**Before the**

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of                 | * | MB Docket No. 07-18          |
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| NEWS CORPORATION and             | ) |                              |
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| THE DIRECTV GROUP, INC.,         | * |                              |
| Transferors,                     |   |                              |
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| LIBERTY MEDIA CORPORATION,       | * |                              |
| Transferee,                      | * |                              |
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| For Authority to Transfer        | * |                              |
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MEMORANDUM OPINION AND ORDER

**Adopted: February 25, 2008 Released: February 26, 2008**

By the Commission: Commissioner Copps concurring and issuing a
statement; Commissioner Adelstein approving in part, dissenting in part
and issuing a statement.

Table of Contents

Heading Paragraph \#

I. INTRODUCTION 1

II\. DESCRIPTION OF THE PARTIES 6

A. The DIRECTV Group, Inc. 6

B. Liberty Media Corporation 8

C. News Corporation 13

III\. The Proposed Transaction 16

A. Description 16

1\. The Share Exchange Agreement 16

2\. Resulting Ownership and Management Structure of DIRECTV 18

B. Application and Review Process 20

1\. Commission Review 20

2\. Department of Justice Review 21

IV\. STANDARD OF REVIEW AND PUBLIC INTEREST FRAMEWORK 22

V. analysis of potential harms in the relevant markets 27

A. Introduction 27

B. Relevant Markets 28

1\. MVPD Distribution 30

a\. Product Market 30

b\. Geographic Market 32

2\. Video Programming 36

a\. Product Markets 36

b\. Geographic Market 37

C. Analysis of Potential Public Interest Harms 38

1\. Potential Horizontal Harms 38

2\. Potential Vertical Harms 64

*a.* Access to Affiliated Programming 66

\(i\) Non-Broadcast Programming Generally 72

\(ii\) Regional Sports Programming 87

\(iii\) Broadcast Programming Issues 104

\(iv\) Interactive Television 109

b\. Access to Unaffiliated Programming and Exclusive Dealing 111

c\. Carriage of Unaffiliated Programming 119

3\. Other Potential Public Interest Harms 122

a\. Future Application of the *News Corp.-Hughes* Conditions 122

\(i\) Program Access Conditions 122

\(ii\) Arbitration Conditions 128

b\. Local-Into-Local Provision of Broadcast Television Service 129

VI\. ANALYSIS OF PUBLIC INTEREST BENEFITS 138

A. Analytical Framework 140

B. Claimed Benefits 142

1\. Reduction of Vertical Integration and Media Concentration 142

2\. Interactive Commerce and Other Technologies 151

VII\. BALANCING PUBLIC INTEREST HARMS AND BENEFITS 153

VIII\. PROCEDURAL MATTERS 159

A. Applicants' Waiver Request 159

B. Weinstein Motion to Enlarge the Issue 160

IX\. ordering clauses 162

APPENDIX A -- Licenses and Authorizations

APPENDIX B -- Conditions

# INTRODUCTION 

1.  In this Order, we approve, subject to conditions, the
    application[^1] of News Corporation ("News Corp."), The DIRECTV
    Group, Inc. ("DIRECTV") and Liberty Media Corporation ("Liberty
    Media") (collectively, the "Applicants") for consent for the
    transfer of control of various Commission licenses and
    authorizations, including direct broadcast satellite ("DBS")[^2]
    licenses and authorizations, held by DIRECTV and its subsidiaries
    (collectively, DIRECTV), from News Corp. to Liberty Media.[^3] The
    Application is filed pursuant to section 310(d) of the
    Communications Act of 1934, as amended ("Communications Act" or
    "Act").[^4] As discussed more fully below, the Applicants assert
    that approval of the Application would result in a number of public
    interest benefits, would not create any anticompetitive effects, and
    would be fully consistent with Commission rules and policies.

2.  Approval of the Application is necessary to permit consummation of
    the Share Exchange Agreement between Liberty Media and News Corp.,
    pursuant to which Liberty Media will exchange all of its 16.3
    percent ownership interest in News Corp. for all of News Corp.'s
    ownership interest in DIRECTV, three Regional Sports Networks
    ("RSNs"), and approximately \$550 million in cash.[^5] Upon
    completion of the transaction, Liberty Media will have a 40.36
    percent interest in DIRECTV, making it the largest stockholder by
    far.[^6] By virtue of this interest, Liberty Media will have *de
    facto* control over DIRECTV which, through its subsidiaries, is the
    largest DBS service provider in the United States and a provider of
    DBS service to Latin America.[^7] Liberty Media also will appoint
    three representatives to DIRECTV's 11-member Board of Directors to
    replace resigning News Corp. directors.[^8] Chase Carey will remain
    as the President, Chief Executive Officer, and a member of the Board
    of Directors of DIRECTV.[^9]

3.  The Applicants state that the transaction will benefit the public
    because it will: (1) eliminate the vertical integration of News
    Corp. and DIRECTV, and thus alleviate the Commission's concern,
    expressed in the *News Corp.-Hughes* proceeding, that the
    combination of News Corp.'s programming interests and its ownership
    of DIRECTV, could increase News Corp.'s incentive and ability to
    threaten to withhold or actually withhold programming from competing
    multi-channel video programming distributors ("MVPDs");[^10] (2)
    reduce media concentration by separating the interests of Liberty
    Media and News Corp.;[^11] and (3) make Liberty Media's expertise in
    the areas of interactive television, broadband access, and
    interactive commerce more available to DIRECTV.[^12] In addition, to
    address potential Commission concerns arising from the Application,
    Liberty Media agrees to be bound by the conditions established by
    the Commission for News Corp. when News Corp. acquired its interest
    in DIRECTV.[^13]

4.  To obtain Commission approval, the Applicants must demonstrate that
    the proposed transaction will serve the public interest,
    convenience, and necessity pursuant to section 310(d) of the
    Communications Act.[^14] The Commission's review of the Application
    includes an assessment of whether the proposed transaction complies
    with the specific provisions of the Communications Act, other
    statutes, and the Commission's rules.[^15] If the transaction would
    not violate a statute or rule, the Commission next considers whether
    the transactions could result in public interest harms by
    substantially frustrating or impairing the objectives or
    implementation of the Communications Act or related statutes.[^16]
    The Commission generally weighs any potential public interest harms
    of proposed transactions against any potential public interest
    benefits.[^17] The Applicants have the burden of proving that the
    proposed transaction, on balance, serves the public interest by a
    preponderance of the evidence.[^18]

5.  As discussed more fully below, based on the record before us, we
    find that our grant of the Application, as conditioned, serves the
    public interest. We find that the proposed transaction will comply
    with all applicable statutes and Commission rules. However, we also
    find that the proposed transaction would increase the likelihood of
    harms to competition and diversity absent remedial conditions. These
    potential harms largely result from the combined ownership and
    positional interests that John Malone and other officers and
    directors of Liberty Media would hold after the consummation of the
    transaction. In addition, combining Liberty Media's ownership of
    programming services, including regional sports networks and
    broadcast television stations, with its ownership of DIRECTV,
    presents potential public interest harms similar to those the
    Commission sought to mitigate when it conditionally approved News
    Corp.'s acquisition of an interest in DIRECTV. As the Commission did
    in approving that transaction, we grant the instant Application
    subject to certain conditions to address our concerns. Specifically,
    we require the Applicants to abide by program access, program
    carriage, RSN arbitration, and retransmission consent arbitration
    conditions modeled on the conditions imposed in the News
    Corp.-Hughes proceeding. In addition, we require that within one
    year of the date this Order is adopted, all of the attributable
    interests connecting DIRECTV-Puerto Rico and Liberty Cablevision of
    Puerto Rico, Ltd. ("LCPR") be severed.[^19] Severing the ties
    between these two companies is necessary to prevent the potential
    competitive harms that would arise from the effective reduction of
    competitors from three to two in areas of the Puerto Rico MVPD
    market served by LCPR. It will help ensure that the firms will
    continue to compete vigorously throughout Puerto Rico and devote the
    requisite competitive resources to that market. We also find that
    the transaction will result in certain public interest benefits.
    More specifically, we find that the transaction is likely to reduce
    media concentration and vertical integration by decoupling the
    interests of News Corp. from the interests of Liberty Media and
    DIRECTV. We find that the potential public interest harms of the
    proposed transaction, as conditioned, are outweighed by the
    potential public interest benefits. Therefore, on balance, we find
    that the public interest will be served by approval of the
    Application subject to the conditions we adopt in this Order.[^20]

# DESCRIPTION OF THE PARTIES 

## The DIRECTV Group, Inc.

6.  DIRECTV through its subsidiaries, offers direct-to-home ("DTH")
    satellite service in the United States and Latin America.[^21] Its
    subsidiary, DIRECTV Enterprises LLC, operates nine geostationary
    satellites serving more than 16 million subscribers nationwide,
    making it the largest provider of DTH satellite TV services and the
    second largest provider in the MVPD industry in the United
    States.[^22] DIRECTV also owns DIRECTV Latin America Holdings, Inc.,
    a group of companies that includes DIRECTV's wholly owned
    subsidiary, DIRECTV Latin America, LLC ("DIRECTV Latin
    America").[^23] In turn, DIRECTV Latin America provides DTH
    satellite TV service to more than 2.8 million subscribers in 27
    countries in Latin America and the Caribbean, including Puerto Rico,
    through DIRECTV-Puerto Rico.[^24]

7.  DIRECTV offers a wide variety of programming services, distributing
    to its subscribers more than 1,650 digital video and audio channels.
    In particular, DIRECTV offers approximately 180 basic entertainment
    channels, 31 premium movie channels, 35 regional and specialty
    sports networks, more than 1,100 local broadcast channels, more than
    45 pay-per-view "movie and event choices," and more than 85 Spanish
    and other foreign language special interest channels."[^25]
    DIRECTV's offerings include exclusive content such as NFL Sunday
    Ticket and NCAA Mega March Madness.[^26]

## Liberty Media Corporation 

8.  Liberty Media Corporation, through its ownership interests in
    subsidiaries and other companies, is primarily engaged in video and
    online commerce, media, communications, and entertainment industries
    in North America, Europe, and Asia.[^27] Liberty Media is structured
    as a holding company consisting of two business groups, the
    Interactive Group and the Capital Group. Neither group is a separate
    legal entity, and therefore neither can own assets, issue
    securities, or enter into legally binding agreements. Currently, the
    economic performance of each group is reflected separately by two
    tracking stocks, Liberty Interactive Common Stock and Liberty
    Capital Common Stock.[^28] After consummation of the Share Exchange
    Agreement, Liberty Media intends to further split the Liberty
    Capital Group into two tracking stocks, Liberty Capital and Liberty
    Entertainment.[^29]

9.  The Interactive Group and the Capital Group are assigned separate
    businesses, assets, and liabilities. Each business in the
    Interactive Group and the Capital Group is separately managed, and
    each requires different technologies, distribution channels, and
    marketing strategies.[^30] The Interactive Group includes Liberty's
    interests in businesses that are engaged in video and on-line
    commerce, such as QVC; Inc., IAC/InterActive Corp. ("IAC"); Expedia,
    Inc.; Provide Commerce, Inc.; and BuySeasons, Inc.[^31] The Capital
    Group holds Starz Entertainment, LLC; Starz Media, LLC;
    TruePosition, Inc.; and FUN Technologies, Inc. In addition, the
    Capital Group holds Liberty Media's interests in GSN, LLC; WildBlue
    Communications, Inc.; Time Warner Inc.; and Sprint Nextel
    Corporation.[^32] The Capital Group also owns the Atlanta Braves
    baseball team.[^33] Liberty Media also holds interests in Crown
    Media United States, LLC and Viacom Inc.[^34] John Malone is the
    Chairman of the Board of Liberty Media.[^35] He holds approximately
    32.3 percent of Liberty Media's voting shares and 5.2 percent of
    Liberty Media's outstanding equity.[^36]

10. *Liberty Global, Inc.* Liberty Global Inc. ("Liberty Global")
    operates broadband communications networks and media and programming
    businesses in Puerto Rico and outside the United States.[^37]
    Liberty Global also owns LCPR, a cable system serving approximately
    130,000 subscribers in central Puerto Rico.[^38] John Malone is the
    Chairman of the Board of Liberty Global,[^39] and is one of two
    members of the Executive Committee.[^40] Malone owns approximately
    31.4 percent of Liberty Global's voting shares and 5.0 percent of
    Liberty Global's outstanding equity.[^41] Additionally, four members
    of Liberty Media's Board of Directors, including Malone, sit on
    Liberty Global's 10-person Board of Directors.[^42]

11. *Discovery Holding Company.* In July 2005, Liberty Media completed
    the spin-off of Discovery Holding Company ("Discovery
    Holding"),[^43] which included Liberty Media's interest in Discovery
    Communications, Inc. ("Discovery"), an operator of video programming
    networks, including several digital tier networks.[^44] Discovery is
    an information-based media company reaching more than 1.5 billion
    subscribers in more than 170 countries. Through TV and digital
    media, Discovery's 100-plus worldwide networks include Discovery
    Channel, TLC, Animal Planet, Discovery Health, The Science Channel,
    and Discovery HD Theater. Discovery is owned by Discovery Holding,
    Advance/Newhouse Programming Partnership ("Advance/Newhouse"), and
    John S. Hendricks, Discovery's founder and chairman.[^45]

12. Although Liberty Media no longer owns the stock of Discovery
    Holding, John Malone, Liberty Media's Chairman, owns common stock
    representing 31.08 percent of "the overall voting power" of
    Discovery Holding and 5.47 percent of all outstanding shares.[^46]
    Malone is also Discovery Holding's Chairman of the Board, Director,
    and Chief Executive Officer. Additionally, four members of Liberty
    Media's Board of Directors, including Malone, are on Discovery
    Holding's five-member Board of Directors.[^47] Discovery Holding
    (2/3 interest) and Advance/Newhouse (1/3 interest) effectively each
    have negative control of Discovery because significant transactions,
    in addition to Discovery's annual business plan, require approval by
    an 80 percent majority of Discovery's capital stock.[^48] Finally,
    Liberty Media provides management services to Discovery
    Holding.[^49]

## News Corporation

13. News Corporation ("News Corp.") is a diversified international media
    and entertainment company whose enterprises include filmed
    entertainment, television, cable network programming, DBS service,
    magazines and inserts, newspapers, and book publishing.[^50] News
    Corp.'s wholly owned subsidiary, Fox Entertainment Group, Inc.
    ("FEG"), owns approximately 41 percent of DIRECTV's outstanding
    common stock.[^51]

14. FEG develops, produces, and distributes worldwide feature films and
    TV programs, and TV broadcasting and cable network programming.
    Among FEG's programming and distribution interests is FOX
    Broadcasting Company, which programs the FOX Network, MyNetworkTV,
    Fox Television, and related subsidiaries (collectively, "FTS"); Fox
    Cable Networks; Fox News Channel; Twentieth Century Fox Film; and
    Twentieth Century Fox Television.[^52]

15. FEG's programming interests also include Fox Sports Net, Inc.
    ("FSN"). FSN is the largest regional sports network ("RSN")
    programmer in the United States, focusing on live professional and
    major collegiate home team sports events.[^53] FSN's sports
    programming business consists primarily of ownership interests in 16
    RSNs (the "FSN RSNs") and in National Sports Programming, which
    operates Fox Sports Net ("Fox Sports Net"), a national sports
    programming service. Fox Sports Net provides its affiliated RSNs
    with 24-hour national sports programming, featuring original and
    licensed sports-related programming and live and replay sporting
    events.[^54] In addition to 16 RSNs that News Corp. currently owns
    or controls, FSN is also affiliated with an additional five RSNs
    through Fox Sports Net. Together, these RSNs reach approximately
    81 million U.S. households, according to Nielsen Media Research, and
    have rights to telecast live games of U.S. professional sports teams
    in Major League Baseball ("MLB"), the National Basketball
    Association ("NBA"), and the National Hockey League ("NHL"), as well
    as the games of numerous collegiate conferences and individual
    college and high school sports teams.[^55]

# The Proposed Transaction 

## Description

### The Share Exchange Agreement

16. On December 23, 2006, News Corp. and Liberty Media entered into an
    agreement to exchange Liberty Media's 16.3 percent ownership
    interest in News Corp. for News Corp.'s approximately 40.36 percent
    ownership in DIRECTV, News Corp.'s 100 percent interest in three
    regional sports networks (Fox Sports Net Rocky Mountain, LLC; Fox
    Sports Net Pittsburgh, LLC; and Fox Sports Net Northwest, LLC,
    collectively, "RSN Subsidiaries"), and approximately \$550 million
    in cash.[^56]

17. Pursuant to a Share Exchange Agreement and "other ancillary
    agreements," Liberty Media will exchange its 16.3 percent equity
    stake in News Corp. for all of the capital stock of Greenlady Corp.
    ("Splitco"), a wholly owned subsidiary of News Corp.[^57] Before the
    exchange is effected, News Corp. will contribute to Splitco its
    40.36 percent interest in DIRECTV, its 100 percent interest in the
    three RSN Subsidiaries, and approximately \$550 million in
    cash.[^58] Liberty Media will acquire the capital stock of Splitco
    through its indirect wholly owned subsidiaries that hold Liberty
    Media's 16.3 percent equity stake in News Corp. Each Liberty Media
    subsidiary that holds shares of News Corp. common stock will acquire
    a pro-rata interest in Splitco, in exchange for a proportionate
    number of News Corp. common stock shares that it holds.[^59]

### Resulting Ownership and Management Structure of DIRECTV

18. As a result of its purchase of Splitco from News Corp., Liberty
    Media will become the largest stockholder of DIRECTV, acquiring
    approximately 40.36 percent of DIRECTV common stock.[^60] The
    Applicants acknowledge that Liberty Media will have *de facto*
    control over DIRECTV "for purposes of the Communications Act."[^61]
    As a result of its sale of Splitco to Liberty Media, News Corp. will
    acquire from Liberty Media its approximately 16.3 percent equity
    stake in News Corp., and will divest all of its interests in
    DIRECTV.[^62]

19. After the transaction is consummated, the DIRECTV Board of Directors
    will consist of 11 members. Upon consummation of the exchange, the
    three directors representing News Corp. on the DIRECTV Board of
    Directors will resign after proposing that they be replaced by three
    directors to be appointed by Liberty Media. DIRECTV has agreed to
    support the appointment of John Malone, Gregory B. Maffei, and one
    other person.[^63] Chase Carey will remain as President, Chief
    Executive Officer, and member of the Board of Directors of DIRECTV.
    [^64]

## Application and Review Process

### Commission Review

20. On January 29, 2007, News Corp., DIRECTV, and Liberty Media filed a
    consolidated application with the Commission seeking consent to
    transfer control of various Commission licenses and authorizations
    held by DIRECTV and its subsidiaries from News Corp. to Liberty
    Media, pursuant to section 310(d) of the Communications Act of
    1934.[^65] The Commission released a *Public Notice* on February 21,
    2007, accepting the application for filing and establishing the
    pleading cycle for public comment or petitions to deny.[^66]
    Petitions to deny were filed by EchoStar Satellite L.L.C.
    ("EchoStar"), North Dakota Broadcasters ("NDB"), and the Hispanic
    Information and Telecom Network ("HITN").[^67] On July 10, 2007, the
    Media Bureau requested additional information from the
    Applicants.[^68] The Applicants' separately filed responses to those
    requests are included in the record.[^69]

### Department of Justice Review

21. In addition to Commission review, the proposed transaction is
    subject to review by the U.S. Department of Justice ("DOJ"). The DOJ
    reviews communications mergers and transactions pursuant to section
    7 of the Clayton Act, which prohibits mergers that are likely to
    substantially lessen competition in any line of commerce.[^70]

# STANDARD OF REVIEW AND PUBLIC INTEREST FRAMEWORK

22. Pursuant to section 310(d) of the Communications Act, we must
    determine whether the Applicants have demonstrated that the proposed
    transfers of control to Liberty Media of the licenses and
    authorizations held by DIRECTV will serve the public interest,
    convenience, and necessity.[^71] In making this assessment, we first
    assess whether the proposed transaction complies with the specific
    provisions of the Act,[^72] other applicable statutes, and the
    Commission's rules.[^73] If the transaction does not violate a
    statute or rule, we next consider whether it could result in public
    interest harms by substantially frustrating or impairing the
    objectives or implementation of the Act or related statutes.[^74] We
    then employ a balancing process, weighing any potential public
    interest harms of the proposed transactions against any potential
    public interest benefits.[^75] The Applicants bear the burden of
    proving, by a preponderance of the evidence, that the proposed
    transaction, on balance, will serve the public interest.[^76] If we
    are unable to find that the proposed transaction serves the public
    interest, or if the record presents a substantial and material
    question of fact, we would designate the application for hearing
    under section 309(e) of the Act.[^77]

23. The Commission's public interest evaluation necessarily encompasses
    the "broad aims of the Communications Act,"[^78] which include,
    among other things, a deeply rooted preference for preserving and
    enhancing competition in relevant markets;[^79] accelerating private
    sector deployment of advanced services,[^80] ensuring a diversity of
    information sources and services to the public;[^81] and generally
    managing the spectrum in the public interest. This public interest
    analysis may also entail assessing whether a transaction will affect
    the quality of communications services or will result in the
    provision of new or additional services to consumers.[^82] In
    conducting this analysis, we may consider technological and market
    changes, and the nature, complexity, and speed of change of, as well
    as trends within, the communications industry.[^83]

24. Our competitive analysis, which forms an important part of the
    public interest evaluation, is informed by, but not limited to,
    traditional antitrust principles.[^84] The Commission and the DOJ
    each have independent authority to examine communications mergers,
    but the standards governing the Commission's review differ from
    those of the DOJ.[^85] The Antitrust Division of the DOJ reviews
    telecommunications mergers pursuant to section 7 of the Clayton Act,
    which prohibits mergers that are likely to substantially lessen
    competition.[^86] The Antitrust Division's review is limited solely
    to an examination of the competitive effects of the acquisition,
    without reference to diversity, localism, or other public interest
    considerations.

25. The Commission, on the other hand, is charged with determining
    whether the transfer of control serves the broader public interest.
    In the communications industry, competition is shaped not only by
    antitrust law, but also by the regulatory policies that govern the
    interactions of industry players.[^87] In addition to considering
    whether a transaction will reduce existing competition, therefore,
    we also must focus on whether the transaction will decrease the
    market power of dominant firms in the relevant communications
    markets and the transaction's effect on future competition.[^88] Our
    analysis also recognizes that a proposed transaction may lead to
    both beneficial and harmful consequences. For instance, combining
    assets may allow a firm to reduce transaction costs and offer new
    products, but it may also create market power, create or enhance
    barriers to entry by potential competitors, or create opportunities
    to disadvantage rivals in anticompetitive ways.[^89]

26. Finally, the Commission's public interest authority enables us,
    where appropriate, to impose and enforce narrowly tailored,
    transaction-specific conditions that ensure that the public interest
    is served by the transaction.[^90] Section 303(r) of the
    Communications Act authorizes the Commission to prescribe
    restrictions or conditions, not inconsistent with law, which may be
    necessary to carry out the provisions of the Act.[^91] Indeed, our
    public interest authority enables us to rely upon our extensive
    regulatory and enforcement experience to impose and enforce
    conditions to ensure that a transaction will yield overall public
    interest benefits.[^92] Despite this broad authority, the Commission
    has held that it will impose conditions only to remedy harms that
    arise from the transaction (*i.e*., transaction-specific harms)[^93]
    and that are reasonably related to the Commission's responsibilities
    under the Communications Act and related statutes.[^94]

# analysis of potential harms in the relevant markets

## Introduction

27. We discuss below the potential public interest harms that are likely
    to result from the transaction. We consider specifically whether the
    transaction will increase the Applicants' incentive or ability to
    engage in anticompetitive behavior that is likely to harm
    competition, diversity, or localism. As in *News Corp.-Hughes,* we
    examine the transaction's likely impact on the MVPD market and the
    programming market. We conclude that, absent conditions, the
    transaction is likely to harm competition and diversity in both
    markets.

## Relevant Markets

28. In general, the level of competition in a market depends heavily on
    the ability and willingness of consumers to substitute one product
    for another in the event of an increase in price. If consumers have
    such choices, a single firm cannot raise its product's price above
    competitive levels because consumers would respond by switching to a
    substitute product. The level of competition depends on what
    products are substitutes (the "product market"), where those
    substitute products are available (the "geographic market"), what
    firms produce them ("market participants"), and what other firms
    might be able to produce substitutes if the price were to rise
    ("market entrants"). To evaluate the impact of proposed transactions
    on competition, we examine the characteristics of competition in the
    relevant product and geographic markets and the ease with which new
    firms could enter those markets, and determine the impact of the
    transactions on market participants and consumers. Transactions
    raise competitive concerns when they reduce the availability of
    substitute choices (*i.e.*, increase market concentration) to the
    point that the acquiring firm has a significant incentive and
    ability to raise prices or reduce output. Economic theory describes
    how such anticompetitive actions can harm consumers and how to
    measure the magnitude of the harm.[^95]

29. In analyzing MVPD transactions, the Commission has generally
    examined two separate but related product markets: (1) the
    distribution of programming to consumers ("the distribution market")
    and (2) the acquisition of programming ("the video programming
    market"). The Applicants are significant participants in both of
    these product markets, and we therefore examine whether the
    conditions offered by Liberty Media adequately address any potential
    adverse effects the transaction may have on MVPD competition and
    diversity and on the flow of video programming to consumers.[^96]

### MVPD Distribution

#### Product Market 

30. MVPDs include cable operators, DBS providers, and
    "overbuilders."[^97] MVPDs bundle programming networks into groups
    of channels or "tiers" and sell this programming to consumers,
    deriving revenues from subscription fees and the sale of advertising
    time that they receive through their carriage agreements. MVPDs
    sometimes seek exclusive access to certain programming to attempt to
    make their offerings more attractive than those of their direct
    competitors.[^98]

31. We define the MVPD product market according to the analytical
    framework and principles outlined by the U.S. Department of Justice
    and the Federal Trade Commission in the *Horizontal Merger
    Guidelines*. The Guidelines define the relevant product market as
    the smallest group of competing products for which a hypothetical
    monopoly provider of the products could profitably impose at least a
    "small but significant and non-transitory price increase," presuming
    no change in the terms of sale of other products.[^99] Thus, when
    one product is a reasonable substitute for the other in the eyes of
    a sufficiently large number of consumers, it is included in the
    relevant product market even though the products themselves are not
    identical.[^100] In the EchoStar-DIRECTV proceeding, which concerned
    the proposed merger of the two DBS firms, the Commission determined
    that the relevant product market was no broader than the entire MVPD
    market, but may well be narrower.[^101]

#### Geographic Market 

32. The Commission has determined in the past that the relevant
    geographic market for MVPD services is local because consumers
    subscribe to MVPD services based on the choices available to them at
    their residences. They are unlikely to change residences to avoid a
    small but significant increase in the price of MVPD service.[^102]
    To simplify the analysis, however, we aggregate consumers that face
    the same choice in MVPD products into larger relevant geographic
    markets, as we have done in the past.[^103] Because the major MVPD
    competitors in most areas are the local cable operator and the two
    DBS providers, and consistent with the Commission's approach in
    prior license transfer proceedings, we conclude that the franchise
    area of the local cable operator is the relevant geographic market
    for purposes of our analysis.[^104]

### Video Programming

#### Product Markets

33. Firms that own cable or broadcast programming networks both produce
    their own programming and acquire programming produced by others.
    They package and sell this programming as a network or networks to
    MVPD providers for distribution to consumers.[^105] To provide
    multichannel video services to subscribers, MVPDs combine broadcast
    television signals and cable programming networks (non-over-the-air
    programming) with distribution on their cable, satellite, or
    wireless distribution networks.[^106]

34. Owners of cable programming networks are compensated in part through
    license fees that are based on the number of subscribers served by
    the MVPDs that carry the networks. These license fees are negotiated
    based on "rate cards"[^107] that specify a top fee, but substantial
    discounts are negotiated based on the number of MVPD subscribers and
    on other factors, such as placement of the network on a particular
    programming tier.[^108] Most cable programming networks and MVPDs
    also derive revenue by selling advertising time during the
    programming.[^109]

35. Video programming differs significantly in terms of characteristics,
    focus, and subject matter. Programming is offered by over-the-air
    broadcast stations; regional sports networks; national cable
    networks, including news, entertainment and hobby networks; and
    various non-sports regional networks.[^110] The record shows that
    neither MVPDs nor their subscribers view these networks as perfect
    substitutes for each other. We find that markets that include video
    programming are classic differentiated product markets.[^111] We
    also note that at least a certain proportion of MVPD subscribers
    view certain types of programming as so vital or desirable that they
    are willing to change MVPD providers in order to gain or retain
    access to that programming.[^112]

36. Nothing in the record suggests a need for us to define rigorously
    all the possible relevant product markets for video programming
    networks. For purposes of our discussion, we will separate the video
    programming products offered by the Applicants into three broad
    categories: (1) national and non-sports regional cable programming
    networks; (2) regional sports networks; and (3) local broadcast
    television programming.

