Barbara S. Esbin
Admitted in the District of Columbia
A Professional Limited Liability Company
1333 New Hampshire Ave., NW, Fl 2
Washington, DC 20036
Telephone: (202) 872-6811
Facsimile: (202) 683-6791
Chicago Office
307 North Michigan Ave., Suite 1020
Chicago, Illinois 60601
Telephone: (312) 372-3930
Facsimile: (312) 372-3939
December 8, 2010
Via ECFS
Marlene Dortch
Secretary
Federal Communications Commission
445 12th Street, SW
Room TW-A325
Washington, DC 20554
Re: American Cable Association (?ACA?) Notice of Ex Parte Presentation; In
the Matter of Applications of Comcast Corporation, General Electric
Company and NBC Universal, Inc. for Consent to Assign Licenses or
Transfer Control of Licenses; MB Docket No. 10-56.
Dear Ms. Dortch:
On December 8, 2010, Matt Polka and Ross Lieberman, American Cable Association;
Colleen Abdoulah, President & CEO, WOW!; William Rogerson, Northwestern University; and
the undersigned met with Edward Lazarus, Chief of Staff, Chairman Genachowski; John Flynn,
Senior Counsel to the Chairman for Transactions; and Paul de Sa, Chief, Office of Strategic
Policy. WOW!, is a small operator providing high-speed Internet, cable and voice services in
communities located in Illinois, Michigan, Indiana and Ohio, competes head-to-head in local
markets in Illinois and Michigan with Comcast?s cable systems and also negotiates with
Comcast and NBC Universal (?NBCU?) to purchase all of their ?must have? programming,
including Comcast?s regional sports networks (?RSNs?), NBC owned and operated television
broadcast stations (?NBC O&Os?), and the suite of highly-rated NBCU national cable
programming networks.
During the meetings, ACA discussed the substantial impact of the horizontal and vertical
harms of the proposed Comcast-NBCU transaction on smaller multichannel video programming
distributors (MVPDs) and the safeguards ACA has proposed to protect consumers and
competition, consistent with ACA?s filings in this docket, including Comments filed June 21,
2010, Response to Comments filed July 21, 2010, and Reply filed August 19, 2010 in the
above-referenced proceeding.1
1 In the Matter of Applications of Comcast Corporation, General Electric Company, and NBC Universal,
Inc., to Assign and Transfer Control of FCC Licenses, MB Docket No. 10-56, Comments of the American
Cable Association (filed June 21, 2010) (?ACA Comments?); Response to Comments of the American
Cable Association (filed July 21, 2010); Reply of the American Cable Association (filed Aug. 19, 2010)
(?ACA Reply?). In addition ACA?s concerns are documented in ex parte letters filed on August 27, 2010,
September 21, 2010, September 22, 2010, October 12, 2010, November 5, 2010, November 8, 2010, and
November 24, 2010.
Marlene Dortch
December 8, 2010
Page 2
As ACA has demonstrated, the transaction will allow Comcast-NBCU to raise
programming fees above levels they would be able to command without combining assets, and
these fee increases will largely be passed through to subscribers in the form of higher
subscription prices. This consumer harm will manifest itself in two ways: (1) vertical harm
arising from the combination of NBCU key programming assets ? NBCU national cable
programming networks and NBC O&Os2 ? with Comcast?s cable distribution assets permitting
Comcast-NBCU to raise the fees it charges for NBCU programming to Comcast multichannel
video programming distributor rivals (MVPDs); and (2) horizontal harm resulting from the
increased market power derived from combining NBCU?s key programming assets ? the suite of
highly rated NBCU national cable programming networks and NBC O&Os ? with Comcast?s key
programming assets ? its RSNs ? that will allow Comcast-NBCU to raise the fees charged for
this programming to additional MVPDs.3
Participants discussed the fact that, not only is the magnitude of the quantifiable vertical
and horizontal harms that will result from the Comcast-NBCU transaction substantial, it far
exceeds the quantifiable benefits. ACA has demonstrated that the harms will cause
programming prices for MVPDs (other than Comcast) to increase approximately $320 million
annually and that the harms are more than 10 times greater than the quantifiable benefits.4
ACA and the operators reiterated the need for effective relief from the higher
programming fees that Comcast-NBCU will be able to extract from multichannel video
programming distributors (MVPDs) of all sizes as a result of the combination of the key
programming and distribution assets of the applicants. They discussed how best to fashion
relief for smaller MVPDs serving 125,000 or fewer subscribers for NBC broadcast station and
Comcast RSN programming in a particular region or Designated Market Area, consistent with
ACA?s previous filings in this docket. ACA and the operators emphasized that although the
?final offer? or ?baseball style? arbitration for ?must have? programming negotiations that the
Commission has used to ameliorate the vertical harms of previous media transactions has
worked well in practice for larger MVPDs, it has proven to be of no value for smaller MVPDs and
their subscribers due to the fixed costs of the process being far in excess of the potential
benefits, lack of access to key data and information upon which to base final offers, and its
overall substantial risks to business operations. Consistent with ACA?s previous filings, WOW!?s
President, Colleen Abdoulah stressed how, in her experience, the Commission had previously
provided small MVPDs with a right, but not a remedy for transaction-related vertical harms.5
According to Abdoulah, it would be a grave error for the Commission to rely again solely on
remedies that in the past have proven of no value for smaller operators.
ACA again called upon the Commission to impose conditions that would prohibit
Comcast-NBCU from charging smaller MVPDs more than clear, market-based rates for ?must
have? programming together with a simplified enforcement mechanism that can provide certain
relief when commercial negotiations fail to produce satisfactory outcomes for smaller MVPDs.
ACA noted that its proposed conditions to protect smaller MVPDs from above-market rate
increases for Comcast RSNs and NBC O&Os post-transaction will affect less than 5 percent of
the MVPD subscribers in the relevant markets for that programming. In short, imposing ACA?s
suggested conditions on Comcast-NBCU will ameliorate transaction-related harms that
2 ACA Comments at 25-37; ACA Reply at 14-25.
3 ACA Comments at 18-25; ACA Reply at 7-14.
4 See ACA Notice of Ex Parte, attach. Rogerson III, at 17 (filed Nov. 8, 2010).
5 ACA Comments at 51.
Marlene Dortch
December 8, 2010
Page 3
otherwise would significantly and adversely affect smaller MVPDs and their subscribers, while
having a de minimis impact on either Comcast-NBCU specifically or the programming market in
general. Participants also discussed means of empowering bargaining agents to bargain
collectively on behalf of small MVPDs for NBCU national cable programming networks,
consistent with the recommendations contained in ACA?s previous filings in this docket.
If you have any questions, or require further information, please do not hesitate to
contact me directly. Pursuant to section 1.1206 of the Commission?s rules, this letter is being
filed electronically with the Commission.
Sincerely,
Barbara S. Esbin
cc (via email): Edward Lazarus
Paul de Sa
John Flynn