Did Comcast Fool the FCC?

Dispute with Bloomberg will test conditions regulator imposed on NBCU merger

Do the conditions that the Federal Communications Commission imposed on the merger of Comcast and NBC Universal have any real teeth? We may find out soon, thanks to a complaint against Comcast that Bloomberg LP is set to file with the FCC as early as this Friday.

In its complaint, Bloomberg will allege that Comcast is violating a condition regarding “neighborhooding”­—that is, grouping similar channels together on the dial so that viewers can find them more easily. The condition, imposed to prevent Comcast from using its cable systems to shut out competitors to networks like MSNBC and CNBC that it now owns, specifies, “If Comcast now or in the future carries news and/or business news channels in a neighborhood… Comcast must carry all independent news and business news channels in that neighborhood.”

Bloomberg argues that Comcast is neighborhooding those channels, and that it’s violating the condition by keeping CNBC competitor Bloomberg Television out in a nosebleed section.

Comcast has yet to formally respond, but in a statement it said it doesn’t neighborhood “in the way Bloomberg seeks to be repositioned.” Moreover, its interpretation of the condition is quite different from Bloomberg’s. Because it hasn’t moved CNBC since the merger went through, Comcast argues, it doesn’t have to move Bloomberg Television or anything else.

But several lawyers in the field think Comcast is wrong. “Bloomberg has a pretty good case,” says Scott Flick, partner with Pillsbury Winthrop Shaw Pittman. “It boils down to a factual finding. Is Comcast carrying news in a neighborhood?” Flick and others think the answer is yes. And, he says, “The condition says if you neighborhood one, you neighborhood them all. It’s very clean.”

But that doesn’t mean Bloomberg will win. In fact, says Susan Crawford, who led the Obama transition team’s FCC review and wrote a book on the Comcast-NBCU merger due out next spring, Comcast is likely to prevail, thanks to its having outfoxed the FCC in the game of legal chess that was the merger approval process. Crawford points to the forward-looking “If Comcast now or in the future” language in the condition, which she says favors Comcast.

“Although the FCC did its best, it does look that when it comes down to the specifics, they were probably outlawyered by [Comcast executive vice president David] Cohen and his team,” Crawford says.

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