• ACA Cites Conflicting Claims By Fox Parent
  News Corp. Blatantly Manipulates FCC’s Process

The American Cable Association has formally filed in opposition of an ongoing effort by News Corp. to change the conditions imposed by the FCC, by the Order permitting the acquisition of satellite provider DirecTV. News Corp., which sold its holdings in DirecTV in 2008, now claims the conditions should no longer apply and has filed a petition of modification with the FCC. The terms of the Order are not set to expire until 2010.

In its filing of opposition, on May 1, ACA explained that failure to deny the Petition would erode the substantial public interest benefits that have accrued, and will continue to do so throughout the full term of those conditions. The News Corp./DirecTV conditions continue to advance the public interest by: (i) protecting competition by maintaining access to “must have” programming; and (ii) avoiding temporary foreclosures and the disruption of customer viewing patterns. Moreover, the existence of the conditions has not resulted in any appreciable harm to News Corp.

“News Corp’s efforts to change the rules long after the game has started is certainly unreasonable,” said Matthew M. Polka, ACA President and Chief Executive Officer, “but its attempts to deceive the commission and suppress their true intent to skirt the conditions of the previous Order is unforgivable. For the entire year leading up to the 2008 sale of DirecTV, News Corp maintained it would not ask for the conditions of the 2004 Order to be modified, but before the ink had even dried they had filed a petition with the Commission asking for the conditions to be modified – a blatant manipulation of the process. This behavior undermines the Commission’s authority and the public interest the 2004 Order has successfully advanced. The Commission must not stand for it, and unquestionably should not reward it.”

During negotiations with the FCC prior to the sale of DirecTV, the issue of modifying the 2004 Order was raised during the public comment period, prompting News Corp to respond with the following statement:

“Because News Corp. has not filed a petition for modification of the conditions, they are scheduled to remain effective, by their terms, until January 14, 2010. Accordingly, requests that the Commission continue to apply to News Corp. the RSN and broadcast arbitration conditions, as set forth in the CU, ACA and NCTC comments, are inapposite and untimely….At this point, further discussion of the issue is unnecessary, irrelevant and a waste of Commission resources…”

News Corp. Claims Harm; ACA Cites ‘Big Gains’

Filing formal reply comments with the Commission on May 16, ACA expands on its previous filing calling attention to News Corp.’s. recent claims of “big gains” from its broadcast and cable networks. As stated in the filing, “These public statements eliminate any shred of credibility to the Petition’s claims that News Corp., and the public interest, would somehow suffer from a ‘competitive disadvantage’ that would befall News Corp. if the conditions were not terminated early.”

“Throughout this process, News Corp. has manipulated the Commission and ignored the public interest,” said ACA’s Matt Polka. “Petitioning the Commission for relief from conditions it alleges are restrictive while simultaneously reporting to Wall Street ‘big gains’ from its television stations and cable networks defies logic. The conditions set in 2004 serve the public good, specifically for those communities served by small and medium-sized cable systems. Repealing them prematurely would reward News Corp. for its abuse of the process, enabling it to ignore the public good while continuing to collect ‘big gains.’“

If the agreed-upon conditions for News Corp. were lifted, small cable operators and their customers will be forced to pay more money for the same content, because News Corp. will exercise unconstrained market power over smaller distributors – again, said ACA. The public will also face the risk of disruption in service because News Corp. would be permitted to withdraw broadcast channels and regional sports networks to squeeze higher license fees.