D.C. Circuit Stays Release of VPCI in Merger Transactions
The U.S. Court of Appeals for the D.C. Circuit granted an emergency stay request that blocks the FCC from releasing confidential programming and retransmission consent documents to outside counsel connected with the Comcast/Time Warner Cable and AT&T/DirecTV mergers, said a court order released Friday. Though the FCC, the merging companies and Dish Network had argued that such a stay would delay the mergers, the court disagreed: “The agency has access to the relevant documents at issue in this matter and can continue to evaluate the proposed merger during the stay.” The stay is to remain in place until the court rules on a petition for review filed by a group of content companies that includes CBS, Disney and Viacom.
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The decision puts pressure on the FCC to reach some sort of agreement with the content companies, several communications attorneys told us. Though the stay would go away if the court rejects the petition for review, the court's granting it indicates it believes the programmer's arguments, and the litigation is likely to take several months at even the fastest possible pace, said Georgetown Law Institute for Public Representation Senior Counselor Andrew Schwartzman. Schwartzman has spoken in favor of releasing the programming documents. The longer the merger transactions remain in limbo, the more likely investors are to move on from them, Schwartzman said. In its filings opposing the stay (see 1411190061) the FCC also said a stay “by itself, could impact the outcome of these applications.” The stay order “deals with a procedural matter that has never had anything to do with the substance of our transaction,” a Comcast spokeswoman told us by email. AT&T didn't comment.
Though FCC officials can still review the documents, the current state of affairs means none of the parties that requested access to confidential documents connected with the merger can access them, a cable attorney involved in the proceeding told us. That makes it difficult for many parties involved to prepare their reply comments, which have yet to be submitted in Comcast/TWC, the attorney said. The FCC can't complete its merger review without allowing comments to be submitted, and if parties are forced to prepare comments without access to all the materials connected with the deal, it would likely lead to further litigation, the attorney said.
Instead, the commission could try to reach a deal with the content companies to allow access to Video Programming Confidential Information, several attorneys told us. The programmers have told us they're willing to bargain with the commission, and previously have suggested alternatives such as somehow anonymizing the data. However, the FCC already has demonstrated a strong unwillingness to bend in this dispute, a cable attorney said, and may be unwilling to go back on its earlier position that sharing VPCI was important to properly reviewing the mergers, the attorney said.
The FCC is studying how to resolve the merger requests in a timely manner, an FCC official told us. That includes the possibility of restarting both merger shot clocks, which were frozen when the content companies raised their objections. In a statement, Commissioners Ajit Pai and Michael O'Rielly agreed with the court that the stay doesn't affect the mergers' progress. “We are pleased that the D.C. Circuit has stayed the Commission's sharply-divided decision to disclose programming agreements to outside parties in the merger proceedings,” said Pai and O'Rielly. “There is no reason why this ruling should delay the Commission’s review of these transactions. In the meantime, we hope that the Commission and programmers will come to the negotiating table and reach a compromise.”