News Articles

Regulation Watch

7/28/2002 08:00:00 PM Eastern

FTC SAYS NO TO LIBERTY

Looks like Liberty Media won't get to buy more AOL Time Warner stock or exercise control over the stock it has.

In a 5-0 decision, the Federal Trade Commission has rejected Liberty's request that it be disentangled from conditions put on the merger of Time Warner and Turner in 1996 now that Liberty is an independent company (it was spun off from AT&T in August 2001).

Those conditions required Liberty to put into a separate company the AOL Time Warner stock it received as part of the merger. Only that company could vote the shares or acquire more, both of which Liberty wanted the ability to do.

Liberty Chairman John Malone has been making noise about trying to secure a voice in AOL's management, angling for a board seat.

Liberty had been included because the FTC feared that the horizontal and vertical alliances among Turner, Time Warner and TCI, which then owned both Liberty and a piece of Time Warner, would "restrict competition among cable programmers." Liberty contended the split-off represented a "change of fact."

The commission said that, for any change in the order based on a change in fact, Liberty would have to demonstrate both that TCI and Liberty had severed their ties (which the FTC accepted on its face) and that it has "a present intention not to reenter that market." The FTC was not convinced of the latter.

Plus, the FTC said, there was no reason to believe its vertical-integration concerns about Liberty had changed.

Mike Erickson, VP, investor relations for Liberty, responded, "We are evaluating the FTC's decision to determine what the next steps might be." According to the FTC competition bureau, those steps could include appealing the decision or filing a new petition, without prejudice, containing additional supporting arguments.

ADELSTEIN ADVANCES

Would-be FCC Commissioner Jonathan Adelstein took a step, but only a step, closer to confirmation last Tuesday when the Senate Commerce Committee approved his nomination in an off-the-floor meeting. That nomination will now go before the full Senate for a vote, although Sen. John McCain (R-Ariz.) is still blocking all nominations until Democrat Ellen Weintraub is confirmed to a seat on the Federal Election Commission. Senate Majority Leader Tom Daschle (D-S.D.) wants to get the nominations approved individually, which means he first has to line up 60 votes to trump a McCain filibuster.

OVERBUILDER OVERVIEW

Sens. Herb Kohl (D-Wis.) and Mike Dewine (R-Ohio) want to know whether cable overbuilders have an effect on keeping prices down and customer service up in markets where they are competitive with traditional cable. "The [cable-TV] marketplace has experienced increased consolidation in recent years, with the pending merger of Comcast and AT&T Broadband being only the most recent example," wrote Kohl and Dewine in a letter to David Walker, comptroller general of the General Accounting Office. "Moreover, cable television rates continue to rise at about triple the rate of inflation since 1996. We are concerned about the competitive implications of this continued consolidation in the … marketplace." Chairman and ranking member, respectively, of the Senate Antitrust Subcommittee, Kohl and Dewine want GAO to look at the "effect of presence of cable overbuilders on cable rates and quality of service offerings, Internet broadband services and local telephone competition."

ECHOSTAR ON THE CLOCK

The FCC has restarted the countdown on its review of the EchoStar/DirecTV merger. The commission stopped the clock March 6 while it gathered documents from the parties, but, it says, the "applicants have substantially complied with our request." The FCC also found "without merit" complaints by the National Association of Broadcasters and the National Rural Telecommunications Cooperative, both of which oppose the merger. Those organizations raised several objections about the process by which the FCC was collecting documents from EchoStar and DirecTV. The FCC is now due to complete its review by Nov. 1.

RTNDA PUSHES FOR CAMERAS in court

The Radio-Television News Directors Association—together with the New Hampshire Association of Broadcasters, WMUR-TV Manchester, N.H., and the Boston Globe—is pushing for greater access for cameras in New Hampshire state courts.

The news organizations wanted to cover State v. Tulloch, a high-profile case in which two Vermont teenagers were accused of murdering two Dartmouth professors. Although the case was eventually pled out, the news organizations still want the New Hampshire Supreme Court to address their concerns about restrictions on television and still cameras in the Grafton County Superior Court. RTNDA wants the court to "limit the exercise of such unlimited discretion by the judge and to recognize the presumptive right of the press to report on courtroom proceedings through still photography and audio/video, absent a specific and compelling interest that outweighs the public's right to know."

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