ACA Keeps Pressure on FCC Regarding News Corp. Conditions

American Cable Association Again Asks Federal Communications Commission to Deny News Corp.'s Attempt to Remove Conditions from DirecTV Acquisition

By John Eggerton -- Broadcasting & Cable, 5/2/2008 11:45:00 AM

The American Cable Association again asked the Federal Communications Commission to deny News Corp.'s effort to get out from under conditions the FCC put on the company when it bought DirecTV.

This time, the ACA argued that the company "manipulated commission processes to suppress scrutiny of a key issue in the Liberty [Media]/DirecTV transaction."

The FCC Feb. 25 approved the sale of DirecTV to Liberty. News Corp. petitioned the FCC March 11 to lift the conditions. The company said its sale of DirecTV to Liberty justified lifting the conditions that required it to submit to commercial arbitration in cable-operator program-access complaints about negotiations for regional sports networks or retransmission-consent talks.

The FCC applied those conditions out of concerns that News Corp. would have the incentive and opportunity to deny “must-have” programming like sports or TV-station signals to multichannel-video competitors in favor of its own multichannel pay platform (DirecTV). But with the divestiture of DirecTV, News Corp. suggested, those conditions need no longer apply.

The ACA -- members of which are small and midsized cable operators that must negotiate for carriage of stations and RSNs -- argued at the time that the conditions should stay in place anyway, and it added new arguments Thursday.

In petitioning the FCC Thursday not to lift the conditions, the ACA quoted News Corp. as telling the agency in its pitch for the Liberty sale: "At this point, further discussion of the issue is unnecessary, irrelevant and a waste of commission resources … Since News Corp. has not requested any change to the conditions, the commission need not speculate about any impact that elimination of the conditions could have on pending disputes.”

"Then, just two weeks after getting its deal approved," the ACA added, "News Corp. changed its story" and asked that the conditions be lifted.

The ACA argued that News Corp. has no "legitimate argument" for not disclosing its plan to seek modification of the conditions.

The group wants the FCC to maintain the conditions through 2010, or, failing that, to at least wait until it completes its broader inquiry into program-access rules. The ACA wants the FCC to apply those or similar conditions generally to ensure access to programming by smaller cable operators with less clout in programming and retransmission-consent transactions.

News Corp. had not returned a call for comment at press time, but it did signal one year ago that it might seek modification down the line.

In a letter to the FCC in April 2007, News Corp. told the commission that it had not asked that the arbitration conditions be lifted and pointed out that they were "scheduled to remain effective until 2010." But it also said the commission should "defer any further consideration of this issue unless and until News Corp. at some time in the future files a petition seeking to modify or eliminate the conditions."