiers other than its expanded basic tier to reduce competition with channels in which it has a
financial interest. Such concerns are not theoretical; multiple programmers have already alleged
that Comcast engages in a pattern of discrimination against unaffiliated programmers, and it uses
unfavorable tier placements as a means of the discrimination. NFL Enterprises LLC alleged, for
example, that "Comcast carries the NFL Network on a premium digital sports tier for which
subscribers must pay substantial extra fees while uniformly carrying sports channels that it owns
108
47 c.F.R. § 76.971(a)(I).
109 Fouce Amusement Enters., Inc. Licensee of Television Station KRCA, Riverside, California,
For Carriage on Paragon Cable System Serving Garden Grove, Westminster, and Huntington
Beach, California, and Paragon Cable, Modification of KRCA ADI Market for Must Carry
Purposes, Memorandum Opinion and Order, 10 FCC Rcd 668, 673 'II 25 (1995).
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on an analog basic tier that entails no extra cost for subscribers."lIo NFL Enterprises LLC
alleged that Comcast had "Comcast exploited its bottleneck power by precipitously dropping the
NFL Network from its highly-penetrated digital basic tier in the wake of a decision by the
National Football League (the 'League') not to grant Comcast telecast rights - a financial interest
- in a valuable program package of eight, live NFL footbal1 games... for Versus, a competing
Comcast-owned sports channel." II! This tactic impaired NFL Network's competitiveness while
at the same time making Versus, the sports network affiliated with Comcast, more easily able to
acquire sports programming.
More recently, the Tennis Channel made similar al1egations against Corneas!. The
Tennis Channel al1eges that Comcast is discriminating against it in favor of the Golf Channel and
Versus (both affiliated with Comcast).ll2 The Tennis Channel al1eges that Comcast carried the
Golf Channel and Versus on broadly penetrated tiers while refusing to carry the Tennis Channel
on a similarly popular tier. It alleges that Comcast has "stranded Tennis Channel on a premium
tier. .. [e]ven though those programming services are by all objective standards competitive with
and comparable to Tennis Channel, they are carried on Comcast's most widely received
110 NFL Enterprises LLC v. Comcast Cable Commc'ns, LLC, Program Carriage Complaint'll 3,
File No. CSR-7876-P (May 6, 2008).
111 NFL Enterprises LLC v. Comcast Cable Commc'ns, LLC, Program Carriage Complaint, 'II 4,
File No. CSR-7876-P (May 6, 2008); see also TCR Sports Broadcasting Holding, L.L.P. v.
Comcast Corp., Program Carriage Complaint, File No. 8001-P (Aug. 7, 2008).
112 The Tennis Channel, Inc., Program Carriage Complaint, File No. CSR-8258-P (Jan. 5,2010).
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programming tiers[.],,1 n Indeed, the Tennis Channel notes that "Comcast relegates only
unaffiliated services like Tennis Channel to its narrowly-penetrated premium sports tier."lI4
Thus, Comcast has demonstrated in the past that it favors channels with which it is
affiliated by placing unaffiliated channels on more expensive or less viewed service tiers. BTV
has no reason to believe that Comcast will discontinue its discriminatory practices when it has a
plethora of new, affiliated programming to protect from independent competitors. Comcast's
vertical integration with NBCU may, in fact, exacerbate the problems independent programmers
have faced in their dealings with Corneas!. Comcast could decrease viewership of BTV relative
to CNBC by placing or keeping BTV on a more expensive, premium digital tier notwithstanding
its increasing appeal, while keeping CNBC on the basic, non-premium tier. As Congress and the
Commission have recognized, it is in the public interest to prevent this form of program carriage
discrimination.
Since Comcast's current behavior evidences discrimination in tiering, and the
Transaction will increase its incentive and ability to protect its affiliated networks, the
Transaction raises a substantial and material question of fact as to whether grant of the
Application is in the public interest, and the Application should be denied. In the alternative, the
Commission should prohibit Comcast-NBCU from carrying any business news programming
network on a different tier than CNBC or any similar Comcast business news programming
network. Where a business news programming network is currently on a less-heavily subscribed
113 Id.
114 Id.
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tier, it must be moved to the tier or tiers where CNBC is carried within six months of the DOJ
consent decree or FCC decision, whichever is later.
3. Refusal of Carriage
For many of the same reasons that neighborhooding and tier placement are critical to
maintenance of robust competition in business news programming, so, too, is carriage. Refusal
of carriage is a long-recognized anticompetitive harm. Among other measures, Congress
implemented so-called "must carry" rules to prevent MVPDs from refusing to carry competing
local broadcast stations. "Congress emphasized that the must-carry and channel positioning
provisions are meant to protect our system of television allocations and promote competition in
local markets." I 15
The Marx Report establishes business news as an antitrust market and demonstrates that,
contrary to the Application's assertion that the Transaction represents "no risk" of foreclosure,
Comcast-NBCU would only need to foreclose one business news channel to achieve the benefits
of foreclosure. I 16 BTV reaches 23% of its viewers via Comcast's cable systems. so any
reduction in carriage on Comcast's system would be detrimental to BTV.
II
? In addition, as
discussed below. through bundling of Comcast/NBC programming and advertising, Comcast can
force other MVPDs to foreclose BTV.
115 Implementation of the Cable Television Consumer Prot. and Competition Act of 1992
Broad. Signal Carriage Issues; Reexamination of the Effective Competition Standard for the
Regulation of Cable Television Basic Servo Rates; Request by TV 14, Inc. to Amend Section
76.51 of the Commission's Rules to Include Rome, Georgia, in the Atlanta, Georgia. Television
Market, Report and Order, 8 FCC Rcd 2965, 2988 'lI91 (1993).
116 Marx Report at 26-28.
II?
Marx Report Appendix at 25.
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Comcast-NBCU will have two networks, CNBC and The Golf Channel, that attract the
same demographic as BTV. That demographic, affluent adult males, is highly valued by
advertisers. Comcast-NBCU would have every incentive to maximize its leverage over
advertisers interested in tbat demograpbic by dropping BTV from its line-up.
Of course, the greatest barm tbat Comcast could cause to BTV would be complete refusal
to carry it. If Comcast were to refuse BTV carriage, it would deprive BTV of the ability to reach
Comcast's 24 million subscribers. COlllcast's subscribers are located in most of the major
business centers in the nation. These markets have the largest percentage and absolute number
of BTV viewers.
The Marx Report documents both short- and long-term benefits of foreclosure. In the
short term, Comcast-NBCU will increase viewers and advertising revenue for CNBC without
competition from BTV. Advertising rates for the Comcast-NBCU networks would increase. To
the extent BTV's loss of carriage, and corresponding loss of advertising revenue, reduces its
value to other MVPDs, Comcast-NBCU would be able to increase fees for CNBC. In the long
term, advertising revenue for CNBC would continue to grow across all cable systems as a result
of foreclosure. The Marx Report concludes that both short- and long-term foreclosure would be
profitable.
Comcast has a history of limiting the widest possible diversity of information sources to
the public by denying independent programmers carriage, as evidenced by the situation of
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MASN, when Comcast initially refused to carry MASN's regional sports programming. 118 Even
after Commission Orders forced Comcast to negotiate with MASN, MASN was forced to file a
program carriage complaint in 2009 for areas where Comcast continued to refuse to carry
MASN, despite the strong demand for MASN in the areas where Comcast refused it carriage. I 19
Indeed, as noted above, Comcast continues to favor its own sports programming channel,
Versus, at the expense of MASN. Comcast placed Versus on a channel adjacent to the two
principal ESPN channels, plus its own Comcast Sports Network, while leaving MASN's
principal channel more than 30 channels away.
In particular, once Comcast owns NBC, it will have the economic incentive to deny
access to its distribution system to CNBC's main competitor - BTV, as it did to local sports
competitor MASN in the Washington, D.C. market. The Marx Report shows that such
foreclosure would be profitable both in the short-term, and over time.
The Commission's program carriage rules and the difficulties encountered in enforcing
them would provide BTV (and similarly situated independent programmers) with only limited
and ineffective protection from such anticompetitive conduct. This point was recently
underscored by Senator Kohl in his May 26, 2010 letter to Chairman Genachowski, where he
noted that requiring Comcast not to discriminate in favor of its own programming "would be
independent of the existing FCC program carriage rules, and apply regardless of whether or not
118 See TCR Sports Broadcasting Holding, L.L.P. d/b/a Mid-Atlantic Sports Network v. Comcast
Corp., Proposed Findings of Fact and Conclusions of Law, MB Docket No. 08-214, June 26,
2009 (hereinafter, "MASN Proposed Findings of Fact and Conclusions of Law").
