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FCC Letter from 43 ACA Members to Chairman Genachowski regarding the Comcast-NBCU Joint Venture

Submission Date: 
11/29/2010

November 29, 2010

Via ECFS

The Honorable Julius Genachowski
Chairman
Federal Communications Commission
445 12th Street, SW
Room: 8-B201
Washington, DC 20554

Re: Ex Parte; In the Matter of Applications of Comcast Corporation, General Electric Company and NBC Universal, Inc. for Consent to Assign Licenses or Transfer Control of Licenses; MB Docket No. 10-56

Dear Chairman Genachowski:

The undersigned - all members of the American Cable Association ("ACA") - are smaller multi-channel video programming distributors ("MVPDs") that today purchase "must have" programming separately from Comcast and NBC Universal ("NBCU"). On one or more of our cable systems, we carry both a Comcast regional sports network ("RSN") and the suite of NBCU national cable networks. Some of us also carry an NBC owned-and-operated television broadcast station ("O&O") on these same systems. Even though none of us competes head-to-head with a Comcast cable system, should Comcast-NBCU be permitted to jointly own and negotiate carriage of the "must have" programming assets of Comcast and NBCU, based on our negotiating experiences, the prices we pay for this programming will be significantly increased. In turn, an appreciable portion of these costs will be passed along to our customers.

In extensive comments filed in the above-referenced proceeding, ACA demonstrated how the proposed horizontal combination of the key programming assets of the two companies will result in significant price increases, consistent with economic theory and empirical evidence. It produced evidence indicating that these transaction-induced price increases would likely exceed 22% - an amount that would trigger concerns under the Horizontal Merger Guidelines of the Department of Justice and Federal Trade Commission. Most recently, the association presented evidence that the total magnitude of the programming price increases as a result of the proposed horizontal combination would total $1.14 billion over nine years.

As small entities negotiating with programmers, we can attest to the validity of ACA's concerns and evidence. The Comcast RSNs, the suite of NBCU's national cable programming, and the NBC broadcast stations are all essential programming to our companies and our customers, without which we could not successfully compete against other MVPDs. When multiple blocks of this "must-have" programming are combined under single ownership, what little bargaining leverage we have to resist unjustified increases in carriage fees will be reduced materially. This is because Comcast-NBCU can then threaten to withdraw all of these blocks of "must-have" programming simultaneously.

To prevent Comcast-NBCU from charging significantly higher fees as a result of the joint ownership of multiple blocks of "must have" programming in the same region, ACA proposed a series of remedies, including baseball-style commercial arbitration for carriage disputes involving NBC broadcast station signals, Comcast RSNs, and the suite of NBCU national cable programming networks. Most importantly from our perspective and that of our customers, because of the high fixed costs of baseball-style commercial arbitration, ACA also put forth a series of special provisions for smaller MVPDs. For smaller MVPDs with 125,000 subscribers or less in the relevant market of the NBC broadcast station or Comcast RSN, ACA proposed that Comcast-NBCU be prohibited from charging these operators more than a clearly defined market-based rate and that these smaller operators be able to use an alternative binding dispute resolution process to enforce this prohibition. For NBCU national cable networks, ACA proposed that bargaining agents be empowered to negotiate with Comcast-NBCU in a manner similar to larger operators, including a right to invoke the baseball-style commercial arbitration process to resolve bargaining impasses. These proposals, if adopted, will go a long way to ensuring that MVPD purchasers of Comcast-NBCU programming and their customers are not harmed by the proposed combination.

In sum, we support ACA's proposed remedies to alleviate the horizontal harms from the proposed combination of the key programming assets of Comcast and NBCU. We urge the Commission to adopt this relief in full.

Sincerely,

Keith Galitz
President
Canby Telcom
Canby, OR

Gerald E. Gill
President
Cass Communications
Virginia, IL

James R. Krieg
General Manager
Cedar Falls Utilities
Cedar Falls, IA

Paige L. Venczel
Cable TV Manager
Chesnee Communications, Inc.
Chesnee, SC

James Gleason
President and CEO
NewWave Communications
Sikeston, MO

Darlene Mills
General Manager
Wire Tele-View Corp.
Pottsville, PA

Linda Jane Maaia
President and CEO
Full Channel
Warren, RI

Paul W. Hannigan
President
Bee Line Cable
Skowhegan, ME

David Langhout
President
Cableview Communications
Esparto, CA

David L. Gibson
General Manager
Cascade Communications Company
Cascade, IA

Todd Harris
President
Full Choice Communications, Inc.
Hoopeston, IL

Patrice M. Carroll
President and General Manager
ImOn Communications, LLC
Cedar Rapids, IA

Shirley Manning
President
Lincolnville Communications
Nobleboro, ME

Phil Garrett
General Manager
Monmouth Independence Networks
Monmouth, OR

Troy Nimrick
General Manager
New Windsor Cable TV, Inc.
New Windsor, IL

Joey Anderson
Vice President and COO
Nortex Communications
Muenster, TX

Paul Venturella
Communications Manager
Rancho Murieta Association
Rancho Murieta, CA

James B. Sandlin, P.E.
General Manager
Scottsboro EPB
Scottsboro, AL

L. Brooks Derryberry
Vice President
Telapex, Inc.
Ridgeland, MS

Belinda Graham
Chief Operating Officer
Windjammer Communications, LLC
Overland Park, KS

James E. Sherburne
Chief Executive Officer
Mid Century Telecom
Fairview, IL

Jack Ebert
General Manager
Ski Sat LLC
Waterville Valley, NH

Colette Hartman
Office Manager
Tel-Star Cablevision, Inc.
Metamora, IL

Levoy Knowles
Chief Manager
Volunteer Wireless, LLC
McMinnville, TN

Terry Reynolds
President
Reynolds Cable TV, Inc.
Swansboro, GA

Martin F. Brophy
President and CEO
Shen-Heights TV Assoc., Inc.
Shenandoah, PA

Thomas E. Gelardi
LLC Manager
Central Valley Cable TV, LLC
Clovis, CA

Dave Olson
General Manager
Oneida Cablevision
Oneida, IL

Robert G. Fischer Jr.
President
Nova Cablevision, Inc.
Galesburg, IL

Thomas J. Barth
Manager
Scio Cablevision, Inc.
Scio, OR

Salvatore Lobianco
General Manager
Muscatine Power and Water
Muscatine, IA

Thomas R. Josie
General Manager
SELCO
Shrewsbury, MA

Stacie Harris
Chief Financial Officer
WTC Communications, Inc.
Wilton, IA

Judy Dodd
Marketing Manager
Darien Communications
Darien, GA

John Eric Galbreath
Vice President of Operations
TV Cable of Rensselaer/Winamac
Rensselaer, IN

John Williamson, Jr.
President
Depot Street Communications, Inc.
Hartwell, GA

Cindy Blake
Communications Manager
Bellevue Municipal Cable
Bellevue, IA

Darrel Wenzel
General Manager
Independence Telecommunications Utility
Independence, IA

Kenneth Laursen
General Manager
F&B Communications, Inc.
Wheatland, IA

Aaron Palmer
President
Grand River Cablevision
Leaf River, IL

Lynn Goldman
President
Demopolis CATV, Inc.
Demopolis, AL

Robert Millikan
President
Viola Communications, Inc.
Viola, IL

David A. Bowers
President
Moultrie Telecommunications
Lovington, IL

[FOOTNOTES OMITTED] 

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