FCC chairman offers cable sports deal, but leaves out Philadelphia
By Miriam Hill and Jeff Gelles
INQUIRER STAFF WRITERS
The chairman of the Federal Communications Commission has proposed a deal with Comcast Corp. and Time Warner Inc.: If they agree to conditions that include offering their local sports programming to competitors at reasonable prices, the FCC will approve their acquisition of cable systems owned by the bankrupt Adelphia Communications.
But the proposal will change nothing in Comcast's hometown of Philadelphia, said people familiar with its details.
Viewers here could watch most Phillies, Flyers and Sixers games on TV only on cable. Unless Comcast decides to change its policy, satellite customers would continue to miss out.
The FCC's bargain would apply only to other markets. FCC Chairman Kevin Martin's goal is to bar Comcast and Time Warner from keeping local sports to themselves elsewhere, according to two FCC officials who have seen the proposal and spoke today on condition of anonymity. Details of Martin's proposal were first reported Monday by USA Today.
The proposal, similar to rules imposed on News Corp., owner of Fox News, when it acquired DirecTV in 2003, would also require Comcast and Time Warner to accept binding arbitration in disputes over how much it can charge competitors for professional sports telecasts.
Comcast's ownership of local sports channels around the country, and the possibility that it could withhold sports elsewhere as it does in Philadelphia, was among the main reasons the Adelphia deal has become something of a logjam at the FCC, the officials said.
The complex deal, worth about $17 billion, was first proposed in April 2005, and includes a swap of systems already owned by Comcast and Time Warner that would increase their footprints in major markets that they already dominate. Comcast would not comment for this story because the deal is pending. The FCC also turned down a request for comment.
Separately, the judge overseeing Adelphia's bankruptcy case today granted the company permission to sell its assets to Time Warner and Comcast.
Judge Robert Gerber of the Southern District of New York said he would approve an order to detach the asset sale from the rest of Adelphia's bankruptcy process, allowing it to be executed without the approval of an overall restructuring plan. Adelphia sought the separation to bypass creditor disputes that have slowed the company in its filing of its plan.
The sale agreement with Time Warner and Comcast had been put in jeopardy because of a July 31 deadline at which the buyers could retract their offer. The offer includes a $12.7 billion cash component and the rest as shares in Time Warner. Once complete, the acquisitions would secure Time Warner's and Comcast's status as the two biggest cable operators in the nation.
Comcast's representatives have met repeatedly with FCC commissioners and staffers to press its case, and have done the same in testimony to congressional committees weighing proposals to rewrite an exemption in program-access requirements set by Congress in the Cable Act of 1992.
The law requires a cable company that owns programming distributed by satellite to allow other pay-TV companies to carry it. But it exempts programming distributed by land-based cables or wires.
Satellite companies such as DirecTV and Echostar, and competitive cable companies such as RCN Corp., argue that the exemption was intended to encourage cable companies to invest in news coverage and other local programming.
Echoed recently by some in Congress, they say the rule should not allow a cable company to restrict rivals' access to "must-have" local sports events, as Comcast does by withholding SportsNet from the satellite carriers.
Comcast has responded by pointing out that it has not used the exemption beyond Philadelphia, where the $22-billion-a-year company is headquartered, even though it now owns similar channels in Washington, D.C., Chicago and California.
The FCC chairman apparently accepted Comcast's argument that Philadelphia should remain an exception.
"The chairman just said, 'Let's make a deal. We'll protect your crown jewel,'" one of the FCC officials said.
By Miriam Hill and Jeff Gelles
INQUIRER STAFF WRITERS
The chairman of the Federal Communications Commission has proposed a deal with Comcast Corp. and Time Warner Inc.: If they agree to conditions that include offering their local sports programming to competitors at reasonable prices, the FCC will approve their acquisition of cable systems owned by the bankrupt Adelphia Communications.
But the proposal will change nothing in Comcast's hometown of Philadelphia, said people familiar with its details.
Viewers here could watch most Phillies, Flyers and Sixers games on TV only on cable. Unless Comcast decides to change its policy, satellite customers would continue to miss out.
The FCC's bargain would apply only to other markets. FCC Chairman Kevin Martin's goal is to bar Comcast and Time Warner from keeping local sports to themselves elsewhere, according to two FCC officials who have seen the proposal and spoke today on condition of anonymity. Details of Martin's proposal were first reported Monday by USA Today.
The proposal, similar to rules imposed on News Corp., owner of Fox News, when it acquired DirecTV in 2003, would also require Comcast and Time Warner to accept binding arbitration in disputes over how much it can charge competitors for professional sports telecasts.
Comcast's ownership of local sports channels around the country, and the possibility that it could withhold sports elsewhere as it does in Philadelphia, was among the main reasons the Adelphia deal has become something of a logjam at the FCC, the officials said.
The complex deal, worth about $17 billion, was first proposed in April 2005, and includes a swap of systems already owned by Comcast and Time Warner that would increase their footprints in major markets that they already dominate. Comcast would not comment for this story because the deal is pending. The FCC also turned down a request for comment.
Separately, the judge overseeing Adelphia's bankruptcy case today granted the company permission to sell its assets to Time Warner and Comcast.
Judge Robert Gerber of the Southern District of New York said he would approve an order to detach the asset sale from the rest of Adelphia's bankruptcy process, allowing it to be executed without the approval of an overall restructuring plan. Adelphia sought the separation to bypass creditor disputes that have slowed the company in its filing of its plan.
The sale agreement with Time Warner and Comcast had been put in jeopardy because of a July 31 deadline at which the buyers could retract their offer. The offer includes a $12.7 billion cash component and the rest as shares in Time Warner. Once complete, the acquisitions would secure Time Warner's and Comcast's status as the two biggest cable operators in the nation.
Comcast's representatives have met repeatedly with FCC commissioners and staffers to press its case, and have done the same in testimony to congressional committees weighing proposals to rewrite an exemption in program-access requirements set by Congress in the Cable Act of 1992.
The law requires a cable company that owns programming distributed by satellite to allow other pay-TV companies to carry it. But it exempts programming distributed by land-based cables or wires.
Satellite companies such as DirecTV and Echostar, and competitive cable companies such as RCN Corp., argue that the exemption was intended to encourage cable companies to invest in news coverage and other local programming.
Echoed recently by some in Congress, they say the rule should not allow a cable company to restrict rivals' access to "must-have" local sports events, as Comcast does by withholding SportsNet from the satellite carriers.
Comcast has responded by pointing out that it has not used the exemption beyond Philadelphia, where the $22-billion-a-year company is headquartered, even though it now owns similar channels in Washington, D.C., Chicago and California.
The FCC chairman apparently accepted Comcast's argument that Philadelphia should remain an exception.
"The chairman just said, 'Let's make a deal. We'll protect your crown jewel,'" one of the FCC officials said.