#### Geographic Market 

37. We have found it reasonable to approximate the relevant geographic
    market for video programming by looking to the area in which the
    program owner is licensing the programming.[^113] For national cable
    programming networks, the relevant geographic market therefore is at
    least national in scope. Such networks are generally licensed to
    MVPDs nationwide, and, in some cases, they are licensed
    internationally. In contrast, with respect to RSNs and other
    regional networks, we conclude, as we did in the *News Corp.-Hughes*
    and *Adelphia* transactions, that the relevant geographic market is
    regional.[^114] In general, contracts between sports teams and RSNs
    limit the distribution of the content to a specific "distribution
    footprint," usually the area in which there is significant demand
    for the specific teams whose games are being transmitted.[^115] MVPD
    subscribers outside the footprint are unable to view many of the
    sporting events that are among the most popular programming offered
    by RSNs. We thus find it reasonable to define the relevant
    geographic market for regional networks as the "distribution
    footprint" established by the owner of the programming.[^116]

## Analysis of Potential Public Interest Harms 

### Potential Horizontal Harms 

38. *Overview*. As a result of the transaction, two of the three
    competitors serving LCPR's territory will be commonly controlled.
    Liberty Media, which is controlled by Malone, is acquiring a *de
    facto* controlling interest in DIRECTV, which provides MVPD services
    to Puerto Rico through its DIRECTV Latin America division.[^117]
    Liberty Global, which is also controlled by Malone,[^118] provides
    cable television services in portions of Puerto Rico through
    LCPR.[^119] EchoStar is the other MVPD in the areas served by both
    LCPR and DIRECTV-Puerto Rico.[^120]

39. Post-transaction, LCPR and DIRECTV-Puerto Rico could be expected to
    compete less vigorously with each other. Diminished competition
    could serve to increase both firms' revenues. Shareholders would
    benefit from such an outcome, while consumers would be harmed.
    Diminished competition could take various forms. For example, as
    sister companies rather than true rivals, LCPR and DIRECTV-Puerto
    Rico would have little incentive to undercut the other's price and
    could even be expected to match the other's price increase or
    quality reduction. Likewise, each firm could be expected to scale
    back promotional and marketing activities or service improvements
    designed to lure away the other firm's subscribers. Moreover,
    neither firm would have to explicitly communicate this strategy to
    the other in order for it to be effective. Rather, the mere fact of
    common ownership and the prospect of increased revenues for each
    firm due to less vigorous competition would be sufficient to induce
    the problematic, yet profitable, behavior. The only constraint on
    such behavior would be subscribers' defection to EchoStar, LCPR's
    and DIRECTV-Puerto Rico's common rival. Yet, as we discuss below, we
    do not believe that EchoStar is a sufficiently strong competitor in
    Puerto Rico to prevent LCPR and DIRECTV-Puerto Rico from profitably
    increasing prices or reducing service quality in LCPR's territory.
    As a result, the transaction could reduce competition in those
    portions of Puerto Rico that are served by LCPR, leading to higher
    prices, lower quality service or both. Regardless of whether the
    firms increase profits by raising additional revenue through a price
    increase or lowering costs by reducing programming and promotions,
    consumers in Puerto Rico will be worse off.

40. We explain below how the corporate entanglements between Liberty
    Media and Liberty Global set the stage for this competitive outcome,
    and we address the Applicants' contentions that our concerns are
    unfounded. Ultimately, we conclude that a remedial condition is
    necessary to mitigate the public interest harm that is likely to
    arise from the transaction.

41. *Discussion*. LCPR's ownership history and the relationship between
    Liberty Global and Liberty Media provide the context for our concern
    about the transaction's potentially adverse competitive effects.
    LCPR was originally a subsidiary of Liberty Media. In June of 2004,
    Liberty Media was split into two publicly traded companies, with
    LCPR being part of the assets that made up what is now known as
    Liberty Global.[^121]

42. Today, although Liberty Media and Liberty Global are nominally
    independent and have separate shareholders, Malone owns
    approximately 5 percent of the equity and 30 percent of the voting
    power of both companies.[^122] In addition, he is Chairman of the
    Board of both corporations, which gives him the power to hire and
    fire management, and sits on the Executive Committees of both
    companies.[^123] Moreover, Malone also possesses the authority,
    among other things, to act on behalf of each corporation.[^124] In
    public filings, Liberty Global concedes that Malone "has significant
    influence over the outcome of any corporate transaction or other
    matters submitted to our stockholders for approval, including the
    election of directors, mergers, consolidations and the sale of all
    or substantially all of our assets."[^125] In addition, although the
    Compensation Committee is comprised of independent directors and
    therefore does not include Malone, Malone has made recommendations
    to Liberty Media's Compensation Committee concerning the
    compensation policies and compensation of individual executives and
    \[REDACTED\].[^126] Malone is one of two persons who sits on Liberty
    Global's Executive Committee.[^127] A person has *de facto* control
    when he possesses the ability to dominate the corporation's
    affairs.[^128] Based on this evidence, we conclude that John Malone
    has *de facto* control of both Liberty Media and Liberty
    Global.[^129]

43. In addition to Malone's control of both Liberty Media and Liberty
    Global, the boards of both corporations also exhibit substantial
    overlap. The boards of the two corporations share four members (John
    Malone, Paul A. Gould, David E. Rapley, and Larry E. Romrell).[^130]
    These individuals constitute half of Liberty Media's board of
    directors and 40 percent of Liberty Global's board of directors. In
    addition, Malone has substantial professional and business
    relationships with several of the directors of the two companies.
    For example, Paul Gould (Liberty Media and Liberty Global boards),
    Robert "Dob" Bennett (Liberty Media board), M. LaVoy Robison
    (Liberty Media board), and David J. Wargo (Liberty Global board)
    also sit with Malone on the board of Discovery Holding.[^131] Malone
    has the ability to exert influence over the nominally independent
    directors on each company's board because he socializes with
    independent directors and shares ownership interests with them in
    various assets, including an airplane, Irish race horses, Colorado
    commercial real estate, and an Alaskan hunting lodge.[^132]

44. The evidence before us indicates that DIRECTV-Puerto Rico and LCPR
    are each other's primary competitors. According to the Applicants,
    across all of Puerto Rico as of year-end 2006, DIRECTV-Puerto Rico
    had approximately 177,000 subscribers whereas EchoStar had
    \[REDACTED\] subscribers.[^133] Focusing on LCPR's territory, the
    Applicants report that LCPR has 130,000 subscribers and
    DIRECTV-Puerto Rico has approximately 73,000 subscribers.[^134]
    Based on the Applicants' own evidence, therefore,
    \[REDACTED\].[^135] Moreover, LCPR's internal documents reveal that
    "\[REDACTED\]."[^136] Based on this evidence, we conclude that
    DIRECTV-Puerto Rico and LCPR are each other's primary competitors.
    This finding heightens our concern regarding competitive harm in
    Puerto Rico because we conclude that EchoStar is not a sufficiently
    strong competitor in Puerto Rico to prevent LCPR and DIRECTV-Puerto
    Rico from profitably increasing prices or reducing service quality
    in LCPR's territory. Notably, EchoStar also raises competitive
    concerns regarding the impact of the transaction in Puerto Rico and
    urges the Commission to require divestiture of LCPR.[^137]

45. In the absence of any conditions, the strategic directions of two of
    the primary three competitors in LCPR's service territory would be
    controlled by the same person, John Malone, and would be
    significantly influenced by three other persons who sit on both
    boards. Among the strategic decisions that these individuals likely
    would be asked to decide would be whether to upgrade LCPR's cable
    system or the addition of new services and programming.[^138]
    Moreover, Malone and others would be evaluating the performance of
    each firm's officers and determining their compensation. In short,
    with Malone and common directors controlling both Liberty Media and
    Liberty Global, there is a substantial likelihood that
    DIRECTV-Puerto Rico and LCPR would cease acting as rivals and view
    themselves as sister companies under common control. Just as Liberty
    Media, DIRECTV-Puerto Rico, and Liberty Global would benefit from a
    reduction in competition between DIRECTV-Puerto Rico and LCPR via an
    explicit combination of DIRECTV-Puerto Rico and LCPR, so they would
    benefit from a reduction in competition via the instant
    transaction.[^139] However, unlike a formal combination, the
    coordination between DIRECTV-Puerto Rico and LCPR would not generate
    any cost savings due to integration of their operations.

46. Liberty Media asserts that the LCPR franchise areas are unlike most
    areas in the U.S. and that, even with coordinated action, LCPR and
    DIRECTV would be unable to raise prices. They claim that fewer than
    half of all homes in LCPR franchise areas subscribe to any MVPD
    service and that any concerted efforts to raise MVPD prices in
    Puerto Rico would adversely affect subscribership levels.[^140] This
    argument is based on faulty reasoning regarding the incentives to
    raise prices. The present market share of MVPD services is based
    upon the degree of competition among the firms in the market and the
    resulting prices. In the case of Puerto Rico, low incomes may serve
    to limit the number of households that purchase service. However, it
    does not follow that the firms cannot raise rates for those
    individuals who do subscribe. The ability of the firms to raise
    prices following the transaction depends upon the reactions of those
    individuals who are currently purchasing service, not on the number
    of individuals who have not purchased services at existing prices.
    Crucial to this analysis is information regarding the behavior of
    existing customers regarding price increases and which of the
    competing services are the closest substitutes for customers.
    \[REDACTED\].[^141] \[REDACTED\].[^142] This illustrates LCPR's
    acknowledgement, as highlighted above, that its \[REDACTED\].[^143]
    DIRECTV Puerto Rico is clearly the closest substitute for LCPR cable
    service and further increases our concern over the profitability of
    coordinated action by the two firms.

47. Liberty Media also argues that LCPR customers are more likely to
    drop service for financial reasons such as an inability to pay
    rather than because of a better competitive offer from a
    competitor.[^144] We do not find this information convincing, and
    internal studies by LCPR indicate that \[REDACTED\].[^145]
    Examination of the cited document indicates that \[REDACTED\].[^146]
    \[REDACTED\].[^147]

48. Liberty Media contends that a recent price increase by LCPR
    \[REDACTED\] and that this is indicative of an inability of LCPR to
    profitably raise prices.[^148] Even assuming that Liberty Media is
    correct, LCPR's inability to profitably increase prices on its own
    is beside the point.  Our concern is that approval of this
    transaction will enable LCPR and DIRECTV-Puerto Rico to jointly
    increase prices.  As discussed in paragraph 44, \[REDACTED\].

49. Liberty Media argues that LCPR and DIRECTV-Puerto Rico have a *de
    minimis* overlap of operations and therefore there is no opportunity
    or incentive to engage in conduct that would impair competition in
    Puerto Rico.[^149] Furthermore, they contend, LCPR and
    DIRECTV-Puerto Rico constitute such a small portion of the
    operations of the parent companies that there would be no financial
    incentives to engage in any type of anticompetitive conduct.[^150]
    We disagree. LCPR and DIRECTV compete to provide service to 337,000
    households, which is 27 percent of all households in Puerto
    Rico.[^151] The volume of revenue that Liberty Global and DIRECTV
    derive from Puerto Rico is not insignificant.[^152] This is by no
    means a *de minimis* overlap. Certainly, the increased rates due to
    coordinated action of two of the three MVPDs in the LCPR franchise
    areas will not be *de minimis* for the affected households. We also
    place no credence on Liberty Media's argument that there are no
    incentives to engage in anticompetitive activities, even if the
    activities are profitable, because Puerto Rico is such a small
    portion of the parent companies' revenues. Under this reasoning, all
    anticompetitive transactions would receive approval as long as the
    acquiring firms were of a sufficiently large size and/or the
    anticompetitive harms were a small part of the overall transaction.
    We reject this notion.[^153]

50. This reduction in competition between DIRECTV-Puerto Rico and LCPR
    might not adversely impact consumers, however, if the remaining
    firms in the market could maintain enough competitive pressure on
    DIRECTV-Puerto Rico and LCPR to prevent any attempt to increase
    prices or reduce service quality following the transaction from
    being profitable. In this case, however, in the areas served by both
    LCPR and DIRECTV-Puerto Rico, there is only one other firm --
    EchoStar -- \[REDACTED\].[^154]

51. In the EchoStar-DIRECTV transaction, the Commission examined the
    combination of two firms that were, in many areas, the two smallest
    firms in the market. The Commission had sufficient concern over the
    effect on competition that it designated the EchoStar-DIRECTV
    transaction for a hearing before an administrative law judge. The
    Commission found that a reduction of competitors in a market from
    three to two raised significant competitive concerns that were not
    mitigated by the presence of a third competitor.[^155] In that case,
    the third competitor was the incumbent franchised cable
    operator.[^156] Even in the presence of such a strong competitor,
    the Commission determined that "\[s\]uch a drastic reduction in the
    number of competitors and concomitant increase in concentration
    create a strong presumption of significant anticompetitive
    effects."[^157]

52. By contrast, this transaction involves the effective combination of
    the two strongest competitors in the relevant markets.[^158] Indeed,
    even DIRECTV notes that EchoStar is a \[REDACTED\].[^159] Just as in
    *EchoStar-DIRECTV*, the transaction reduces the number of
    independent competitors in the market from three to two. The overall
    effect of the transaction, therefore, would be to reduce the level
    of competition,[^160] which ultimately would lead to higher prices
    and lower quality services in Puerto Rico.[^161] We find nothing in
    the record that would cause us to be less concerned about the
    reduction of competition here than was the case in
    *EchoStar-DIRECTV*.

53. In response to anticipated concerns regarding Malone's dual status
    as Chairman of the Board of both Liberty Media and Liberty Global,
    the Applicants initially proposed that Malone recuse himself from
    all decisions concerning LCPR or the operations of DIRECTV-Puerto
    Rico.[^162] We do not believe that such recusal is sufficient to
    alleviate potential competitive concerns, because the boards of
    directors of Liberty Media and Liberty Global will continue to have
    three members in common that would not be covered by the
    recusal.[^163] Because Liberty Media will be the controlling
    shareholder of DIRECTV, these common directors will continue to have
    opportunities to influence decisions on issues regarding Puerto
    Rico. Moreover, Malone would continue to control both companies and
    would remain Chairman of both boards.

54. In response to concerns about their recusal proposal, the Applicants
    submitted a revised "insulation" proposal that included the creation
    of a Special Market Committee of the DIRECTV Board of Directors
    ("Special Committee").[^164] The Special Committee, which would be
    comprised solely of independent directors, would "review, consider
    and approve (or disapprove)" matters relating to DIRECTV Latin
    America or DIRECTV-Puerto Rico to the extent that such matters would
    ordinarily be decided upon by the DIRECTV Board.[^165] The
    Applicants' proposal also includes measures intended to limit
    Malone's influence over LCPR and DIRECTV-Puerto Rico.[^166] For
    example, the proposal would prohibit DIRECTV from revealing
    non-public DIRECTV-Puerto Rico information to Malone, Liberty Media,
    or the Liberty Media-designated directors.[^167] Finally, the
    Special Committee would submit an annual written certification to
    the Commission regarding compliance by DIRECTV during the prior
    year.[^168]

55. In *News Corp.-Hughes*, we reviewed a similar proposal. There, the
    applicants proposed to have the Audit Committee, which, like the
    Special Committee, was comprised of independent directors, review
    related-party contracts and ensure that they were negotiated at
    arm's length.[^169] In that case, the applicants submitted the
    proposal to address concerns that News Corp. would raise its
    programming prices to DIRECTV, which would then set a benchmark that
    other MVPDs would have to accept unless they were willing to lose
    the right to carry News Corp.'s programming.[^170] The Commission
    found that the independent directors would be subject to News
    Corp.'s influence, notwithstanding their nominal independence,
    because they would fear being ousted if they took a step that
    displeased News Corp., DIRECTV's controlling shareholder.[^171]
    Although the applicants argued that News Corp. was not a controlling
    shareholder and therefore could not oust directors solely by
    exercising its votes, the Commission was not persuaded, concluding
    that a sufficient number of additional shareholders might follow the
    leadership of an influential stakeholder, like News Corp.[^172]
    Finally, the Commission observed that the existing directors
    controlled the nominating committee, which in turn selected the
    independent director slate. Based on general corporate trends, the
    Commission found that the nominating committee would likely nominate
    to the Audit Committee those directors with a financial interest in
    the corporation or, in the least, a personal relationship with News
    Corp. or Rupert Murdoch.[^173] Accordingly, the Commission concluded
    that there exists "a significant risk that unfair self-dealing
    transactions may occur and go uncorrected" despite related-party
    contract review being delegated to the Audit Committee.[^174]

56. Just as the Commission deemed the Audit Committee in *News
    Corp.-Hughes* to be an inadequate remedy to protect against
    related-parted transactions between News Corp. and DIRECTV, we
    believe the Special Committee and other measures proposed herein are
    inadequate to protect against concerns regarding competitive harm in
    Puerto Rico. Most notably, the proposal does not adequately curtail
    the influence of Malone, or Liberty Media over DIRECTV-Puerto Rico's
    or LCPR's activities. Even if such influence were addressed, the
    fact that the proposal fails to include the other common directors
    or Liberty Global, lacks any compliance or enforcement provision,
    and terminates automatically upon notice to the Commission, renders
    it inadequate to address our competitive concerns.

57. First, as we determined in *News Corp.-Hughes* with respect to the
    Audit Committee and its functions, the mere fact that directors are
    nominally independent is not necessarily adequate to protect against
    undue influence with respect to the issues before us. In *News
    Corp.-Hughes*, the Commission found that using the NYSE standard for
    independence was inadequate because that standard did not provide
    for the independent directors' independence from the company's
    controlling shareholder.[^175] Here, the proposal's definition of
    "independent director" mainly relies on the NASDAQ definition, which
    is similarly lacking in any protection from controlling shareholder
    influence.[^176] Although the proposal's definition of "independent
    director" is slightly supplemented by inclusion of a provision that
    would preclude the service of a person who, within the past five
    years, was a director, officer, employee, agent or partner of any
    Affiliated Entity,[^177] or has had, within the preceding five years
    any business or financial relationship with Malone, that provision
    does not alleviate our concerns. We remain skeptical of the
    directors' independence because nothing appears to prohibit those
    persons who may have had, or are continuing to have, business
    dealings with DIRECTV or who hold equity, debt, or other interests
    in DIRECTV, from serving as independent directors. Such persons
    would have a vested interest in preserving the business relationship
    that they currently have with DIRECTV by not acting counter to
    Malone's interests, and/or voting in a manner that would facilitate
    coordinated behavior by DIRECTV-Puerto Rico and LCPR, if doing so
    would maximize DIRECTV's value.[^178]

58. Second, the independence of the Special Committee is further
    compromised because the nominations for "independent" directors are
    typically controlled by the nomination committee, which is composed
    of existing directors.[^179] As discussed in *News Corp.-Hughes*,
    nomination of a person by the nominating committee virtually ensures
    their election by the shareholders, and the "persons nominated are .
    . . often friends of the chief executive or other insiders."[^180]
    In fact, the composition of Liberty Global's and Liberty Media's
    Board of Directors exemplifies this conclusion -- its independent
    directors have long-standing and close ties with Malone.[^181]
    Accordingly, we remain skeptical of the Special Committee's
    effectiveness since its members would have been selected by, and
    likely reflect the interests of, directors whose interests are
    closely aligned with those of Malone.

59. Third, John Malone currently controls approximately 30 percent of
    the votes in Liberty Global and Liberty Media, and Liberty Media
    will control approximately 40 percent of the votes on DIRECTV's
    Board.[^182] As we found in *News Corp.-Hughes*, "we do not think
    that it is far-fetched to suggest that a sufficient number of
    shareholders might follow the lead of the largest single
    stockholder" and vote the way Liberty Media voted.[^183] Should any
    of the independent directors displease Malone, he could exercise his
    influence over Liberty Media or Liberty Global and cause them to
    change their business relationship with that person, or any entities
    that person is involved in, and/or introduce a resolution to the
    DIRECTV Board to terminate or not re-elect that independent
    director.[^184] Again, as we found in *News Corp.-Hughes*, the
    threat of such action "is likely to be . . . that an independent
    director will be cautious before taking any step that could cause
    offense . . . for fear that he or she might be ousted."[^185]

60. Moreover, the proposal contains other deficiencies that render it
    inadequate to address the competitive harms. Foremost, the
    proposal's provisions regarding the actions of John Malone do not
    apply to Liberty Global,[^186] but instead are commitments by
    Malone. Similarly, the proposal does not cover any of the other
    three common directors, who, as noted above, have long-standing
    business and personal ties with Malone.[^187] In addition, the
    proposal's communication ban works only in one direction and is
    limited to a prohibition on the sharing of information regarding
    DIRECTV Latin America and DIRECTV-Puerto Rico.[^188] Nothing in the
    proposal would likewise ban the sharing of information about
    LCPR.[^189]

61. The scope of the Special Committee's responsibilities is also
    extremely limited. The Special Committee would handle only those
    matters normally handled by the DIRECTV Board of Directors unless
    the Special Committee determines that it wants additional oversight
    responsibility. \[REDACTED\].[^190] \[REDACTED\], a result that
    fails to address our competitive concerns.

62. Moreover, the proposal contains no audit provision, no penalties for
    noncompliance, and no enforcement mechanism should a violation
    occur. There is no compliance program or compliance officer to
    ensure that Malone and the other entities are complying with the
    commitments, nor is there any means for the Commission to
    investigate whether the annual certification is accurate. Further,
    the termination provision is wholly inadequate: the restrictions
    would terminate automatically 10 days after the parties provide the
    Commission with written notice that one of several events triggering
    termination has occurred. The proposal contains no mechanism for the
    Commission to determine whether the qualifying events have in fact
    occurred or that termination is appropriate. For example, the
    proposal would permit termination if LCPR ceases to be a direct or
    indirect subsidiary of Liberty Global but neglects to include other
    entities attributed to Liberty or Malone.[^191] Based on the
    foregoing, it is clear that the proposal contains numerous
    deficiencies that render it inadequate to address the competitive
    harms that could result from the transaction.[^192]

63. Accordingly, we find that the recusal and insulation options
    proposed by the Applicants would fail to alleviate the competitive
    harms that are likely to arise as a result of this transaction. To
    mitigate these potential competitive harms, we require, as a
    condition of our approval of this transaction, that all of the
    attributable interests connecting DIRECTV-Puerto Rico and LCPR be
    severed within one year of the date on which this Order is adopted,
    either by divestiture or by otherwise making the interests
    non-attributable.[^193] Specifically, within one year of the
    adoption date of this Order, the Applicants must certify either that
    they have complied with this condition or that they have filed all
    necessary applications for regulatory approval to do so. As part of
    the certification of compliance, the Applicants must explain with
    sufficient detail precisely how they came into compliance with this
    condition or how any filed applications would result in compliance,
    and they must identify all remaining direct or indirect
    relationships between DIRECTV-Puerto Rico and LCPR and their parent
    companies, including all indirect or direct subsidiaries, whether or
    not those relationships are attributable under our rules (e.g.,
    equity or debt holdings or interests (including stock options),
    management roles of officers or directors, shared resources or
    personnel, and so forth).[^194] We find that severing all of the
    attributable interests between DIRECTV-Puerto Rico and LCPR is the
    only effective remedy to the potential harms to consumers that would
    arise from the effective reduction of competitors from three to two
    in LCPR's territory and should help ensure that the firms will
    continue to compete vigorously in Puerto Rico and devote the
    requisite competitive resources to that market.

### Potential Vertical Harms

64. In this section, we consider whether, as a result of the
    transaction, the Applicants would have an increased incentive and
    ability to engage in anticompetitive foreclosure strategies with
    respect to national and non-sports regional programming networks,
    RSNs, and broadcast television station signals. In addition, we
    evaluate whether the Applicants' proffered conditions would be
    sufficient to mitigate such harms.

65. We find that the vertical integration of Liberty Media with DIRECTV
    would increase the merged firm's incentive and ability to engage in
    anticompetitive conduct with respect to its affiliated broadcast and
    non-broadcast programming. More specifically, the transaction would
    increase the likelihood that the merged firm could successfully
    implement a temporary foreclosure strategy with respect to access to
    its RSN and broadcast programming. Thus, we accept the conditions
    that the Applicants have offered to mitigate these harms and craft
    modifications to those conditions as appropriate. Finally, we
    recognize the potential concerns that may arise from a merger of a
    major program supplier with an MVPD and therefore accept the
    Applicants' offer to comply with a condition forbidding
    discrimination with respect to program carriage.

#### Access to Affiliated Programming

66. *Background.* The potential for a vertically integrated firm, as the
    result of a transaction, to foreclose downstream competitors from
    important inputs (*e.g.*, programming) is the subject of substantial
    economic literature. Theoretically, where a firm that has market
    power in an input market acquires a firm in the downstream output
    market, the acquisition may increase the incentive and ability of
    the integrated firm to raise rivals' costs either by raising the
    price at which it sells the input to downstream competitors or by
    withholding supply of the input from competitors.[^195] By doing so,
    the integrated firm may be able to harm its rivals' competitive
    positions, enabling it to raise prices and increase its market share
    in the downstream market, thereby increasing its profits while
    retaining lower prices for itself or for firms with which it does
    not compete.

67. One way by which vertically integrated firms can raise their rivals'
    costs is to charge higher programming prices to competing MVPDs than
    to their affiliated MVPDs. The Commission's program access rules,
    which apply to cable operators but not to DBS firms, prohibit price
    discrimination by programming networks that are vertically
    integrated with a cable operator unless the price discrimination is
    based on market conditions.[^196]

68. A vertically integrated firm could also attempt to disadvantage its
    rivals by engaging in a foreclosure strategy, *i.e.*, by withholding
    a critical input from them. The economic literature suggests that an
    integrated firm will engage in permanent foreclosure only if the
    increased profits it earns in the downstream market (*e.g.*, the
    MVPD market) as the result of foreclosure exceed the losses it
    incurs from reduced sales of the input in the upstream market
    (*e.g.*, the programming market).[^197] The Commission's program
    access rules generally prohibit exclusive dealing by programming
    networks that are vertically integrated with cable operators.

69. If an integrated firm calculates that permanent foreclosure would be
    unprofitable, or if such foreclosure is prohibited by our rules, it
    nevertheless might find it profitable to engage in temporary
    foreclosure in certain markets. For temporary foreclosure to be
    profitable in the context of MVPDs' access to programming, there
    must be a significant number of subscribers who would switch MVPDs
    to obtain the integrated firm's programming and would not
    immediately switch back to the competitor once the foreclosure has
    ended. In markets exhibiting consumer inertia,[^198] temporary
    foreclosure may be profitable even where permanent foreclosure is
    not. The profitability of this strategy in the MVPD context derives
    not only from subscriber gains, but also from the potential to
    extract higher prices in the long term from MVPD competitors.[^199]
    Specifically, by temporarily foreclosing supply of the programming
    to an MVPD competitor or by threatening to engage in temporary
    foreclosure, the integrated firm may improve its bargaining position
    so as to be able to extract a higher price from the MVPD competitor
    than it could have negotiated if it were a non-integrated
    programming supplier.[^200] In order for a vertically integrated
    firm successfully to employ temporary foreclosure or the threat of
    temporary foreclosure as a strategy to increase its bargaining
    position, there must be a credible risk that subscribers would
    switch MVPDs to obtain the programming for a long enough period to
    make the strategy profitable.[^201]

70. In *News Corp.-Hughes*, the Commission concluded that the vertical
    integration of News Corp. with DIRECTV could increase the likelihood
    of anticompetitive behavior toward DIRECTV's rivals. Therefore, the
    Commission adopted program access-type commitments to alleviate any
    concern that the transaction would increase News Corp.'s incentive
    and ability to permanently withhold programming or to engage in
    price discrimination.[^202] Although Liberty Media's common
    ownership interests in News Corp. and LCPR rendered News Corp. a
    "satellite cable programming vendor in which a cable operator holds
    an attributable interest" subject to the program access rules, the
    Commission adopted the conditions in the event Liberty Media
    divested those interests and was no longer subject to the
    rules.[^203] The condition ensured that the operative elements of
    the program access rules would apply to News Corp.'s programming
    even if News Corp. were no longer affiliated with a cable operator
    via Liberty Media's common interests in News Corp. and LCPR.

71. The Commission also determined that News Corp.'s acquisition of
    DIRECTV would increase its incentive to temporarily withhold News
    Corp. RSNs and local broadcast signals from its competitors,
    behavior that would not be constrained by the program access rules
    or rules governing the carriage of local broadcast signals.[^204] It
    therefore imposed arbitration conditions to mitigate that harm.
    Under the terms of the arbitration conditions, an MVPD may choose to
    submit a dispute to commercial arbitration when negotiations fail to
    produce a mutually acceptable set of price, terms, and conditions
    for carriage of an RSN or for a retransmission consent
    agreement.[^205] The arbitration remedy encourages parties to come
    to agreement prior to the expiration of programming carriage
    agreements. Moreover, if disputes are not resolved prior to
    termination of an agreement, the remedy prohibits the program rights
    holder from withholding the programming while the dispute is being
    resolved, provided that the MVPD seeking access has elected to use
    the arbitration remedy. This ensures that the parties make serious
    efforts to resolve their dispute in a timely manner, and it protects
    consumers from disruptions in service if disputes are referred to
    arbitration.

##### Non-Broadcast Programming Generally

###### Program Access Condition

72. Commenters raise concerns about potential harms that could flow from
    the vertical integration of Liberty Media's programming networks and
    DIRECTV.[^206] Several commenters ask us to impose broad program
    access conditions on all entities affiliated with either Liberty
    Media or John Malone, including Discovery Communications.[^207] We
    conclude that the program access rules, combined with the proffered
    program access conditions, arbitration conditions, and other
    requirements that we adopt in this Order, will eliminate any
    potential for anticompetitive conduct due to the vertical
    relationship between Liberty Media's satellite cable programming
    networks and DIRECTV's distribution platform with respect to all
    Liberty Media and Discovery programming. Accordingly, we adopt the
    proffered conditions with the additional protections described
    below.