) 19 MASN Proposed Findings of Fact and Conclusions of Law at II.
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those rules are in force" and should expressly apply to issues such as tiering or
neighborhooding.
12o
The Commission should deny the Application because such incentive and ability to
foreclose poses a substantial and material question of fact as to whether grant of the Application
is in the public interest. In the alternative, the Commission should condition the grant of the
Application on the requirement that existing business news networks must to carried on
nondiscriminatory terms and conditions. If the Commission does not adopt these conditions, the
Commission should require divestiture of CNBC.
The merged Comcast-NBCU will have both the power and incentive to harm and
discriminate against BTV and other independent programmers in channel placement, carriage,
and tiering. It will control the largest cable distribution system in the U.S., and will have the
incentive to protect CNBC, its second most profitable affiliated cable network. As the Supreme
Court noted fifteen years ago, "[b]esides the cable operators' incentives to wield their market
power to the detriment of the broadcast industry, Congress also had evidence that cable operators
had already dropped, refused to carry, or adversely repositioned significant numbers of local
broadcasters.,,121 The Supreme Court has also recognized the resulting harms that an MVPD's
discrimination may cause. When a cable system denies a channel access to the cable network, a
series of negative ramifications ensues:
120 Letter from Sen. Herbert Kohl to the Hon. Christine Varney, Assistant Attorney General
Antitrust Division, and the Hon. Julius Genachowski, Chairman of the Federal Communications
Commission at 5 (May 26, 2010).
121 Turner Broad. v. FCC, 910 F. Supp 734, 742 (D.D.C. 1995), aff'd 520 U.S. 180 (1997).
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If a station is denied access to a cable network or is ad versely
repositioned, the size of the audience it can reach will be restricted.
A reduced audience decreases a commercial station's
attractiveness to advertisers, which causes advertising revenues to
decline. ... When the revenue declines, the station's ability to
provide quality programming is hampered, further decreasing the
viewing audience and creating a vicious cycle of declining
financial stability and health.
122
In this case, all of the discriminatory conduct outlined above will reduce the public's
access to critically important news content and unfairly weakens independent news
programmers' competitive postures. Because the Transaction will hinder independent
programmers from reaching or retaining fair channel carriage, the Transaction should be denied
or appropriately conditioned to address these transaction-specific harms. Specifically, Comcast-
NBCU should be required to carry, or continue to carry, on all of its cOntent distribution
platforms (cable, Internet, mobile devices) all business news channels currently carried by
Comcast and must provide such business news channels with non-discriminatory terms of
carriage, including the provision of subscription fees.
B. Restrictions on Internet Distribution ofBTV
Internet access issues are especially important to a company like Bloomberg, which is
highly dependent On the Internet to deliver content to its customers. Consumers are currently
able to gain access to all BTV content over the Internet, including a Ii ve stream of the BTV
service. BTV is concerned that a combined Comcast-NBCU will have an incentive to restrict the
ability to access BTV over the Internet or degrade BTV's Internet signal.
122
Id. at 744.
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I. Restricting Access to BTV over the Internet
As a news provider that simultaneously distributes all its content over the Internet, BTV
is concerned that Comcast-NBCU could inhibit users' access to BTV video over the Internet.
Comcast has launched "TV Everywhere," which limits access to programming to Internet users
who can "authenticate" that they have purchased cable subscriptions. Comcast is enforcing this
model through contracts that prevent cable programmers from distributing their content via the
Internet other than through Comcast's preferred mechanisms. The Commission and Congress
have recognized that competition from new technologies, providing alternatives to traditional
means of accessing cable television, is in the public interest. 123NBCU is very familiar with this
tactic. During the last Winter Olympics, NBC only allowed viewers to watch full replays on the
Internet if they could first demonstrate that they were subscribers to a cable system, or other
MVPD.
124
Senator Kohl, at the time, expressed concern that such content restrictions may be a
harbinger of competitive limitations "particularly in the context of the proposed Comcast-NBC
Universal merger." 125
BTV is concerned that Comcast-NBCU could pressure independent channels into
removing or limiting content availability on the Internet. Comcast-NBCU could do so by
offering independent channels discriminatory or unfavorable terms if they use other platforms
123 See, e.g., Cable Television Consumer Protection and Competition Act of 1992, H.R. Rep.
No. 102-628 at 25 (1992) ("A principal goal of H.R. 4850 is to encourage competition from
alternative and new technologies, including competing cable system, wireless cable, direct
broadcast satellites, and satellite master antenna television services.")
124 Letter from Sen. Herb Kohl to Jeff Zucker, President and CEO of NBC Universal (Feb. 26,
2010).
125
Id.
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like the Internet to distribute their content. Having the ability to restrict the platforms that
independent channels may use to distribute their content is inherently anticompetitive. And such
restrictions, as they relate to BTV, would prevent the public from accessing independent sources
of news and information on-line altogether. Such restrictions on news cannot be in the public
interest. Any artificial limits on the ability to access content on-line also devalues consumers'
broadband subscriptions. It is yet another reason for the Commission to deny the Application. If
the Commission does not deny the Application, it should impose a condition that Comcast is
prohibited from imposing any restriction, limitation or disincentive on the ability of competing
business news channels to offer their content on other platforms, including but not limited to the
Internet.
2. Degrading Internet Access
Comcast is not only an MVPD, it is also among the Nation's largest Internet service
providers. The proposed Comcast-NBCU merger therefore presents concerns regarding both
degraded and restricted Internet access. Indeed, Comcasl's history of interfering with certain
kinds of content, such as peer-to-peer file transfer systems, has prominently been the subject of
recent litigation. Such "network management" techniques pose a potential threat to other
Internet content and service providers. This is the kind of public interest harm that the
Commission should address through conditions to the proposed merger or through denial of the
merger altogether. Especially in light of the D.C. Circuit's recent decision in Comcast,126 which
called into question the Commission's authority to regulate Comcast's Internet network
management practices, it is critical that the Commission either deny or condition the Merger to
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prevent Comcast-NBCU from restricting BTV from delivering its programming content over the
Internet. If the Commission does not deny the Transaction, it should condition the Merger so
that Comcast-NBCU is prohibited from diminishing or degrading the terms or level of service or
quality of signal delivery of any business news channel on any of its content-distribution
platforms (cable, Internet, mobile devices) without the consent of the owner of said business
news channel.
C. Discriminatory Payment Terms
The transaction provides Comcast the incentive and power to employ other
discriminatory practices in terms of the compensation it provides to independent programmers.
It will have an incentive to offer below-market compensation to independent programmers who
compete with channels affiliated with Comcas!. The Tennis Channel's pending program carriage
complaint against Comcast provides a prime example. Even after the Tennis Channel made
significant investments, improved and expanded its program content, and expanded its audience
share, Comcast would only "carry Tennis Channel on significantly less favorable terms than
[Comcast's] affiliated sports networks - even though Tennis Channel compares favorably to
Comcast's similarly situated affiliates[.],,127
Notwithstanding that BTV is currently on a positive trajectory to increase its audience in
the U.S. and abroad at a rapid pace, Comcast does not currently provide BTV compensation for
carriage. Even as BTV's viewership increases, however, Comcast will have an incentive to
126 Comcast Corp. v. FCC, 600 F.3d 642 (D.C. Cir. 2010).
127 The Tennis Channel, Inc., Program Carriage Complaint '1[52, File No. CSR-8258-P (Jan 5,
2010).
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compensate it at rates below those that would be afforded in the market. Once Comcast owns
CNBC, BTV's main competitor, absent strong restrictions and prohibitions against such conduct,
Comeast will have the incentive and opportunity to provide CNBC competitive advantages
through discriminatory terms of carriage for BTV. This result is directly contrary to the
Commission's duty to promote competition and to protect the public interest.
D. Disadvantaging BTV's Ability to Obtain Advertisers
Once Comcast acquires CNBC, it will have a compelling incentive to favor companies
that it controls, including CNBC. BTV targets advertisers interested in reaching BTV's primary
audience, affluent adult males, which is a highly sought-after demographic to advertisers.
Several other channels that a combined Comcast-NBCU would own target the same audience
and attract similar advertisers. Solely through ownership of a major distribution platform,
Comcast-NBCU can bundle its advertising in a manner that makes BTV less attractive, or even
redundant, to advertisers. Comcast's cable carriage agreements require programmers like BTV
to provide Comcast with a certain amount of free advertising time on BTV's network. As a
result, Comcast could bundle advertising time on BTV with advertising on its own programming
networks with similar demographic appeal, such as the CNBC, The Golf Channel, or regional
sports networks. The Marx Report demonstrates that Comcast-NBCU would have the clear
incentive and ability to bundle advertising in such an anticompetitive manner.
