October 7, 2014 - 2:57 pm

Today, in connection with two significant and simultaneous merger reviews, the Media Bureau issued an Order establishing unique protections for the Merger Applicants’ programming contracts, retransmission agreements, and other related materials.

This new procedure balances three important public-interest obligations: (i) the Commission’s need for access to highly relevant information about the Applicants’ business practices, (ii) other parties’ need to express informed views to the Commission about the transactions, and (iii) the need to ensure that sensitive competitive information is used solely for that purpose.

These obligations are supported by the law, which requires that we decide whether a proposed transaction would further the “public interest, convenience and necessity.” That analysis is informed by the Applicants’ past course of conduct, which is critical to understanding the impact of a future merger.  Equally important is the legal command that the Commission’s decision be based on a public record developed through public notice and an opportunity to comment.

The Commission often obtains sensitive commercial information along the way. And it has a long-established method of handling such information. Through a binding Protective Order, third parties can gain access to Highly Confidential Information only after agreeing to restrictions that are based on years of Commission experience. For example, the only people allowed to see Highly Confidential Information are outside representatives who personally acknowledge and commit to abide by these restrictions.  The information may be used only in connection with the proceeding in which it is produced, and no one involved in competitive decision-making is eligible to see it. Individuals also must destroy or return the information when the Commission’s proceeding is over.

This process has been used successfully to protect extremely sensitive information, including that of parties not directly involved in a transaction under review. For example, in both the Cingular/AT&T Wireless and AT&T/T-Mobile transactions, the Commission received from third parties detailed subscriber, pricing, and revenue data (including billing records).

Today’s Order recognizes the programmers’ and broadcasters’ position that the contracts they entered into with the Applicants should not be received by the Commission nor made available to commenters. However, our Order also recognizes that such an approach would be a radical departure.

Indeed, the Commission has never refused to receive entire categories of information highly relevant to a pending merger. As CenturyLink explains, “the programmers have cited no prior instance, much less an analogous one, where the Commission has precluded private parties from reviewing in any way an entire set of information that the Commission has determined is relevant to its review.”

No decisions on the merits have been made, but even a casual review of the issues raised in the pending transactions demonstrates that programming terms are highly relevant. For example, in the context of the Comcast transaction, BBC America has explained that “[u]nderstanding the video programming marketplace and the concessions made by programmers to gain carriage are essential to” the Commission’s work. Similarly, DISH’s submission cites a series of comments that have raised concerns about programming costs.

The Commission carefully balances relevance and risk and sometimes concludes that certain information is not necessary to its merger review.  But that conclusion is not appropriate here, because remaining ignorant of Applicants’ contract terms would disable the Commission from effectuating its statutory responsibility.

However, the programmers and the broadcasters make an important point that speaks to the larger public interest in these unusual circumstances. Access to the Applicants’ contracts could allow someone to obtain a detailed, industry-wide overview of the current and future programming market. Indeed, because the AT&T and Comcast transactions are pending simultaneously, the ability to capture an understanding of the programming marketplace is greater, and potentially more troublesome, than if only one were before us.

This is why we are creating a unique combination of protections for these programming contracts, retransmission consent agreements and certain related information. Specifically, the Order:

  • Emphasizes that Highly Confidential Information will be available only to outside representatives who are not involved in “Competitive Decision-Making” (defined as “involving advice about or participation in the relevant business decisions or the analysis underlying the relevant business decisions of the client in competition with or in a business relationship with the Submitting Party”). Anyone involved in negotiation of programming contracts and retransmission consent agreements is “involved in Competitive Decision-Making” and is ineligible.
  • Requires all outside counsel and consultants seeking access to Highly Confidential Information to re-certify that they are eligible to access Highly Confidential Information by re-executing "Acknowledgements of Confidentiality."  A list of those re-certifying will be posted on the Transaction Team web page for each transaction.  That posting will start the period for filing objections.
  • Allows third parties whose Highly Confidential Information will be accessed to object to the Commission if they identify ineligible signatories to Acknowledgements (e.g., because the signatories are involved in Competitive Decision-Making).
  • Requires certification, under penalty of perjury and subject to 18 U.S.C. §1001 (the criminal false statement statute), that all materials containing Highly Confidential Information have been destroyed or returned at the close of the proceeding.   
  • Prohibits copying or printing of the programming contracts, retransmission agreements, and certain other information and makes such material only accessible by commenters through a secure electronic link that will record any attempt to copy or print in violation of the Order.

These procedures do not create a “new normal”.  But here, for the reasons we have explained, the new procedures are the best way to protect the public interest.