73. *Background*. In enacting the program access provisions of the 1992
    Cable Act, Congress found that extensive vertical integration
    between cable operators and cable programming vendors created an
    imbalance of power, both between cable operators and programming
    vendors and between incumbent cable operators and their multichannel
    competitors.[^208] Congress determined that this imbalance of power
    limited both the development of competition among MVPDs and consumer
    choice.[^209] Congress expressed its concern that unaffiliated MVPDs
    faced difficulties gaining access to programming required to provide
    a viable alternative to cable.[^210] Congress found that vertically
    integrated program suppliers had the incentive and ability to favor
    their affiliated cable operators.[^211] In response, Congress
    imposed specific conduct restrictions, including limits on exclusive
    contracts, to ensure that market entrants could gain access to all
    vertically integrated satellite cable programming.[^212]

74. In our 2007 order extending the prohibition against exclusive
    programming contracts for vertically integrated programming for
    another five years, we found that competitive MVPDs must have access
    to vertically integrated programming to remain viable substitutes to
    the incumbent cable operator in the eyes of consumers.[^213] In
    addition, we concluded that there are frequently no good substitutes
    for satellite-delivered vertically integrated programming, and that
    ensuring access to such programming is necessary to maintain for
    viable competition in the video distribution market.[^214] The
    Commission also concluded that competition and diversity in the
    distribution of video programming would not be preserved and
    protected without a prohibition against exclusive programming
    because vertically integrated programmers continue to have the
    ability and incentive to favor their affiliated cable operators over
    competitive MVPDs.[^215] The Commission explained that there is "a
    continuum of vertically integrated programming, 'ranging from
    services for which there may be substitutes (the absence of which
    from a rival MVPD's program lineup would have little impact), to
    those for which there are imperfect substitutes, to those for which
    there are no close substitutes at all (the absence of which from a
    rival MVPD's program lineup would have a substantial negative
    impact).'"[^216] The Commission further explained that national
    programming networks such as The Discovery Channel provide some of
    the most popular programming currently available.[^217] Based on the
    evidence in the record, the Commission decided to retain the
    prohibition on exclusive contracts for another five years because
    MVPDs' ability to compete otherwise would be impaired significantly
    by the inaccessibility of popular vertically integrated programming
    for which no good substitute exists.[^218]

75. In *News Corp.-Hughes*, the Commission addressed the potential harms
    posed by vertical integration of DIRECTV and another entity's (in
    that case News Corp.'s) programming networks. Liberty Media's
    investment in News Corp. then, combined with its ownership of LCPR,
    brought News Corp.'s programming within the ambit of the rules, just
    as Liberty Media's investment in DIRECTV does now. News Corp.,
    however, volunteered to subject its programming to the program
    access rules in the event it were no longer subject to the rules by
    virtue of affiliation with a cable operator, and the conditions
    imposed in *News Corp.-Hughes* were intended to alleviate concerns
    about News Corp.'s ability and incentive to favor DIRECTV in that
    event.[^219] The conditions applied to programming owned by News
    Corp. as well as programming owned by Liberty Media.[^220]

76. *Positions of the Parties*. Commenters' concerns regarding fair and
    non-discriminatory access to Liberty Media's and Discovery's cable
    programming echo the competitive concerns addressed in Section
    628(c)(2) of the Communications Act and the Commission's
    implementing rules. Liberty Media has conceded that the program
    access rules apply to it by virtue of its relationship with LCPR and
    has agreed to remain subject to the conditions applicable to News
    Corp. even if the program access rules otherwise would cease to
    apply because its ties to LCPR are severed.[^221] EchoStar, RCN
    Telecom Services, Inc. ("RCN"), American Cable Association ("ACA"),
    and other commenters insist that the conditions should apply not
    only to Liberty Media's programming but also to Discovery's
    networks.[^222] They reason that John Malone will have attributable
    interests not only in DIRECTV and Liberty Media but also in
    Discovery by virtue of his interests in its parent, Discovery
    Holding.[^223] Cautioning that the Applicants' proposed program
    access commitments would apply only to programming owned by Liberty
    Media, EchoStar would have the Commission define "Liberty" to
    include any entities in which Liberty Media or its principal
    shareholder, John Malone, hold an attributable interest. EchoStar
    states that this class would include Liberty Global, Discovery
    Holding, their respective subsidiaries, and any other similarly
    situated company.[^224] The Applicants and Discovery oppose
    application of program access conditions to Discovery.[^225]
    Discovery argues that application of the conditions to Discovery is
    unnecessary because it already is subject to the program access
    rules and in any event would not have an incentive to discriminate
    in favor of DIRECTV.[^226]

77. *Discussion*. Commenters' concerns regarding fair and
    non-discriminatory access to Liberty Media's and Discovery's cable
    programming echo the competitive concerns addressed in Section
    628(c)(2) of the Communications Act, as amended, and the
    Commission's rules.[^227] Liberty Media has conceded that it is
    subject to the prohibitions in the program access rules[^228] and
    has agreed to remain subject to program access conditions analogous
    to those conditions that the Commission adopted with regard to News
    Corporation in the *News Corp.-Hughes Order*.[^229] By prohibiting
    permanent foreclosure and overt discrimination in the pricing of
    satellite cable programming, the program access rules directly
    address the concerns raised by EchoStar and others regarding
    continued access to cable programming that Liberty Media owns or
    controls. In addition, Liberty Media's proffered program-access
    commitments address commenters' concerns about exclusive
    distribution agreements between DIRECTV and Liberty Media
    programming networks. Because these commitments ensure that the
    operative prohibitions in the program access rules will remain in
    force even if the rules no longer apply to Liberty Media, we are
    satisfied that the potential harms created by vertical integration
    of Liberty Media and DIRECTV would be mitigated with respect to
    programming owned by Liberty Media. However, we are also concerned
    about the influence of John Malone and other officers and directors
    of Liberty Media who may themselves hold attributable interests in
    programming networks.

78. Like Liberty Media, Discovery is subject to the program access rules
    as a "satellite cable programming vendor."[^230] Advance/Newhouse's
    interest in Discovery triggers the rules because Advance/Newhouse
    holds an attributable interest in a cable system under the program
    access rules.[^231] The rationale for imposing program access
    conditions on Liberty Media applies equally to Discovery. First, in
    the absence of any restrictions embodied in the rules or conditions,
    Discovery, like Liberty Media, would be able to withhold programming
    or price discriminate in favor of DIRECTV. Second, both Liberty
    Media and Discovery offer the type of nationally distributed,
    general interest programming that the Commission sought to address
    via the *News Corp.-Hughes* program access condition. That is,
    Liberty Media and Discovery each control popular programming
    networks that create similar nationally distributed and popular
    content without close substitutes.[^232] Third, Liberty Media and
    Discovery are situated similarly within the corporate hierarchy of
    entities controlled by John Malone. Malone holds attributable
    interests in Discovery Holding, Liberty Media, Liberty Global, and
    LCPR under the attribution standards applicable to the program
    access rules.[^233] He is well positioned to influence or even
    direct Discovery's decisions concerning whether or not to sell
    programming to an unaffiliated MVPD and how to set the prices,
    terms, and conditions of such sales. In addition, Liberty Media and
    Discovery Holding have interlocking directorates that could
    facilitate communication or cooperation leading to discrimination by
    Discovery in favor of DIRECTV and to the detriment of its MVPD
    competitors.[^234] Certain employees or officers of Liberty Media
    are also highly paid executives of Discovery Holding, and, pursuant
    to a services agreement, Discovery Holding compensates Liberty Media
    for the services that these Liberty Media employees and officers
    render to Discovery Holding. The shared directors, officers, and
    employees could allow the firms in question to cooperate in a
    strategy designed to raise DIRECTV's rivals' prices for Discovery's
    programming, which would inure to DIRECTV's benefit through
    subscriber migration. After the transaction, therefore, Liberty
    Media and Malone unquestionably would be able to unduly influence
    the decisions of their attributable programming networks to improve
    DIRECTV's competitive position vis-à-vis its rivals.[^235]

79. We also determine that, post-transaction, Liberty Media and John
    Malone would have the incentive to unduly influence the decisions of
    attributable programming networks to improve DIRECTV's competitive
    position. Underpinning the program access rules is a recognition by
    Congress and the Commission that the incentive to engage in
    anticompetitive pricing or withholding strategies implicitly exists
    where there is vertical integration. Section 19 of the 1992 Cable
    Act added to Section 628 of the Communications Act, which prohibits
    unfair or discriminatory practices in the sale of satellite cable
    and satellite broadcast programming.[^236] In its implementation of
    Section 628, the Commission determined that subsection (b) of the
    statute does not impose a threshold burden on complainants to
    establish that they have suffered harm as a result of the proscribed
    conduct.[^237] In particular, the Commission determined that
    "subsection (c) defines specific conduct which the Commission's
    rules must prohibit and which Congress has already determined causes
    anticompetitive harm."[^238] The Commission determined that if
    behavior meets the definitions of the activities proscribed in
    subsection (c), such practices are "implicitly harmful."[^239] The
    Commission further observed that this concept of "harm" is common in
    FCC regulation:

    Our rules, for example, require licensees to keep their towers
    properly painted and lit; a violation occurs even if no one is
    damaged as a result of the licensee's failure to comply with our
    rules. We believe that Congress adopted a similar stance with
    respect to the specific practices proscribed by Section 628(c). In
    each case, a legislative determination was made that there was
    sufficient potential for harm that the specified unfair practices
    should be prohibited.[^240]

    Thus, the Commission determined that unfair practices must be
    prevented even where no damage to a competitor can be shown. In this
    manner, Congress and the Commission inferred the vertically
    integrated firm's incentive to engage in unfair practices. This
    transaction presents the same potential for harm that the program
    access rules were designed to prevent. Today, the program access
    rules would mitigate the harm posed by the vertical integration of
    Liberty Media and DIRECTV. If the program access rules were to cease
    to apply to Discovery because of a corporate restructuring, however,
    prophylactic measures similar to the program access rules would be
    necessary.

80. Although the program access rules currently prevent Discovery from
    withholding valuable programming, they could cease to apply to
    Discovery if Advance/Newhouse were to divest its interest in
    Discovery. [^241] Since this scenario presumes that Advance/Newhouse
    will have divested its interest, or brought it below the five
    percent attribution threshold, Discovery's claim that
    Advance/Newhouse would prevent any undue favoritism toward DIRECTV
    is invalid with respect to the scenario in which the rules no longer
    apply.

81. Accordingly, we will require as a condition of our approval of the
    transaction that the program access conditions set forth herein with
    respect to Liberty Media shall apply also to Discovery for as long
    as John Malone or any other officer or director of Liberty Media or
    DIRECTV holds an attributable interest in Discovery and for as long
    as Liberty Media holds an attributable interest in DIRECTV, provided
    that our program access rules are in effect. As with application of
    the condition to News Corp. and Liberty Media programming, both of
    which currently are subject to the program access rules, the
    condition that we adopt with regard to Discovery in this Order will
    not become operative unless Discovery is no longer a "cable
    satellite programming vendor" subject to the program access rules.

82. Finally, to ensure that the program access condition applies to any
    entity that is situated similarly to Liberty Media and Discovery, we
    clarify below that the program access conditions will apply broadly
    to any entity that is managed by Liberty Media, or in which Liberty
    Media or Malone hold an attributable interest (including Discovery),
    and to any Affiliated Program Rights Holder.[^242] As was the case
    in *News Corp.-Hughes*, and for the reasons stated therein, these
    conditions will apply equally to regional sports networks as well as
    national and non-sports regional networks.[^243]

83. Specifically, to ensure that the access and non-discrimination
    requirements of the program access rules will continue to apply to
    programming networks that are affiliated with DIRECTV or Liberty
    Media, through any attributable interest, and to obtain the
    additional protections encompassed by the Applicants' related
    commitments, we adopt the following conditions:[^244]

-   Liberty Media shall not offer any of its existing or future national
    and regional programming services on an exclusive basis to any
    MVPD.[^245] Liberty Media shall continue to make such services
    available to all MVPDs on a non-exclusive basis and on
    nondiscriminatory terms and conditions.[^246]

-   DIRECTV shall not enter into an exclusive distribution arrangement
    with any Affiliated Program Rights Holder.

-   As long as Liberty Media holds an attributable interest in DIRECTV,
    DIRECTV shall deal with any Affiliated Program Rights Holder with
    respect to programming services the Affiliated Program Rights Holder
    controls as a vertically integrated programmer subject to the
    program access rules.[^247]

-   Neither Liberty Media nor DIRECTV (including any entity over which
    either firm exercises control) shall unduly or improperly
    influence: (i) the decision of any Affiliated Program Rights Holder
    to sell programming to an unaffiliated MVPD; or (ii) the prices,
    terms and conditions of sale of programming by any Affiliated
    Program Rights Holder to an unaffiliated MVPD.

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-   DIRECTV may continue to compete for programming that is lawfully
    offered on an exclusive basis by an unaffiliated program rights
    holder (*e.g*., NFL Sunday Ticket).

-   These conditions shall apply to Liberty Media, DIRECTV, and any
    Affiliated Program Rights Holder until the later of a determination
    by the Commission that Liberty Media no longer holds an attributable
    interest in DIRECTV or the Commission's program access rules no
    longer remain in effect (provided that if the program access rules
    are modified these commitments shall be modified, as the Commission
    deems appropriate, to conform to any revised rules adopted by the
    Commission).

-   Aggrieved MVPDs may bring program access complaints against the
    Applicants using the procedures found at Section 76.1003 of the
    Commission's rules.[^248]

84. We find that the additional conditions advocated by commenters with
    respect to national and non-sports regional programming are
    unnecessary.[^249] ACA has asked the Commission to prohibit Liberty
    Media and Discovery from engaging in any noncost-based price
    discrimination when dealing with small and medium-sized cable
    operators or their buying group, contending that "volume discounts"
    are a means of raising rivals' programming costs.[^250] The record
    is devoid of any evidence demonstrating that these conditions are
    necessary to remedy transaction-specific harms. Rather, it appears
    that ACA's real complaint is with the operation of the Commission's
    program access rules.[^251] We repeatedly have held that such
    arguments should be raised and addressed in proceedings of general
    applicability, not in license transfer proceedings.[^252]

###### Arbitration

85. *Position of Parties.* Though the Commission declined to apply an
    arbitration condition to News Corp. with respect to access to its
    non-RSN programming, EchoStar recommends that we do so here.[^253]
    EchoStar contends that this transaction would create harms with
    respect to national programming, that the current program access
    complaint procedures fail to "ensure fair and non-discriminatory
    access to cable or News Corp.-affiliated programming," and that
    therefore we should adopt an arbitration condition for national
    programming in this transaction.[^254] It contends that the News
    Corp.-Hughes arbitration conditions have worked very effectively,
    that the Applicants offer no explanation as to why such a condition
    is not warranted, and that Liberty Media's "long history of abuses
    in the national programming market . . . also underscores the clear
    need for a failsafe remedy in this transaction."[^255] Liberty Media
    counters that because the Commission determined that an arbitration
    condition applicable to non-RSN programming was unwarranted in the
    News Corp.-Hughes proceeding, no basis exists for such a condition
    here.[^256]

86. *Discussion.* The Commission designed the arbitration condition in
    the *News Corp.-Hughes* proceeding to alleviate harms arising from
    News Corp.'s increased incentive and ability, post-transaction, to
    temporarily foreclose access by its competitors to its RSNs.[^257]
    The Commission did not find in *News Corp.-Hughes*, nor do we find
    in this transaction, that temporary foreclosure would be a
    successful anticompetitive strategy with respect to national
    programming.[^258] We find that EchoStar's allegations regarding a
    "long history of abuse" of Liberty's predecessor in interest, TCI,
    lack sufficient evidentiary support and are irrelevant to our review
    of how the current transaction would impact access to RSNs. Absent a
    finding of a transaction-related harm, we have no basis to extend
    the arbitration remedy to non-RSN programming as EchoStar
    recommends. Any general concerns EchoStar has with respect to the
    utility of the Commission's program access procedures are more
    appropriately addressed in the pending program access
    proceeding.[^259]

##### Regional Sports Programming

87. As a result of this transaction, Liberty Media will acquire FSN
    Northwest, FSN Pittsburgh and FSN Rocky Mountain, News Corp.'s RSNs
    in Seattle, Pittsburgh, and Denver, respectively. These RSNs serve
    approximately 8.6 million homes, and carry sporting events from the
    MLB, NFL, NHL, and NBA.[^260] At the outset, we note that RSNs are
    often considered "must-have" programming. As the Commission observed
    in the *News Corp.-Hughes Order*, "the basis for the lack of
    adequate substitutes for regional sports programming lies in the
    unique nature of its core component: RSNs typically purchase
    exclusive rights to show sporting events and sports fans believe
    that there is no good substitute for watching their local and/or
    favorite team play an important game."[^261] Hence, an MVPD's
    ability to gain access to RSNs, and the price and other terms of
    conditions of access, can be important factors in its ability to
    compete with rivals. As noted in the *Adelphia Order*, an MVPD that
    drops local sports programming risks subscriber defections, and
    MVPDs "will drive hard bargains to buy, acquire, defend or exploit
    regional sports programming rights."[^262]

88. To address and eliminate concerns regarding access to RSNs owned now
    or in the future by Liberty Media or DIRECTV, Liberty Media and
    DIRECTV have agreed to comply with the conditions that News Corp.
    and DIRECTV agreed to in the *News Corp.-Hughes Order* relating to
    access to RSNs*.*[^263] These conditions include a commitment to
    comply with restrictions embodied in the program access rules, as
    discussed above, in the event the RSNs are no longer subject to the
    rules.[^264] In addition, Liberty Media has agreed to comply with
    the RSN arbitration condition adopted in the *News Corp.-Hughes
    Order*. With respect to RSNs, given that this transaction, like News
    Corp.'s original purchase of DIRECTV, also creates a vertically
    integrated MVPD with sizeable programming assets, a similar
    arbitration condition is appropriate to mitigate potential
    anticompetitive harms. [^265] Such harms are likely to arise from
    Liberty Media's increased incentive and ability, post-transaction,
    to temporarily foreclose its RSN programming. Accordingly, we
    clarify and accept Liberty Media's proffered arbitration condition
    with respect to its RSNs.[^266] Below, we assess whether we should
    adjust the scope of that commitment and address concerns raised by
    commenters.

89. *Positions of the Parties.* Commenters agree that an arbitration
    condition is necessary but seek various modifications to the terms
    offered by the Applicants. EchoStar, for example, is concerned that
    the condition may not apply to any future-acquired RSNs and seeks
    confirmation of the length of time that the condition would
    apply.[^267] ACA asks that the small cable operator provisions be
    modified in various respects.[^268] Liberty Media confirms that its
    proffered RSN arbitration condition would apply to future-acquired
    RSNs for a six-year period.[^269] With respect to commenters'
    concerns regarding the small cable operator provisions, both Liberty
    Media and News Corp. contend that further modifications are
    unwarranted*.*[^270]

90. *Discussion.* The Commission may craft conditions in license
    transfer proceedings to mitigate harms that would likely arise if
    the transfer occurred absent restrictions. For example, in *News
    Corp.-Hughes*, economic analysis showed that an MVPD lost -- or
    would likely lose -- subscribers in a Designated Market Area ("DMA")
    if it did not carry the programming of the local sports teams. Given
    this evidence that hometown sports programming was "must have," the
    Commission determined that News Corp.'s acquisition of DIRECTV would
    increase its incentive and ability to temporarily withhold News
    Corp. RSN programming from its competitors.[^271] It therefore
    designed an arbitration condition to mitigate that harm.[^272] In
    *Adelphia*, the record showed that, after the transactions, Comcast
    and Time Warner would be able to profitably impose a uniform price
    increase for their affiliated RSNs on their MVPD competitors in
    several key DMAs.[^273] This provided further evidence that, in the
    MVPD market, RSN programming was "must have." Therefore, the
    Commission crafted an arbitration remedy similar to that adopted in
    the *News Corp.-Hughes Order*.[^274] Thus, in both *News
    Corp*.-*Hughes* and *Adelphia*, the arbitration condition was
    crafted to prevent transaction-related harms that were likely to
    arise as a result of the vertical integration between MVPDs and
    RSNs. Here, Liberty Media has agreed to abide by the *News
    Corp.-Hughes* RSN arbitration condition after the transaction. We
    must determine whether this is sufficient to mitigate the harms that
    we have already found are likely to arise from the vertical
    integration of DIRECTV and RSNs. We conclude that three
    modifications to the proffered condition, as clarified in Appendix
    B, are necessary to mitigate the potential harms. [^275]

91. *Scope and Duration.* Commenters seek clarification of two aspects
    of the Applicants' proffered RSN arbitration condition: (1) the
    duration of the condition, and (2) whether the condition would apply
    to future-acquired RSNs.[^276] Commenters recommend that the
    condition apply for a six-year term that commences the day the
    transaction closes.[^277] In addition, commenters contend that the
    condition should apply to RSNs that DIRECTV and Liberty Media
    acquire in the future.[^278] In response, Liberty Media clarified
    that it intends for the RSN condition to last for six years,
    beginning on the transaction's closing date, and that the condition
    would apply to the RSNs acquired from News Corp as well as any
    later-acquired RSNs.[^279] EchoStar recommends that we extend the
    condition beyond that time frame if, at the end of that term, we
    determine that the conditions remain necessary to mitigate the harms
    that the condition was intended to alleviate.[^280] Liberty Media
    counters that even though it had no attributable broadcast or RSN
    interests when it submitted its Application in this proceeding, it
    has agreed to be bound by exactly the same conditions imposed by the
    Commission upon News Corp., and argues that those conditions satisfy
    any legitimate public interest concerns that might arise from this
    transaction.[^281]

92. As clarified by the Applicants, the condition will apply for six
    years after the closing date of the transaction and will apply to
    any RSN that Liberty Media owns, manages, or controls during the
    term of the condition, including future-acquired RSNs.[^282] We note
    here, as we did in *News Corp.-Hughes* and *Adelphia* that markets
    and technologies used in the provision of MVPD services and video
    programming continue to evolve over time, rendering accurate
    predictions of future competitive conditions difficult.[^283] Thus,
    as in *News Corp.-Hughes,* the Commission will consider a petition
    for modification of this condition if it can be demonstrated that
    there has been a material change in circumstance or the condition
    has proven unduly burdensome, rendering the condition no longer
    necessary in the public interest. We reject, however, EchoStar's
    suggestion that our condition should last beyond six years. We find
    that six years is a sufficient time to address transaction-related
    harms and that EchoStar's proposal could lead to open-ended terms
    based on speculation about future competitive conditions that
    ultimately could harm MVPD markets. Thus, we adopt Applicant's
    proffered six-year term, including the *News Corp.-Hughes* option
    for modification or early termination, should such a modification or
    early termination serve the public interest.

93. *Defining RSN.* Though we did not define the term "RSN" in the *News
    Corp.-Hughes Order*, we did describe several characteristics of RSN
    programming.[^284] First, we explained that RSNs consist of
    programming with a uniquely local interest, the airing of which is
    time-sensitive. Second, we characterized RSN programming as
    programming for which no reasonably available substitute exists.
    Third, we found that an RSN may leverage significant market power in
    a geographic market.[^285] In *Adelphia*, we defined the term "RSN"
    for purposes of the arbitration condition as follows:

    *The term "RSN" means any non-broadcast video programming service
    that (1) provides live or same-day distribution within a limited
    geographic region of sporting events of a sports team that is a
    member of Major League Baseball, the National Basketball
    Association, the National Football League, the National Hockey
    League, NASCAR, NCAA Division I Football, NCAA Division I Basketball
    and (2) in any year, carries a minimum of either 100 hours of
    programming that meets the criteria of subheading 1, or 10% of the
    regular season games of at least one sports team that meets the
    criteria of subheading 1.* [^286]

94. The *Adelphia* definition of RSN was intended to capture the
    attributes ascribed to RSNs in *News Corp.-Hughes.* We adopt that
    definition of RSN, with one modification, on a going-forward basis,
    as applicable to RSN program access arbitration proceedings arising
    from this transaction. The Applicants offer MVPD service in Puerto
    Rico, so our definition of RSN should reflect the types of sports
    programming that Puerto Ricans are likely to value most highly.
    Accordingly, we add Liga de Béisbol Profesional de Puerto Rico,
    Baloncesto Superior Nacional de Puerto Rico, Liga Mayor de Fútbol
    Nacional de Puerto Rico, and the Puerto Rico Islanders of the United
    Soccer Leagues First Division to the list of sports leagues in our
    definition.[^287]

95. Thus, we adopt the following definition of RSN for purposes of the
    program access arbitration condition:

    *The term "RSN" means any non-broadcast video programming service
    that (1) provides live or same-day distribution within a limited
    geographic region of sporting events of a sports team that is a
    member of Major League Baseball, the National Basketball
    Association, the National Football League, the National Hockey
    League, NASCAR, NCAA Division I Football, NCAA Division I
    Basketball, Liga de Béisbol Profesional de Puerto Rico, Baloncesto
    Superior Nacional de Puerto Rico, Liga Mayor de Fútbol Nacional de
    Puerto Rico, and the Puerto Rico Islanders of the United Soccer
    League's First Division and (2) in any year, carries a minimum of
    either 100 hours of programming that meets the criteria of
    subheading 1, or 10% of the regular season games of at least
    one sports team that meets the criteria of subheading 1.*[^288]

96. *Modifications to Small Cable Operator Provisions.* ACA urges the
    Commission to refine the Applicants' proffered RSN arbitration
    conditions to address the concerns of small operators. First, ACA
    wants the Commission to clarify the rights of a collective
    bargaining agent.[^289] ACA points to a dispute between the National
    Cable Television Cooperative ("NCTC") and Fox Cable regarding NCTC's
    ability to gain access to the expiring contracts of small cable
    operators on whose behalf it sought to negotiate RSN renewals
    pursuant to the *News Corp.-Hughes* conditions, and contends that
    media conglomerates have the incentive and ability to delay and
    frustrate bargaining efforts. ACA maintains that collective
    bargaining agents should be given the right to access the expiring
    contracts of their principals.[^290] ACA contends that the sharing
    of an expiring contract between a principal and its bargaining agent
    increases the efficiency of negotiating renewals.[^291] Conversely,
    according to ACA, a practice of forbidding the bargaining agent from
    viewing the expired contract of its principal eviscerates the
    collective bargaining alternative for small and medium-sized cable
    companies.[^292] News Corp. states that the Commission need not
    consider ACA's proposed modifications or clarifications because News
    Corp. has not sought modifications to the arbitration condition,
    which does not expire until six years after the release date of the
    *News Corp.-Hughes Order*.[^293] Moreover, it disputes NCTC's
    characterization of the facts surrounding the parties' dispute and
    states that once Fox Cable received a notice of intent to arbitrate
    on behalf of several small cable operators that had appointed NCTC
    as their collective bargaining agent, Fox Cable provided NCTC with
    the expired contracts of all the small cable operators listed in the
    notice.[^294]

97. Second, ACA urges the Commission to extend the arbitration notice
    periods to prevent inadvertent loss of arbitration rights.[^295]
    ACA's members report that the notice provisions in the *News
    Corp.-Hughes* arbitration conditions set an initial notice window
    that is too narrow and that imposes overwhelming burdens for small
    companies with limited administrative resources.[^296] ACA states
    that the narrow notice-and-demand windows create substantial risk of
    inadvertent procedural default. It notes that in other contexts, the
    Commission has provided extended response periods in recognition of
    the limited resources available to smaller cable companies.[^297]
    Thus, according to ACA, the Commission should (1) extend the amount
    of time for the submission of a notice of intent to arbitrate from 5
    to 20 days, and (2) extend the timeframe for submitting a complete
    arbitration demand to 45 days after contract expiration from the
    current window of between 15 and 20 days after contract expiration.
    ACA contends that these extensions would not prejudice the
    Applicants in any way.[^298] Liberty Media counters that, even
    conceding the timing problems described by ACA, ACA's problems
    arising from the short timing windows are not transaction-specific
    concerns.[^299]

98. ACA also seeks to expand the scope of the small cable provisions to
    include all ACA members, not just those members that serve fewer
    than 400,000 subscribers.[^300] ACA contends that no ACA member
    serves more than 1.5 percent of U.S. television households and that
    the transaction would create a "vast disparity" in market power
    between its members and the merged firm.[^301] ACA argues that
    application of the special provisions for small firms to all ACA
    members would extend the *News Corp.-Hughes* protections afforded to
    small cable operators to an additional two million households and
    would offset the immense disparity in post-transaction market power
    between its members and Liberty Media.[^302] Liberty Media claims
    that ACA's concern is not transaction specific and notes that the
    proposed modification would likely benefit the nation's 10th-largest
    MVPD.[^303] Liberty Media asserts that there is no reason for the
    Commission to revisit the scope of the "small cable company"
    definition.[^304]

99. Finally, ACA recommends increasing the duration of the conditions
    applicable to small and medium-sized cable companies from six to ten
    years.[^305] ACA maintains that the six-year term provides
    insufficient protection for small and medium-sized cable companies
    because of RSNs' resistance to the collective bargaining process and
    because many Liberty Media programming and RSN contracts have terms
    exceeding five years.[^306] ACA contends that if the Commission
    decides against granting this extension, its members would face the
    prospect of renewals unconstrained by program access commitments,
    arbitration, or collective bargaining rights.[^307] Liberty Media
    counters that ACA provides no evidence to support its view that the
    terms of most RSN contracts exceed five years.[^308] News Corp.
    contends that after it divests its interest in DIRECTV, the
    arbitration condition would be unnecessary because it would no
    longer be vertically integrated with an MVPD.[^309]

100. News Corp. is currently engaged in an ongoing arbitration
     proceeding with a bargaining agent.[^310] The fact that the
     arbitration between News Corp. and the bargaining agent is underway
     demonstrates that small operators have been able to avail
     themselves of the arbitration condition. We note that in the
     *Adelphia Order*, we took steps to ensure that a bargaining agent
     was aware of when its principal's contracts expired so that the
     agent could meet the deadlines in the arbitration condition. We did
     so by modifying News Corp.'s program access RSN arbitration
     condition slightly in the *Adelphia Order* so that a small operator
     would be permitted to disclose to its bargaining agent the date the
     operator's contract was set to expire.[^311] We take the same
     action here to ensure that a bargaining agent can meet the
     deadlines for providing notice to arbitrate and for submitting its
     arbitration demand, as described below. However, for purposes of
     arbitrating RSN access disputes under the terms of this Order, we
     will not extend the modifications to allow the bargaining agent
     access to additional details of the contracts held by its
     principals.[^312]

101. The purpose of the arbitration condition is to place MVPDs in a
     similar bargaining position to that which would exist in the
     absence of the transaction.[^313] The arbitration condition induces
     the parties to enter into negotiations and ensures that programming
     cannot be withheld from the MVPD. ACA's arbitration proposals would
     go farther than necessary to achieve this result, affecting the
     balance between programmer and MVPD. In standard negotiations, an
     MVPD would rarely have access to the contracts signed between the
     programmer and other MVPDs. We retain the small cable operator
     provisions from the *News Corp.-Hughes Order*, as modified in
     *Adelphia,* but go no farther, because with this limited
     modification, the provisions place a bargaining agent in the same
     situation as any MVPD negotiating a request for carriage in the
     context of the arbitration condition.