128
Comcast
NBCU could do so at heavily discounted prices in order to deprive BTV of a fair opportunity to
sell its own advertising to advertisers who prefer the BTV network.
128 Marx Report at 8.
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Ifthe Commission permits the merger to proceed, Comcast-NBCU will have the
incentive and ability to bundle advertising time on CNBC with other affiliated programming
with similar demographic appeal. For example, Comcast may bundle advertising on CNBC with
advertising on regional sports networks and the Golf ChanneL As an independent programmer,
BTV would not be able to offer advertisers similar packages. Comcast-NBCU's market power
would foreclose competitors like BTV from access to advertisers by eliminating BTV's ability to
compete on a level playing field for advertising revenue based on the quality and value of its
programming.
In order to avoid this result, the Commission should adopt remedies that I) prohibit
Comcast-NBCU from selling advertising on non-Comcast-owned business news channels
together with advertising on Comcast networks as part of a bundled sale of advertising by
Comcast; 2) prohibit Comcast-NBCU from offering discounts or other inducements to
advertisers that are tied directly or indirectly to reducing or refraining from advertising purchases
on any business news channel other than CNBC or any other similar Comcast-NBCU-owned
business news channel; and 3) prohibit Comcast-NBCU from offering discounts or other
inducements for bundled advertising purchases that include advertising on CNBC or other
Comcast-NBCU-owned business news channeL
E. Foreclosing Carriage by Other MVPDs
With the combination of NBC-owned channels and Comcast-owned channels, Comcast
NBCU will be able to bundle channels strategically in a way that could disadvantage BTV.
Specifically, Comcast-NBCU could crowd out the number of channels available on other cahle
systems for independent news. Comcast could also threaten to withhold the most popular
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Comcast-NBCU channels, or offer them on less advantageous terms, unless an MVPD agreed
not to carry BTV (or other independent programming), or to only carry BTV on a less popular
tier or in a more remote neighborhood than CNBC.
Such bundling, or "tying arrangements" leave MVPDs with a dilemma: they must either
refuse the tied programming package and potentially go without must-have programming, or
they can agree to the tying arrangement and purchase programming that neither they nor their
customers want. 129 The Commission has recognized and addressed the harms that "tying"
practices cause in past mergers. no When the Commission considered the DirecTV/News Corp
merger, it agreed that the "transaction [could] enhance News Corp.'s incentive and ability to
persuade competitors to carry its affiliated programming.,,131 Only by imposing conditions on
the merger did the Commission find that it remedied this potential harm.
132
After the merger, Comcast could require an MVPD to carry the full suite of Comcast-
NBCU programming in order to be able to carry must-have channels. Comcast-NBCU could
also require it to carry CNBC in order to get access to must-have programming, such as a
regional sports channel. The FCC describes the concern with bundling for carriage as follows:
When programming is available for purchase only through
programmer-controlled packages that include both desired and
undesired programming, MVPDs face two choices. First, the
MVPD can refuse the tying arrangement, thereby potentially
depriving itself of desired, and often economically vital,
programming that subscribers demand and which may be essential
129 Tying Order at 17862 'l[l 20.
130 News Corp. at 593 'lI27I.
I31 Id.
132 Adelphia at 8220'1[ 28.
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to attracting and retaining subscribers. Second, the MVPD can
agree to the tying arrangement, thereby incurring costs for
programming that its subscribers do not demand and may not want,
with such costs being passed onto subscribers in the form of higher
rates, and also forcing the MVPD to allocate channel capacity for
the unwanted programming in place of programming that its
b
·b f 133
SU scn ers pre er.
The Commission found that concern well-founded when it reviewed the News Corp.
transaction. Specifically, it concluded that
we agree with Commenters who contend that the transaction can
enhance News Corp.'s incentive and ability to persuade
competitors to carry its affiliated programming. Specifically, as
we held above, the transaction may enhance News Corp.'s
incentive and ability to extract higher compensation from
competing MVPDs in exchange for carriage of its most popular
programming-RSN and broadcast programming. Such
compensation may include monetary compensation, but also
carriage of News Corp. affiliated networks. To obtain RSN or
broadcast programming from News Corp., an MVPD may accede
to News Corp.'s demands to carry its affiliated cable networks, or
to pay excessive rates for News Corp. programming. Absent these
demands and higher costs, the MVPD might have elected to carry
an independent rival network that would have expanded the
f
··1 bl . b·b 134
sources 0 programmmg avar a e to Its su scn ers.
133 Tying Order at 17862 'll120. The Commission also notes that "small cable operators and
MVPDs are particularly vulnerable to such tying arrangements because they do not have
leverage in negotiations for programming due to their smaller subscriber bases." Id. It further
noted that "OPASTCOIITAA, representing small and rural MVPDs, cites the practice of
programmers to require carriage of less popular programming in specified (usually basic) tiers in
return for the right to carry popular programming as an onerous and unreasonable condition that
denies consumers choice and impedes entry into the MVPD market." Id.
134 News Corp. at 593 'lI 271. ("[V]ertical transactions also have the potential for anticompetitive
effects. In particular, a vertically integrated firm that competes both in an upstream imput
market and a downstream output market, such as post-transaction News Corp., may have the
incentive and ability to: (I) discriminate against particular rivals in either the upstream or
downstream markets (e.g., by foreclosing rivals from inputs or customers); or (2) raise the costs
to rivals generally in either of the markets.") Such concerns prompted the Commission to
impose, both in News Corp. and the Adelphia decision remedies, such as arbitration, outside the
normal FCC procedures for resolution of complaints. Accordingly, Bloomberg has proposed
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Such forced bundling harms independent networks' ability to compete for limited shelf
space. In such circumstances the public interest is harmed regardless of the MVPD's resolution
of the carriage issue. Ifthe MVPD refuses such bundled programming, it deprives itself of
economically significant programming. If the MVPD agrees to carry a bundle with
programming that subscribers do not want, the costs are passed on to subscribers in the form of
higher rates. In such circumstances, "the MVPD and its subscribers are harmed by the refusal of
the programmer to offer each of its programming services on a stand-alone basis.,,135 This
effectively reduces the limited number of channels on an MVPD's system available to
independent progranuners.
After the merger, Comcast-NBCU will own or have an attributable interest in 54 cable
networkS.
136
An MVPD with limited capacity (as is the case for numerous rural carriers) may
not be able to carry BTV.
137
As demonstrated in the Marx Report, the transaction increases the
incentive and ability to bundle channels and the overall impact will harm other networks,
particularly those such as BTV that offer substitutes to the Comcast-NBCU networks. 138 Absent
bundling, however, such an MVPD with limited capacity may have chosen to carry BTV over
one of the Comcast-NBCU channels if those channels were offered on the same terms
similar kinds of remedies outside existing procedures to address the harm from this even more
dangerously integrated Merger.
135 Tying Order at 17862 'll119 (2007).
136 News Com. at 508 '1171.
137 Marx Report at 39 and Marx Report Appendix at 34.
138 See Id. ('The cable industry has become more vertically integrated into programming, which
may harm competing programmers").
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individually. In order to avoid this harm, the Commission should prohibit Comcast from
offering to any MVPD or requiring any MVPD to accept any combination of NBCU and
Comcast's network programming as a condition of receiving more favorable licensing terms than
Comcast offers on an "a la carte" basis. The Commission should also prohibit Comcast from
offering any discount or other inducement to any MVPD or other distributor of news content by
electronic means on condition that said MVPD or distributor provide competitive business news
channels on less favorable terms or conditions of carriage.
V. THE COMMISSION MUST DENY THE MERGER BECAUSE THE
APPLICANTS HAVE NOT DEMONSTRATED THAT THE PROPOSED
TRANSACTION SERVES THE PUBLIC INTEREST AND THE HARMS
OUTWEIGH THE BENEFITS
The Commission must deny the Application because the Transaction will result in
specific competitive harms that, when balanced against the potential public interest benefits, do
not serve the public interest. Further, the Transaction results in public interest harms that "would
otherwise frustrate implementation or enforcement of the Communications Act and federal
communication policy."139
The vertical combination of NBC Universal's range of programming content - CNBC in
particular- with the nation's single largest MVPD will lead to anti-competitive effects that the
Commission has long sought to mitigate. If the Transaction is granted, it will result in further
concentration of mass media ownership that will reduce the diversity ofprogram and service
viewpoints. Grant of the Application will further concentrate Comcast-NBCU's editorial power
over the content of affiliated channels. It will significantly increase Comcast-NBCU's incentive
139 News Corn. at 483-84 'j[ 16.
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and ability to harm and discriminate against unaffiliated channels in terms of carriage and
advertising.
