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2011.06.06.Bloomberg.letter

2011.06.06.Bloomberg.letter

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Published by joemullin
Comcast letter to Bloomberg re: neighborhooding complaints
Comcast letter to Bloomberg re: neighborhooding complaints

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Categories:Business/Law
Published by: joemullin on Jun 14, 2011
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06/14/2011

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June6,2011
CorncastCorporationOneComcastCenterPhiladelphia,PA19103-2838Office:215-286-7564Mobile:215-421-1000Fax:215-286-7794ablock@corncast.com
@omcast®
ArthurR.BlockSeniorVicePresident,GeneralCounselandSecretary
DavidBoies,Esq.Boies,Schiller
&
FlexnerLLP333MainStreetArmonk,NY10504StephenDiazGavin,Esq.PattonBoggsLLP2550MStreet,NWWashington,D.C.20037
Re:BloombergTelevision
DearMessrs.BoiesandGavin:IwriteinresponsetoyourletterdatedMay26,2011.Unlessotherwiseindicated,allcapitalizedtermshavethesamemeaningasinyourletter.Attheoutset,InotethatComcastvaluesitsrelationshipwithBloomberg,andviewsBloombergasarespectedbusinesspartner.Indeed,ComcasthasvoluntarilylaunchedBTVtonearly18millionsubscribersinlessthanfiveyearswithoutanycontractualobligationtodoso.IthasalsovoluntarilyplacedBTVinmostofitssystemsonthesamelevelofserviceonwhichitoffersCNBC.SincetheNBCUniversaltransactionwasannouncedinDecember2009,ComcasthascontinuedtoexpandBTV'sdistributiontooverthreemillionnewsubscribers.Giventhisproductiverelationship,itisdismayingthatBloomberghaselectedtomakebaselessallegationsagainstComcast.'Bloomberg'sclaimthatComcastisinviolationoftheFCCOrder
2
iswhollywithoutmerit.Atthemostbasiclevel,yourletterispremiseduponthefaultyassumptionthatComcastcurrentlyengagesinawidespreadpracticeof"neighborhooding"newsorbusinessnewsnetworks.Thisclaiminturnrestsentirelyonadefinitionofanews"neighborhood"(fournetworks)ofyourowncreation,whichisatoddswiththepracticesofComcastandotherMVPDs.Evenmoretellingly,BTV'sdefinitionofneighborhoodingisinconsistentwithBloomberg'SownadvocacybeforetheFCC.ThedefinitionyouproposewouldcausesignificantdisruptiontoconsumersandothercablenetworksbeyondanythingtheFCCcontemplatedorcouldreasonablyhaverequired.
!
Further,inlightofyourdecisiontoresorttothreatsoflitigationratherthancommercialnegotiations,itwasinappropriateundertheapplicablerulesofprofessionalethicsforexternalcounseltoBloombergtocontactaComcastbusinesspersondirectly,especiallywhenBloombergwasonnoticethatComcastisrepresentedbyexternalcounselinthismatter.Inthefuture,pleasedirectallcommunicationstoeitherComcast'sexternalorinternalcounsel,thelatterofwhomMr.BoiesshouldbefamiliarwithfromhispriorrepresentationsofComcast.
2
SeeIntheMatterofApplicationsofComcastCorp.,GeneralElectricCo.,andNBCUniversalInc.ForConsenttoassignLicensesandTransferControlofLicenses,MemorandumOpinionandOrder,
26FCCRed4238(2011)(the"FCCOrder").
 