102. We likewise reject ACA's remaining proposals. Though ACA contends
     that the notice and final demand deadlines for small cable
     operators are overly burdensome and difficult to track, it does not
     provide specific evidence in support of its position. Absent such
     evidence, we have no basis for changing the current deadlines.
     [^314] Second, we retain the 400,000 subscriber "small cable
     company" standard for determining eligibility for the small
     operator provisions. We adopted the small cable provisions in *News
     Corp.-Hughes* to give small MVPDs equal access to a remedy. As we
     noted in the *News Corp.-Hughes Order,* "given the size of their
     subscriber base and financial resources, small and medium-sized
     MVPDs may also be far less able to bear the costs of commercial
     arbitration, even on an expedited basis, than large MVPDs, thus
     rendering the remedy of less value to them."[^315] ACA does not
     adequately explain why we should expand the protections offered to
     small cable companies to a wider category of MVPDs or how the
     current definition materially harms competition.[^316]

103. Finally, we reject ACA's recommendation to extend the term of the
     Applicants' proffered arbitration conditions for small cable
     operators from six years to 10. ACA alleges that a six-year term
     does not provide adequate protection given the alleged delays
     involved in the dispute between NCTC and News Corp. and the fact
     that RSN contracts often exceed a five-year term. We find that the
     record evidence is insufficient to support extension of the term to
     ten years. In addition, as noted above, markets and technologies
     used in the provision of MVPD services and video programming
     continue to evolve over time, rendering accurate predictions of
     future competitive conditions difficult.[^317] Accordingly, we
     still believe that six years is the appropriate duration of the
     arbitration conditions. Moreover, because Liberty Media has agreed
     to comply with the same retransmission consent condition for the
     broadcast stations it now owns and any it acquires in the future,
     we find it reasonable to apply the RSN arbitration condition for
     the same amount of time, as the Commission did in *News
     Corp.-Hughes*.

##### Broadcast Programming Issues

###### Retransmission Consent Arbitration

104. *Background.* In the *News Corp.-Hughes Order*, the Commission
     found that News Corp.'s acquisition of DIRECTV would increase its
     incentive to temporarily foreclose its broadcast programming from
     competing MVPDs in order to obtain a higher price, and that such an
     anticompetitive strategy was likely to be successful.[^318] The
     Commission adopted an arbitration remedy to limit News Corp.'s
     incentive and ability to engage (or threaten to engage) in such
     behavior.[^319] The Commission designed the remedy to serve as a
     last resort in the event retransmission consent negotiations fail
     to produce a mutually acceptable set of price, terms, and
     conditions.[^320] Moreover, the remedy mandates that News Corp.
     continue to provide the retransmission of its broadcast programming
     under the same terms and conditions as those in the expired
     agreement as soon as it receives timely notice of the MVPD's intent
     to arbitrate.[^321] Under the terms of the order, the arbitration
     remedy is available for negotiating retransmission consent
     agreements for any broadcast station that News Corp. owns and
     operates or for any independently owned Fox network affiliates for
     which News Corp. negotiates retransmission consent.[^322]

105. *Positions of the Parties.* The Applicants initially asserted that
     the retransmission consent conditions adopted in the *News
     Corp.-Hughes Order* would not apply to the transaction because
     Liberty Media does not "own or control multiple broadcast
     television stations."[^323] After the Application was filed,
     however, Liberty Media informed the Commission that it was
     acquiring a controlling interest in two broadcast stations and
     stated that it would abide by retransmission consent conditions
     "similar to" the conditions in the *News Corp.-Hughes Order* "with
     respect to" the two stations.[^324] Responding to a request for
     clarification from EchoStar, Liberty Media stated that under its
     proffer, the retransmission consent conditions would sunset six
     years from the date of closing of the Share Exchange Agreement, and
     would apply to the two newly acquired broadcast stations and any
     other television broadcast stations it may acquire during the
     six-year period.[^325]

106. EchoStar advocates applying the *News Corp.-Hughes* retransmission
     consent conditions to Liberty Media, but, as discussed above, asks
     the Commission to extend the six-year term by initiating a
     proceeding to evaluate a continuing need for the condition.[^326]
     Liberty Media disagrees, contending that it has agreed to be bound
     by exactly the same conditions imposed by the Commission upon News
     Corp. It argues that those conditions satisfy any legitimate public
     interest concerns that might arise from this transaction,
     especially since it did not possess any attributable broadcast
     stations until it submitted its Transfer Application.[^327] ACA
     proposes that we apply the same small cable operator provisions to
     retransmission consent negotiations that it proposes for the
     Applicants' proffered RSN arbitration conditions.[^328] The
     Applicants state that ACA's proposals are unnecessary and urge the
     Commission to reject them.[^329]

107. *Discussion*. We accept the Applicant's voluntary commitment to
     comply with the retransmission consent arbitration condition for
     six years.[^330] The *News Corp.-Hughes* retransmission consent
     arbitration condition, as modified, and thus the Applicant's
     voluntary condition, both provide a mechanism for modification or
     early termination of the condition in the event there is a material
     change in circumstances warranting relief.[^331] For the reasons
     discussed above in connection with RSN arbitration, we reject
     EchoStar's request to extend the term of the retransmission consent
     arbitration condition beyond six years.[^332] Finally, with respect
     to ACA's request, we retain the small cable operator conditions, as
     modified in *Adelphia,* and reject ACA's remaining proposals for
     the same reasons we stated above.[^333]

###### Other Broadcast Programming Issues

108. In *News Corp.-Hughes,* we accepted the commitments News Corp.
     volunteered regarding non-discriminatory access to any broadcast
     station that News Corp. owns or on whose behalf it negotiates
     retransmission consent.[^334] Liberty Media and DIRECTV have
     offered to comply with a broadcast non-discrimination condition
     similar to the commitment agreed to by News Corp. when it acquired
     DIRECTV.[^335] Though commenters have not addressed this condition,
     we accept Liberty's offer to comply with a broadcast
     non-discrimination provision as a condition to this license
     transfer proceeding.[^336] Moreover, we accept as a condition to
     this transaction Liberty's agreement to comply with the remaining
     *News Corp.-Hughes* broadcast-related condition, *i.e.,* compliance
     with the good faith and exclusivity requirements of SHVERA beyond
     the sunset date of December 31, 2009 for as long as the program
     access rules are in effect.[^337]

##### Interactive Television

109. EchoStar urges the Commission to apply programming conditions to
     interactive television[^338] features and programming, as well as
     to programming on so-called non-traditional platforms (e.g.,
     video-on-demand, Internet, mobile applications).[^339] According to
     EchoStar, given Liberty Media's "checkered history of exploiting
     regulatory grey areas," the Commission should clarify the full
     scope and reach of the programming restrictions that apply to the
     Applicants.[^340] EchoStar asks the Commission to confirm that
     interactive and on-demand services are covered by the conditions
     imposed in this proceeding.[^341] We find that there is no basis
     for the Commission to impose new conditions on or expand the reach
     of existing conditions to any non-traditional offerings that
     Liberty Media or DIRECTV might develop.[^342]

110. EchoStar appears to be concerned that Liberty Media might attempt
     to evade programming protections by moving valued programming to
     non-traditional platforms.[^343] There is no evidence on the record
     that Liberty Media has made such a transition or plans to do so.
     Further, EchoStar is concerned that the Applicants may seek to
     disadvantage competing program suppliers and technology
     companies.[^344] EchoStar argues that the combination of Liberty
     Media's extensive interactive and online assets with DIRECTV's
     platform "changes the equation dramatically."[^345] As the
     Applicants point out, EchoStar nowhere explains why a change in
     DIRECTV's *de facto* controlling shareholder would make DIRECTV
     anymore likely to engage in anticompetitive behavior in the
     emerging ITV marketplace.[^346] Aside from vague references to
     Liberty Media's "checkered history," EchoStar has failed to
     identify any specific connection between this transaction and the
     alleged harms it would seek to remedy through its proposed
     conditions.

#### Access to Unaffiliated Programming and Exclusive Dealing

111. To provide all the programming their subscribers desire, DIRECTV
     and Liberty Media must have access to programming networks with
     which they are not affiliated. There are two types of unaffiliated
     programming in this context: (1) programming from networks that are
     vertically integrated with cable operators, and (2) programming
     from networks that are not vertically integrated with any cable
     operator.[^347] Programming networks that are affiliated with a
     cable operator cannot enter into exclusive contracts absent a
     waiver of the program access rules, and they also must abide by the
     rules' nondiscrimination provisions.[^348] Programming networks
     that are not vertically integrated with a cable operator are not
     subject to the program access rules. Some commenters are concerned
     that this transaction will increase the incentives of Liberty Media
     and DIRECTV to secure exclusive contracts from non-vertically
     integrated sports networks.

112. *Positions of the Parties.* Commenters allege that DIRECTV already
     abuses its ability to obtain exclusive programming distribution
     agreements and that this transaction would make matters
     worse.[^349] EchoStar and RCN contend that given Liberty Media's
     previous behavior as a vertically integrated cable operator,
     DIRECTV would be likely to enter into more exclusive agreements as
     a result of the transaction.[^350] Commenters point to DIRECTV's
     NASCAR Hot Pass and NFL Sunday Ticket as examples of exclusive
     distribution agreements that harm competition, stating that no
     substitutes exist for such programming, and that MVPDs suffer if
     they are unable to provide it to their subscribers.[^351]
     Commenters also criticize DIRECTV's alleged *de facto* exclusive
     arrangement with Major League Baseball ("MLB") for Extra Innings, a
     programming package that offers out-of-market games.[^352] RCN
     contends that such exclusive agreements cut off access to "must
     have" programming, which MVPDs, especially new entrants, must offer
     their subscribers to remain competitive.[^353] RCN notes that
     Congress has also expressed concern over DIRECTV's exclusive sports
     programming deals.[^354]

113. RCN and ACA recommend that the Commission adopt a condition that
     would limit Liberty Media's and DIRECTV's ability to enter into
     exclusive agreements with non-vertically integrated suppliers of
     local, regional, and national sports programming.[^355] EchoStar
     recommends prohibiting the merged firm from acquiring any
     additional exclusive programming, not just sports
     programming.[^356]

114. The Applicants dismiss the rationale underlying the proposed
     condition. They counter that Commission rules permit DIRECTV's use
     of exclusive agreements and that this transaction would not
     increase DIRECTV's incentive or ability to enter into such
     agreements.[^357] DIRECTV notes that Congress crafted the ban on
     exclusive cable programming to counter the imbalance caused by the
     combination of ownership of "must have" programming with the cable
     operators' market power in individual franchise areas.[^358]
     DIRECTV states that unlike cable operators serving individual
     franchise areas, it does not have market power and will not acquire
     it through this transaction.[^359] Moreover, according to DIRECTV,
     a condition precluding DIRECTV from using exclusive agreements --
     when other MVPDs can -- would put DIRECTV at a competitive
     disadvantage, especially with respect to cable and telephone
     companies that attempt to differentiate their services through
     bundled service offerings.[^360] DIRECTV points out that the
     Commission did not forbid DIRECTV's use of exclusive agreements
     with non-vertically integrated programmers in the *News
     Corp.-Hughes Order* and asserts that it therefore should not do so
     here.[^361]

115. DIRECTV disagrees with allegations that Liberty Media's past
     business conduct would alter DIRECTV's incentive and ability to
     obtain exclusive agreements after the transaction is
     consummated.[^362] In fact, according to DIRECTV, Liberty Media's
     acquisition of DIRECTV would reduce concerns about vertical
     integration because the transaction would delink DIRECTV from News
     Corp., leaving Liberty Media as the only programmer that is
     vertically integrated with DIRECTV.[^363] DIRECTV states that
     commenters' proposal to forbid DIRECTV from entering into exclusive
     programming agreements stems from misplaced concern over DIRECTV's
     agreement with MLB for Extra Innings.[^364] Contrary to commenters'
     allegations, DIRECTV contends, the Extra Innings contract is not
     and never was exclusive.[^365]

116. RCN and ACA also urge the Commission to require DIRECTV to provide
     reasonable and non-discriminatory sublicense agreements for its
     exclusive programming to competing MVPDs.[^366] RCN explains that
     such a requirement would enable competing MVPDs to acquire only the
     exclusive "must have" sports programming, not the formatting and
     packaging enhancements created by DIRECTV.[^367] In opposition,
     Liberty Media likens RCN's proposal to forcing CBS to share its
     exclusive rights to the Super Bowl, March Madness, or the Masters
     Golf tournament so that CBS' competitors could develop a
     "differentiated" programming schedule.[^368] DIRECTV notes that it
     would be impossible for DIRECTV to sublicense its exclusive
     programming under the relevant agreements.[^369] Finally, DIRECTV
     emphasizes that the proposed condition would give competitors an
     unfair advantage by entitling them to DIRECTV's exclusive
     programming, in addition to any exclusive programming they may be
     able to secure on their own.[^370]

117. *Discussion.* Exclusive agreements between MVPDs and non-vertically
     integrated programming networks fall outside the scope of the
     congressional rationale underlying the program access rules.[^371]
     Independent programmers not affiliated with any MVPD have no
     incentive to favor one MVPD over another in order to achieve
     particular competitive outcomes in the market for sale of MVPD
     service to consumers. The only factor an independent programmer
     considers is whether it is obtaining the highest price it can for
     that programming. As DIRECTV correctly notes, it was the market
     imbalance stemming from combining MVPD market power with ownership
     of programming that led Congress to forbid vertically integrated
     programming networks from entering into exclusive distribution
     agreements with MVPDs.[^372] Congress noted that programming
     networks affiliated with cable operators have an incentive and
     ability to discriminate against MVPDs with which their affiliated
     cable operators compete.[^373]

118. The record does not support a condition forbidding DIRECTV from
     entering into exclusive distribution agreements with non-vertically
     integrated programmers. We find that this transaction would not
     give DIRECTV market power or provide DIRECTV with an unfair
     advantage in obtaining programming on an exclusive basis.[^374] The
     transaction would not increase the number of DIRECTV subscribers in
     any local, regional, or geographic market. Further, the record
     includes no evidence providing an alternative basis for concluding
     that the transaction would increase DIRECTV's incentive or ability
     to enter into exclusive agreements with unaffiliated programming
     networks. Commenters' contentions that Liberty Media's past
     behavior would increase DIRECTV's incentives to use exclusives bear
     no connection to the economic principles described above that would
     justify their proposed condition. Moreover, other MVPDs have had
     exclusive agreements with non-vertically integrated programmers or
     are equally capable of securing them.[^375] These factors lead us
     to conclude that though DIRECTV may be the second-largest MVPD
     nationally based on the number of subscribers it serves, the
     transaction will not confer an unfair advantage on DIRECTV in
     obtaining exclusive distribution agreements for programming that is
     not already subject to the program access rules. [^376] Thus, we
     conclude that the proposed conditions are not necessary to mitigate
     any transaction-specific harm.

#### Carriage of Unaffiliated Programming

119. This transaction, like the *News Corp.-Hughes* transaction, will
     combine a major MVPD with an owner of broadcast and non-broadcast
     programming. Recognizing the potential concerns raised by such a
     combination, News Corp. offered to be bound by a condition
     prohibiting discrimination against unaffiliated program providers,
     similar to the proscriptions embodied in the Commission's program
     carriage rules.[^377] Liberty Media and DIRECTV have offered to be
     bound by the same condition in connection with Liberty Media's
     acquisition of News Corp.'s interest in DIRECTV.[^378] As we did in
     *News Corp.-Hughes*, and for the same reasons set forth there, we
     find that adoption of such a condition in connection with the
     transaction now before us would serve the public interest.[^379]
     Accordingly, DIRECTV and Liberty Media will be bound by the program
     carriage condition set forth in Appendix B.[^380]

120. The Hispanic Information and Telecommunications Network, Inc.
     ("HITN") raised a related issue in its Petition to Deny, urging the
     Commission to deny the Application because it fails to address
     DIRECTV's obligations to provide carriage for noncommercial,
     educational, and informational programming and does not
     sufficiently safeguard the interests of independent programmers
     that rely on carriage by DBS operators to reach a critical mass of
     viewers.[^381] Subsequently, HITN withdrew its Petition to
     Deny.[^382] No other commenters in this proceeding raised issues
     regarding the carriage of noncommercial, educational, and
     informational programming. In its Withdrawal of Petition to Deny,
     HITN encourages the Commission to address issues related to the
     carriage of public interest, minority controlled, and independent
     channels in a broader proceeding. HITN refers the Commission to
     HITN's Petition for Declaratory Ruling filed on May 18, 2007, and
     states that the latter petition raises one such issue regarding
     qualifications for carriage on the public interest set aside
     channels. In the Petition for Declaratory Ruling, HITN requests
     that the Commission issue a declaratory ruling that V-me Media,
     Inc., does not meet the requirements of a qualified national
     educational programming provider under section 25.701 of our rules,
     concerns that are similar to the issues raised in its Petition to
     Deny in this proceeding.[^383] We grant the withdrawal and note
     that Liberty Media and DIRECTV will be bound by the program
     carriage condition described above.

121. Commercial programmers also raise concerns with respect to program
     carriage. For example, HDNet LLC ("HDNet") alleged that DIRECTV
     engaged in illegal and discriminatory behavior when it announced in
     October 2007 that it would remove HDNet and HDNet Movies from the
     current tier of HDTV offerings that DIRECTV's customers receive in
     exchange for a flat \$9.99 HDTV fee.[^384] HDNet also alleged that
     HDNet's two networks would be moved with four others -- Universal
     HD, Smithsonian HD, MGM HD, and MHD -- to an obscure and expensive
     tier and that subscribers were being told that the current channel
     was a free preview.[^385] HDNet further alleged that Discovery
     wrongfully terminated an advertising agreement with HDNet and that
     Liberty suggested that HDNet sell it a 50 percent ownership
     interest.[^386] HDNet asked the Commission to impose certain
     conditions and arbitration requirements on this transaction.[^387]
     In response, DIRECTV and Discovery dispute HDNet's interpretation
     of the facts and contends that the Commission's program carriage
     rules provide a more appropriate forum for resolving these
     issues.[^388] HDNet subsequently informed the Commission that it
     had settled its dispute with DIRECTV and withdrew its requests for
     the imposition of any conditions on the proposed transaction.[^389]
     WealthTV also raises allegations concerning program carriage and
     notes that it has been unable to secure acceptable terms of
     carriage with DIRECTV.[^390] WealthTV alleges that Liberty's
     vertical integration with DIRECTV will make it more difficult for
     non-vertically integrated programmers to gain carriage on
     DIRECTV.[^391] It seeks imposition of conditions that would require
     DIRECTV to reserve a certain percentage of its capacity for the
     carriage of non-vertically integrated programming.[^392] In
     response, DIRECTV notes that it was already vertically integrated
     with News Corp. and that WealthTV's proposed condition therefore is
     not transaction-specific.[^393] We agree and therefore decline to
     adopt WealthTV's proposed condition. As noted above, Liberty Media
     and DIRECTV will be bound by the program carriage condition set
     forth in Appendix B.

### Other Potential Public Interest Harms

#### Future Application of the *News Corp.-Hughes* Conditions

##### Program Access Conditions

122. Commenters urge the Commission to continue to apply the *News
     Corp.-Hughes* program access conditions to News Corp. after Liberty
     Media's acquisition of DIRECTV is consummated.[^394] News Corp.
     asserts that it should be free of those conditions, stating that
     once it divests its interest in DIRECTV, it will lack any undue
     advantage over its programming rivals. We agree.

123. *Positions of the Parties.* NCTC contends that the program access
     conditions should continue to apply to all of News Corp.'s RSNs
     after the transaction if the Commission finds that the transferred
     RSNs will be operated as a *de facto* or *de jure* joint venture
     between News Corp. and DIRECTV.[^395] Moreover, it recommends that
     the conditions apply to all News Corp. programming agreements
     entered into or modified by DIRECTV during the period beginning
     four months prior to the announcement of the merger and ending four
     months after the transaction closes. NCTC contends that News Corp.
     and DIRECTV may have entered into "sweetheart deals" in
     anticipation of the transaction.[^396] EchoStar and Consumers
     Union, Consumer Federation of America, Free Press, and the Media
     Access Project ("CU") advise the Commission to thoroughly
     investigate any carriage agreements, business agreements, or
     management relationships between News Corp. and DIRECTV.[^397]
     Specifically, they ask the Commission: (1) to determine whether
     News Corp. programming contracts with DIRECTV contain most favored
     nation clauses, which they allege provide DIRECTV with a
     competitive advantage; and (2) to require the Applicants to produce
     any ancillary agreements referred to in the Share Exchange
     Agreement.[^398] They contend that, if the Commission's review
     shows that the financial interests of News Corp. and DIRECTV would
     remain intertwined after the transaction, and that Chase Carey
     would remain the CEO and director of DIRECTV as well as a director
     of News Corp., then continued application of the program access
     conditions to News Corp. will remain necessary.[^399] EchoStar
     alleges that DIRECTV and News Corp. are crafting preferential terms
     for each other in their program access contracts while they are
     still a vertically integrated firm, and that these contracts will
     provide an unjustifiable competitive advantage for DIRECTV going
     forward. Thus, even if the program access conditions do not
     continue to apply by the terms of the *News Corp.-Hughes Order*
     after the transaction, EchoStar recommends that any contracts
     executed while DIRECTV and News Corp. are affiliated should remain
     subject to the program access conditions until the last News
     Corp./DIRECTV programming contract expires.[^400]

124. News Corp. counters that once the transaction is consummated, it
     will no longer have any ownership interest in DIRECTV, nor will it
     have any power over or ability to influence DIRECTV's
     affairs.[^401] It explains that the agreements implementing the
     transaction with Liberty do not permit News Corp. to exercise any
     control over the terms and conditions of carriage or the price that
     MVPDs must pay to obtain carriage of the RSNs it is transferring to
     Liberty Media/DIRECTV.[^402] Instead, the agreements merely allow
     certain Fox RSNs to continue their present operations consistent
     with how those RSNs operated under Fox's ownership.[^403] Liberty
     Media states that the ancillary agreements mentioned in the
     Applicants' Share Exchange Agreement do not relate to any ongoing
     ownership, management, or other vestigial interest by News Corp. in
     DIRECTV.[^404] In addition, News Corp. notes that CU, EchoStar, and
     NCTC fail to show how alleged preferential treatment between News
     Corp. and DIRECTV in program carriage agreements would create an
     ability or incentive for a non-vertically integrated News Corp. to
     engage in anticompetitive conduct after the transaction.[^405]
     DIRECTV highlights the fact that, by virtue of its current
     affiliation with News Corp. and Liberty Media, DIRECTV is better
     positioned now than it would be post-transaction -- after severing
     ties with News Corp. -- to work with News Corp. and Liberty on an
     alleged "coordinated content strategy."[^406] DIRECTV asserts that
     because there is no evidence that it has engaged in such activity
     despite its current connection to both Liberty Media and News
     Corp., it is even less likely to do so after it eliminates its link
     to News Corp. after this transaction closes.[^407] Liberty Media
     contends that commenters do not justify their request for
     "wholesale review" of DIRECTV's affiliation agreements, and
     disputes allegations that the existence of MFN provisions in News
     Corp.'s affiliation agreements with DIRECTV would maintain the
     benefits of vertical integration between News Corp. and the merged
     firm post-transaction.[^408] Instead, Liberty Media counters that
     the existence of MFN provisions proves that the agreements were
     negotiated at arm's length to ensure that DIRECTV receives the best
     price, terms and conditions from News Corp. in the event News Corp.
     gives a better deal to another distributor in the future.[^409]
     Moreover, as Liberty Media and DIRECTV point out, the affiliation
     agreements were subjected to review and approval by a committee of
     independent directors to ensure that the agreements were fair to
     the other 61.6 percent of DIRECTV's shareholders.[^410]

125. News Corp. notes that commenters' concerns regarding Chase Carey's
     post-transaction role in News Corp. are misplaced because he will
     resign his membership on the News Corp. Board of Directors after
     the transaction.[^411] It alleges that continued application of the
     program access condition to News Corp. after it sells DIRECTV to
     Liberty would be unfair because News Corp. would no longer possess
     an economic incentive to favor one MVPD over another and it would
     face a competitive disadvantage as compared to other independent
     programmers.[^412]

126. *Discussion.* In *News Corp.-Hughes,* the Commission crafted
     program access conditions to mitigate potential transaction-related
     harms arising from News Corp.'s vertical integration with DIRECTV.
     Those conditions prohibit News Corp. and DIRECTV from entering into
     agreements that unfairly discriminate against DIRECTV's MVPD
     competitors, and they apply for as long as News Corp. holds an
     attributable interest in DIRECTV.[^413] Once this transaction
     closes, News Corp. will sell its interest in DIRECTV to Liberty
     Media.[^414] At that point, News Corp. will no longer have an
     attributable interest in DIRECTV.[^415] Thus, the program access
     conditions would no longer apply to News Corp. [^416] Commenters,
     however, ask us to extend the program-access type conditions'
     application to News Corp. after it no longer holds an attributable
     interest in DIRECTV. They recommend this remedy based on their
     concerns that sweetheart deals and discriminatory terms may be
     embedded in the transaction documents and programming agreements.
     As noted above, however, News Corp. and DIRECTV drafted these
     documents while still subject to our program access conditions.
     Such conduct, therefore, is already prohibited. If an MVPD believes
     News Corp. or DIRECTV violated this condition while they were
     vertically integrated, the program access complaint provision
     provides an avenue for relief.[^417]

127. Moreover, our own review of the documents triggering concern among
     commenters confirms our assessment that continued application of
     the conditions is unnecessary. The review of the transaction
     agreements, including the ancillary agreements, and News Corp.'s
     programming agreements with DIRECTV does not lead us to believe
     that DIRECTV or News Corp. will receive any undue advantage
     vis-à-vis their competitors as a result of their prior vertical
     integration.[^418] That review also shows that the ancillary
     agreements criticized by commenters do not provide News Corp. with
     control of or the ability to exercise undue influence over those
     RSNs.[^419] Based on that review, the rationale for imposing the
     program access conditions in the *News Corp.-Hughes* transaction
     will not apply to News Corp. post-transaction.

##### Arbitration Conditions

128. Commenters also recommend that the RSN and retransmission consent
     arbitration conditions from the *News Corp.-Hughes* transaction
     continue to apply to News Corp. after the transaction is
     consummated. News Corp. contends that the Commission need not make
     this determination because it has not asked the Commission to
     terminate the conditions. We agree. We crafted the arbitration
     conditions for News Corp. because we found that its merger with
     DIRECTV would increase News Corp.'s incentives to raise its MVPD
     rivals' costs after the transaction.[^420] By the terms of the
     *News Corp.-Hughes Order*, the Commission will consider a petition
     for modification of the arbitration conditions if, because of a
     material change in circumstance, the condition no longer serves the
     public interest. News Corp. has not petitioned the Commission for
     removal of the *News Corp.-Hughes Order's* arbitration conditions.
     Thus, assessing the continued need for the conditions after the
     transaction is premature. Accordingly, the conditions shall
     continue to apply for their full term or until such time as the
     Commission grants relief. If and when News Corp. asks the
     Commission to terminate the conditions, we will evaluate whether
     our doing so would serve the public interest.[^421]

#### Local-Into-Local Provision of Broadcast Television Service

129. In the *News Corp.-Hughes Order*, the Commission adopted a
     condition requiring News Corp. to increase by 30 the number of
     markets in which DIRECTV provided local-into-local broadcast TV
     service.[^422] DIRECTV fulfilled that condition, and now provides
     local-into-local service in 144 of the nation's 210 television
     markets, covering more than 94 percent of U.S. TV households.[^423]
     DIRECTV states that it expects to launch local-into-local service
     in six additional markets by the middle of 2008.[^424] DIRECTV has
     committed to providing "a seamless, integrated local channel
     package" to all 210 markets before the end of 2008.[^425] In
     addition, DIRECTV delivers high-definition broadcast signals in 60
     markets, covering approximately 70 percent of U.S. TV households,
     and it plans to expand its offering of HD local signals to 100
     markets by the end of 2008.[^426]

130. Commenters ask the Commission to require DIRECTV to provide
     local-into-local television broadcast service in all 210 TV markets
     via satellite by 2008.[^427] They allege that News Corp. promised
     in the *News Corp.-Hughes* proceeding that it would do so. For the
     reasons set forth below, we decline to impose additional
     local-into-local broadcast television signal carriage requirements
     in this proceeding.