Indeed, "It]he weighing of policies under the public-interest standard is a task that
Congress has delegated to the Commission in the first instance[.j"14o The Commission must, as
it did in the Adelphia proceeding, "analyze all relevant issues raised by the transactions that ...
significantly affect the public interest.,,!41
A. The Transaction Would Reduce the Number of Independent News Sources,
thereby Reducing Viewpoint Diversity, and May Impede the Free Flow of
Video Programming
Diversity of ownership helps ensure that the public receives unbiased information in
order to participate in the democratic process. Independent news outlets, such as BTV, provide
the type of unbiased reporting needed by the public to make informed decisions.
The Transaction will result in Comcast, the country's largest cable company, holding a
controlling interest in NBC Universal. NBC Universal, in turn, indirectly holds licenses for 25
over-the-air broadcast stations; NBC News, which broadcasts over those over-the-air stations,
and news and information networks including MSNBC, the Weather Channel, CNBC World,
and CNBC, the dominant business news network in the United States. The number of
independent voices will be reduced when CNBC and other news channels become affiliated with
Comcast and as a result, decrease viewpoint diversity. More importantly, as a direct result of the
140 Natl' Citizens, 436 U.S. at 810 (emphasis added).
141 Applications for Consent to the Assignment and/or Transfer of Control of Licenses: Adelphia
Commc'ns Corp., Assignors, to Time Warner Cable, Inc., Assignees, Adelphia Commc'ns Corp.,
Assignors and Transferors, to Comcast Corp., Assignees and Transferees, Comcast Corp.,
Transferor, to Time Warner Inc., Transferee; Time Warner Inc., Transferor, to Comcast Corp.,
Transferee, Memorandum Opinion and Order, 21 FCC Red 8203 'J[ 28 (2006) (emphasis added).
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Transaction, Comcast-NBCU would have the ability and incentive to harm and discriminate
against independent programmers and independent news progranuning in particular. Such
potential harm to the number ofindependent voices and the commensurate decrease in viewpoint
diversity is clearly contrary to the public interest.
The public interest requires a variety of viewpoints so citizens may make informed
decisions. News and information providers like BTV serve "one of the most vital of all general
interests: the dissemination of news from as many different sources, and with as many different
facets and colors as is possible."I42 Allowing private business interests to restrain the free flow
of news and information to the public is not in the public interest.
The public benefits from the free flow of information.
"The interest of the public is to have the flow of news not
trammeled by the combined self-interest of those who enjoy a
unique constitutional position precisely because of the public
dependence on a free press. A public interest so essential to the
vitality of our democratic government may be defeated by private
restraints no less than by public censorship."I43
The public interest requires news and information from a variety of independent news outlets to
ensure that the public has the unbiased information needed to make informed decisions.
Comcast's defense of the Transaction essentially argues that because no Commission
rule is violated, no diversity concerns are present. Assessing the Transaction for any rule
violations is only part of the Commission's analysis - more importantly, it must affirmatively
142 Associated Press v. United States, 326 U.S. 1,28 (1945).
143 Associated Press, 326 U.S. at 28-29.
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determine if the Transaction is in the public interest.
144
In addition, Comcast argues that because
the Transaction involves a vertical, rather than horizontal, merger, no diversity concerns are
present. However, the Commission has recognized that "vertical transactions also have the
potential for anticompetitive effects,,145 and this transaction has significant anticompetitive
effects on their major competitors. Comcast ignores the significant horizontal impacts, such as
control of channel lineups and neighborhooding decisions favoring their own programming that
are created by the Merger.
B. The Transaction Would Reduce Diversity in Ownership and Their
Commitment to Independence Does Not Mitigate That Concern
Comcast's commitment to "independence" using an ombudsman does not address the
harm to ownership diversity that results from Comcast acquiring a controlling interest in NBCU
programming, particularly in the area of NBC News and related cable news networks MSNBC
and CNBC, where diverse ownership and viewpoint is critical. Nor does it guarantee NBC
News' independence. Moreover, such an ombudsman arrangement does nothing to ameliorate
Comcast's potential anticompetitive actions, as a distribution platform owner, which will result
from ownership of a controlling interest in NBCU and its programming.
144 47 U.S.c. § 310(d).
145 DirectTV 'II 71.
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C. The Transaction Results in Significant Competitive Harms and Would
Impair, Rather than Promote, Competition
As Congress has recognized, "concerns... regarding increased vertical and horizontal
integration in the cable industry are serious and substantial.,,146 The combination of Comcast,
the Nation's largest MYPD, with NECU will inevitably lead to competitive injury, barriers to
entry, reduced media diversity and other harms described herein.
In recent years, Bloomberg has invested substantially to enhance BTY's ability to be a
stronger independent source of news and information. The efforts of independent news outlets to
succeed need to be encouraged and supported by the Commission.
If the Commission approves the Transaction, the little remaining competition between
independent and MYPD-owned programmers will diminish further. Concurrently, the
Commission will essentially approve an increase in Comcast-NBCU's market power to harm and
discriminate against independent programmers. Approval in these circumstances runs counter to
the public interest and the express will of Congress.
When considering the 1992 Cable Act, Congress recognized that vertical integration of
the cable industry had already begun harming independent programmers competing with
programmers affiliated with MYPDs
l47
It noted that "vertically integrated companies reduce
146 Cable Television Consumer Protection and Competition Act of 1992, H.R. Rep. No. 102-628
at 34 (1992).
147 See Cable Television Consumer Protection and Competition Act of 1992 Conference Report,
H.R. Rep. No. 102-862 at 34 (1992) ("The cable industry has become more vertically integrated
into programming, which may harm competing programmers").
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diversity in programming by threatening the viability of rival cable programming services.',,48 It
further noted the various forms of harm that may stem from discrimination against unaffiliated,
competitor programmers, induding denying access to programmers affiliated with rival multi-
system operators, price discrimination, channel placement discrimination, and an offer of
carriage only in exchange for a financial interest in the programmer.
'49
Courts, too, have recognized the harms that vertically integrated MVPDs and content
providers can cause. "[T]he cable industry has become increasingly horizontally concentrated
and vertically integrated. Power has been concentrated in the hands of fewer and fewer operators
(horizontal concentration), which has led to increased vertical integration as the largest operators
h b d d h
· . . bl . k ,,150
ave egun to eman owners lp Interests In ca e programmIng networ s.
The Commission has recognized that "vertical transactions also have the potential for
anticompetitive effects....[A] vertically integrated firm that competes both in an upstream input
market and a downstream output market, such as post-transaction News Corp., may have the
incentive and ability to: (I) discriminate against particular rivals in either the upstream or
148 Id. at 33. The cable industry has become vertically integrated; cable operators and cable
programmers often have common ownership. As a result, cable operators have the incentive and
ability to favor their affiliated programmers. This could make it more difficult for noneable
affiliated programmers to secure carriage on cable systems. Vertically integrated program
suppliers also have the incentive and ability to favor their affiliated cable operators over
nonaffiliated cable operators and programming distributors using other technologies. See also,
Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, 106
Stat. 1460 § 2(a)(5) (1992).
149 Id. The House Committee on Energy and Commerce "received testimony that vertically
integrated operators have impeded the creation of new programming services by refusing or
threatening to refuse carriage to such services that would compete with their existing
programming services. Cable Television Consumer Protection and Competition Act of 1992,
H.R. Rep. No. 102-628 at 33 (1992).
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downstream markets (e.g., by foreclosing rivals from inputs or customers); Dr (2) raise the costs
to rivals generally in either of the markets.",51
I. The Commission may condition its consent to a transaction in order to
address competition-related concerns.
Congress mandated, and the Commission ultimately adopted, program access and
program carriage rules to attempt to ameliorate concerns about vertically integrated cable
companies. These rules, however, do not specifically address issues such as neighborhooding.
Moreover, the complaint process has proven lengthy and expensive, and is not an adequate
150 Turner, 910 F. Supp. at 740 .
151 News Corp. at 508 '1171.
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substitute to address the harm that will occur here with the merger of the largest cable distributor
and one of the largest programmers. Indeed, in the past, the Commission has adopted merger
conditions to address the type of harms that would not be adequately resolved by the current
d
. I 152
program access an program carnage ru es.
