Cable-Industry Document Access Case Could Delay Mergers

By Brent Kendall 

WASHINGTON--A federal court case about access to sensitive cable-industry documents could further delay U.S. regulators' review of two major mergers: Comcast Corp.'s deal for Time Warner Cable and AT&T Inc.'s planned acquisition of DirecTV.

A three-judge panel of a Washington federal appeals court voiced concerns Friday about a decision by the Federal Communications Commission to give third-party opponents of the mergers limited access to video-programming contracts between the merging companies and TV-channel owners like CBS Corp., Walt Disney Co. and Viacom Inc.

Robert Long, a lawyer for the content companies, argued the FCC acted in a "totally unprecedented" manner in allowing representatives for third parties like DISH Network to have access to their highly sensitive business documents, including hundreds of thousands of pages of materials on pricing and negotiating strategies for dealing with distributors like Comcast. Disclosure of that confidential material "would be highly damaging," Mr. Long said during an argument session that lasted nearly an hour.

David Gossett, a lawyer for the FCC, said the commission has put strong protections in place limiting access to the documents to a limited number of outside lawyers and consultants who work with third parties challenging the mergers. Those individuals will have access to the materials only for the purposes of providing input during the FCC proceedings and are barred, under the threat of severe sanctions, from disclosing or using the information for competitive decision-making purposes, Mr. Gossett said.

Because the FCC is examining the buying power of companies like Comcast in the video-programming market, the documents are critical for the agency's review, and for the ability of third-party challengers to make informed input to the government, Mr. Gossett said.

Judges on the U.S. Court of Appeals for the District of Columbia Circuit peppered the FCC with skeptical questions.

Judge David Tatel said everyone agreed the FCC should get access to the documents, but he questioned whether the agency followed its own policies in allowing access to third parties.

Judge Sri Srinivasan suggested the FCC, before allowing disclosure of the documents, needed to do more than just show that the material was relevant for the merger reviews. He suggested the agency needed to show the disclosure was necessary to the FCC resolving its reviews.

The judges didn't signal exactly how or when they would rule. The court previously issued a stay blocking the FCC from allowing access to the material while the case continued.

The FCC and the merging parties have warned the video programmers' objections to document access threatened unacceptable delays in the merger review process.

Both the FCC and the Justice Department are reviewing the proposed deals.

Write to Brent Kendall at [e-mail]

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