131. *Positions of the Parties.* Commenters urging imposition of a
     condition, all of them broadcasters, contend that the Commission
     relied on News Corp.'s alleged commitment to provide local
     broadcast signals in all 210 DMAs by the end of 2008 in adopting
     the *News Corp.-Hughes Order*.[^428] Further, they argue that the
     Commission should require DIRECTV and Liberty to offer universal
     local-into-local service, via satellite, by 2008, even if News
     Corp. did not make a specific commitment to do so, to enhance the
     public interest benefits of the merger.[^429] They claim that
     improvements in satellite technology,[^430] additional satellite
     capacity,[^431] and the greater availability of satellites since
     the adoption of the *News Corp.-Hughes Order* makes universal
     local-into-local satellite service attainable.[^432]

132. These commenters claim that DIRECTV ignores small markets, offering
     local-into-local service to only 15 of the smallest DMAs.[^433] NDB
     asserts that the "seamless integrated local" over-the-air antenna
     service that DIRECTV provides to subscribers in rural areas is
     inferior to satellite-delivered local service because antenna
     service cannot deliver local stations to viewers in areas where
     local signals are blocked by mountains and other
     obstructions.[^434] It adds that universal delivery of local
     broadcast signals via satellite would be more effective in
     expediting the digital transition than would the delivery of
     additional HD signals in large markets.[^435] Commenters maintain
     that the provision of local-into-local service also promotes
     localism, benefits consumers, and enhances competition.[^436] As
     examples of these benefits, they point to the delivery of local
     news, local sports, and local public affairs. They also note the
     importance of local emergency announcements, including the
     closed-captioning of those announcements for the hearing
     challenged, which are critical to public safety.[^437] NDB asserts
     that a condition requiring universal delivery of local signals via
     satellite is necessary to prevent MVPD competition and competition
     among broadcasters from lagging in smaller, rural markets.[^438]

133. DIRECTV maintains that the Commission did not impose any condition
     that requires DIRECTV to provide satellite-delivered local
     broadcast signals in every television market and notes that it has
     already achieved and surpassed the local-into-local condition that
     the Commission did impose in the *News Corp.-Hughes Order*.[^439]
     DIRECTV states that it currently provides local-into-local service
     in 144 DMAs, and expects to reach 150 DMAs in the next few
     months.[^440] It asserts that the Commission understood that
     DIRECTV would use a mix of delivery systems when it granted
     conditional approval in the *News Corp.-Hughes Order*, affording
     DIRECTV discretion as to the delivery mechanism, based on market
     conditions.[^441]

134. DIRECTV states that it plans to allocate its existing satellite
     capacity to additional rollout of HD service in large markets and
     to some expansion of local-into-local service, "consistent with
     economic, satellite capacity, and technological limitations."[^442]
     It asserts that in 60 markets covering 70 percent of the nation's
     television households, it offers at least some local broadcast
     signals in HD, explaining that it will have enough capacity to
     provide more comprehensive HD local service to the vast majority of
     Americans after its next two satellites are launched.[^443] DIRECTV
     also submitted an economic analysis showing that a requirement that
     it offer satellite-delivered local broadcast signals in the 60
     markets it does not already serve or plan to serve could cost it
     more than \$250 million.[^444] DIRECTV asserts that such a
     requirement would put it at a competitive disadvantage by imposing
     costs on DIRECTV that other competitors are not required to
     incur.[^445]

135. DIRECTV contends that the broadcasters who favor imposition of a
     universal local-into-local condition fail to recognize the tension
     between the competing public interest objectives of using new
     satellite capacity to provide local-into-local service in
     additional DMAs and launching HD local service in DMAs that already
     receive standard definition local service. It asserts that
     satellite-delivered local-into-local service is available in
     markets covering all but approximately 2.4 percent of television
     households nationwide, but "\[t\]he transition to digital
     television is a massive and complex undertaking, affecting
     virtually every segment of the television industry and every
     American who watches television."[^446] It states that providing
     local-into-local service in the markets where it is not yet
     available might benefit a small segment of the public, but the
     retransmission of local stations in HD will have a greater positive
     effect on the DTV transition, accelerating its progress and
     extending its benefits to more viewers throughout the United
     States.[^447]

136. Finally, DIRECTV has committed to specific methods of delivering
     local broadcast signals in all 210 DMAs by the end of 2008.[^448]
     By the end of 2008, DIRECTV will deliver local signals via
     satellite in 150 DMAs.[^449] In the remaining 60 DMAs, DIRECTV will
     provide a means for consumers to view local broadcast signals via
     their DIRECTV set-top box using over-the-air antennas. These
     consumers will be able to purchase a digital tuner accessory from
     DIRECTV at an estimated one-time cost of \$50.[^450] Consumers will
     be responsible for purchasing their own off-air antenna, but
     DIRECTV will install it for existing customers at a flat fee of
     \$99 and for new customers at an incremental fee above the cost of
     installing the DBS antenna.[^451] DIRECTV already provides a \$3
     monthly discount to subscribers who receive local service using
     over-the-air antennas and will continue to offer this discount to
     subscribers who use the tuner accessory. DIRECTV states that with
     the tuner accessory, subscribers will have a "seamless, integrated"
     experience, meaning that the broadcast programming will appear in
     the electronic program guide and that all other available set-top
     box functions, such as DVR capability, will work with broadcast
     programming. [^452]

137. *Discussion.* We do not agree that the Commission conditioned its
     approval in the *News Corp.-Hughes* proceeding on DIRECTV's
     provision of local-into-local service into all 210 DMAs by the end
     of 2008. We decline to impose a universal local-into-local
     condition here. There is no evidence in the record that such a
     condition is necessary to remedy a transaction-specific harm.
     Moreover, Liberty and DIRECTV have reiterated the commitment to
     provide local broadcast signals, in a manner transparent to the
     customer, in all 210 DMAs by the end of 2008. Finally, no entity
     has alleged that the transaction will diminish DIRECTV's incentive
     or ability to expand the rollout of local broadcast service.

# ANALYSIS OF PUBLIC INTEREST BENEFITS

138. The Applicants claim that the transaction will increase competition
     and benefit consumers. They state that the transfer of control of
     DIRECTV from News Corp. to Liberty Media will decrease media
     concentration and alleviate many of the concerns that the
     Commission had in approving News Corp.'s acquisition of DIRECTV,
     since Liberty Media does not have any "must have" programming. They
     state that the transaction will eliminate Liberty Media's current
     interest in News Corp. and will therefore further decrease media
     concentration by separating the two companies. Finally, they claim
     consumers will benefit because the transaction will make Liberty
     Media's experience and expertise in interactive commerce and other
     technologies more readily available to DIRECTV.[^453]

139. We agree that the transaction will decrease media concentration and
     find that this is a public benefit of the transaction. We also
     find, however, that the Applicants have not shown that making
     Liberty Media's expertise available to DIRECTV provides any
     substantial benefit to the public compared to DIRECTV's situation
     today.

## Analytical Framework

140. In determining whether a transaction is in the public interest, the
     Commission evaluates whether the transaction is likely to produce
     public interest benefits.[^454] The Commission applies several
     criteria in deciding whether a claimed benefit should be considered
     and weighed against potential harms. First, the claimed benefit
     must be transaction specific. This means that the claimed benefit
     must be likely to be accomplished as a result of the transaction
     but be unlikely to be realized by other means that entail fewer
     anticompetitive effects. For example, the Commission does not
     credit benefits that are likely to be realized even absent the
     transaction. Second, the claimed benefit must be verifiable.[^455]
     Because much of the information relating to the potential benefit
     of a transaction is in the sole possession of the Applicants, they
     are required to provide sufficient supporting evidence so that the
     Commission can verify the likelihood and magnitude of each claimed
     benefit.[^456] The Commission discounts or dismisses speculative
     benefits that cannot be verified.[^457] In this regard, benefits
     that are expected to occur only in the distant future are
     inherently more speculative than benefits that are expected to
     occur more immediately. The Commission calculates the magnitude of
     benefits net of the cost of achieving them.[^458] Third, the
     benefits must flow through to consumers, and not inure solely to
     the benefit of the company.[^459]

141. Finally, the Commission applies a "sliding scale approach" to its
     ultimate evaluation of benefit claims. Under this approach, where
     potential harms appear both substantial and likely, the Applicants'
     demonstration of claimed benefits also must reveal a higher degree
     of magnitude and likelihood than the Commission would otherwise
     demand.[^460] On the other hand, where potential harms appear less
     likely and less substantial, we will accept a lesser showing.[^461]

## Claimed Benefits

### Reduction of Vertical Integration and Media Concentration

142. DIRECTV is currently controlled by News Corp., which also controls
     Fox Broadcasting. As discussed above, Fox controls both a number of
     RSNs and a number of full-power television stations, as well as
     operating one of the four major television networks. As the
     Applicants point out, in approving News Corp.'s acquisition of
     control of DIRECTV, the Commission was concerned about the possible
     harms that could occur to MVPDs that compete with DIRECTV because
     of News Corp.'s control of "must have" programming -- Fox's
     broadcast television stations and RSNs.[^462] In particular, the
     Commission found that if News Corp. acquired control of DIRECTV, it
     would have a greater incentive and ability to temporarily withhold
     its programming from other MVPDs and thereby be able to secure
     higher prices than it had before. Consumers would be harmed by both
     the temporary withholding and the resulting higher prices, which
     would likely be passed on to them.[^463] The Commission therefore
     imposed a number of conditions on News Corp. to ameliorate these
     potential harms.[^464]

143. The Applicants claim that the transfer of control of DIRECTV from
     News Corp. to Liberty Media will greatly decrease the amount of
     vertical integration and accompanying harms. While News Corp.
     currently controls 15 RSNs, after the transaction, Liberty Media
     will control only three. And while News Corp. owns a number of
     broadcast television stations, Liberty Media owns only two.
     Therefore, the harms the Commission was concerned about in the
     *News Corp.-Hughes* proceeding will be greatly reduced.[^465]

144. The Applicants also state that Liberty Media is currently
     affiliated with News Corp., and, thus, with both Fox and DIRECTV,
     because it owns approximately 16 percent of News Corp. stock (which
     represents approximately 19 percent of the voting rights). The
     transaction will eliminate this ownership and will, therefore, in a
     different manner, reduce the amount of media consolidation. As the
     Commission has generally been concerned with the increase of media
     consolidation, the Applicants claim this deconsolidation as a
     public benefit.[^466]

145. A number of commenters express skepticism that Liberty Media and
     News Corp. are truly disentangling themselves from each
     other.[^467] EchoStar also argues that Liberty Media could have
     decoupled itself from News Corp. without acquiring DIRECTV in the
     process,[^468] and that Liberty Media's statement that it may
     acquire more programming in the future means that the transaction
     will actually lead to more vertical integration.[^469]

146. Commenters' skepticism is generally predicated on the number of
     ancillary contracts Liberty Media and News Corp. have entered into,
     and several commenters asked the Commission to carefully examine
     those contracts.[^470] We have done so. The Applicants argue that
     the contracts are simply ordinary agreements that will allow the
     RSNs to continue to operate as they have in the past as part of the
     Fox RSN network, which already includes both News Corp.-controlled
     and independently controlled RSNs.[^471] For example, several of
     the agreements cover services that News Corp. already provides to
     other RSNs that are affiliated with -- but not controlled by -- Fox
     and News Corp. The agreements are part of the record in this
     proceeding. No commenter has pointed to any particular provision of
     the contracts that causes them concern. We have found no provision
     in these contracts that would give Fox or News Corporation an
     incentive to discriminate against competitors of Liberty Media or
     DIRECTV. We also agree with the Applicants that the ancillary
     contracts do not allow News Corp. to exercise any control or undue
     influence over the RSNs that will be owned by Liberty Media.

147. Commenters have also raised as evidence of the continued
     relationship of Liberty Media and News Corp. the fact that Chase
     Carey, then a member of the News Corp. Board of Directors, will
     continue to serve as CEO of DIRECTV after the transaction.[^472]
     However, News Corp. stated that, upon consummation of the
     transaction, Carey would resign from News Corp.'s Board of
     Directors, and any News Corp. employees currently on DIRECTV's
     Board of Directors would resign from DIRECTV's Board. In fact,
     Carey resigned his position as a member of News Corp.'s Board of
     Directors on December 7, 2007.[^473] News Corp. further states that
     the transaction will "completely sever" its ownership and control
     ties with DIRECTV.[^474] Therefore, we find that Chase Carey's
     continued involvement with DIRECTV after the transaction will not
     result in any relationship between News Corp. and Liberty Media.

148. As an overarching point, News Corp. argues that, far from wishing
     to remain connected, News Corp. and Liberty Media entered into this
     agreement specifically to end the "complicated ownership
     connections" between them.[^475] News Corp. states that the recent
     history of its tensions with Liberty Media is well
     documented.[^476] Liberty Media increased its stake in News Corp.
     in 2004 without notice to News Corp. In response, News Corp.
     adopted a shareholders' rights plan to prevent Liberty Media from
     acquiring additional shares without approval from the News Corp.
     Board of Directors. News Corp. states that the parties then
     negotiated for more than two years before agreeing to this
     transaction as a way of disentangling their relationship.[^477]
     News Corp. argues that this history belies any assumption or
     conclusion that the parties will be "close and interconnected"
     following consummation of the transaction.[^478]

149. EchoStar argues that, aside from the alleged continued relationship
     between News Corp. and DIRECTV, the transaction will not reduce
     media vertical integration because Liberty Media owns a number of
     programming assets, as well as other related assets, and is
     constantly adding to its portfolio.[^479] Therefore, EchoStar
     contends, the level of media concentration will not differ
     regardless whether DIRECTV is owned by News Corp. or Liberty Media.
     EchoStar agrees, however, that at least for now, Liberty Media has
     fewer programming assets than News Corp.[^480] Moreover, Liberty
     Media has significantly less "must have" programming of the kind
     the Commission was concerned about in the *News Corp.-Hughes*
     proceeding, and Liberty Media has agreed to be bound by the same
     conditions we imposed in *News Corp.-Hughes*. [^481] We therefore
     find that the transfer of control of DIRECTV from News Corp. to
     Liberty Media will result in less media vertical integration.

150. In conclusion, we agree with the Applicants that the merger will
     result in Liberty Media and News Corp. severing their ownership
     interests with each other. Contrary to some commenters' concerns,
     we find that the agreements the parties have entered into with
     regard to the three RSNs that will be transferred to Liberty Media
     are not unusual, and we find nothing in them that would cause
     either Liberty Media or News Corp. to act in anything but their
     own, separate best business interests. Further, we find that the
     transfer of control of DIRECTV from News Corp. to Liberty Media,
     which owns fewer programming assets, only two broadcast stations
     and far fewer RSNs than News Corp., will lead to less media
     vertical integration.[^482] We therefore conclude that the
     transaction will decrease media consolidation and that this
     decrease benefits the public.

### Interactive Commerce and Other Technologies 

151. The Applicants also claim as a benefit of the transaction that
     Liberty Media will now be able to make available to DIRECTV its
     experience and expertise in interactive commerce and other
     technologies.[^483] Liberty Media argues that it has an established
     reputation for imagination and innovation and a long history of
     creating and developing new programming services.[^484] Liberty
     Media argues that it will encourage DIRECTV to roll out advanced
     video service to consumers.[^485] EchoStar, on the other hand,
     argues that the Application is devoid of any specific detail
     regarding the possibility of innovative synergies and, moreover,
     that any synergies are not merger specific.[^486]

152. We agree that the Applicants have not provided sufficient detail
     about how or why the transaction will lead to greater innovation
     than would otherwise occur. When News Corp. acquired control of
     DIRECTV, it, too, claimed to have "a proven track record of
     innovation in programming and DTH services,"[^487] and claimed that
     it would enhance interactive service and other innovations.[^488]
     News Corp., however, provided far more detail in that application
     than the Applicants have here. Moreover, Liberty Media has not
     shown how DIRECTV will be *more* innovative under Liberty's control
     than the company is under News Corp.'s. We therefore conclude that
     while, as the Applicants claim, DIRECTV may very well continue to
     be innovative and imaginative, any benefits resulting from this
     aspect of the transaction are too nebulous and speculative to be
     considered.

# BALANCING PUBLIC INTEREST HARMS AND BENEFITS 

153. As we stated at the beginning of our analysis, our task under the
     Communications Act is to determine whether the "public interest,
     convenience and necessity will be served" by the granting of the
     Application.[^489] Having determined that the proposed transaction
     does not violate the Communications Act, other applicable statutes,
     or our rules, we now employ a balancing process, weighing the
     potential public interest harms of the proposed transaction that we
     have found against the potential public interest benefits.[^490]
     The Applicants bear the burden of proving, by a preponderance of
     the evidence, that the proposed transaction, on balance, will serve
     the public interest.[^491] Our options are to approve the
     application without conditions, approve it with conditions, or hold
     a hearing if we are unable to make the findings required for
     approval.[^492] The Application and the substantial record before
     us make clear that, on balance, the public interest will be served
     by approval of the Application subject to the conditions that we
     have discussed above.

154. Liberty Media's proposed acquisition of DIRECTV is in many respects
     similar to News Corp.'s acquisition of DIRECTV, which the
     Commission approved with conditions in 2003. Liberty Media, like
     News Corp., controls video programming, and both the potential
     harms and the potential benefits of the combination of Liberty
     Media's and DIRECTV's assets are in many respects those inherent in
     the supplier/distributor integration. As we stated in 2003, on the
     one hand, certain of the potential competitive harms inherent in
     vertically integrated programming/MVPD providers have been
     recognized as requiring special remedies to prevent potential
     abuses. On the other hand, the remedies chosen, at least in recent
     years, have not generally been structural remedies, such as
     prohibitions on common ownership of programming and distribution
     assets, but behavioral remedies, such as requirements for program
     access and nondiscrimination.[^493]

155. Recognizing these issues, the Applicants here have generally
     offered to be bound by the same conditions that the Commission
     imposed in *News Corp*. For the reasons discussed above in Section
     V.C., we accept the Applicants' proffer and impose similar
     conditions here, with some small modifications that take into
     account both the different assets controlled by Liberty Media and
     News Corp. and the parties' experience with the implementation of
     the conditions over the past few years. We conclude that these
     conditions are sufficient to ameliorate any potential vertical
     integration harms that might otherwise occur.

156. On the other hand, unlike in *News Corp.-Hughes*, this transaction
     also involves a potential horizontal overlap. If the transaction
     were to be approved as filed, John Malone would control two of the
     three MVPD providers serving parts of Puerto Rico: DIRECTV-Puerto
     Rico (through his control of Liberty Media) and LCPR (through his
     control of Liberty Global). The transaction would therefore
     decrease the number of independent MVPD providers serving many
     Puerto Rico consumers from three to two, and would likely result in
     increased prices, reduced quality, or decreased choices for those
     consumers. For the reasons discussed in Section V.C, we therefore
     are requiring that within one year of the adoption date of this
     Order, all of the attributable interests connecting DIRECTV-Puerto
     Rico and LCPR be severed.

157. We agree with the Applicants that the transaction will benefit the
     public interest. In particular, we find that the transfer of
     control of DIRECTV from News Corp. to Liberty Media, which owns
     fewer programming assets, only two broadcast stations, and far
     fewer RSNs than News Corp., will lead to less media vertical
     integration. Liberty Media also owns a minority interest in News
     Corp. itself, and the transaction will cause Liberty Media and News
     Corp. to sever their ownership interests with each other. We
     therefore conclude that the transaction will decrease media
     consolidation and that this decrease will likely benefit the
     public.

158. In sum, we find that the proposed transaction, as conditioned, will
     not likely cause harm to the public interest, and, that, indeed, it
     will result in some public interest benefits. Accordingly, after
     reviewing the record and weighing the potential harms against the
     potential benefits, we conclude that, on balance, the proposed
     transaction, as conditioned, will serve the public interest,
     convenience, and necessity.

# PROCEDURAL MATTERS 

## Applicants' Waiver Request

159. The Applicants request a waiver of the Commission's space station
     application "cut-off" rules with respect to all pending
     applications filed by DIRECTV or its subsidiaries for additional
     space and earth station authorizations, "to the extent that those
     applications are subject to the Commission's 'first-come,
     first-served' processing regime."[^494] Our rules provide that any
     pending application that is modified by a "major amendment" after a
     "cut-off" date specific to that application will be considered to
     be a "newly filed" application, therefore losing its place in the
     application processing queue. Prior to 2003, the Commission treated
     transfer of control applications as major amendments that could
     affect the length of time of the processing of an application.  In
     2003, however, the Commission determined that transfers of control
     would no longer be treated as major amendments of space station
     applications and would therefore not affect the processing of a
     space station application under its first-come, first-served
     procedures.  Accordingly, the Commission eliminated the subsection
     of section 25.116 that classified transfer of control and
     assignment applications as "major amendments" for purposes of space
     station processing.[^495]  Thus, for purposes of processing space
     station applications subject to our first-come, first-served
     procedures, a transfer of control would have no impact on the
     status of the application. Accordingly, based on the foregoing, we
     dismiss the waiver request as moot.

## Weinstein Motion to Enlarge the Issue

160. On July 19, 2007, Stephen Weinstein filed a document entitled
     Motion to Enlarge the Issue ("Motion"). Weinstein claims that
     DIRECTV violated section 1.4000 of the Commission's rules governing
     over-the-air reception devices ("OTARD rule") and misrepresented
     OTARD requirements and protections.[^496] Weinstein claims that
     DIRECTV did not give him accurate legal advice about the OTARD rule
     and his right to have an individual satellite antenna in cases
     where the landlord offers a central antenna system. He states: "In
     determining whether the proposed transfer will result in any party
     having excessive or monopolistic control, or in a restraint of
     trade between persons who are not parties to the proposed
     transaction, it is essential \[for the Commission\] to consider
     that DIRECTV provides false legal advice to tenants, thereby
     preventing the tenants from obtaining service from a
     competitor.\"[^497]

161. We decline to grant the Motion or to delay approval of the
     transaction pending an investigation of DIRECTV's practices
     regarding the Commission's OTARD rule. In general, the OTARD rule
     limits the ability of entities such as homeowners associations and
     landlords to restrict residents' ability to install certain
     antennas, including satellite antennas one meter or less in
     diameter. The Motion is beyond the scope of this proceeding, as
     Weinstein has not alleged a transaction-specific harm.[^498] We
     deny the Motion.

# ordering clauses

162. Accordingly, having reviewed the Applications and the record in
     this matter, IT IS ORDERED, pursuant to sections 4(i), 4(j), 309,
     and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C.
     §§ 154(i), 154(j), 309, 310(d), that the Consolidated Application
     for Authority to Transfer Control of various Commission licenses
     and authorizations from News Corporation to Liberty Media
     Corporation IS GRANTED subject to the conditions set forth
     herein.[^499] This grant includes authority for the transfer of
     control to Liberty Media Corporation of any authorization issued to
     the DIRECTV Group, Inc., and its subsidiaries during the
     Commission's consideration of the Application and the period
     required for consummation of the transaction following approval and
     issuance of this order.

163. IT IS FURTHER ORDERED that the Commission's grant of the transfer
     of control of licenses from News Corporation to Liberty Media
     Corporation is conditioned upon the completion, within one year
     from the adoption of this Order, of the severing of all
     attributable interests linking the relevant entities as described
     in Part V.C(1) of this Memorandum Opinion and Order as set forth
     more fully in Appendix B.

164. IT IS FURTHER ORDERED that pursuant to sections 4(i), 4(j), 309,
     and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C.
     §§ 154(i), 154(j), 309, 310(d), that the Petition to Deny filed by
     North Dakota Broadcasters IS DENIED and the Petition to Deny filed
     by EchoStar Satellite L.L.C. IS DENIED except to the extent
     otherwise indicated in this Order.

165. IT IS FURTHER ORDERED that pursuant to Sections 4(i), 4(j), 309,
     and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C.
     §§ 154(i), 154(j), 309, 310(d), that the Motion to Withdraw filed
     by Hispanic Information and Telecom Network IS GRANTED.

166. IT IS FURTHER ORDERED that pursuant to Sections 4(i), 4(j), 309,
     and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C.
     §§ 154(i), 154(j), 309, 310(d), that the Applicants' request to
     waive section 25.116 of the Commission's rules, 47 C.F.R. § 25.116,
     IS DISMISSED AS MOOT.

167. IT IS FURTHER ORDERED that pursuant to Sections 4(i), 4(j), 309,
     and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C.
     §§ 154(i), 154(j), 309, 310(d), that the Motion to Enlarge the
     Issue filed by Stephen Weinstein IS DENIED.

168. IT IS FURTHER ORDERED that this Memorandum Opinion and Order SHALL
     BE EFFECTIVE upon release, in accordance with section 1.103 of the
     Commission's rules, 47 C.F.R. § 1.103.

     FEDERAL COMMUNICATIONS COMMISSION

     Marlene H. Dortch

> Secretary

**APPENDIX A**

**Licenses and Authorizations**

The consolidated application filed by News Corp., DIRECTV and Liberty
Media includes Commission authorizations and licenses listed below. They
are separated by the type of authorization or license, and, within each
category, listed by licensee name, application or ULS file number, call
sign or lead call sign (for ULS filings), and/or other service-specific
information, as appropriate. Interested parties should refer to the
applications for a more detailed listing of the authorizations or
licenses. Each of the Applicants' subsidiaries or affiliates may hold
multiple authorizations or licenses of a particular type.

**Part 25 -- Satellite Communications**

**[File No.]{.underline}** **[Licensee/Registrant]{.underline}** **[Call
Sign]{.underline}**

***Satellite Space Stations***

SAT-T/C-20070129-00021 DIRECTV Enterprises, LLC S2369

S2430

S2455

S2632

> S2669

S2673

> S2693

SAT-T/C-20070129-00023 DIRECTV Enterprises, LLC S2132

> S2133
>
> S2191
>
> S2640

S2641 S2689

***Satellite Earth Stations***

SES-T/C-20070129-00151 DIRECTV Enterprises, LLC E010129

> E010130
>
> E020172
>
> E030105
>
> E030117
>
> E050112
>
> E050113
>
> E050121
>
> E050122
>
> E050229
>
> E050230
>
> E050255
>
> E050286
>
> E060014
>
> E060187
>
> E060188
>
> E060236
>
> E060298
>
> E060299
>
> E930191

**[File No.]{.underline}** **[Licensee/Registrant]{.underline}** **[Call
Sign]{.underline}**

SES-T/C-20070129-00151 (cont'd.) E930229

> E930304
>
> E930485
>
> E950349
>
> E980285
>
> E980338
>
> E980340

E980473

E990159

SES-T/C-20070129-00152 DIRECTV Enterprises, LLC E050340

SES-T/C-20070129-00153 DIRECTV Enterprises, LLC E040179

> E040180

E980170

> E980341

SES-T/C-20070129-00154 DIRECTV Enterprises, LLC E040024

SES-T/C-20070129-00155 California Broadcast Center, LLC E010237

E020091

SES-T/C-20070129-00156 DIRECTV Enterprises, LLC E990545

***Satellite Earth Stations Granted During the Pendency of the
Consolidated Application***

DIRECTV Enterprises, LLC E060441

E070002

E070023

E070027

E070073

E070074

E070111

E070122

E070123

**[Wireless Licenses]{.underline}**

**[File No.]{.underline}** **[Licensee/Registrant]{.underline}** **[Call
Sign]{.underline}**

FCC File No. 0002876183 DIRECTV Enterprises, LLC WPZC401

FCC File No. 0002876452 The DIRECTV Group, Inc. WNEU909

FCC File No. 0002876636 DIRECTV, Inc. WPTZ691

**APPENDIX B**

**Conditions**

I.  **CONDITION TO REMEDY OVERLAPPING MVPD SERVICE IN PUERTO RICO**

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1.  Within one year of the date on which this Order is adopted, all of
    the attributable interests connecting DIRECTV-Puerto Rico and
    Liberty Cablevision Puerto Rico, Ltd. ("LCPR") must be severed,
    either by divestiture or by otherwise making the interests
    non-attributable. Specifically, within one year of the adoption date
    of this Order, the Applicants must certify either that they have
    complied with this condition or that they have filed all necessary
    applications for regulatory approval to do so. As part of the
    certification of compliance, the Applicants must explain with
    sufficient detail precisely how they came into compliance with this
    condition or how any filed applications would result in compliance
    and must identify all remaining direct or indirect relationships
    between DIRECTV-Puerto Rico and LCPR and their parent companies,
    including all indirect or direct subsidiaries, whether or not those
    relationships are attributable under our rules (e.g., equity or debt
    holdings or interests (including stock options), management roles of
    officers or directors, shared resources or personnel). Within nine
    months of the adoption of this Order, the Applicants shall submit to
    the Commission a description of their plan for complying with this
    condition to ensure that their proposal satisfies the public
    interest concerns underlying the condition.