By prescribing remedies beyond mere resort to the program access and program carriage
rules, the Commission has acknowledged that, at times, the rules alone are an insufficient
remedy. For example, in the DirectTVlNews Corp merger,. the Commission imposed special
commercial arbitration conditions that apply when negotiations for carriage of its regional sports
networks failed.
153
Similarly, in the AdelphiafTime Warner merger, the Commission applied
program access conditions requiring commercial arbitration of access disputes involving regional
sports networks. 154 Both cases demonstrate that the Commission has recognized the potential for
harms and discrimination can be so great as to need additional conditions. In this light, the
mechanisms that BTV proposes to forestaJl discrimination against independent programmers are
appropriate conditions.
Vertical integration of the cable industry is causing injury to independent content
providers as they struggle, increasingly, against anticompetitive industry tactics. Approval of the
152 News Corp. at 676 App'x F; Adelphia at 8336 App'x B.
153 News Corp. at 676 App'x F. The Commission first found it necessary to impose compliance
with its program carriage and access rules as a separate condition to the merger. Id. at 677.
154 Adelphia at 8336 App'x B; see also Time Warner Inc., et aI., Decision and Order, 123 F.T.C.
171,197,1997 FTC LEXIS 13, at *50 (Feb. 3, 1997) (".. .Time Warner shall execute a
Programming Service Agreement with at least one Independent Advertising-Supported News
and Information National Video Programming Service, unless the Commission determines, upon
a showing by Time Warner, that none of the offers of Carriage Terms are commercially
reasonable").
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Application in this matter would serve only to continue a trend that is detrimental to a
competitive and independent marketplace of ideas. To prevent the public interest harms detailed
in this Petition, the Commission should deny the Application or impose significant conditions.
VI. IF THE COMMISSION GRANTS THE APPLICATION, IT MUST IMPOSE
CONDITIONS TO PROTECT THE PUBLIC INTEREST.
A. The Commission has authority to impose conditions to address public
interest considerations
Under Section 310(d) of the Communications Act, the Commission must find the merger
in the public interest. Ifthe Commission does not deny the Application. it must impose
conditions to ensure that the public interest standard is met.
Our public interest authority also enables us to impose and enforce
narrowly tailored. transaction-specific conditions that ensure that
the public interest is served by the transaction...Section 303(r) of
the Communications Act authorizes the Commission to prescribe
restrictions or conditions, not inconsistent with law, that may be
necessary to carry out the provisions of the Act. Similarly, section
2l4(c) of the Act authorizes the Commission to attach to the
certificate 'such terms and conditions as in its judgment the public
convenience and necessity may require.' Indeed, unlike the role of
antitrust enforcement agencies, our public interest authority
enables us to rely upon our extensive regulatory and enforcement
experience to impose and enforce conditions to ensure that the
merger will yield overall public interest benefits.',155
After considering how a transaction may affect the promotion of competition as an
element of its public interest analysis, the Commission may craft competition-specific remedies.
The Commission has authority to "attach conditions to a transfer of licenses and authorizations in
155 Applications of AT&T at 'lI 43 (2004).
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order to ensure that the public interest is served by the transaction.,,156 The Commission's ability
to attach conditions to a license transfer application is broad and encompasses remedies beyond
those available to the antitrust enforcement agencies. 157 The Commission may impose
conditions which "in its judgment the public convenience and necessity may require" and are
"not inconsistent with law as it may be necessary to carry out the provisions of the ACt.,,158
The FCC could order, or the Transaction parties could agree to divest CNBC and other
NBC news outlets in order to remedy the Transaction's harms. Absent such divestiture, the only
way to protect independent business news programming is for the FCC to impose conditions that
require Comcast-NBCU to provide BTV and other similarly situated independent programmers
with the safeguards discussed below that will put them on an equal footing with CNBC.
1. Neighborhooding of independent business news programming.
The failure to neighborhood channels creates a distinct competitive advantage for
channels within the neighborhood and a corresponding distinct disadvantage with respect to
channels outside a neighborhood. As demonstrated in the Marx Report, the placement of BTV
outside of CNBC's "channel neighborhood" decreases the probability that an MVPD subscriber
watches BTV by [[.JJ and decreases the hours spent watching BTV by [[.JJ. Such
decrease undermines BTV's ability to compete for views and advertisers.
156 AOL, at 6556 'Il25.
157 Id.
158 .
Id. (CIting 47 U.S.c. § 214(c); 47 U.S.c. § 303(r)).
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[n its public interest statement, Comcast and NBCU agreed voluntarily to add certain
independent channels to its digital line-up once digital migration is complete in 2011.
159
BTV
respectfully submits that such voluntary commitments are hollow unless such independent
networks attain channel placement that puts them on a level playing field with similar content
providers, particularly those owned by Comcast-NBCU. Therefore, BTV requests that if the
Commission determines to grant the Application, it must condition the merger on
neighborhooding (placing on contiguous, adjacent channels) of business news on all Comcast
systems in all places in the channel line up where CNBC is located within six months of the
Commission's decision or DOJ Consent Decree.
2. Competing business news programming must be carried on the same tier
as CNBC.
Commission precedent recognizes the importance ofcarrying similar programming on
the same cable program tier.
160
Failure to do so results in competitive harm for programming
that is carried on a paid tier or higher-cost tier than other programming. In fact, BTV is only
carried on cable systems' digital tiers, and where only analog service is available, BTV is not
carried at all.
161
As a result, the Commission should require Comcast-NBCU to carryall
competing unaffiliated business news networks on the same tier as CNBC and, as noted above,
on contiguous, adjacent channels, wherever CNBC is carried.
159 See Application Public Interest Statement at 112.
160 Fouce Amusement Enters., Inc. Licensee of Television Station KRCA, Riverside, California,
For Carriage on Paragon Cable System Serving Garden Grove, Westminster, and Huntington
Beach, California, and Paragon Cable, Modification of KRCA Am Market for Must Carry
Purposes, Memorandum Opinion and Order, 10 FCC Red 668 (1995).
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3. Bloomberg's remedies are a reasonable response to the competitive harm
posed by Comcast's control over the competitor with an 85% share of the
business news market.
As previously set forth, the remedy simplest to implement and enforce from the
perspective of the Commission would be the requirement that Comcast divest itself of its control
over and any ownership interest in CNBC. Clearly, divestiture would eliminate any incentive of
Comcast's to use its dominant position in the business news market to the detriment of its
competitors. Ifthe Commission were not to require Comcast's divestiture of CNBC, however,
the alternative remedies proposed by Bloomberg are reasonable methods for the Commission to
eliminate the harm to independent sources of news and information.
The proposed "neighborhooding" remedy -- requiring carriage of BTV and other business
news networks in competition with CNBC (the "Business News Channels") by Comcast on
channels located contiguously and adjacent to CNBC at each channel position where CNBC is
located -- is grounded in the need to preserve independent, diverse sources of news and
information programming. Bloomberg is the world's largest newsgathering organization, and
BTV is the last major source of video news programming not affiliated either with an MVPD or
a multi-channel programmer. Preservation of such diverse news sources is a fundamental piece
of the architecture of the Commission's regulatory structure and merits use of a special remedy
like neighborhooding to alleviate the harm that would otherwise be caused by Comcast's natural
incentive to protect its hugely profitable CNBC channel from competition.
161 "I conclude that carriage of CNBC on basic or expanded basic decreases the carriage rate for
Bloomberg TV on that tier by close to two-thirds (63%) ...." Marx Report at 22.
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Requiring carriage of particular channels, in this case the business news channels, in the
interest of preservation of diverse, independent sources of news and information programming is
hardly unprecedented. Although the "must carry" rules applied to over-the-air broadcast
stations,'62 in ordering cable systems to carry the local broadcast signals, as well as provide
carriage of leased access stations, Congress specifically intended to "assure the widest possible
diversity of information sources are made available to the public." 163 Moreover, when it
imposed the "must carry" obligation, Congress went further and required placement of channels
on the same position as broadcast over-the-air, 164 demonstrating that Congress recognized
channel placement as a similarly important objective. Indeed, Congress made findings that it
would insist upon carriage and channel placement because "in the absence of rules mandating
carriage and channel positioning ... some cable system operators have denied carriage or
repositioned the carriage of some television stations.,,165 Further, this was deemed necessary
because a cable operator had a direct financial interest in promoting its own cable networks. 166
The Commission, in addition to imposing this requirement on cable MVPDs, has also
determined to apply this to DBS operators,'67 with no significant difficulties encountered by
either type of MVPD.
