Federal Communications Commission
Home » Blog

Media Bureau Category

Continuing a Conversation About the FCC’s Merger Review Process

Posted March 17th, 2011 by Jonathan Baker - Chief Economist

Six weeks after the FCC completed its high profile review of the Comcast/NBCU transaction, Commissioner Meredith Baker (no relation) suggested that the agency’s transaction review process should be overhauled.  I have been involved in merger reviews on both sides of the table for most of my career – working with private parties advocating or questioning deals, and at the Federal Trade Commission and Department of Justice as well as the FCC – putting me in a unique position to address some of the issues that Commissioner Baker raised.

    To provide context, I want to begin with what the FCC accomplished in terms of process during its Comcast/NBCU review: 

  • Fact-based and data driven analysis.  As the Commission’s order shows, its conclusions were based upon a well-developed record about the industry, the applicants, and the potential implications of the transaction.
  • Development of a model legal and economic analysis.  The FCC set forth a roadmap for antitrust tribunals reviewing the exclusionary impacts of vertical integration in future cases.
  • Detailed findings and reasons.  The Commission provided a detailed opinion explaining the reasons for the order’s provisions. 
  • Close coordination with the Department of Justice.  The FCC and DOJ worked together to share insights and to assure an efficient process and consistent outcomes.  By most accounts, this was the most successful transaction-related collaboration ever between these agencies.
  • Avoided unnecessary burdens.  The FCC worked with the applicants and other parties to craft an order that protects the public interest without restricting the applicants’ ability to accomplish their legitimate business objectives.  Comcast Executive Vice President David Cohen concurred, saying publicly after the FCC issued its order, “I don’t think any of the conditions is particularly restrictive.”

    The success of the FCC’s review process is particularly striking given that the transaction presented a wide range of important and complex issues, including novel and difficult competitive questions raised by the deal’s potential impact on nascent competition in online video distribution.

    Against this backdrop, let’s look at Commissioner Baker’s concerns.  The first is with the statutory mandate for the FCC and the antitrust enforcement agencies to review competition concurrently.  Comcast/NBCU highlights the advantages of Congress’ design.  Working together, the FCC and DOJ are often more effective in addressing competition issues than either would be working alone.  The FCC brings industry expertise and a greater practical ability to review and address concerns about a merger’s impact on potential competition.  Through collaboration, moreover, both agencies were able to conduct an extensive, careful, and cooperative review of that transaction without delaying the process.  Not surprisingly, the two agencies addressed competition problems by imposing similar conditions.

    In addition, Commissioner Baker raises concerns with the costs of a long merger review process.  Yet she also recognizes the need for careful review.  The FCC should not hold up the consummation of mergers that are in the public interest or allow merger reviews to languish, but, equally, it cannot cut corners when undertaking those reviews.  No responsible agency can simply assume that every communications merger proposed in the free market is in all respects beneficial to the public.  Nor can the FCC compromise on the procedural protections that administrative law confers on interested parties.  Based on my experience working at both antitrust agencies as well as the FCC, I would say that the length of a merger review is determined primarily by the complexity of the competitive issues, not whether the reviewing agency is the FCC, FTC or DOJ.  (Other major vertical mergers reviewed recently by DOJ, such as Ticketmaster/Live Nation, have taken as long as Comcast/NBCU to reach a consent settlement.)

    Commissioner Baker also questions whether the FCC at times goes too far afield when imposing conditions to assure that mergers serve the public interest, leading it to impose some conditions that may be unrelated to the transaction.  The wide range of conditions in the typical merger order is easy to explain:  it is the natural and foreseeable result of the statutory “public interest” charge to the agency.   In furtherance of that mandate, the FCC takes on competition concerns – in the Comcast/NBCU order, two-thirds of the pages on conditions sought to protect or foster competition – but it also addresses other public interest issues that Congress has put front and center in the Communications Act, such as diversity of viewpoints, localism, and deployment of advanced telecommunications services.  My sense is that most disputes over whether specific conditions are “transaction-related” are not mainly about the integrity of the merger review process but are really about a basic policy question – whether the Commission should continue to pursue the longstanding public interest goals identified by Congress in the Act.  If so, process reforms are unlikely to stop the criticism.

    Even a successful process can be improved.  It is possible, for example, that the FCC could do better in developing and testing evidence by introducing more adversarial elements into its administrative merger review process.  (A similar issue comes up in comparing the antitrust review of mergers in the US and Europe.)   The FCC experimented with one such procedural innovation in Comcast/NBCU:  the staff conducted an economic workshop, bringing together economists for the parties to the transaction and third parties for a structured discussion placed on the adjudicative record.  In future reviews, the FCC staff could also consider deposing merging firm executives as the antitrust agencies often do; this process may, for example, help the FCC staff evaluate merging firm documents.  

    In Comcast/NBCU, Chairman Genachowski was determined to ensure a model transaction review process – and through the dedicated effort of the transaction team led by John Flynn and staffed from throughout the agency, particularly the Media Bureau, the Office of General Counsel, and the Office of Strategic Planning and Policy Analysis, he succeeded.  I had little exposure to FCC merger review in the past.  But after working on Comcast/NBCU and other transactions during my time at the FCC, I think of the agency’s merger review process more as a source of pride than as a source of concern.