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169. If the Applicants choose to comply with the condition by making the
     connecting interests non-attributable, we will apply the
     Commission's cable attribution standards set forth in Section
     76.1000(b) of the rules.[^500] We note that determining whether a
     particular interest is attributable is a fact-intensive inquiry,
     and, even where an interest may appear non-attributable under the
     bright-line attribution rules, the Commission retains the
     discretion to review individual cases that present unusual issues.
     Such would be the case where there are combined interests that are
     so extensive that they raise an issue of significant influence
     notwithstanding the fact that the interests do not come within the
     parameters of a particular attribution rule.[^501]

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II. **PROGRAM CARRIAGE CONDITION TO PREVENT DISCRIMINATION AGAINST ALL
    FORMS OF UNAFFILIATED VIDEO PROGRAMMING**

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1.  Neither Liberty Media nor DIRECTV will discriminate against
    unaffiliated programming services in the selection, price, terms, or
    conditions of carriage.

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III. **PROGRAM ACCESS CONDITIONS TO ENSURE NON-DISCRIMINATORY ACCESS TO
     ALL SATELLITE CABLE PROGRAMMING**

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1.  Liberty Media shall not offer any of its existing or future national
    and regional programming services on an exclusive basis to any
    MVPD.[^502] Liberty Media shall continue to make such services
    available to all MVPDs on a non-exclusive basis and on
    nondiscriminatory terms and conditions.[^503]

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170. DIRECTV will not enter into an exclusive distribution arrangement
     with any Affiliated Program Rights Holder.[^504]

171. As long as Liberty Media holds an attributable interest in DIRECTV,
     DIRECTV will deal with any Affiliated Program Rights Holder with
     respect to programming services the Affiliated Program Rights
     Holder controls as a vertically integrated programmer subject to
     the program access rules.[^505]

172. Neither Liberty Media nor DIRECTV (including any entity over which
     either firm exercises control) shall unduly or improperly
     influence: (i) the decision of any Affiliated Program Rights Holder
     to sell programming to an unaffiliated MVPD; or (ii) the prices,
     terms, and conditions of sale of programming by any Affiliated
     Program Rights Holder to an unaffiliated MVPD.

173. DIRECTV may continue to compete for programming that is lawfully
     offered on an exclusive basis by an unaffiliated program rights
     holder (*e.g*., NFL Sunday Ticket).[^506]

174. These conditions will apply to Liberty Media, DIRECTV, and any
     Affiliated Program Rights Holder until the later of a determination
     by the Commission that Liberty Media no longer holds an
     attributable interest in DIRECTV or the Commission's program access
     rules no longer remain in effect (provided that if the program
     access rules are modified these commitments shall be modified, as
     the Commission deems appropriate, to conform to any revised rules
     adopted by the Commission).

175. Aggrieved MVPDs may bring program access complaints against the
     Applicants using the procedures found at Section 76.1003 of the
     Commission's rules.[^507]

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IV. **CONDITIONS CONCERNING ACCESS TO LOCAL BROADCAST TELEVISION STATION
    SIGNALS**

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1.  When negotiations fail to produce a mutually acceptable set of
    price, terms and conditions for a retransmission consent agreement
    with a local broadcast television station that Liberty Media owns or
    on whose behalf it negotiates retransmission consent ("Liberty Media
    Broadcast Station"), an MVPD may choose to submit a dispute to
    commercial arbitration in accordance with the following
    procedures.[^508]

    A.  ***Commercial Arbitration Remedy***

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1.  The commercial arbitration condition commences following the
    expiration of any existing retransmission consent agreement.

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176. Following such expiration, or 90 days after a first time request
     for retransmission consent, a MVPD may notify Liberty Media within
     five business days that it intends to request arbitration over the
     terms and conditions of retransmission consent.

177. Upon receiving timely notice of the MVPD's intent to arbitrate,
     Liberty Media must immediately allow continued retransmission of
     the broadcast signal under the same terms and conditions of the
     expired retransmission consent agreement as long as the MVPD
     continues to meet the obligations set forth in this condition.

178. Retransmission of the broadcast signal during the period of
     arbitration is not required in the case of first-time requests for
     carriage.[^509]

179. "Cooling Off Period." Following the MVPD's notice of intent to
     submit the dispute to arbitration, but prior to filing for formal
     arbitration with the American Arbitration Association ("AAA"), the
     MVPD and Liberty Media will enter a "cooling-off" period during
     which negotiations will continue.

180. Formal Filing with the AAA. The MVPD's formal demand for
     arbitration, which shall include the MVPD's "final offer," may be
     filed with the AAA no earlier than the 15th business day after the
     expiration of the retransmission consent agreement and no later
     than the end of the 20th business day following such expiration. If
     the MVPD makes a timely demand, Liberty Media must participate in
     the arbitration proceeding.

181. The AAA will notify Liberty Media and the MVPD upon receiving the
     MVPD's formal filing.

182. Liberty Media will file a "final offer" with the AAA within two
     business days of being notified by the AAA that a formal demand for
     arbitration has been filed by the MVPD.

183. The MVPD's final offer may not be disclosed until the AAA has
     received the final offer from Liberty Media.

184. The final offers shall be in the form of a contract for the
     retransmission of the broadcast signal for a period of three years.
     The final offers may not include any provision to carry any video
     programming networks or any other service other than the broadcast
     signal.

     A.  ***Rules of Arbitration***

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1.  The arbitration will be decided by a single arbitrator under the
    expedited procedures of the Rules, excluding the rules relating to
    large, complex cases, but including the modifications to the Rules
    set forth in Part F, below. The arbitrator shall issue his decision
    within 30 days from the date that the arbitrator is appointed.

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185. The parties may agree to modify any of the time limits set forth
     above and any of the procedural rules of the arbitration; absent
     agreement, however, the rules specified herein apply. The parties
     may not modify the requirement that they engage in final-offer
     arbitration.

186. The arbitrator is directed to choose the "final offer" of the party
     which most closely approximates the fair market value of the
     programming carriage rights at issue.

187. To determine fair market value, the arbitrator may consider any
     relevant evidence (and may require the parties to submit such
     evidence to the extent it is in their possession), including, but
     not limited to:

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a.  current contracts between MVPDs and Liberty-affiliated stations on
    whose behalf Liberty Media does not negotiate;

b.  current contracts between MVPDs and non-Liberty network stations;

c.  offers made in the preceding negotiations (which may provide
    evidence of either a floor or a ceiling of fair market value);

d.  evidence of the relative value of Liberty programming compared to
    other network programming (e.g., advertising rates, ratings);

e.  contracts between MVPDs and stations on whose behalf Liberty Media
    has negotiated made before Liberty Media acquired control of
    DIRECTV, as well as offers made in such negotiations;

f.  internal studies of the imputed value of retransmission consent
    agreements in bundled agreements;

g.  changes in the value of non-Liberty retransmission consent
    agreements;

h.  changes in the value or costs of Liberty programming or broadcast
    stations, or in other prices relevant to the relative value of
    Liberty broadcast programming (e.g., advertising rates).

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188. The arbitrator may not consider offers prior to the arbitration
     made by the MVPD and Liberty Media for the programming at issue in
     determining the fair market value.

189. If the arbitrator finds that one party's conduct, during the course
     of the arbitration, has been unreasonable, the arbitrator may
     assess all or a portion of the other party\'s costs and expenses
     (including attorney fees) against the offending party.

190. Following the decision of the arbitrator, and to the extent
     practicable, the terms of the new retransmission consent agreement,
     including payment terms, if any, will become retroactive to the
     expiration date of the previous retransmission consent agreement.
     The MVPD will make an additional payment to Liberty Media in an
     amount representing the difference, if any, between the amount that
     is required to be paid under the arbitrator's award and the amount
     actually paid under the terms of the expired contract during the
     period of arbitration. If carriage of the Liberty Media Broadcast
     Station's programming has continued uninterrupted during the
     arbitration process, and if the arbitrator's award requires a
     smaller amount to be paid than was required under the terms of the
     expired contract, the Liberty Media Broadcast Stations will credit
     the MVPD with an amount representing the difference between the
     amount actually paid under the terms of the expired contract during
     the period of arbitration and the amount that is required to be
     paid under the arbitrator's award.

191. Judgment upon an award entered by the arbitrator may be entered by
     any court having competent jurisdiction over the matter, unless one
     party indicates that it wishes to seek review of the final award
     with the Commission and does so in a timely manner.

     A.  ***Review of Final Award by the Commission***

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1.  A party aggrieved by the arbitrator's final award may file with the
    Commission a petition seeking *de novo* review of the award. The
    petition must be filed within 30 days of the date the award is
    published. The petition, together with an unredacted copy of the
    arbitrator's award, shall be filed with the Secretary's office and
    shall be concurrently served on the Chief, Media Bureau. The
    Commission shall issue its findings and conclusions not more than 60
    days after receipt of the petition, which may be extended by the
    Commission for one period of 60 days.

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192. The MVPD may elect to continue to retransmit the broadcast signal
     pending the FCC decision, subject to the terms and conditions of
     the arbitrator's award.

193. In reviewing the award, the Commission will examine the same
     evidence that was presented to the Arbitrator and will choose the
     final offer of the party that most closely approximates the fair
     market value of the programming carriage rights at issue.

194. The Commission may award the winning party costs and expenses
     (including reasonable attorney fees) to be paid by the losing
     party, if the Commission considers the appeal or conduct by the
     losing party to have been unreasonable. Such an award of costs and
     expenses may cover both the appeal and the costs and expenses
     (including reasonable attorney fees) of the arbitration.

195. Judgment upon an award entered by the arbitrator may be entered by
     any court having competent jurisdiction over the matter.

     A.  ***Provisions Applicable to Small MVPDs***

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1.  An MVPD meeting the Commission\'s definition of "small cable
    company" may appoint a bargaining agent to bargain collectively on
    its behalf in negotiating with Liberty Media for carriage of the
    programming subject to this condition, and Liberty Media may not
    refuse to negotiate with such an entity.[^510] The designated
    collective bargaining entity will have all the rights and
    responsibilities granted by these conditions. An MVPD that uses a
    bargaining agent may, notwithstanding any contractual term to the
    contrary, disclose to such bargaining agent the date upon which its
    then current retransmission consent agreement expires.

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196. When dealing with MVPDs with fewer than 5,000 total subscribers, we
     require Liberty Media to either elect "must-carry" status or
     negotiate retransmission consent for its stations and any
     affiliated station on whose behalf it negotiates retransmission
     consent without any requirements for cash compensation or carriage
     of programming other than the broadcast signal.

     A.  ***Additional Provisions Concerning Arbitration***

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1.  No later than 20 business days prior to the expiration of a
    must-carry election or retransmission consent agreement with an
    MVPD, Liberty Media must provide the MVPD with a copy of the
    conditions imposed in this Order. Liberty Media must provide a copy
    of the conditions imposed in this Order within 10 business days of
    receiving a first time request for retransmission consent.

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197. This condition will expire six years after consummation of the
     transaction, or on such date as the Commission deems to be
     necessary in the public interest pursuant to an early termination
     of the condition in accordance with the provisions below.

198. The Commission will consider a petition for modification of this
     condition if it can be demonstrated that there has been a material
     change in circumstance or the condition has proven unduly
     burdensome, rendering the condition no longer necessary in the
     public interest.

     A.  ***Modifications To Rules For Arbitration Involving
         Retransmission Consent***

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1.  We modify the Rules in several respects as they apply to arbitration
    over retransmission consent.

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199. Initiation of Arbitration. Arbitration shall be initiated as
     provided in Rule R-4 except that, under Rule R-4(a)(ii) the MVPD
     shall not be required to submit copies of the arbitration
     provisions of the contract, but shall instead refer to this Order
     in the demand for arbitration. Such reference shall be sufficient
     for the AAA to take jurisdiction.

200. Appointment of the Arbitrator. Appointment of an arbitrator shall
     be in accordance with rule E-4 of the Rules. Arbitrators included
     on the list referred to in rule E-4 (a) of the Rules shall be
     selected from a panel jointly developed by the American Arbitration
     Association and the Commission and will be based on the following
     criteria:

     a.  The arbitrator shall be a lawyer admitted to the bar of a state
         of the United States or the District of Columbia;

     b.  The arbitrator shall have been practicing law for at least 10
         years;

     c.  The arbitrator shall have prior experience in mediating or
         arbitrating disputes concerning media programming contracts;

     d.  The arbitrator shall have negotiated or have knowledge of the
         terms of retransmission contracts.

201. Exchange of Information. At the request of any party, or at the
     discretion of the arbitrator, the arbitrator may direct the
     production of current and previous contracts between either of the
     parties and MVPDs and broadcast stations as well as any additional
     information that is considered relevant in determining the value of
     the programming to the parties. Parties may request that access to
     information of a commercially sensitive nature be restricted to the
     arbitrator and outside counsel and experts of the opposing party
     pursuant to a protective order.

202. Administrative Fees and Expenses. If the arbitrator finds that one
     party's conduct, during the course of the arbitration, has been
     unreasonable, the arbitrator may assess all or a portion of the
     other parties costs and expenses (including reasonable attorneys\'
     fees) against the offending party.

203. Locale. In the absence of agreement between the parties, the
     arbitration shall be held in the city that contains the
     headquarters of the MVPD.

204. Form of Award. The arbitrator shall render a written award
     containing the arbitrator's findings of fact and reasons supporting
     the award. If the award contains confidential information, the
     arbitrator shall compile two versions of the award; one containing
     the confidential information and one with such information
     redacted. The version of the award containing the confidential
     information shall only be disclosed to persons bound by the
     Protective Order issued in connection with the arbitration. The
     parties shall include such confidential version in the record of
     any review of the arbitrator\'s decision by the Commission.

     A.  ***Non-discriminatory Access to Local Broadcast Television
         Station Signals***

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1.  The non-discrimination commitments that Liberty Media has proposed
    and we have crafted as conditions regarding access to
    non-discriminatory access to satellite cable programming networks
    are extended to any broadcast station that Liberty Media owns or on
    whose behalf it negotiates retransmission consent.

    A.  ***Good Faith and Exclusivity Requirements of SHVERA***

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1.  The good faith and exclusivity requirements of SHVERA, in effect by
    their terms until December 31, 2009, are extended to apply to
    retransmission consent negotiations undertaken by Liberty Media for
    carriage of its local broadcast station signals so long as the
    program access rules are in effect.[^511]

**IV. ADDITIONAL CONDITIONS CONCERNING ACCESS TO REGIONAL SPORTS
NETWORKS**

1.  When negotiations fail to produce a mutually acceptable set of
    price, terms and conditions for carriage of a non-broadcast regional
    sports network owned, managed, or controlled by Liberty Media either
    now or in the future ("Liberty Media RSN"), an MVPD may choose to
    submit a dispute to commercial arbitration in accordance with the
    following procedures.[^512]

    A.  ***Commercial Arbitration Remedy***

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1.  An aggrieved MVPD may submit a dispute with the Liberty Media RSN
    over the terms and conditions of carriage of RSN programming in each
    region in which Liberty Media owns, manages or holds a controlling
    interest in a regional sports network.

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205. Following the expiration of any existing contract, or 90 days after
     a first time request for carriage, an MVPD may notify the Liberty
     Media RSN within five business days that it intends to request
     commercial arbitration to determine the terms of the new
     affiliation agreement.

206. Upon receiving timely notice of the MVPD's intent to arbitrate, a
     Liberty Media RSN must immediately allow continued carriage of the
     network under the same terms and conditions of the expired
     affiliation agreement as long as the MVPD continues to meet the
     obligations set forth in this condition.

207. Carriage of the disputed programming during the period of
     arbitration is not required in the case of first time requests for
     carriage.[^513]

208. *"Cooling Off Period."* The period following the Liberty Media
     RSN's receipt of timely notice of the MVPD's intent to arbitrate
     and before the MVPD's filing for formal arbitration with the AAA
     shall constitute a "cooling-off' period during which time
     negotiations are to continue.

209. *Formal Filing with the AAA*. The MVPD's formal demand for
     arbitration, which shall include the MVPD's "final offer," may be
     filed with the AAA no earlier than the 15th business day after the
     expiration of the RSN contract and no later than the end of the
     20th business day following such expiration. If the MVPD makes a
     timely demand, the Liberty Media RSN must participate in the
     arbitration proceeding.

210. The AAA will notify the Liberty Media RSN and the MVPD upon
     receiving the MVPD's formal filing.

211. The Liberty Media RSN will file a "final offer" with the AAA within
     two business days of being notified by the AAA that a formal demand
     for arbitration has been filed by the MVPD.

212. The MVPD's final offer may not be disclosed until the AAA has
     received the final offer from the Liberty Media RSN.

213. The final offers shall be in the form of a contract for the
     carriage of the programming for a period of at least three years.
     The final offers may not include any provision to carry any video
     programming networks or any other service other than the RSN.

     A.  ***Rules of Arbitration***

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1.  The arbitration will be decided by a single arbitrator under the
    expedited procedures of the commercial arbitration rules, then in
    effect, of the AAA (the "Rules"), excluding the rules relating to
    large, complex cases, but including the modifications to the Rules
    set forth in Part F below. The arbitrator shall issue his decision
    within 30 days from the date that the arbitrator is appointed.

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214. The parties may agree to modify any of the time limits set forth
     above and any of the procedural rules of the arbitration; absent
     agreement, however, the rules specified herein apply. The parties
     may not modify the requirement that they engage in final-offer
     arbitration.

215. The arbitrator is directed to choose the final offer of the party
     that most closely approximates the fair market value of the
     programming carriage rights at issue.

216. Under no circumstances will the arbitrator choose a final offer
     that does not permit the Liberty Media RSN to recover a reasonable
     share of the costs of acquiring the programming at issue.

217. To determine fair market value, the arbitrator may consider any
     relevant evidence (and may require the parties to submit such
     evidence to the extent it is in their possession),[^514] including,
     but not limited to:

     a.  current or previous contracts between MVPDs and RSNs in which
         Liberty Media does not have an interest as well as offers made
         in such negotiations (which may provide evidence of either a
         floor or a ceiling of fair market value);

     b.  evidence of the relative value of such programming compared to
         the RSN programming at issue (*e.g*., advertising rates,
         ratings);

     c.  internal studies or discussions of the imputed value of RSN
         programming in bundled agreements;

     d.  other evidence (including internal discussions) of the value of
         RSN programming;

     e.  changes in the value of non-Liberty Media RSN programming
         agreements;

     f.  changes in the value or costs of Liberty Media RSN programming,
         or in other prices relevant to the relative value of Liberty
         Media RSN programming (*e.g*., advertising rates).

218. The arbitrator may not consider offers prior to the arbitration
     made by the MVPD and the Liberty Media RSN for the programming at
     issue in determining the fair market value.

219. If the arbitrator finds that one party's conduct, during the course
     of the arbitration, has been unreasonable, the arbitrator may
     assess all or a portion of the other party's costs and expenses
     (including attorney fees) against the offending party.

220. Following resolution of the dispute by the arbitrator, to the
     extent practicable, the terms of the new affiliation agreement will
     become retroactive to the expiration date of the previous
     affiliation agreement. If carriage of the RSN programming has
     continued uninterrupted during the arbitration process, and if the
     arbitrator's award requires a higher amount to be paid than was
     required under the terms of the expired contract, the MVPD will
     make an additional payment to the Liberty Media RSN in an amount
     representing the difference, if any, between the amount that is
     required to be paid under the arbitrator's award and the amount
     actually paid under the terms of the expired contract during the
     period of arbitration. If carriage of the Liberty Media RSN
     programming has continued uninterrupted during the arbitration
     process, and if the arbitrator's award requires a smaller amount to
     be paid than was required under the terms of the expired contract,
     the Liberty Media RSN will credit the MVPD with an amount
     representing the difference between the amount actually paid under
     the terms of the expired contract during the period of arbitration
     and the amount that is required to be paid under the arbitrator's
     award.

221. Judgment upon an award entered by the arbitrator may be entered by
     any court having competent jurisdiction over the matter, unless one
     party indicates that it wishes to seek review of the award with the
     Commission and does so in a timely manner.

     A.  ***Review of Final Award by the Commission***

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1.  A party aggrieved by the arbitrator's final award may file with the
    Commission a petition seeking *de novo* review of the award. The
    petition must be filed within 30 days of the date the award is
    published. The petition, together with an unredacted copy of the
    arbitrator's award, shall be filed with the Secretary's office and
    shall be concurrently served upon the Chief, Media Bureau. The
    Commission shall issue its findings and conclusions not more than 60
    days after receipt of the petition, which may be extended by the
    Commission for one period of 60 days.

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222. The MVPD may elect to carry the programming at issue pending the
     FCC decision, subject to the terms and conditions of the
     arbitrator's award.

223. In reviewing the award, the Commission will examine the same
     evidence that was presented to the arbitrator and will choose the
     final offer of the party that most closely approximates the fair
     market value of the programming carriage rights at issue.

224. The Commission may award the winning party costs and expenses
     (including reasonable attorney fees) to be paid by the losing
     party, if it considers the appeal or conduct by the losing party to
     have been unreasonable. Such an award of costs and expenses may
     cover both the appeal and the costs and expenses (including
     reasonable attorneys' fees) of the arbitration.

225. Judgment upon an award entered by the arbitrator may be entered by
     any court having competent jurisdiction over the matter.

     A.  ***Provisions Applicable to Small MVPDs***

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1.  An MVPD meeting the definition of a "small cable company" may
    appoint a bargaining agent to bargain collectively on its behalf in
    negotiating carriage of RSNs with the Liberty Media RSN and the
    Liberty Media RSN may not refuse to negotiate carriage of RSN
    programming with such an entity.[^515] The designated collective
    bargaining entity will have all the rights and responsibilities
    granted by these conditions. An MVPD that uses a bargaining agent
    may, notwithstanding any contractual term to the contrary, disclose
    to such bargaining agent the date upon which its then current
    carriage contract with the RSN expires.

    A.  ***Additional Provisions Concerning Arbitration***

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1.  No later than 20 business days prior to the expiration of an
    affiliation agreement with an MVPD for video programming subject to
    this condition, the Liberty Media RSN must provide the MVPD with a
    copy of the conditions imposed in this Order. No later than 10
    business days after receiving a first time request for carriage, the
    Liberty Media RSN must provide the requesting MVPD with a copy of
    this Order's conditions.

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226. This condition will expire six years after the consummation of the
     transaction, or on such date as the Commission deems to be
     necessary in the public interest pursuant to early termination in
     accordance with the provisions below. The Commission will consider
     a petition for modification of this condition if it can be
     demonstrated that there has been a material change in circumstance
     or the condition have proven unduly burdensome, rendering the
     condition no longer necessary in the public interest.

     A.  ***Modifications To Rules For Arbitration Involving Regional
         Sports Networks***

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1.  We modify the Rules in several respects as they apply to arbitration
    involving regional sports networks.

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227. Initiation of Arbitration. Arbitration shall be initiated as
     provided in Rule R-4 except that, under Rule R-4 (a) (ii) the MVPD
     shall not be required to submit copies of the arbitration
     provisions of the contract, but shall instead refer to this Order
     in the demand for arbitration. Such reference shall be sufficient
     for the AAA to take jurisdiction.

228. Appointment of the Arbitrator. Appointment of an arbitrator shall
     be in accordance with rule E-4 of the Rules. Arbitrators included
     on the list referred to in rule E-4 (a) of the Rules shall be
     selected from a panel jointly developed by the American Arbitration
     Association and the Commission and will be based on the following
     criteria:

     a.  The arbitrator shall be a lawyer admitted to the bar of a state
         of the United States or the District of Columbia;

     b.  The arbitrator shall have been practicing law for at least 10
         years;

     c.  The arbitrator shall have prior experience in mediating or
         arbitrating disputes concerning media programming contracts;
         and

     d.  The arbitrator shall have negotiated or have knowledge of the
         terms of comparable cable programming network contracts.

229. Exchange of Information. At the request of any party, or at the
     discretion of the arbitrator, the arbitrator may direct the
     production of current and previous contracts between either of the
     parties and MVPDs, broadcast stations, video programming networks,
     and sports teams, leagues, and organizations, as well as any
     additional information that is considered relevant in determining
     the value of the programming to the parties. Parties may request
     that access to information of a commercially sensitive nature be
     restricted to the arbitrator and outside counsel and experts of the
     opposing party pursuant to a protective order.

230. Administrative Fees and Expenses. If the arbitrator finds that one
     party's conduct, during the course of the arbitration, has been
     unreasonable, the arbitrator may assess all or a portion of the
     other parties costs and expenses (including reasonable attorneys'
     fees) against the offending party.

231. Locale. In the absence of agreement between the parties, the
     arbitration shall be held in the city that contains the
     headquarters of the MVPD.

232. Form of Award. The arbitrator shall render a written award
     containing the arbitrator's findings of fact and reasons supporting
     the award. If the award contains confidential information, the
     arbitrator shall compile two versions of the award, one containing
     the confidential information and one with such information
     redacted. The version of the award containing the confidential
     information shall only be disclosed to persons bound by the
     Protective Order issued in connection with the arbitration. The
     parties shall include such confidential version in the record of
     any review of the arbitrator\'s decision by the Commission.

**CONCURRING STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS**

Re: *News Corp. and the DirecTV Group, Inc., Transferors, and Liberty
Media Corporation, Transferee, for Authority to Transfer Control*, *MB
Docket* *No. 07-18*

Four years ago, I strenuously dissented to the Commission's decision to
allow News Corp. to acquire DirectTV.  At the time, I said that the
consolidation of so many media properties under News Corp.'s control
could not be good for localism, diversity and competition. Nothing in
the past four years has alleviated my concerns. To the contrary, the
intervening years only confirm the devastating effect of media
consolidation on the health of our democracy and the public interest. 

 

Nevertheless, while I have objected to many of the Commission's
decisions that have brought us to this point, I must make decisions
based on the facts as they exist today.  The question here is whether we
should approve the transfer of assets from one giant media conglomerate
to a marginally-less-giant media conglomerate.  Once consummated, the
transaction will result in a measure of de-consolidation and somewhat
less vertical integration.  That is the distinction between this
transaction and the Hughes-News Corp. deal four years ago, and that is
why I am concurring rather than dissenting in today's decision.

I support the Order's imposition of the *News Corp--Hughes* conditions
and the requirement that the Applicant to abide by these conditions for
a fresh six year period.  I also support the Order's requirement that
DirecTV-Puerto Rico and Liberty Cablevision of Puerto Rico sever any
attributable relationships within a one-year period. This should ensure
that consumers in Puerto Rico will not be faced with fewer choices in
video providers after the condition is met.

 

I am disappointed that the Commission failed to adopt a condition
requiring DirectTV to provide local-into-local service via satellite to
all of the nation's 210 television markets within a reasonable period of
time.  Such a condition would have served the public interest by
ensuring that consumers in rural states from North Dakota to Michigan to
Maine have access to the news and public safety information provided by
local broadcast stations---without the upfront investment contemplated
by the Applicant's over-the-air solution for these markets.

In the end, this transaction is hardly an occasion to jump for joy. The
Commission should be waging a proactive battle against harmful media
consolidation, not simply accepting small levels of de-consolidation
when it comes. Over the past twenty-five years, the Commission has
permitted the public interest largely to be defined by the demands of
Wall Street and Madison Avenue. It's high time to restore a sense of
balance to the system and give the American people the media environment
they deserve.

**STATEMENT OF**

**COMMISSIONER JONATHAN S. ADELSTEIN**

**APPROVING IN PART, DISSENTING IN PART**

Re: News Corporation and The DirecTV Group, Inc., Transferors, and
Liberty Media Corporation, Transferee, for Authority to Transfer
Control., MB Docket No. 07-18.

I approve in part this transaction, because it is in the public interest
to deconsolidate a major vertically-integrated media and entertainment
company that has significant interests in broadcasting, satellite
program delivery, cable programming, film and print. While News Corp is
transferring DirecTV to Liberty Media \-- another vertically-integrated
media company which seems to have an appetite to become even more
vertically-integrated[^516] \-- a little media deconsolidation is better
than no deconsolidation at all.

Equally significant is the willingness of Liberty Media and DirecTV to
abide by the Commission\'s program access and program carriage rules and
to agree to special retransmission consent and regional sports network
arbitration conditions.  These conditions safeguard against potentially
anticompetitive practices of a vertically-integrated media company.

I must, however, dissent in part to the approval of this transaction,
because it substantially frustrates important objectives of the
Communications Act and longstanding policy goals of the Commission.

As the Commission has stated repeatedly, video competition is a
significant policy goal and the delivery of local broadcast stations to
local markets is an important element of a compelling subscription
service\'s program offering.  In order to promote video competition,
increase choices and lower prices, cable and satellite operators should
provide comparable services and every community in the United States
should be served.  In 2003, News Corporation argued that "DirecTV will
be the strongest possible competitor to incumbent cable operators only
if it can provide consumers with their local broadcast channels...." As
a regulatory agency, the Commission should ensure that DBS should be
just as attractive as cable and no community is left behind. Scores of
markets throughout the country have been ignored by DirecTV. The
Commission should not neglect these markets, relegating them to
second-class video citizenship.

