Washington

FCC Acting General Counsel Jon Sallet Outlines Deal-Vetting Philosophy

Suggests license transfers with competition or public interest issues should be designated for hearing 3/13/2014 10:29:00 AM Eastern

The FCC's acting general counsel Wednesday softened the ground for chairman Tom Wheeler and the Media Bureau's deep dig into TV station sharing arrangements and his muscular use of the public interest standard in license transfer reviews. He also suggested that the reason FCC chairman Tom Wheeler wants to ban coordinated negotiations is that they can artificially drive up prices without any countervailing consumer benefit.

In a speech at the National Press Club on March 12, Jon Sallet said he was speaking as a lawyer and for himself, not as a policymaker or for the FCC. But he spent much of the speech outlining what he said was chairman Wheeler's approach to weighing allegations that some station license transfers are anticompetitive.

"I am aware of the reputation that some attribute to the FCC, that the answer is always 'yes' and the path to 'yes' is bargaining with the agency. It is hard to imagine that such a view can be squared with the manner in which the commission assiduously applied the law to the facts of the proposed AT&T/T-Mobile transaction," which was not approved.

He made the point early on that while Justice looks at antitrust issues, the FCC's public interest review takes it beyond whether a deal harms competition to whether it promotes it. He said that if "for any reason" the FCC concludes that a deal does not service the public interest, or it has a substantial question of fact about whether it does, those deals need to be designated for an administrative hearing.

Sallet extolled the virtues of transaction conditions not only to remedy perceived future harms that would be tough for DOJ to get at, but to make policy as well. "The FCC has particular expertise that we bring to the table that adds value and that can have—I believe has had—concrete impact on transaction reviews." For example, he said: "As Jonathan Baker has explained, our conditions and divestitures on mergers like Comcast/NBCU allow us to remedy potential anticompetitive harms that DOJ would have difficulty addressing. Similarly, my friend Phil Weiser has described 'successful cases of FCC merger review [where] the agency’s oversight of mergers can be a productive part of the policymaking process.'"

He used the chairman's proposal to disallow coordinated retrans negotiations among two of the top four stations in a market as an example of the chairman's philosophy of protecting competition where it exists, saying the presumption in those coordinated negotiations is they will drive up prices without providing any pro-competitive advantages to consumers.

"Consider, for example, the ban on joint negotiations among the top four broadcast stations in a television market. This arises when, for example, two of the big local stations begin negotiations with a cable or satellite system by declaring that one will not be available without the other. These two stations are competitors—in the supply of local news, for example, and in the market for local advertising. So joint negotiations can only be expected to artificially drive up prices to their customers, without supplying significant, if any, pro-competitive efficiencies. It is precisely to protect competition that the Chairman is asking the Commission to ban this practice."

Sallet's speech came the same day that the FCC's Media Bureau issued guidance to broadcasters that it would be scrutinizing sharing arrangements with financial components closely to make sure they were arms-length transactions and not de facto control.

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