Posted in Media Bureau Office Of Chairman Office Of Strategic Planning And Policy Analysis

Aiding Japan Disaster Relief Fundraising Efforts

Posted March 16th, 2011 by William Lake - Chief of the Media Bureau

While there have been other disasters during our lifetime, few are of the magnitude Japan is experiencing.  Over the weeks and months to come, much help will be needed to rebuild the lives of those affected by the continuing devastation the earthquake and tsunami have caused.  To assist with Japan relief efforts, the Federal Communications Commission today announced procedures on how noncommercial educational (NCE) stations can request a waiver to conduct on-air fundraising in support of these efforts.

The Commission’s rules generally prohibit NCEs from on-air fundraising on behalf of any entity other than the station itself.  However, the Commission has previously granted waivers for limited fundraising programs or for station appeals for disasters such as Hurricanes Andrew and Katrina, the Haiti 2010 earthquake, and the September 11th terrorist attack, among others.  Stations are already requesting waivers and we look forward to granting as many as we can in support of this important cause.

More information can be found in the public notice issued today.

Posted in Public Notices Media Bureau
No Comments

Bureau Waiver Fosters Innovation and Competition in the Mobile DTV Marketplace

Posted July 27th, 2010 by William Lake - Chief of the Media Bureau

The Media Bureau’s recent decision to waive some of the tuner requirements for Mobile DTV devices not only gives manufacturers greater flexibility in how they design and market these new receivers, it ensures the devices can be in the hands of consumers in  time for the 2010 holiday season.  Mobile DTV, or MDTV, is a kind of television service designed for use on-the-go instead of in a single location.

Current FCC rules require that all television receivers have the ability to get both digital and analog signals.  Although full-power television stations stopped broadcasting in analog last year, the analog broadcast standard remains in use by some low-power broadcasters.  Until the requirement is removed, television manufacturers must ask the Commission’s approval if they want to produce a device without an analog tuner. 

A group of Mobile DTV manufacturers recently asked for this approval which, among other things, would eliminate their having to produce a potentially larger, heavier and pricier device that uses more power.  We promptly approved their request, furthering the Commission’s commitment to foster innovation and competition in the marketplace. 

Where the service is available, consumers will be able to watch live MDTV on compliant netbooks, smartphones and portable TVs in their cars.  Many MDTV devices also will be able to receive standard television.  Look on the packaging to see whether a particular model receives MDTV signals only or if it also gets nationwide standard DTV signals.  The device will not only provide news and entertainment while on the move, it will be another way to receive critical information in times of emergency.

Posted in Media Bureau

An Opportunity Knocks for Broadcasters

Posted April 29th, 2010 by William Lake - Chief of the Media Bureau

The Commission’s proposal to invite voluntary participation by TV broadcasters in a spectrum exchange is an opportunity knocking at their door.  Broadcasters who are strapped for capital may find that answering that knock will be just what they need to kick their performance up to the next level. 

Many – though not all – broadcasters find themselves today to be capital constrained as they contemplate taking advantage of the many potential benefits of the DTV transition.  Whether they seek to develop new digital content, expand their new media platforms, or exploit new technologies that enable transmission of two HDTV streams on a 6 MHz channel, these broadcasters may find that they are “spectrum poor” – their scarcest resource is not spectrum but the capital needed to make those improvements.  To help broadcasters be all that they can be, ways need to be found to help them get that capital. 

A voluntary spectrum exchange offers these broadcasters a chance to get the needed capital infusion to make the investments that will position them to serve their communities even better going forward.  The Commission has yet to work out the details of such a voluntary program, and broadcasters’ input to that process will be key.  But a broadcaster is likely to have the option of contributing half of a 6 MHz channel and sharing spectrum with another station that has done the same, or – Congress willing – to contribute a 6 MHz channel to an incentive auction in which the broadcaster will share in the auction proceeds.  Either way, a broadcaster will be able to use the capital thus generated to jump to an improved business model in its continued broadcast activities, making it a stronger contender in the multimedia ecosystem that is evolving daily.  Innovative spectrum-sharing arrangements should create new opportunities for minority and niche broadcasters to prosper.

Done right, these steps can truly be a “win-win-win”… for broadcasters, consumers, and broadband users alike.  I will spend the next few months working with the other members of the Commission’s Spectrum Task Force to try to make that happen.  We’ll have many operational and procedural features to work out.  I hope we can continue the many constructive dialogues that have begun with all of the affected parties.  Broadcasters who want to explore opportunities to position themselves for greater success in the future will find that we want to help them do just that.

Posted in Media Bureau
1 Comment

Is Your EEO Public File Report On Your Website?

Posted April 8th, 2010 by Lewis Pulley - Assistant Chief, Policy Division, Media Bureau

Broadcast stations with five or more full-time employees, and multichannel video programming distributors (MVPDs), including cable and satellite TV companies, with six or more full-time employees, are required by FCC rules to maintain an EEO recruitment program.  They must also create a report each year providing information about the program and place it in their public files.  Requirements for EEO public file reports are outlined in the EEO rules for broadcast stations (Section 73.2080(c)(6)) and MVPDs (Section 76.1702(b)).  Those stations and MVPDs that have websites are also required to post the current year's EEO public file report on their websites.  Failure to create the report with all required information, to place it in the public file, or to post it to the station's or MVPD's website are violations of our rules and may result in enforcement action.  The Commission has issued forfeitures for these violations in the past.  All forfeitures released by the Commission for violations of EEO rules, as well as all EEO regulations and other EEO information, may be viewed on the EEO page on the FCC website.  In addition, if you have questions about the FCC's EEO rules, please contact the Media Bureau's EEO Staff, at (202) 418-1450.

Posted in Media Bureau
No Comments