DavidBoies,Esq.StephenDiazGavin,Esq.June6,2011
Accordingly,weurgeyourclienttoreconsideritsdecisiontofileacomplaintandinsteadinviteyourclienttoresumegoodfaithcommercialdiscussionswithComcastofthetypethathavebeensomutuallybeneficialtobothsidesinthepast.
A.TheFCCOrder
TheFCCOrderconsidered
whether,followingtheacquisitionofNBCUniversal,
Comcastmighthavetheincentiveorabilitytodiscriminateamongprogrammers"onthebasisofaffiliationornon-affiliation.,,3TheCommissionultimatelyadoptedaconditionprohibitingdiscriminationonthebasisofaffiliationornon-affiliation.
4
TheCommissionalsodiscussedandadoptedthenewsneighborhoodingconditioninthecontextofthatveryfocuseddiscussionintheFCCOrder.
5
Comcast'sbasicchannelplacementsofBTVvis-a-visCNBCandMSNBCweremadelongbeforeComcasteveracquiredorproposedtoacquireanyinterestinCNBCorMSNBC.Theirrespectivechannelpositionsarearesultofthispre-acquisitionhistory,notanydiscriminatorymotivetoadvantageCNBCorMSNBCordisadvantageBTV.Accordingly,inpursuingitsclaimshere,itisclearthatBloombergisnotattemptingtoremedyanydiscriminationarisingoutoftheNBCUniversaltransaction-theonlypotentiallylegitimatepurposeofamergercondition-butisinsteadattemptingtoobtain
morefavorable
treatmentthanitwouldeverhavebeenentitledtoabsentthattransaction.Intheend,thisentirematterreflectsnothingmorethananattemptbyBloomberg-amulti-billiondollarfinancialservicesconglomeratethatcanandshouldstandonitsowntwofeetinanynegotiation-tomanipulatetheFCCprocessforitsownnarrowcommercialgain.
3
See
FCCOrder,26FCCRedat4287.
4
ld.
at4358.
5
It
isComcast'spositionthattheneighborhoodingconditionisprospectiveinnature,andonlyappliesintheeventComcastengagesinneighborhoodinginthefuture.Thisisreflectedintheforward-lookinglanguageoftheFCCOrderandtheoverallcontextoftheFCC'sanalysis,aswellas
in
Bloomberg'sownadvocacybeforetheCommission.
See,e.g.,
FCCOrder,26FCCRedat4288("Ourcondition,however,wouldonlytakeeffect
if
Comcast-NBCU
undertook
toneighborhooditsnewsorbusinessnewschannels....")(emphasesadded);
seealso
June21,2010PetitiontoDenyat31(arguingthat"[a]bsentthemerger,BTVwouldhaveexpectedComcasttoneighborhooditschannelline-upquicklytocompetewithotherMVPDs,andthatsuchatransitionwouldbefosteredbyCorncast'sconversiontodigitalcable").Indeed,wedonotseeanyjurisdictionalbasisfortheFCCtoaddressnon-transaction-specificpre-acquisitionconductinamergercondition.
See
FCCOrder,26FCCRedat4249.Nevertheless,becauseComcastdoesnotcurrentlyengageinneighborhoodingunderthedefinitionappliedbyboththeFCCandtheindustry-exceptperhapsinafewpilotmarkets(whereBloombergisincludedintheneighborhood)-itisnotnecessarytoresolvethisinterpretivedisputeinordertoconcludethatBloomberg'scomplaintiswithoutmerit.
2
 
DavidBoies,Esq.StephenDiazGavin,Esq.June6,2011
B.The"Neighborhooding"Condition
TheFCCOrderprovidesthat,ifComcast"noworinthefuturecarriesnewsand/orbusinessnewschannelsinaneighborhood,"thenitmustinclude"allindependentnewsand/orbusinessnewschannels"inthatneighborhood."
It
definesanewsneighborhoodas"asignificantnumberorpercentageofnewsand/orbusinessnewschannelssubstantiallyadjacenttooneanotherinasystem'schannellineup.t"TheCommissioncharacterizedthisasa"narrowlytailored"conditionandplainlydidnotcontemplatethatitwasrequiringComcasttoengageinwidespreadre-orderingofitschannellineups.Yourlettercontends,however,thattheFCCOrderrequiresComcasttoalterradicallyitschannellineupsacrossthecountry.Tosupportthisclaim,youproposeanarbitrarydefinitionofanewsneighborhoodas"fourormorenewschannelsconsecutivelyplacedor...fournewschannelslocatedinanyblockoffiveadjacentchannelpositions."ThenotionthatacollectionoffourchannelsconstitutesaneighborhoodforthepurposesoftheFCCOrderiswithoutmeritformanyreasons,someofthemostobviousofwhichIwillreview.
First,
nomatterhowonedefinesa"newsand/orbusinesschannel,"fourchannelsconstituteasmallminorityofsuchchannelsthatComcastfrequentlycarries-andplainlyaninsufficientnumbertoconstituteaneighborhood.
In
allevents,BloombergessentiallyconcededthatanewsneighborhoodisfarmorethanfourchannelsinitsownadvocacybeforetheCommission.Specifically,BloombergcitedtotheCommissionfourMVPDs(Verizon,AT&T,Dish,andDirecTV)asexamplesofMVPDswhoengagein"neighborhooding.TSignificantly,thislist
didnot
includeComcast.TheMVPDscitedbyBloomberghavethefollowing"neighborhoods":15consecutivenewsnetworks(Verizon)14outof15newsnetworks(AT&T)10newsnetworkswithin11channels(DishNetwork)10newsnetworkswithin12channels(DirecTV)loClearly,consistentwithBloomberg'sprioradvocacy,industrypracticefor"neighborhooding"requiresfarmorethanfourconsecutive(ornearlyconsecutive)channels.
II
6
FCCOrder,26FCCRedat4287-88.
7
Jd.
at4288.
8
Jd.
at4287-88.
9
June21,2010PetitiontoDeny,Exhibit3,at~94(the"June21MarxReport").
10
Basedonpubliclyavailableinformation,asofJune3,2011.
11
NotethatelsewhereintheproceedingBloombergsuggestedthatfivenetworksarenecessarytomakeupaneighborhood.
See
June21MarxReport,n.86.Clearly,evenBloomberghashadadifficulttimecomingupwithaconsistentdefinitionofanewsneighborhood.
3

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