WASHINGTON—Comcast has filed its formal response to a Federal Communications Commission complaint from Bloomberg, which alleges the cable giant violated one of the conditions regulators imposed on its merger with NBC Universal.
Since May, Bloomberg has been contending that, according to the FCC's merger conditions, Comcast must move Bloomberg TV nearer in channel position to its main rival, CNBC, which Comcast controls as a result of the NBCU deal.
In its 70-page filing, Comcast fought back hard against that argument, saying that Bloomberg is using "regulatory gamesmanship" to try and improve its business. Comcast turned to some of the same points it made last month in a five-page letter sent to Bloomberg's legal team, saying that it does not have neighborhoods, that the FCC has never spelled out its definition of "neighborhooding," and that Bloomberg's channel position did not change because of the merger.
The FCC's decision will rest on how it interprets the definition of "now" in the condition, which reads: "If Comcast now or in the future carries news and/or business news channels in a neighborhood, defined as placing a significant number or percentage of news and/or business news channels substantially adjacent to one another in a system's channel lineup, Comcast must carry all independent news and business news channels in that neighborhood."
The regulator will also need to decide how many channels constitute a "neighborhood." Comcast argues that four or five channels is not a neighborhood and is only a small percentage of the news channels it carries.
How the FCC decides could affect the future of independent news sources and independent programming, Bloomberg argues.
"Comcast is the largest distributor in the country in the largest business centers, so when independent channels don't have a fair channel placement in those markets, it's impossible to compete," says Greg Babyak, head of government affairs for Bloomberg.
The regulator may have already shown its cards earlier this month in an opinion the FCC's enforcement bureau wrote in which it recommended that an administrative law judge sanction Comcast for not neighborhooding Tennis Channel with two networks it owns, Golf Channel and Versus.
"It's the exact issue we are arguing. The recommendations even cited back to the Comcast/NBCU order and the neighborhooding language, so we think that underscores the commission understanding the importance of neighborhooding," Babyak says. "But even absent the Tennis channel recommendations, we have enormous confidence."
"It certainly bodes well for Bloomberg’s case," says Scott Flick, a partner with Pillsbury Law who represents media companies. "The Tennis Channel case shows that the FCC is sympathetic to that position and willing to pursue it."
Bloomberg will file its response in the next 20 to 30 days, and Babyak says he expects the FCC to make a decision by the end of this year or early next.