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Judge Enters Comcast–NBCU Final Judgment, With His Own New OVD Condition - Broadcasting & Cable

Judge Enters Comcast–NBCU Final Judgment, With His Own New OVD Condition

Requires keeping track of any arbitration that can be invoked by competing OVDs for two years
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A U.S. District judge has given final approval to the DOJ Comcast–NBCU consent decree, but not without requiring the government for the next two years to keep track of any arbitration that can be invoked by competing online video providers as one of the NBCU deal approval conditions.

The deal was effectively done in January, but the other legal shoe still to drop was a court's final approval of the consent decree, which came this week.

The FCC and Justice were concerned that Comcast would be able to discriminate against online video providers by withholding valuable video product of a combined Comcast–NBCU. Justice agreed not to block the deal subject to a Comcast–GE "agreement to license programming to online competitors to Comcast's cable TV services, subject themselves to anti-retaliation provisions and adhere to Open Internet requirements.

The FCC approved the deal with conditions, while Justice filed suit against it and at the same time filed a consent decree with the court containing the agreed-to conditions. That is in contrast to DOJ's antitrust suit against AT&T–T-Mobile, which was to block the deal outright. DOJ can approve, file suit to block, or essentially approve with conditions -- frequently divestitures -- by filing both the suit and the decree that resolves it. But the court still has to give its final approval, which came for the Comcast/NBCU decree this week.

Judge Richard Leon officially entered the proposed final judgment on the Comcast–NBCU deal Thursday, which the government had sought, saying it was in the public interest. The judgment was entered in favor of the U.S. and the five states that were parties to the suit: California, Florida, Missouri, Texas and Washington.

That final judgment came after a hearing at which the judge said he became concerned about the government's ability of monitor and enforce the condition. "[T]he court determines that entry of the proposed Final Judgment is in the public interest and therefore grants the government's motion for entry of final judgment," the judge wrote. "However, given a number of potential uncertainties regarding the final judgment's implementation...I hereby order certain steps to ensure that the public interest continues to be service."

The judge said that after the July 27 hearing on the judgment, "I grew increasingly concerned that the Government's non-appealable arbitration mechanism for online video distributors ("OVDs") did not serve the public interest... Moreover, I was unsure whether the proposed Final Judgment adequately empowered the Department of Justice to enforce the terms of the agreement."

The government countered that there was a two-track arbitration process, at the FCC and at Justice, though an online video provider (OVD) not happy with an FCC result does not get a "second bite at the apple" at Justice. But those tracks notwithstanding, the judge pointed out that even the government has conceded that even though the final judgment vests it with responsibility to investigate OVD claims of fraud in the arbitration process, it can't enforce that decree.

"[B]ecause of the way the Final Judgment is structured, the Government's ability to 'enforce' the Final Judgment, and, frankly, this Court's ability to oversee it, are, to say the least, limited."

Because of that, he said, he was ordering as part of the judgment that for at least the next two years, the government must:

"Create and maintain a report which details (a) how many OVDs initiate arbitration under the FCC Order and the result of those arbitrations; (b) how many times OVDs appeal the result of their arbitration, and to which judicial bodies, if any, they appeal; (c) how many OVDs seek permission from the Department of Justice to arbitrate under the Final Judgment and how many are granted permission; and (d) how many times the United States denies an OVD's request to initiate arbitration under the Final Judgment, and how many of those denied subsequently elect to initiate arbitration under the FCC Order.

"It is further ordered that the United States shall prepare this report and share it with all parties in advance of a yearly hearing before this Court.

"It is further ordered that the parties shall convene for an annual hearing with this Court to explain and discuss the report and any other non-arbitration-related issues that may have arisen during the previous year to ensure that the Final Judgment does, and continues to, satisfy the public interest."

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