Perhaps because I am from rural America, I can appreciate fully the
discouraging impact that the lack of DBS local-into-local service has on
the video choices of rural households. This disincentive to satellite
television service is compounded by DirecTV's hybrid local-into-local
solution, which amounts to a rural or undesired market tax \-- approved
by members of the Commission who have often complained about video
distributors requiring consumers to purchase expensive set-top boxes
when cheaper alternatives could be made available.

I cannot support an unfair service tax on rural households, while
DirecTV has made the business decision to provide local-into-local HD
service over the next few years to local markets that are already
served. A similar commitment should be made to provide local-into-local
service to unserved markets in the coming years. Universal
local-into-local service should be a localism goal of the Commission,
and it should be an imperative for DirecTV. The benefits of video
competition should be available for all Americans.

[^1]: Consolidated Application for Authority to Transfer Control, News
    Corporation and The DIRECTV Group, Inc., Transferors, and Liberty
    Media Corporation, Transferee (Jan. 29, 2007) ("Application"). After
    filing their Application, the Applicants submitted a letter
    informing the Commission of a transaction Liberty Media entered into
    to acquire a television station in Green Bay, Wisconsin and its
    satellite station in Escanaba, Michigan. *See* Letter from Robert L.
    Hoegle, Nelson Mullins Riley & Scarborough LLP, Counsel to Liberty
    Media, to Marlene H. Dortch, Secretary, FCC (Feb. 16, 2007)
    ("Supplement to Application"). For purposes of our review of this
    transaction, we associate this supplementary information with the
    Application. *See* Supplement to Application at 2 (asking the
    Commission to associate the supplementary letter with the
    Application). The Media Bureau placed the Application on public
    notice on February 21, 2007, establishing a comment cycle for this
    proceeding. *See* *News Corporation, The DIRECTV Group Inc., and
    Liberty Media Corporation Seek Approval to Transfer Control of FCC
    Authorizations and Licenses,* Public Notice, 22 FCC Rcd 3493 (MB
    2007) ("*Public Notice*").

[^2]: Direct Broadcast Satellite Service is a radio communication
    service in which signals are transmitted or retransmitted by space
    stations for direct reception by communities or individuals. *See*
    47 C.F.R. § 25.201.

[^3]: Application at 1-2, Exhibit 3 ("List of FCC Licenses and
    Authorizations Controlled by DIRECTV Group, Inc."). The Applicants
    also request a waiver of our "cut-off" rules with respect to all
    pending applications filed by DIRECTV for additional space and earth
    station authorizations, to the extent that those applications are
    subject to the Commission's processing rules. *See* Application at
    26-27; s*ee also* 47 C.F.R. § 25.116(b)(4) & (d).

[^4]: 47 U.S.C. § 310(d).

[^5]: Application at 2-3. The RSNs to be transferred are Fox Sports Net
    Northwest, LLC; Fox Sports Net Pittsburgh, LLC; and Fox Sports Net
    Rocky Mountain, LLC (collectively, the "Fox RSNs"). The Fox RSNs do
    not hold any licenses or authorizations and are not included in any
    of the transfer applications.

[^6]: Liberty Media Oct. 23, 2007 Response to Information and Document
    Request at 15. Because DIRECTV has repurchased shares of its own
    stock since the Application was filed with the Commission, the
    percentage of DIRECTV shares that Liberty Media will acquire has
    increased to 40.36 percent from 38.4 percent, although the number of
    shares Liberty Media will acquire remains the same as in the
    Agreement. *I**d*. Pursuant to the Agreement, Liberty will acquire
    from News Corp. beneficial ownership of 470.4 million shares of
    DIRECTV common stock. News Corp. will acquire from Liberty 324.6
    million shares of News Corp. Class A common stock and 188 million
    shares of News Corp. Class B common stock. Application at 13.

[^7]: The Commission found that the acquisition of a 34 percent interest
    in Hughes Electronics Corporation by News Corp. would make it owner
    of the single largest block of shares in Hughes, thus providing News
    Corp. with a *de facto* controlling interest over Hughes and its
    subsidiaries, including wholly-owned subsidiary DIRECTV. *General
    Motors Corporation and Hughes Electronics Corporation, Transferors,
    and The News Corporation Limited, Transferee*, 19 FCC Rcd 473 ¶¶ 1-2
    (2004) ("*News Corp.-Hughes Order*").

[^8]: *See* Application at 13-14.

[^9]: *Id.* at 13.

[^10]: *Id.* at i-ii, 16-18 (citing *News Corp.-Hughes Order,* 19 FCC
    Rcd at 551-556 ¶¶ 169-179; *Applications for Consent to the
    Assignment And/Or Transfer of Control of Licenses Adelphia
    Communications Corporation, (and Subsidiaries,
    Debtors-In-Possession), Assignors, to Time Warner Cable Inc.
    (Subsidiaries), Assignees, Adelphia Communications Corporation, (And
    Subsidiaries, Debtors-In-Possession), Assignors and Transferors, to
    Comcast Corporation (Subsidiaries), Assignees and Transferees*, 21
    FCC Rcd 8203, 8273-77 ¶¶ 155-165 (2006) ("*Adelphia Order*")).

[^11]: *Id.* at 19-20.

[^12]: *Id.* at 20-21.

[^13]: Application at ii-iii, 17-18; Supplement to Application at 1-2;
    Liberty Media Opposition of Apr. 9, 2007 at 6.

[^14]: *See* 47 U.S.C. § 310(d); *see also A**delphia Order,* 21 FCC Rcd
    at 8217 ¶ 23; *News Corp.-Hughes Order*, 19 FCC Rcd at 485 ¶ 18;
    *Application of EchoStar Communications Corporation, General Motors
    Corporation, Hughes Electronics Corporation, (Transferors), and
    EchoStar Communications Corporation, (Transferee)*, 17 FCC Rcd
    20559, 20574 ¶ 25 (2002).

[^15]: *See Adelphia Order,* 21 FCC Rcd at 8217 ¶ 23; *News Corp.-Hughes
    Order,* 19 FCC Rcd at 484 ¶ 16.

[^16]: *See infra* at paras. 22-26.

[^17]: *News Corp.-Hughes Order*, 19 FCC Rcd at 477 ¶ 5.

[^18]: *Id.* at 483 ¶ 15.

[^19]: *See* Section V.C.1., discussing compliance requirements.

[^20]: The conditions in this Order are set forth in Appendix B.

[^21]: DIRECTV was traded on the New York Stock Exchange under ticker
    symbol DTV until December 3, 2007, when DIRECTV switched to the
    NASDAQ Global Select Market under the same ticker symbol, DTV. *See*
    DIRECTV, *The DIRECTV Group Announces Switch to The Nasdaq Stock
    Market*, Press Release (Nov. 15, 2007), *available at*
    http://phx.corporate-ir.net/phoenix.zhtml?c=127160&p=irol-newsArticle&ID=1078547&highlight=
    (visited Dec. 16, 2007). Formerly known as Hughes Electronics
    Corporation, the company changed its name to The DIRECTV Group, Inc.
    in 2004, following its acquisition by News Corporation, Ltd. *See*
    DIRECTV, *SEC Form 8-K*, filed March 16, 2004.

[^22]: As of June 30, 2007, DIRECTV had 16.3 million subscribers and was
    the second largest MVPD, after Comcast, which had 24.1 million video
    subscribers.  EchoStar's Dish network had 13.6 million subscribers
    and Time Warner Cable had 13.4 million subscribers as of June 30,
    2007. *See* DIRECTV, *SEC Form 10-Q for the Quarter Ended June 30,
    2007*, at I-2, 26; Comcast Corporation and Subsidiaries, *SEC Form
    10-Q for the Quarter Ended June 30, 2007*, at I-2, 24; EchoStar DBS
    Corporation, *SEC Form 10-Q, for the Quarter Ended June 30, 2007*,
    at I-2, 22;  Time Warner Inc., *SEC Form 10-Q for the Quarter Ended
    June 30, 2007*, at  I, 3.

[^23]: The Applicants state that DIRECTV has an 86 percent ownership
    interest in DIRECTV Latin America. Application at 6. However, in
    January 2007, DIRECTV acquired the remaining 14 percent interest in
    DIRECTV Latin America, giving it 100 percent ownership. DIRECTV*,
    SEC Form 10-K for the Year Ended December 31, 2006*, at 11.

[^24]: *See* DIRECTV, *SEC Form 10-Q for the Quarter Ended March 31,
    2007*, at 23-24; DIRECTV, *SEC Form 8-K*, filed May 9, 2007, at
    Exhibit 99.1 (total number of DIRECTV subscribers in Latin America
    increased to 2.80 million from 1.66 million). In the Application,
    the Applicants state that DIRECTV Latin America has more than 1.7
    million subscribers. Application at 6.

[^25]: Application at 6-7.

[^26]: DIRECTV, *SEC Form 10-K for the Year Ended December 31, 2006*, at
    4. DIRECTV has also launched The 101, a channel dedicated to
    broadcasting exclusive content. *Id.*; DIRECTV, *SEC Form 10-Q for
    the Quarter Ended March 31, 2007*, at 8 n.4, 24.

[^27]: Application at 8; Liberty Media, *SEC Form 10-K for the Year
    Ended December 31, 2006*, at II-43.

[^28]: The Liberty Media tracking stocks are publicly traded as LINTA
    and LINTB on the NASDAQ. Liberty Capital Common Stock may be
    converted into Liberty Interactive Common Stock, and Liberty
    Interactive Common Stock may be converted into Liberty Capital
    Common Stock. Liberty Media, *SEC Form 10-K for the Year Ended
    December 31, 2006*, at II-43. A tracking stock is a type of common
    stock that the issuing company intends to reflect or "track" the
    economic performance of a particular business or "group," rather
    than the economic performance of the company as a whole. Holders of
    tracking stocks have no direct claim to the issuing company's stock
    or assets and are not represented by separate boards of directors.
    Instead, holders of tracking stock are stockholders of the issuing
    company, with a single Board of Directors and subject to all of the
    risks and liabilities of the issuing company. *See* What is a
    Tracking Stock?, http://www.libertymedia.com/faq/default.htm#02
    (visited Jan. 16, 2008); *see also* Iacobucci and Triantis,
    [Economic and Legal Boundaries of Firms]{.smallcaps}, 93 Va. L. Rev.
    515, 536, 539-541, 542 (May 2007) (stating that tracking stocks
    uniformly provide that tracking stockholders are entitled to share
    in the value of the entire firm and that holders of tracking stock
    voting rights, if any, must vote for directors of a unitary board as
    a practical if not a legal matter).

[^29]: Liberty Media, *SEC Form 8-K,* filed October 24, 2007 at 2. If
    the reclassification is implemented, the Liberty Entertainment
    common stock would be intended to track the economic performance of
    a newly designated Entertainment Group, which would hold
    subsidiaries Starz Entertainment, LLC; FUN Technologies, Inc.; GSN,
    LLC; and WildBlue Communications, Inc.; approximately \$500 million
    in cash and cash equivalents; and a \$551 million principal amount
    (as of June 30, 2007) of Liberty Media's publicly traded debt. In
    addition, Liberty Media plans to include in this new group its
    interest in DIRECTV, the three RSNs, and the cash it would acquire
    in the instant transaction. Liberty Media, *SEC Form S-4,* filed
    September 7, 2007, at i-ii.

[^30]: Liberty Media, *SEC Form 10-K for the Year Ended December 31,
    2006*, at II-82.

[^31]: Application at 8-9. QVC, a wholly owned subsidiary, markets a
    wide variety of consumer products in the United States and foreign
    countries, primarily through the QVC networks and the Internet
    through its domestic and international websites. Liberty Media, *SEC
    Form S-4*, filed January 25, 2007. IAC is an interactive commerce
    company consisting of brands such as Ticketmaster, Lending Tree,
    HSN, and Ask Jeeves, Inc. (now Ask.com). It transacts business
    worldwide via the Internet, television, and the telephone. Expedia,
    Inc. was incorporated under Delaware law in April 2005 to hold
    substantially all of IAC's travel and travel-related businesses, and
    completed its spin-off from IAC in August 2005. *Id.* Liberty Media
    has a 20 percent equity interest and 52 percent voting interest in
    Expedia, and a 22 percent equity and 54 percent voting interest in
    IAC. Barry Diller, as Chairman of the Board and CEO of IAC, and
    Chairman of the Board and Senior Executive of Expedia, is entitled
    to direct the vote of Liberty Media's shares of IAC and Expedia,
    "subject to certain limitations." Application at 10 nn. 8, 10.
    Provide Commerce's online e-commerce stores sell grower-shipped
    flowers, gourmet fruit baskets, steaks, and other gifts via the
    Internet. BuySeasons, Inc. is an online retailer of costumes,
    accessories and Halloween products. *See*
    http://www.libertymedia.com/ir/asset_list.htm (visited Oct. 3,
    2007). On November 5, 2007, the IAC Board of Directors voted to
    split itself into five independent companies, with all shares of the
    new companies to be distributed to current IAC shareholders. IAC,
    *SEC Form 8-K*, filed November 5, 2007 at 2.

[^32]: Application at 8-9. Starz Entertainment, LLC, a wholly owned,
    consolidated subsidiary included in the Capital Group, provides
    premium programming distributed throughout the United States by
    cable operators, DTH satellite providers, other distributors, and
    the Internet. *See* Liberty Media, *SEC Form 10K for the Year Ended
    December 31, 2006*, at II-82. Starz Media, LLC is a creator and
    distributor of animated and live-action programming, creator of
    content under contract for other media companies, and leading
    independent home video/DVD entertainment company. True Position,
    Inc. develops and implements advanced wireless location products,
    services, and devices in a cross-carrier environment, including the
    potential for use in connection with social networks, mobile gaming
    companies, search companies, mobile advertisers, and providers of
    music, comedy, and entertainment content to wireless devices.
    Liberty Media owns 100 percent of these three companies. FUN
    Technologies, Inc. provides online and interactive casual gaming
    systems to distribution partners worldwide. On June 21, 2007,
    Liberty Media made an offer to purchase the 47 percent of FUN
    Technologies, Inc. that it did not own. On December 19, 2007, the
    shareholders of FUN Technologies, Inc. approved Liberty Media's
    offer and on December 28, 2007, the transaction was consummated
    after a Canadian court approved the transaction. Liberty Media has a
    50 percent interest in Game Show Network, LLC, which operates GSN, a
    cable television channel featuring multi-platform interactive game
    programs, and GSN.com, an Internet gaming site; a 32 percent equity
    interest in WildBlue Communications, Inc., a provider of two-way
    broadband Internet access via satellite to homes and small
    businesses in rural markets underserved by terrestrial broadband
    alternatives; an approximately 2.8 percent interest in Time Warner
    Inc., whose businesses include filmed entertainment, interactive
    services, television networks, cable systems, music and publishing;
    and a 3 percent interest in Sprint Nextel Corporation, a
    communications services provider. Liberty Media, *SEC Form 10-K for
    the Year Ended December 31, 2006*, at II-44; "Liberty Media
    Corporation Investment Summary (as of June 30, 2007)," at
    http://www.libertymedia.com/ir/asset_list.htm (visited Oct. 3,
    2007); "Liberty Media Completes Atlanta Braves Purchase," May 17,
    2007, at
    http://uk.reuters.com/article/partiesNews/idUKWEN819520070517
    (visited Oct. 18, 2007).

[^33]: Liberty Media, *SEC Form 8-K*, filed May 21, 2007 at 2. Liberty
    Media received a Time Warner Inc. subsidiary that held the Atlanta
    Braves (and certain of the Braves' minor league teams), Leisure
    Arts, Inc., and approximately \$960 million in cash in exchange for
    approximately 68.5 million shares of Time Warner Inc. common stock.
    *Id.*

[^34]: Application at 9-10. Liberty Media has an 11 percent interest in
    Crown Media United States, LLC, owner/operator of the Hallmark
    Channel and the Hallmark Movie Channel, and a 1 percent interest in
    Viacom Inc. *Id.*

[^35]: Application at 11-12.

[^36]: Specifically, John Malone holds 32.4 percent of the voting stock
    of Liberty Interactive and 32.02 percent of the voting stock of
    Liberty Capital for a combined voting interest in Liberty Media of
    32.34 percent. Malone also holds 5.21 percent of the equity of
    Liberty Interactive and 5.18 percent of Liberty Capital, for a
    combined equity interest in Liberty Media of 5.2 percent. The voting
    and equity percentages include currently exercisable options to
    acquire Liberty Media shares. If such options are excluded, Malone's
    voting interest is 30 percent and his equity percentage is 4.7
    percent. Liberty Media Oct. 23, 2007 Response to Information and
    Document Request at 8 and n.9; *see also* Liberty Media, *SEC Form
    S-4*, filed Sept. 7, 2007 at 28.

[^37]: Application at 11. Liberty Global was formed by the union of
    UnitedGlobalCom, Inc., and Liberty Media International ("LMI"). LMI
    was formed by Liberty Media in 2004 as part of a plan to spin off
    some of its international television and programming assets. *See*
    Liberty Media Oct. 23, 2007 Response to Information and Document
    Request at 8 n. 11.

[^38]: Liberty Media Oct. 23, 2007 Response to Information and Document
    Request at 4.

[^39]: Application at 11-12; s*ee also* Liberty Media Oct. 23, 2007
    Response to Information and Document Request at 9.

[^40]: Liberty Global, *Fact Sheet*, +http://www.lgi.com/fact.html
    (visited Feb. 13, 2008); Liberty Global, *SEC Form DEF14-A -- Other
    definitive proxy statements*, filed Apr. 30, 2007, at 14.

[^41]: The equity and voting percentages include currently exercisable
    options to acquire Liberty Global shares. Excluding such options,
    the equity percentage is 4.0 percent, and the voting interest is
    25.6 percent. Liberty Media Oct. 23, 2007 Response to Information
    and Document Request at 9 and n.14.

[^42]: Application at 12. The overlapping directors and their equity
    interests are: Paul A. Gould (Liberty Media, 0.09 percent; Liberty
    Global, 0.11 percent); David E. Rapley (Liberty Media, 0.00 percent;
    Liberty Global, 0.01 percent); and Larry E. Romrell (Liberty Media,
    0.01 percent; Liberty Global, 0.01 percent). Liberty Media Oct. 23,
    2007 Response to Information and Document Request at 9 and n.13.
    When the Application was filed, Liberty Media owned less than 0.10
    percent of Liberty Global's voting shares. Liberty Media
    subsequently sold all of those shares. Liberty Media Oct. 23, 2007
    Response to Information and Document Request at 6 (citing Liberty
    Media July 10, 2007 Response to Information and Document Request at
    9); s*ee also* Application at 11.

[^43]: Discovery Holding's shares are traded on the NASDAQ under the
    symbols [DISCA](http://finance.yahoo.com/q?s=disca&d=t) and
    [DISCB](http://finance.yahoo.com/q?s=discb&d=t).

[^44]: Application at 11-12. Discovery Communications Holding, LLC is
    the successor reporting entity to Discovery Communications, Inc. The
    ownership structure is unchanged. At the time of the spin-off of
    Discovery Holding from Liberty Media, Discovery Holding owned 50
    percent of Discovery Communications, Inc. Currently, Discovery
    Holding holds a 66.6 percent interest and Advance/Newhouse
    Programming Partnership ("Advance/Newhouse") holds a 33.3 percent
    interest of Discovery Communications Holding, LLC. Discovery Holding
    Company, *SEC Form 10-K for Year Ended December 31, 2007* at I-1. In
    September 2007, Discovery Holding and Advance/Newhouse engaged in
    preliminary discussions concerning an exchange of Advance/Newhouse's
    interests in Discovery Communications Holding LLC for shares of
    Discovery Holding. Those discussions included "matters relating to
    valuation and governance." *See* Discovery Holding, *SEC Form 8-K*,
    filed Sept. 21, 2007 at 1. On December 13, 2007, Discovery Holding
    announced that it had signed a non-binding letter of intent with
    Advance/Newhouse pursuant to which Discovery Holding and
    Advance/Newhouse will combine their stakes in Discovery
    Communications. Immediately after spinning-off Ascent Media Group,
    Discovery Holding will combine with a new holding company, and
    existing Discovery Holding stockholders will receive shares of
    common stock of the new publicly traded holding company. As part of
    the same plan, Advance/Newhouse will combine its interests in
    Discovery Communications and Animal Planet with the new holding
    company in exchange for preferred stock that, immediately after the
    closing of the transactions, will be convertible into shares
    representing one-third of the outstanding shares of common stock of
    the new holding company. The preferred stock held by
    Advance/Newhouse will entitle it to elect two members of the new
    holding company\'s board of directors and to "exercise approval
    rights with respect to the taking of specified actions by the new
    holding company and Discovery Communications." *See* Discovery
    Holding, *Discovery Holding Company Announces Agreement-in-Principle
    with Advance/Newhouse to Combine Their Stakes in Discovery
    Communications*, http://ir.discovery\
    holding.com/phoenix.zhtml?c=191960&p=irol-newsArticle&ID=1087104&highlight=
    (visited Dec. 16, 2007). In this Order, we refer to Discovery
    Communications, Inc. and Discovery Communications Holding, LLC as
    "Discovery."

[^45]: *See* Discovery Communications, *Discovery Consolidates Media
    Operations*, http://corporate.discovery.com\
    /news/press/07q3/globalmedia082707.html (press release), Aug. 27,
    2007). In addition to its interest in Discovery, Discovery Holding
    has two wholly owned operating subsidiaries, Ascent Media Group,
    LLC, and AccentHealth, LLC. Discovery Holding, *SEC Form 10-Q,
    Quarterly Report for Period Ended March 31, 2007*, at I-5.

[^46]: Liberty Media Oct. 23, 2007 Response to Information and Document
    Request at 14. Major Holders of Class A Common Stock include John
    Malone, Paul A. Gould, David J.A. Flowers, Charles Y. Tanabe, and
    David Wargo. Major Holders of Class B Common Stock include John
    Malone and Paul A. Gould.

[^47]: Application at 10-11.

[^48]: *Id*.

[^49]: *See* *infra* para. 78.

[^50]: Application at 7.

[^51]: News Corp., *SEC Form 10-Q, Quarterly Report for Period Ended
    December 31, 2007*, at 12.

[^52]: Application at 7-8. A list of News Corp.'s national and regional
    cable programming interests in the United States can be found at
    Cable, http://www.newscorp.com/operations/cable.html (visited Jan.
    15, 2008).

[^53]: News Corp., *SEC Form 10-K for the Year Ended June 30, 2007*, at
    11.

[^54]: *Id.*

[^55]: *Id.* In April 2006, News Corp. acquired Turner Regional
    Entertainment Networks, Inc. ("TRENI"), and its wholly owned,
    Atlanta-based, regional sports and entertainment network, Turner
    South, from Time Warner. In that transaction, News Corp. also
    acquired TRENI's rights to televise certain games of MLB's Atlanta
    Braves, the NBA's Atlanta Hawks and the NHL's Atlanta Thrashers.
    News Corp., *SEC Form 10-K for the Year Ended June 30, 2006*, at 10.
    On August 30, 2007, in partnership with The Big Ten Conference,
    Inc., News Corp. launched The Big Ten Network, a 24-hour national
    programming service devoted to the Big Ten Conference and Big Ten
    athletics, academics, and related programming. The network is
    available to all cable and satellite carriers and television
    distributors nationwide, with most programs offered in HD. Big Ten
    Network, *Big Ten Network Launch Arrives*,
    http://www.bigtennetwork.com/corporate/PR8302007.asp (visited Sept.
    12, 2007).

[^56]: Application at 12; Liberty Media Oct. 23, 2007 Response to
    Information and Document Request at 15. The Application contains a
    List of Licenses and Authorizations Controlled by DIRECTV Group,
    Inc. (Exhibit 3); Transfer of Control Applications for Licenses
    Controlled by DIRECTV Group, Inc (Exhibit 7); and a List of Pending
    FCC Applications filed by DIRECTV Group, Inc. or its Subsidiaries
    (Exhibit 8).

[^57]: *See* Application at Exhibit 4 (copy of Share Exchange
    Agreement).

[^58]: "The cash amount is subject to adjustment based upon, among other
    things, the working capital of the RSNs as of the closing of the
    Exchange." Application at 12.

[^59]: *See* Application at Exhibit 5 and n.18. In addition to approval
    from the Commission, other regulatory approvals, a ruling from the
    Internal Revenue Service, and News Corp. stockholder approval are
    required. Application at 13 (citing Share Exchange Agreement at Art.
    VII).

[^60]: Liberty Media Oct. 23, 2007 Response to Information and Document
    Request at 15.

[^61]: Application at 15 and n.21.

[^62]: Application at 13-15, 20. News Corp. will receive approximately
    324.6 million shares of News Corp. Class A common stock and 188
    million shares of News Corp. Class B common stock.

[^63]: Application at 14; DIRECTV Oct. 23, 2007 Response to Information
    and Document Request at 2; *see* *also* Liberty Media July 10, 2007
    Response to Information and Document Request at LMC I.A. 0000213-216
    \[REDACTED\]. Maffei is President and Chief Executive Officer of
    Liberty Media. News Corp. is represented on the DIRECTV Board of
    Directors by K. Rupert Murdoch, Peter F. Chernin, and David F.
    DeVoe.

[^64]: Application at 13. DIRECTV's current directors are listed in the
    Application at Exhibit 6. The Applicants also state that the Audit
    Committee will review and approve all related-party transactions as
    determined by the Audit Committee's Related Party Transactions
    Policies and Procedures, including any transactions between DIRECTV
    and Liberty Media. Application at 14. A related-party transaction is
    a transaction or series of transactions, including indebtedness,
    since the beginning of the company's last fiscal year, or any
    currently proposed transaction in which the company was or is to be
    a participant, in which the amount involved exceeds \$120,000, and
    in which any related person had or will have a direct or indirect
    material interest. The term "related person" includes directors,
    director nominees, executive officers, 5 percent stockholders and
    their respective immediate family members and other persons sharing
    their households. *See* 17 C.F.R. § 229.404 ("Item 404 Transactions
    with related persons, promoters and certain control persons.").

[^65]: *See* 47 U.S.C. § 310(d); Application at 1.

[^66]: The *Public Notice* established March 23, 2007, as the deadline
    for filing comments and/or petitions to deny, and April 9, 2007, as
    the deadline for filing responses to comments and/or oppositions to
    the petitions.

[^67]: *See* EchoStar Petition; NDB Petition; HITN Petition. HITN
    withdrew its Petition on June 6, 2007. *See infra* n. 382 and para.
    120.

[^68]: On May 21, 2007, the Media Bureau adopted a Protective Order
    under which third parties were allowed to review confidential or
    proprietary documents submitted by the Applicants. *See* News
    Corporation and The DIRECTV Group, Inc., Transferors, and Liberty
    Media Corporation, Transferee, Protective Order, DA 07-2116 (rel.
    May 21, 2007) (*"First Protective Order"*). On June 15, 2007, the
    Bureau issued a request for information from Liberty Media and News
    Corp. *See* Letter from Monica Shah Desai, Chief, Media Bureau, FCC,
    to Robert L. Hoegle, Timothy J. Fitzgibbon, Thomas F. Bardo, Nelson
    Mullins Riley & Scarborough LLP, Counsel for Liberty Media (June 15,
    2007); Letter from Monica Shah Desai, Chief, Media Bureau, FCC, to
    Ellen S. Agress and Maureen A. O'Connell, News Corp., John C. Quale
    and Jared S. Sher, Skadden, Arps, Slate, Meagher & Flom LLP, Counsel
    for News Corp., Susan Eid and Stacy Fuller, DIRECTV, William M.
    Wiltshire, Michael Nilsson, and S. Roberts Carter III, Harris,
    Wiltshire & Grannis LLP, Counsel for DIRECTV (June 15, 2007). On
    June 22, 2007, the Bureau issued an initial request for information
    from Discovery and Liberty Global. *See* Letter from Monica Shah
    Desai, Chief, Media Bureau, FCC, to Craig Troyer, Assistant General
    Counsel, Discovery Holding Company (June 22, 2007); Letter from
    Monica Shah Desai, Chief, Media Bureau, FCC, to Christopher Ottele,
    Holme, Roberts and Owen, Counsel for Liberty Global (June 22, 2007).
    On July 10, 2007, the Bureau issued a further Protective Order
    regarding the protection of highly confidential competitively
    sensitive documents. *See* News Corporation and The DIRECTV Group,
    Inc., Transferors, and Liberty Media Corporation, Transferee,
    Protective Order, DA 07-3106 (rel. July 10, 2007) ("*Second
    Protective Order*"). On July 20, 2007, the Bureau issued a
    supplemental Protective Order partially granting Liberty Global's
    request to extend the protections granted in the *Second Protective
    Order* to certain portions of Liberty Global's submissions. *See*
    News Corporation and The DIRECTV Group, Inc., Transferors, and
    Liberty Media Corporation, Transferee, Supplemental Protective
    Order, DA 07-3328 (rel. July 20, 2007) ("*Supplemental Protective
    Order*"); Letter from Lynn R. Charytan, WilmerHale, Counsel for
    Liberty Global, to Monica Shah Desai, Chief, Media Bureau, FCC (July
    16, 2007). On various dates, the Applicants, Liberty Global, and
    Discovery Holding also responded to the Bureau's requests for
    additional information. Responses to these requests were filed in MB
    Docket No. 07-18.