162
47 U.S.C. § 534(a).
163 H.R. Rep. No. l02-862 at 35 (1992).
164
47 U.S.c. § 534(b)(6).
165 H.R. Rep. No. 102-862, Section 2(a)(l0) (emphasis supplied).
166 Id., at Section 2(a)(lI).
167
47 C.F.R. §76.66.
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More specifically, the importance of preserving competitive sources of news and
information by requiring carriage of a competitive news channel has already been considered in
the context of a merger between a cable MVPD and major programming distributor whose
offerings included a major news service. When the Federal Trade Commission approved the
merger of Time Warner, Inc. with Turner Broadcasting System in February 1997, the FTC
expressly required Time Warner Cable to provide carriage to a competitor to Turner's CNN. 168
Thus, it is evident that as an initial matter the requirement of carriage, including the
particular placement of channels for the consumer, is a reasonable remedy which has already
been employed. Taking the next step of carriage that involves neighborhooding, specifically
including the requirement that Comcast carry the Business News Channels on all tiers where
CNBC is carried, is a reasonable way of preventing the competitive harm that Comcast has the
incentive to cause to the business news channels.
First, the reasonableness and feasibility of neighborhooding is demonstrated by the fact
the MVPDs - even cable companies -- are already doing it. MVPDs regularly organize their
channel placement around various genres, specifically including news, sports and children's
programming. Specifically, the DirecTV and DISH channel line-up, as well as that of Verizon's
FIOS and ATT's V-Verse are genre-based and they specifically cluster the business news
programming of Bloomberg TV, CNBC, and Fox Business Network close to one-another.
Comcast, too, is already creating neighborhoods on its systems. For example, on the Comcast
168 Time Warner Inc., et aI., Decision and Order, 123 FTC. 171, 197, 1997 FTC LEXIS 13 (Feb.
3,1997) (" ...Time Warner shall execute a Programming Service Agreement with at least one
Independent Advertising Supported News and Information National Video Programming
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system in the city of Washington, D.C., Comcast currently "neighborhoods" sports
channels. It lines up together Comcast's own Versus (Channel 7), ESPN2 (Channel 8), ESPN
(Channel 9) and Comcast Sports (Channel 10). This suggests that there is no technical
impediment to neighborhooding.
Second, placing BTV and Fox Business on the same tier and on contiguous and adjacent
channels to CNBC can be accomplished with a minimum of disruption to customers. An
analysis of the channel changes made by Comcast to its own systems demonstrates that this
occurs with sufficient frequency that it is not particularly disruptive to customers. In nearly
every system analyzed, there has been at least one channel adjustment in the last five years. In
six of the top ten DMA's, Comcast has made channel adjustments at differing frequencies
throughout the past five years. In the New York market, the largest DMA, Comcast has
frequently changed channel positions over the past three years, with instances of more than 50
channels changed at one time within the previous year. In other sizable markets, such as Miami
(five instances where more than 30 channels changed in the past six years, with additional
changes over seven years) and Baltimore (over 120 channels changed in August 2008; nearly 30
channels in April 2010), Comcast has changed channel positions multiple times within the past
year. The history of Comcast's channel position adjustments throughout many of the largest
markets clearly indicates that channel positions are adjustable and changes to channel positions
are part of Comcast's operational practices. Moreover, in an increasingly digital environment,
Service, unless the Commission determines, upon a showing by Time Warner, that none of the
offers of Carriage Terms are commercially reasonable").
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these changes and rearrangements of channel positions can be accomplished with little
technological difficulty.'69
Third, Corncast cannot deny the value and importance of neighborhooding, in that
Comcast itself is using neighborhooding to cause competitive harm to programmers in
competition with them by denying competitive channels access to neighborhoods. In the
Washington, D.C. system, for example, when Comcast introduced its own Versus sports
network, it placed it on a channel adjacent to the two principal ESPN channels, plus its own
Comcast Sports Network (channels 7-10), while leaving MASN's principal channel more than
30 channels away. To avoid the problem of Comcast's ability to use neighborhooding to cause
competitive harm, Business News Channels must, therefore, be on contiguous and adjacent
channels wherever CNBC is available for viewing on Comcast systems.
Fourth, there is no basis to the objection that Comcast makes about capacity restraints,
especially given that nearly all Comcast systems (80% of the Comcast footprint) will have
converted expanded basic service to digital by the end of 2010 and there are virtually no
limitations on digital capacity. 170 In a digital system, it is technologically simple to ensure that
channels are placed beside each other in all tiers. Thus, placement of existing Business News
Channels on channels contiguous and adjacent to CNBC can be accomplished with a minimum
169 Data from Tribune Media Services. See charts in Exhibit 4 showing the channel changes by
market by frequency of date.
170 Application, at 18 n. 19; see also id. at 76-77 n.144.
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of disruption. Indeed, in most of Comcast's top ten markets, there are even currently open
channels within a few channel positions of CNBC.
171
Thus, it is evident that Bloomberg's proposed remedy - neighborhooding of the Business
News Channels with CNBC in all tiers where Comcast carries CNBC - is a reasonable remedy to
constrain Comcast's ability to harm and discriminate against BTV. In the absence of the
requirement that Comcast divest CNBC, this form of relief is the only means of preventing
Comcast from using its competitive position to eliminate the last independent source of news
programming.
4. The Commission should require mandatory carriage and non
discriminatory terms and conditions ofcarriage for independent news
networks on Comcast digital platforms.
The Commission has long recognized the ability and incentive of vertically integrated
programmers to discriminate against unaftiliated programming. In two decisions that involved
the combination of a signiticant MVPD and the owner of significant broadcast and non-
broadcast programming, the Commission adopted a condition to address concerns about
unaffiliated programmers' ability to secure carriage. Specifically, in both Liberty
MedialDirecTV and News Corp/Hughes Electronics Corp., the Commission adopted a condition
that prohibited discrimination against unaffiliated programming services "in the selection, price,
terms or conditions of carriage."
In this case, Comcast-NBCU will be subject to the Commission's program access rules.
However, as discussed herein, the Commission's complaint rules do not address the needs of
171 See Exhibit 4.
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independent programmers in a timely or cost-efficient manner. Before the Commission approves
the Transaction, it should adopt a specific condition that requires Comcast-NBCU to include
nondiscriminatory terms and conditions of carriage of independent programmers so that
anticompetitive conduct can be addressed in a timely, cost-effective manner, and, as with the
other remedies, an accelerated dispute resolution system, as set forth in Exhibit 2.
5. The Commission must prohibit any restriction, limitation or disincentive
on the ability of alternative business news networks to offer their content
on other platforms, including the Internet.
a. Ban Limitations on TV Everywhere
TV Everywhere is a business model where access to programming is limited to
authenticated cable system subscribers. For BTV, which makes its content available via
television and the Internet, Comcast's proposed "TV Everywhere" could result in BTV being
forced to decide between carriage on Comcast's systems and continuing to provide its highly
valued content to its customers via the internet. This model could have a direct, serious impact
on the ability of BTV viewers to access BTV programming. The Commission should adopt a
condition that prohibits any restriction, limitation or disincentive on the ability of alternative
business news networks to offer their content on other platforms, including the Internet.
b. Protect Internet Access
The Commission found that Corneas! had "significantly impeded consumers' ability to
access the content and use the applications of their choice" I72 by degrading the quality of
I72 Broadband Industry Practices Petition of Free Press et al. for Declaratory Ruling that
Degrading an Internet Application Violates the FCC's Internet Policy Statement and Does Not
Meet an Exception for "Reasonable Network Management," Memorandum Opinion and Order,
23 FCC Red 13028 (2008).
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transmission to customers using peer-to-peer networks. The recent D.C. Circuit decision
determining that the FCC did not have authority over Comcast means that, until further
regulation is imposed, Comcast could degrade signals of its users. BTV provides its content both
via television and over the Internet. The vertical integration of Comcast with BTV's major
competitor, CNBC increases the likelihood that such signal degradation could be used to
negatively impact BTV's internet viewers. In the AOL-Time Warner merger, the Commission
adopted a condition relating to anticompetitive use of the [instant messaging] function.
173
The
Commission must adopt a similar condition to prevent Comcast-NBCU from reducing or
degrading the quality of transmission of signals or feeds of competing business news networks
on all Comcast platforms.
6. The Commission should prohibit Comcast from bundling advertising time
on competing business news networks with advertising time on Comcast
owned networks.
