Antitrust Lawyer Blog Commentary on Current Developments

FCC Chairman Pushes for Review of Adelphia Carve-Up

On May 22, it was reported that FCC Chairman Kevin Martin is putting pressure on senior agency staff to complete their review of the $17.6 billion carve-up of Adelphia Communications Corp. (“Adelphia”) by Comcast Corp. (“Comcast”) and Time Warner Inc. (“Time Warner”). According to sources close to the agency, Martin hopes to receive a draft of an order clearing the transaction, with some conditions, before the end of May. If Martin signs off, that order would then be distributed to the four other FCC commissioners. Martin expects his colleagues would approve the deal a few weeks later.
FCC approval would provide Comcast and Time Warner the last required regulatory clearance from the federal government and close an FCC review that has been under way for an extraordinary 359 days. In order to win the necessary approval of the FCC's two Democratic commissioners, Martin appears willing to overcome his own reluctance to impose conditions on the merger. He is expected to acquiesce to a requirement forcing the cable companies to provide regional sports network programming to rivals at competitive rates. Martin had previously delayed approval until Congress restored the FCC's three-vote majority, which would render Democrats' support for the Adelphia approval irrelevant. But executives from Time Warner and Comcast have gotten antsy about completing the transaction and are pressuring Martin to give them the approval necessary to consummate the split-up of Adelphia's assets by the scheduled July 31 close date. The sport programming conditions would address complaints from satellite rivals DirecTV Group Inc., owned by News Corp., and EchoStar Communications Corp., which have complained to the FCC that Comcast is denying them access to Comcast SportsNet in Philadelphia by using a loophole in programming sharing rules. Comcast's channel is considered critical programming because the network carries the National Hockey League's Flyers and Major League Baseball's Phillies. In addition to access to SportsNet, the FCC's merger condition would require that programming pricing disputes with Comcast or Time Warner be submitted to an independent arbitrator.