The Commission has recognized that discrimination in advertising can impact diversity
and that the Commission has jurisdiction to remedy such practices
174
Comcast-NBCU's ability
to bundle advertising time on competing networks with advertising on its own networks, solely
by virtue of its carriage contracts with competing networks, results in an unfair competitive
advantage that will ultimately starve BTV and other independent programmers from advertising
17J "[O]ur condition gives AOL an incentive to interoperate by forbidding it from providing
streaming video AIHS applications until it interoperates." AOL at 6626 'l! 190. The Commission
determined that "the risk of our not intervening now, however, is to risk the emergence of a
significant new business needing regulation, a result we and Congress wish to avoid especially
on the Internet and interactive services. AOL at 6626 ')[ 188.
174 See Promoting Diversification of Ownership in the Broadcasting Services, 23 FCC Red 5922
'll 49 n.l00 (2008).
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revenue they would achieve in the competitive market. In order for BTV and other independent
programmers to survive after the proposed merger, the Commission must impose a condition
prohibiting anticompetitive advertising bundling in order to ensure the merger is in the public
interest.
Accordingly, the Commission should prohibit the sale of advertising on non-Comcast
owned Business News Channels
l75
such as BTV together with advertising on affiliated
176
Comcast networks as part of a bundled sale of advertising by Comcast without the consent of the
competing Business News Channel. Similarly, the Commission should prohibit Comcast from
offering discounts or other inducements to advertisers that are tied directly or indirectly to
reducing or refraining from advertising purchases on any Business News Channel other than
CNBC or any other similar Comcast Business News Channel. Only in this manner can Comcast
be prevented from foreclosing competitors to Comcast's programming networks, specifically
CNBC, from access to advertisers by eliminating BTV's ability to compete for advertisers on a
level playing field.
175 A "Business News Channel" shall be defined as a video programming network whose
programming is focused on business and financial news reporting and analysis during the hours
from 6:00 AM through 4:00 PM in the U.S. Eastern Time Zone, whenever U.S. securities and
commodities exchanges are open and operating.
176 Affiliate shall have the meaning set forth in 47 U.S.c. § 522(2).
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7. The Commission should prohibit bundling for carriage of programming by
Comcast
The Commission has recognized the potential harm from programming available for
purchase through programmer-controlled packages.
177
As set fonh in the Marx Repon, the
Transaction will provide Comcast with the incentive to discriminate against BTV by offering
programming bundling opponunities involving CNBC. Accordingly, the Commission should
prohibit Comcast from offering to any MVPD or requiring any MVPD to accept any
combination of NBCU's and Comcast's network programming, as a condition of receiving more
favorable licensing terms than Comcast offers on an "a la cane" basis.
177 Tying Order; see also News Corp.
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VII. CONCLUSION
Comcast and GE have failed to meet their burden to demonstrate that the Merger serves
the public interest. The Commission must deny the Merger as presently proposed. In the
alternative, ifit determines to grant the Application, it can only do so with the imposition ofthe
conditions set forth in Exhibit 2 to prevent the anti-competitive harm to BTV, the last
independent source ofnews.
Stephen Diaz Gavin
Kevin 1. Martin
Janet Fitzpatrick Moran
Patton Boggs LLP
2550 M St., NW
Washington, DC 20037
(202) 457-6000
Dated:
5103307.02
June 21, 2010
71
CERTIFICATE OJ<' SERVICE
I, Jillian Gibson, a legal secretary at Patton Boggs LLP, hereby certify that on this 21 Sl day of
June, 2010, I caused true and correct copies ofthe foregoing Petition to Deny to be served by
first-class mail on the following individuals:
Kathleen A. Zachem
Vice President, Regulatory and State
Legislative Affairs
COMCAST CORPORATION
2001 Pennsylvania Avenue NW, Suite 500
Washington DC 20006
Richard Cotton
Executive Vice President & General Counsel
NBC UNIVERSAL, INC.
30 Rockefeller Plaza
New York NY 1Ol!2
Ronald A. Stem
Vice President & Senior Competition Counsel
GENERAL ELECTRIC COMPANY
1299 Pennsylvania Avenue NW
9
th
Floor
Washington DC 20004
Jordan Goldstein
Senior Director, Regulatory Affairs
COMCASTCORPORATION
2001 Pennsylvania Avenue NW
Sutie 500
Washington DC 20006
5102801.01
Brackett B. Denniston, III
Senior Vice President & General Counsel
GENERAL ELECTRIC COMPANY
3135 Easlon Turnpike
Fairfield CT 06828
Joseph W. Waz, Jr.
Senior Vice President, External Affairs and
Public Policy
COMCAST CORPORATION
One Comcast Center
Philadelphia PA 19103-2838
Margaret L. Tobey
Vice President, Regulatory Affairs
NBC UNIVERSAL, INC.
1299 PennsyLvania Avenue NW
9
1h
Floor
Washington DC 20004
A. Richard Metzger, Jr.
Regina M .Keeney
Lawler, Metzger, Keeney & Logan LLC
200I K Street NW, Suite 802
Washington DC 20006
REDACfED - FOR PUBLIC rNSPECfION
Bryan N. Tramont
Kenneth E. Salten
David H. Solomon
Natalie G. Roisman
Wilkinson Barker Knauer LLP
2300 N Street NW, Suite 700
Washington DC 20037
Arthur 1. Burke
Ronan P. Harty
Rajesh James
David Polk & Wardwell LLP
450 Lexington Avenue
New York NY 10017
Michael H. Hammer
James L. Casserly
Michael D. Hurwitz
Brien C. Bell
Willkie Farr & Gallagher LLP
1875 K StreetNW
Washington DC 20006
Exhibit 4
Summary
Comcast Channel Lineup Query Spreadsheets
Tuesday, June 22, 2010
Markets Queried'
DMA Rank (2009-2010)
Baltimore, MD 27
Boston,MA 7
Chicago,IL 3
Denver, CD 16
Detroit, MI 11
Miami-Ft. Lauderdale, FL 17
Philadelphia, PA 4
Pittsburgh, PA 23
NewYork (NY & Nj) 1
San Francisco, CA 6
Seattle-Tacoma, WA 13
Washington, DC 9
Paragraph Swnmary:
In six of the top ten DMA's, Comcast has made channel adjustments at differing frequencies
throughout the past five years. In the NewYork market, the largest DMA, Comcast has frequently
changed channel positions over the past three years, with instances of more than 50 channels
changed at one time within the previous year. In other sizable markets, such as Miami and
Baltimore, Comcast has changed channel positions multiple times within the past year. The history
of Comcast's channel position adjustments throughout many of the hugest markets clearly indicates
that channel positions are adjustable and changes to channel positions are pan of Comcast's
operational practices.
Swnmary ofResults:
Markets with changes in Comcast line"p:
1) Baltimore, MD
a. Approximately 120 channels changed on 8/25/2008
b. Nearly 40 channels changed on 4/30/2010
2) Boston, MA
a. Sy.;tem wide change in Brookline Communityon 6/14/2006
b. Small adjustments made throughout past 4 years
3) Chicago, IL
a. More than 60 channels changed on 5/14/2003
b. Small adjustments made throughout 2003-2008 (None after 2008)
4) Denver, CD
a. Changes only made on specific dates (3 times in past year)
b. Sy.;tem wide changes in April and June of 2010 (more than 100 channels changed)
5102633
5) Detroit, MI
a. Small changes only made on specific dates (6 times in past 10 years)
b. Largest number of changes at one time were 7 on 3/5/2010
6) Miami-Ft. Lmderdale, FL
a. Three instances where more than 30 channels were changed over the past six years
b. Adjustments to channel positions frequently made over the past 7 years
7) NewYork Market
a. New York Section
i. On June 2, 2010, nearly60 channels were changed
ii. Adjustments have been made periodically throughout last 3 years
iii. On 12/5/2006 more than 70 channels changed
b. NewJersey Pan 2
i. Five instances where more than 50 channels were changed in the past 6 years
ii. Adjustments to channel lineup frequently made over the past 5+ years.
c. NewJersey Pan 3
i. Three instances where more than 50 channels were changed in the past 6
years
ii. Adjustments to channel lineup frequently made over the past 5+ years
d. NewJersey Pan 4
i. Five instances of more than 50 channels being changed in the past 8 years
ii. Changes in channel positions were frequently made over the past 3+ years
8) Philadelphia, PA
a. More than 100 channels were changed at one time twice in the past 4 years
b. Nearly 60 channels were changed on May 6,2010
9) San Francisco, CA
a. Only one channel changed on 4/27/2004 (Fox Spans en Espanol)
10) Seattle-Tacoma, WA
a. System wide changes on 12/8/2009
11) Washington, DC
a. Onlychanges made were HBO and SHOW on 1/5/2010
Markets uJz"tb no cbanges in Comcast lineup based on available data:
1) NewJersey Pan 1 (New York Market)
2) Pitts burgh, PA
5102633
5/24/20070:00
8/25/2008 0:00
11/20/20080:00
4/16/20090:00
4/20/2009 0:00
4/21/20090:00
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to
4/26/20100:00
4/29/2010 0:00
4/30/2010 0:00
5/3/2010 0:00
5/5/20100:00
5/10/2010 0:00
Number of Channels Changed
-I'
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4/12/2010 0:00
8/9/2005 0:00
1/22/20090:00
5/16/2005 0:00
8/12/20030:00
10/22/2008 0:00
10/30/2008 0:00
6/14/2006 0:00
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6/29/2006 0:00
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7/6/20060:00
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11/4/2002 0:00
4/8/2003 0:00
5/14/2003 0:00
5/27/20030:00
6/30/20030:00
7/28/2003 0:00
8/25/2003 0:00
2/10/2004 0:00
2/13/20040:00
3/1 8/2004 0:00
7/16/20040:00
0
8/19/2004 0:00
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3/9/2005 0:00
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8/10/2005 0:00
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8/15/20050:00
1/18/20060:00
2/1/2006 0:00
8/2/2006 0:00
2/22/2007 0:00
7/26/20070:00
12/7/2007 0:00
1/10/2008 0:00
1/11/2008 0:00
8/19/2008 0:00
11/10/2008 0:00
11/13/20080:00
Denver, CO Comcast Channel Changes by Date
ICount of cl effective datel
180 -
160
140
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3/30/2010 0:00 4/27/20100:00
Date of Change
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6/2/2010 0:00
ICount of cl effective datel
8 -
Detroit, MI Comcast Channel Changes by Date
7
6
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Date of Change
Icl effective datel
8/19/2008 0:00 3/5/2010 0:00
a
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7/28/20050:00 ,-__
9/15/2005 0:00~_.
3/14/2006 0:00~__
5/31/20060:00 ..
6/1/2006 0:00~_
8/21/2006 0:00
1/10/2007 0:00
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9/22/20070:00 }
10/25/2007 0:00 )I
11/5/20070:00
11/6/2007 0:00
2/12/2008 0:00
2/20/2008 0:00
3/19/2008 0:00
3/25/2008 0:00
4/8/20080:00
5/8/2008 0:00
6/19/2008 0:00
12/19/2008 0:00
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5/29/2009 0:00
2/10/20100:00 '-_
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3/4/2010 0:00
3/25/20100:00
3/30/2010 0:00
New York Section of New York Market Comcast Channel Changes by Date
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6/30/20090:00
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7/20/20090:00
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10/12/2009 0:00
10/13/2009 0:00
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11/3/2009 0:00
12/2/2009 0:00
12/11/2009 0:00
12/1 5/2009 0:00
12/17/2009 0:00
12/24/2009 0:00
1/4/20100:00
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10/24/20070:00 ._
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1/14/20080:00
3/17/20080:00
7/22/2008 0:00
8/4/20080:00
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10/13/2009 0:00
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11/3/2009 0:00
12/11/20090:00
12/15/20090:00
12/17/20090:00
12/24/20090:00
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10/22/20030:00
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7/6/20040:00
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9/8/2004 0:00
9/9/20040:00
12/3/2004 0:00
12/9/2004 0:00
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11/9/2005 0:00
11/23/2005 0:00
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8/23/2006 0:00
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11/15/2008 0:00
11/30/20060:00
12/5/2006 0:00
12/14/2006 0:00
4/5/2007 0:00
4/17/2007 0:00
7/20/20070:00
10/9/2007 0:00
10/16/2007 0:00
10/17/20070:00
10/23/2007 0:00
10/24/2007 0:00
10/31/2007 0:00
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1/ 4/2008 0:00
3/25/2008 0:00
3/27/2008 0:00
6/25/2008 0:00
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8/5/2008 0:00
8/12/2008 0:00
10/15/2008 0:00
10/30/2008 0:00
12/18/2008 0:00
1/11/2009 0:00
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1/13/2009 0:00
4/6/2009 0:00
4/8/2009 0:00
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6/8/20090:00
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6/22/2009 0:00
6/23/20090:00
6/30/20090:00
7/6/20090:00
7/20/20090:00
7/30/20090:00
8/11/20090:00
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10/12/20090:00
10/13/20090:00
10/14/20090:00
10/26/20090:00
10/27/20090:00
11/1/20090:00
11/3/2009 0:00
12/11/20090:00
12/15/2009 0:00
12/17/2009 0:00
12/24/2009 0:00
1/4/20100:00
1/7/20100:00
1/20/20100:00
2/15/2010 0:00
3/16/20100:00
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3/29/2010 0:00
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1/18/2002 0:00
4/11/2002 0:00
6/25/2002 0:00
6/26/20020:00 )- _
11/18/2002 0:00
1/30/2003 0:00
6/4/2003 0:00
6/25/2003 0:00
7/28/2003 0:00
11/6/2003 0:00
4/12/2004 0:00
4/14/2004 0:00
7/15/2004 0:00
9/9/2004 0:00
9/10/2004 0:00
1/31/2005 0:00
2/22/2005 0:00
7/21/20050:00
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8/10/2006 0:00
9/13/2006 0:00
12/14/20060:00 )- _
1/23/2007 0:00
6/12/2007 0:00
7/20/2007 0:00
9/27/2007 0:00
10/15/2007 0:00
11/9/2007 0:00
4/3/20080:00 )- _
7/15/2008 0:00
7/17/20080:00
4/14/2009 0:00
8/3/2009 0:00
8/11/2009 0:00
9/15/2009 0:00
2/24/2010 0:00
3/25/2010 0:00
3/26/2010 0:00~:::~__IIII
4/13/20100:00
5/6/2010 0:00
Seattle-Tacoma, WA Comcast Channel Changes by Date
[Count of cl effective date I
350 "
300
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12/8/2009 0:00
Date of Change
ICI effective datel
CERTIFICATE OF SERVICE
I, Rory E. Adams, hereby certifY that on this 24th day ofJune 2010, I caused true and correct
copies ofthe foregoing Erratum to Petition to Deny to be served by first-class mail on the
following individuals in the version indicated below:
,
Kathleen A. Zachem
Vice President, Regulatory and State
Legislative Affairs
COMCAST CORPORATION
2001 Pennsylvania Avenue NW, Suite 500
Washington DC 20006
Richard Cotton'
Executive Vice President & General Counsel
NBC UNIVERSAL, INC.
30 Rockefeller Plaza
New York NY 10112
Ronald A. Stern'
Vice President & Senior Competition Counsel
GENERAL ELECTRIC COMPANY
1299 Pennsylvania Avenue NW
9
th
Floor
Washington DC 20004
Jordan Goldstein'
Senior Director, Regulatory Affairs
COMCAST CORPORATION
2001 Pennsylvania Avenue NW
Sutie 500
Washington DC 20006
Brackett B. Denniston, III'
Senior Vice President & General Counsel
GENERAL ELECTRIC COMPANY
3135 Easton Turnpike
Fairfield CT 06828
Joseph W. Waz, Jr. '
Senior Vice President, External Affairs and
Public Policy
COMCAST CORPORATION
One Corncast Center
PhiladelphiaPA 19103-2838
Margaret L. Tobey'
Vice President, Regulatory Affairs
NBC UNIVERSAL, INC.
1299 Pennsylvania Avenue NW
9
th
Floor
Washington DC 20004
A. Richard Metzger, Jr.
t
Regina M .Keeney
Lawler, Metzger, Keeney & Logan LLC
2001 K Street NW, Suite 802
Washington DC 20006
Bryan N. Tramont
t
Kenneth E. Satten
David H. Solomon
Natalie G. Roisman
Wilkinson Barker Knauer LLP
2300 N Street NW, Suite 700
Washington DC 20037
Arthur J. Burket
Ronan P. Harty
Rajesh James
David Polk & Wardwell LLP
450 Lexington Avenue
New York NY 10017
Michael H. Hammer
t
James L. Casserly
Michael D. Hurwitz
Brien C. Bell
Willkie Farr & Gallagher LLP
1875 K Street NW
Washington DC 20006
/ :x:-
I Rory E. Adams
* Redacted - For Public Inspection
t Highly Confidential- Subject to First and Second Protective Orders in l'vrn Docket No. 10-56 before the Federal
Communications Commission