[^69]: In this Order, "\[REDACTED\]" indicates confidential or
    proprietary information, or analysis based on such information,
    submitted pursuant to the *First Protective Order*, the *Second
    Protective Order*, and/or the *Supplemental Protective Order*. The
    unredacted version of this Order will be available upon request to
    qualified persons who execute and file with the Commission the
    signed acknowledgements required by the protective orders in this
    proceeding. *See* *First Protective Order*, App. A --
    Acknowledgement of Confidentiality; *see also* *Second Protective
    Order*, App. A -- Acknowledgment of Confidentiality. Any party
    seeking access to the Stamped Highly Confidential Documents or
    Highly Confidential Information subject to the *Supplemental
    Protective Order* shall request access pursuant to the terms of the
    *Supplemental Protective Order* and the *Second Protective Order*
    issued in this proceeding.

[^70]: 15 U.S.C. § 18.

[^71]: 47 U.S.C. § 310(d).

[^72]: Section 310(d) requires that the Commission consider the
    applications as if the proposed transferee were applying for the
    licenses directly. 47 U.S.C. § 310(d). *See SBC Communications Inc.
    and AT&T Corp. Applications for Approval of Transfer of Control,* 20
    FCC Rcd 18290, 18300 ¶ 16 (2005) ("*SBC-AT&T Order*"); V*erizon
    Communications, Inc. and MCI, Inc. Applications for Approval of
    Transfer of Control,* 20 FCC Rcd 18433, 18442-43 ¶ 16 (2005)
    ("*Verizon-MCI Order*"); *Applications of Nextel Communications,
    Inc. and Sprint Corporation,* 20 FCC Rcd 13967, 13976 ¶ 20 (2005)
    ("*Sprint-Nextel Order*"); *News Corp.-Hughes Order,* 19 FCC Rcd at
    483 ¶ 15; *Applications for Consent to the Transfer of Control of
    Licenses from Comcast Corporation and AT&T Corp., Transferors, to
    AT&T Comcast Corporation, Transferee*, 17 FCC Rcd 23246, 23255 ¶ 26
    (2002) ("*Comcast-AT&T Order*").

[^73]: *See, e.g., SBC-AT&T Order*, 20 FCC Rcd at 18300 ¶ 16;
    *Verizon-MCI Order*, 20 FCC Rcd at 18442-43 ¶ 16; *Applications for
    Consent to the Assignment of Licenses Pursuant to Section 310(d) of
    the Communications Act from NextWave Personal Communications, Inc.,
    Debtor-in-Possession, and NextWave Power Partners, Inc.,
    Debtor-in-Possession, to Subsidiaries of Cingular Wireless LLC*, 19
    FCC Rcd 2570, 2580-81 ¶ 24 (2004); *EchoStar Communications Corp.,
    General Motors Corp. and Hughes Electronics Corp., and EchoStar
    Communications Corp., Hearing Designation Order*, 17 FCC Rcd 20559,
    20574 ¶ 25 (2002) ("*EchoStar-DIRECTV HDO*").

[^74]: *See SBC-AT&T Order,* 20 FCC Rcd at 18300 ¶ 16; *Verizon-MCI
    Order,* 20 FCC Rcd at 18443 ¶ 16; *Sprint-Nextel Order,* 20 FCC Rcd
    at 13976 ¶ 20.

[^75]: *See SBC-AT&T Order,* 20 FCC Rcd at 18300 ¶ 16; *Verizon-MCI
    Order,* 20 FCC Rcd at 18443 ¶ 16; *Sprint-Nextel Order,* 20 FCC Rcd
    at 13976 ¶ 20; *News Corp.-Hughes Order*, 19 FCC Rcd at 483 ¶ 15;
    *Comcast-AT&T Order*, 17 FCC Rcd at 23255 ¶ 26.

[^76]: *See* *SBC-AT&T Order*, 20 FCC Rcd at 18300 ¶ 16; *Verizon-MCI
    Order*, 20 FCC Rcd at 18443 ¶ 16; *Comcast-AT&T Order,* 17 FCC Rcd
    at 23255 ¶ 26; *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20574 ¶ 25.

[^77]: 47 U.S.C. § 309(e); *see also News Corp.-Hughes Order,* 19 FCC
    Rcd at 483 n.49; *EchoStar-DIRECTV HDO,* 17 FCC Rcd at 20574 ¶ 25.

[^78]: *Applications of AT&T Wireless Services, Inc. and Cingular
    Wireless Corp. for Consent to Transfer Control of Licenses and
    Authorizations*, 19 FCC Rcd 21522, 21544 ¶ 41 (2004)
    ("*Cingular-AT&T Wireless Order*"); *News Corp.-Hughes Order*, 19
    FCC Rcd at 483 ¶ 16; *Comcast-AT&T Order*, 17 FCC Rcd at 23255 ¶ 27;
    *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20575 ¶ 26; *Applications for
    Consent to the Transfer of Control of Licenses and Section 214
    Authorizations from MediaOne Group, Inc., Transferor, to AT&T Corp.,
    Transferee,* 15 FCC Rcd 9816, 9821 ¶ 11 (2000) ("*AT&T-MediaOne
    Order*"); *Applications of VoiceStream Wireless Corporation or
    Omnipoint Corporation, Transferors, and VoiceStream Wireless Holding
    Company, Cook Inlet/VS GSM II PCS, LLC, or Cook Inlet/VS GSM III
    PCS, LLC, Transferees*, 15 FCC Rcd 3341, 3346-47 ¶ 11 (2000); *AT&T
    Corp., British Telecommunications, PLC, VLT Co. L.L.C., Violet
    License Co. LLC, and TNV \[Bahamas\] Limited Applications*, 14 FCC
    Rcd 19140, 19146 ¶ 14 (1999) ("*AT&T Corp.-British Telecom.
    Order*"); *Application of WorldCom, Inc., and MCI Communications
    Corp. for Transfer of Control of MCI Communications Corp. to
    WorldCom, Inc*., 13 FCC Rcd 18025, 18030 ¶ 9 (1998) ("*WorldCom-MCI
    Order*").

[^79]: 47 U.S.C. § 521(6) (one purpose of statute is to "promote
    competition in cable communications and minimize unnecessary
    regulation"); 47 U.S.C. § 532(a) (purpose of section is "to promote
    competition in the delivery of diverse sources of video programming
    and to assure that the widest possible diversity of information
    sources are made available to the public from cable systems in a
    manner consistent with growth and development of cable systems");
    *see also Applications for Consent to the Transfer of Control of
    Licenses and Authorizations by Time Warner, Inc. and America Online,
    Inc. to AOL Time Warner Inc.*, 16 FCC Rcd 6547, 6555-56 ¶ 22 (2001)
    ("*AOL-Time Warner Order*").

[^80]: *See, e.g.,* Telecommunications Act of 1996, Pub. L. No. 104-104,
    110 Stat. 56 § 706 (1996) (providing for the deployment of advanced
    telecommunications capabilities).

[^81]: 47 U.S.C. § 521(4); *see also* 47 U.S.C. § 532(a).

[^82]: *See Cingular-AT&T Wireless Order*, 19 FCC Rcd at 21544 ¶ 41;
    *Comcast-AT&T Order*, 17 FCC Rcd at 23255 ¶ 27; *AT&T-MediaOne
    Order*, 15 FCC Rcd at 9821-22 ¶ 11; *WorldCom-MCI Order*, 13 FCC Rcd
    at 18031 ¶ 9.

[^83]: *See Comcast-AT&T Order*, 17 FCC Rcd at 23255 ¶ 27;
    *AT&T-MediaOne Order*, 15 FCC Rcd at 9821-22 ¶ 11; *WorldCom-MCI
    Order*, 13 FCC Rcd at 18031 ¶ 9.

[^84]: *Cingular-AT&T Wireless Order*, 19 FCC Rcd at 21544 ¶ 42; *News
    Corp.-Hughes Order*, 19 FCC Rcd at 484 ¶ 17; *EchoStar-DIRECTV HDO*,
    17 FCC Rcd at 20575 ¶ 27; *Application of GTE Corporation and Bell
    Atlantic Corporation for Consent to Transfer Control of Domestic and
    International Authorizations and Application to Transfer Control of
    a Submarine Landing License*, 15 FCC Rcd 14032, 14046 ¶ 23 (2000)
    ("*Bell Atlantic-GTE Order*"); *Comcast-AT&T Order*, 17 FCC Rcd at
    23256 ¶ 28; *WorldCom-MCI Order*, 13 FCC Rcd at 18033 ¶ 13.

[^85]: *See, e.g*., *Verizon-MCI Order*, 20 FCC Rcd at 18444, ¶ 18;
    *SBC-AT&T Order*, 20 FCC Rcd at 18302, ¶ 18; *Rainbow DBS Company
    LLC, Assignor, and EchoStar Satellite L.L.C., Assignee, Consolidated
    Application for Consent to Assignment of Space Station and Earth
    Station Licenses, and Related Special Temporary Authorization*, 20
    FCC Rcd 16868, 16874, ¶ 12 (2005); *Sprint-Nextel Order*, 20 FCC Rcd
    at 13978, ¶ 22; *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20575, ¶ 27.
    *See also Satellite Business Systems*, 62 FCC 2d 997, 1088 (1977),
    *aff'd sub nom. United States v. FCC*, 652 F.2d 72 (D.C. Cir. 1980)
    (*en banc*); *Northern Utilities Service Co. v. FERC*, 993 F.2d 937,
    947-48 (1st Cir. 1993) (public interest standard does not require
    agencies "to analyze proposed mergers under the same standards that
    the Department of Justice . . . must apply").

[^86]: 15 U.S.C. § 18.

[^87]: *Sprint-Nextel Order*, 20 FCC Rcd at 13978 ¶ 22; *Cingular-AT&T
    Wireless Order*, 19 FCC Rcd at 21545 ¶ 42; *Comcast-AT&T Order*, 17
    FCC Rcd at 23256 ¶ 28; *AT&T-MediaOne Order*, 15 FCC Rcd at 9821 ¶
    10.

[^88]: *Bell Atlantic-GTE Order*, 15 FCC Rcd at 14047 ¶ 23; *AT&T
    Corp.-British Telecom*. *Order*, 14 FCC Rcd at 19147-48 ¶ 15;
    *Comcast-AT&T Order*, 17 FCC Rcd at 23256 ¶ 28.

[^89]: *Cingular-AT&T Wireless Order*, 19 FCC Rcd at 21545 ¶ 42;
    *AOL-Time Warner Order*, 16 FCC Rcd at 6550, 6553 ¶¶ 5, 15.

[^90]: *Cingular-AT&T Wireless Order,* 19 FCC Rcd at 21545 ¶ 43; *Bell
    Atlantic-GTE Order*, 15 FCC Rcd at 14047-48 ¶ 24; *AT&T
    Corp.-British Telecom. Order,* 14 FCC Rcd at 19148 ¶ 15; *see also
    WorldCom-MCI Order,* 13 FCC Rcd at 18032 ¶ 10 (stating that the
    Commission may attach conditions to the transfers); *Applications of
    VoiceStream Wireless Corp., Powertel Inc. and Deutsche Telekom AG
    for Consent to Transfer Control of Licenses and Authorizations,* 16
    FCC Rcd 9779, 9782 (2001) (conditioning approval on compliance with
    agreements with Department of Justice and Federal Bureau of
    Investigation addressing national security, law enforcement, and
    public safety concerns).

[^91]: 47 U.S.C. § 303(r). *See Cingular-AT&T Wireless Order*, 19 FCC
    Rcd at 21545 ¶ 43; *Bell Atlantic-GTE Order,* 15 FCC Rcd at 14047 ¶
    24; *WorldCom-MCI Order*, 13 FCC Rcd at 18032 ¶ 10 (citing *FCC v.
    Nat'l Citizens Comm. for Broadcasting*, 436 U.S. 775 (1978)
    (upholding broadcast-newspaper cross-ownership rules adopted
    pursuant to section 303(r)); *U.S. v. Southwestern Cable Co*., 392
    U.S. 157, 178 (1968) (holding that section 303(r) permits the
    Commission to order a cable company not to carry broadcast signal
    beyond station's primary market); *United Video, Inc. v. FCC*, 890
    F.2d 1173, 1182-83 (D.C. Cir. 1989) (affirming syndicated
    exclusivity rules adopted pursuant to section 303(r) authority)).

[^92]: *See, e.g., Cingular-AT&T Wireless Order*, 19 FCC Rcd at 21545 ¶
    43; *News Corp.-Hughes Order*, 19 FCC Rcd at 477 ¶ 5; *Bell
    Atlantic-GTE Order*, 15 FCC Rcd at 14047-48 ¶ 24; *WorldCom-MCI
    Order*, 13 FCC Rcd at 18034-35 ¶ 14.

[^93]: *Sprint-Nextel Order*, 20 FCC Rcd at 13978-79 ¶ 23;
    *Cingular-AT&T Wireless Order,*19 FCC Rcd at 21545-46 ¶ 43; *News
    Corp.-Hughes Order,* 19 FCC Rcd at 534 ¶ 131; *Comcast-AT&T Order,*
    17 FCC Rcd at 23302 ¶ 140; *AOL-Time Warner Order,* 16 FCC Rcd at
    6550 ¶¶ 5-6.

[^94]: *See Cingular-AT&T Wireless Order*, 19 FCC Rcd at 21545-46 ¶ 43;
    *AOL-Time Warner Order,* 16 FCC Rcd at 6609-10 ¶¶ 146-47.

[^95]: *See* Kip Viscusi, John Vernon, and Joseph Harrington, [Economics
    of Regulation and Antitrust]{.smallcaps} Ch. 7 (3d ed. 2000).

[^96]: These goals are embodied in various statutory provisions,
    including sections 613(f), 616, and 628 of the 1992 Act, 47 U.S.C.
    §§ 533, 536, 548.

[^97]: The term "overbuilders" refers to MVPDs, other than DBS
    providers, that compete against cable incumbents in their local
    franchise areas.

[^98]: *Comcast-AT&T Order*, 17 FCC Rcd at 23257-58 ¶ 33; *see also*
    *Commission's Cable Horizontal and Vertical Ownership Limits*, 20
    FCC Rcd 9374, 9412-13 ¶¶ 67-70 (2005) (discussing and requesting
    comment on the Commission's definition of the programming market).

[^99]: *Horizontal Merger Guidelines,* 57 Fed. Reg. 41552 (Sept. 10,
    1992), revised, 4 Trade Reg. Rep. (CCH) ¶ 13104 at § 1.11 (Apr. 8,
    1997) ("*Horizontal Merger Guidelines*").

[^100]: *United States v. E.I. du Pont de Nemours & Co.*, 351 U.S. 377,
    395, 400 (1956) (relevant product market is composed of products
    that have reasonable interchangeability); *see also United States v.
    Microsoft,* 253 F.3d 34, 52-54 (D.C. Cir. 2001), *cert. denied*, 122
    S. Ct. 350 (2001) (in determining reasonable substitutes, the court
    excluded "middleware" software from the definition of the relevant
    product market because of its present non-interchangeability with
    Windows notwithstanding its long-term future potential).

[^101]: *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20609 ¶ 115.

[^102]: *See News Corp.-Hughes Order*, 19 FCC Rcd at 505 ¶ 62;
    *Comcast-AT&T Order*, 17 FCC Rcd at 23282 ¶ 90; *EchoStar-DIRECTV
    HDO*, 17 FCC Rcd at 20610 ¶ 119.

[^103]: *See News Corp.-Hughes Order*, 19 FCC Rcd at 505 ¶ 62.

[^104]: *News Corp.-Hughes Order*, 19 FCC Rcd at 505 ¶ 62.

[^105]: *Comcast-AT&T Order*, 17 FCC Rcd 23258 ¶ 34.

[^106]: *News Corp.-Hughes Order*, 19 FCC Rcd at 502 ¶ 54;
    *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20653 ¶ 248.

[^107]: Such rate cards are not publicly available.

[^108]: *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20654 ¶ 249 (citing
    *Implementation of Section 11 of the Cable Television Consumer
    Protection and Competition Act of 1992,* 16 FCC Rcd 17312, 17322 ¶¶
    10-11) (2001) ("*Cable Ownership Further Notice*"); *News
    Corp.-Hughes Order*, 19 FCC Rcd at 502 ¶ 55.

[^109]: *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20654 ¶ 249 (citing *Cable
    Ownership Further Notice*, 16 FCC Rcd at 17322 ¶¶ 10-11); *News
    Corp.-Hughes Order*, 19 FCC Rcd at 502 ¶ 55. Broadcast television
    station signals carried by MVPDs already contain advertising sold by
    the station owner, the network with which the station is affiliated
    (if any), or other program suppliers. FCC, OPP Working Paper #37,
    *Broadcast Television: Survivor in a Sea of Competition* at 11
    (2002), *at* http://www.fcc.gov/osp/workingp.html (broadcast
    networks, broadcast stations, and syndicators sell time to national
    advertisers; broadcast stations also sell time to local
    advertisers).

[^110]: *News Corp.-Hughes Order*, 19 FCC Rcd at 504 ¶ 59.

[^111]: Differentiated products are products that are similar in many
    respects but nonetheless differ in one or more significant respects
    and that are viewed as imperfect substitutes by consumers. *See*
    Dennis W. Carlton and Jeffrey M. Perloff, [Modern Industrial
    Organization]{.smallcaps} 281 (2d ed. 1991). Most consumer goods are
    differentiated products.

[^112]: *See News Corp.-Hughes Order*, 19 FCC Rcd at 633, App. D; *see
    also Adelphia Order,* 21 FCC Rcd 8270-71 ¶ 46.

[^113]: *News Corp.-Hughes Order*, 19 FCC Rcd at 506 ¶ 64.

[^114]: *Id.*, 19 FCC Rcd at 506 ¶ 66.

[^115]: *See,* *e.g*., DIRECTV, *Blackout Information*,
    http://www.directv.com/DTVAPP/global/contentPage.jsp?assetId=1000007
    (visited Feb. 10, 2008).

[^116]: In the case of broadcast television programming, it is
    reasonable to use DMAs to define the relevant geographic market for
    each individual broadcast station. *See News Corp.-Hughes Order,* 19
    FCC Rcd at 506 ¶ 65.

[^117]: *See supra* para. 2 (stating that the proposed transaction, if
    approved will result in Liberty Media holding the single largest
    block of shares in DIRECTV by far). The Commission has previously
    determined that News Corp. possesses *de facto* control of DIRECTV,
    an interest which Liberty Media would assume if we approve this
    transaction. *See News Corp.-Hughes Order*, 19 FCC Rcd at 476, 483
    ¶¶ 2, 14. We note our determination of News Corp.'s *de facto*
    control was based in part upon News Corp. obtaining a 34 percent *de
    jure* interest in Hughes, whereas Liberty would obtain more than a
    40 percent *de jure* interest in DIRECTV as a result of this
    transaction. *See News Corp.-Hughes Order,* 19 FCC Rcd at 481 ¶ 9;
    *supra* note 6; *see also* DIRECTV, *SEC Form 10-K* *for the Fiscal
    Year Ended Dec. 31, 2007* at 30 (stating that DIRECTV expects that,
    just as is the case with News Corp. currently, Liberty Media will
    have "significant influence over \[DIRECTV\] management and actions
    that require stockholder approval" and that "the proposed interests
    of Liberty \[Media\] may differ from the interests of other holders
    of \[DIRECTV\] common stock"). In addition, News Corp. has agreed to
    support the election of John Malone, Greg Maffei, and another
    unidentified director representing Liberty Media's interests to the
    DIRECTV board of directors. *See supra* note 63.

[^118]: *See infra* note Error: Reference source not found.

[^119]: In addition, Liberty Global \[REDACTED\]. *See* Liberty Global
    Oct. 23, 2007 Response to Information and Document Request at 2.

[^120]: Liberty Media July 10, 2007 Response to Information and Document
    Request at 11; *see also* DIRECTV Sept. 14, 2007 Response to
    Information and Document Request II.H at DTV-II.H.049983
    (demonstrating that \[REDACTED\]). DIRECTV Sept. 4, 2007 Response to
    Information and Document Request II.G at DTV-II.G.005774 (showing
    that \[REDACTED\]).

[^121]: *See* Liberty Media, *Liberty Media Corporation Completes Spin
    Off of Liberty Media International, Inc.* (press release), June 7,
    2004; *see also* Liberty Global Dec. 13, 2007 Response to
    Information and Document Request at LGI.Sup.000093 (demonstrating
    that \[REDACTED\]).

[^122]: As of June 30, 2007, John Malone held 5.2 percent of the
    outstanding shares that track Liberty Media. These shares
    represented 32.34 percent of the voting power of the outstanding
    shares that track Liberty Media. Liberty Media Oct. 23, 2007
    Response to Information and Document Request at 13-14. As of Aug.
    10, 2007, John Malone held 5.0 percent of the outstanding shares of
    Liberty Global. These shares represented 31.4 percent of the voting
    power of the outstanding shares. Liberty Media Oct. 23, 2007
    Response to Information and Document Request at 14; *see also*
    DIRECTV Sept. 4, 2007 Response to Information and Document Request
    II.G at DTV-II.G-006512 (\[REDACTED\]).

[^123]: Liberty Media Dec. 17, 2007 Response to Information and Document
    Request, Ex. A at 23 (Liberty Media Bylaws); *see also* Liberty
    Global, *SEC Form 8-K* (June 15, 2005), Ex. 3.2, at 22 (Liberty
    Global Bylaws).

[^124]: The bylaws of Liberty Media and Liberty Global each provide that
    "the Chairman of the Board, or the President or any Vice President
    or their designees shall have full power and authority on behalf of
    the Corporation to attend and to vote upon all matters and
    resolutions at any meeting of stockholders of any corporation in
    which this Corporation may hold stock, and may exercise on behalf of
    this Corporation any and all of the rights and powers incident to
    the ownership of such stock at any such meeting, whether regular or
    special, and at all adjournments thereof, and shall have power and
    authority to execute and deliver proxies and consents on behalf of
    this Corporation in connection with the exercise by this Corporation
    of the rights and powers incident to the ownership of such stock,
    with full power of substitution or revocation." *Id.*

[^125]: *See* Liberty Global *Schedule to Tender Offer Statement* (Aug.
    10, 2007) at 13, *available at*
    http://ccbn.10kwizard.com/xml/download.php?repo=tenk&ipage=5106794&format=PDF
    *(*visited Feb. 19, 2008); *see also* DIRECTV Nov. 19, 2007 Response
    to Information and Document Request at DTV-SUPP-00067 (stating that
    \[REDACTED\]); *id. at* DTV-SUPP-00194 (\[REDACTED\]); Liberty Media
    Nov. 19, 2007 Response to Information and Document Request at LMC
    SUPP.00397 (noting that \[REDACTED\]) *id*. at LMC.SUPP.00117 (a
    chart depicting \[REDACTED\]).

[^126]: *See* Liberty Media Dec. 17, 2007 Response to Information and
    Document Request at 3; Liberty Global Dec. 20, 2007 Response to
    Information and Document Request at 1. We believe that the
    Compensation Committees may be pressured to adopt John Malone's
    recommendations whether he affirmatively participates in a meeting
    or from his mere presence when his incentives and desires are known.
    The Compensation Committee of another Malone-controlled entity,
    Discovery Holding, adopted Malone's recommendation of granting share
    options to Robert Bennett, a Liberty Media Director. Discovery
    Holding Dec. 17, 2007 Response to Information and Document Request
    at 2. Our concern here is similar to the conclusion we made in the
    *News Corp.-Hughes* *Order* regarding Robert Murdoch's News Corp.'s
    influence over DIRECTV where we found that "News Corp.'s influence
    is likely to be such that an independent director will be cautious
    before taking any step that could cause offense to News Corp. for
    fear that he or she might be ousted." *News Corp.-Hughes Order,* 19
    FCC Rcd at 519 ¶ 97.

[^127]: *See* Liberty Media Oct. 23, 2007 Response to Information and
    Document Request at 9 (Liberty Global's Executive Committee
    currently consists of John Malone and Michael T. Fries). Notably,
    members of the Liberty Global Board have \[REDACTED\]. *See* Liberty
    Global Dec. 13, 2007 Response to Information and Document Request at
    LGI.Sup.000062 (\[REDACTED\]).

[^128]: *See In re* *Benjamin L. Dubb*, 16 FCC 274, 289 (1951) (stating
    that the chief factor in determining whether *de facto* control
    exists by virtue of a particular minority stock interest is the
    power to dominate the management of the corporate affairs); *see
    also generally Guidance Regarding Questions of Real Party in
    Interest and Transfers of Control for Cellular Applications in
    Markets Beyond Top 120*, 1 FCC Rcd 3 (1986); *In re Baker Creek
    Communications*, 13 FCC Rcd 18709 (1998); *In re News
    International*, 97 FCC 2d 349, 357 ¶ 20 (1984); *In re* *Paramount*
    *Television Prods., Inc.*, 17 FCC 264, 339-343 (1953).

[^129]: It appears that DIRECTV and Liberty Global likewise recognize
    Malone's influential position over Liberty Media, Liberty Global,
    and Discovery. *See* DIRECTV Nov. 19, 2007 Response to Information
    and Document Request at DTV-SUPP-00067 (\[REDACTED\]) *and* Liberty
    Media Nov. 19, 2007 Response to Information and Document Request at
    LMC.SUPP.00120 (\[REDACTED\]); *see also supra* note Error:
    Reference source not found.

[^130]: Liberty Media July 10, 2007 Response to Information and Document
    Request I.B., Schedule 3 at 2-7.

[^131]: Discovery Holding Dec. 17, 2007 Response to Information and
    Document Request at 2-3 (listing Paul Gould, M. Lavoy Robison, and
    David Wargo as independent directors). We note that DIRECTV, Liberty
    Media, and Liberty Global follow NASDAQ's rules for establishing the
    qualifications of independent directors. *See* NASDAQ, Rule 4350(c),
    *available at*
    http://www.complinet.com/nasdaq/display/display.html?rbid=1705&element_id=13
    (requiring that a majority of the board consist of independent
    directors for all NASDAQ-listed companies) (visited Feb. 1, 2008).
    DIRECTV, Liberty Global, and Liberty Media are all NASDAQ-listed
    companies. *See* *supra* notes 27 and 42. *See also* DIRECTV Oct.
    23, 2007 Response to Information and Document Request at 1 (stating
    that the majority of the DIRECTV board consists of independent
    directors); Liberty Global Oct. 23, 2007 Response to Information and
    Document Request at 2 (stating that the majority of Liberty Global
    board consists of independent directors); Liberty Media Oct. 23,
    2007 Response to Information and Document Request at 7 (stating that
    the majority of Liberty Media board consists of independent
    directors). Although certain directors may satisfy the NASDAQ rules
    regarding director independence, the NASDAQ definition of
    "independent director" requires only an opinion of the Board of
    Directors that the director does not have a relationship that would
    interfere with the exercise of independent judgment in carrying out
    the responsibilities of a director. *See* The NASDAQ Stock Market,
    Inc. Corporate Governance,
    http://www.nasdaq.com/about/CorporateGovernance.pdf (visited Dec.
    20, 2007) *and* NASDAQ, Rules 4200(a)(15) *and* IM-4200 (defining
    "Independent Director"), *available at*
    http://www.complinet.com/nasdaq/display/display.html?rbid=1705&element_id=13
    (visited Feb. 1, 2008). Even if we were persuaded that the NASDAQ
    standard for director independence is sufficiently effective in this
    case, we generally question the standard's relevance to the
    Commission's *de facto* control analysis under the Communications
    Act. For example, even if Paul Gould were to qualify as an
    independent director under the NASDAQ rules, as Liberty Media
    asserts, we do not believe that we could disregard other substantial
    evidence relevant to his independence as a director when assessing
    the scope of John Malone's *de facto* control of Liberty Media,
    Liberty Global, and Discovery Holding. In addition to sitting on
    each of Liberty Media's, Liberty Global's, and Discovery Holding's
    Boards of Directors, Paul Gould sits on each of Liberty Media's
    Board of Directors committees, \[REDACTED\], and shares ownership of
    two race horses in Ireland with John Malone. *See* Liberty Media
    Dec. 17, 2007 Response to Information and Document Request at 6-7;
    Liberty Media Corp, Investor Relations -- Corporate Governance,
    http://www.libertymedia.com/ir/Board-of-Directors.htm (visited Feb.
    7, 2008); Liberty Media Nov. 19, 2007 Response to Information and
    Document Request at LMC.SUPP.00191-00208 (\[REDACTED\]).

[^132]: *See* Liberty Media Dec. 17, 2007 Response to Information and
    Document Request at 6-7 (describing nominally independent directors'
    historical business relationships with John Malone, socialization
    with John Malone, and joint ownership of property with John Malone);
    *see also* Liberty Media Nov. 19, 2007 Response to Information and
    Document Request at LMC.SUPP.00508 (discussing his business
    strategy, \[REDACTED\]).

[^133]: Liberty Media Oct. 23, 2007 Response to Information and Document
    Request at 4 (DIRECTV-Puerto Rico subscribers); DIRECTV Sept. 14,
    2007 Response to Information and Document Request II.H at
    DTV.II.H.049983 (EchoStar subscribers).

[^134]: Liberty Media Oct. 23, 2007 Response to Information and Document
    Request at 4.

[^135]: While there is evidence that \[REDACTED\]. *See* DIRECTV Sept.
    14, 2007 Response to Information and Document Request II.H at
    DTV-II.H-049983.

[^136]: Liberty Global July 26, 2007 Response to Information and
    Document Request II.H at LGI.II.H 002013 (\[REDACTED\]); *see also
    supra* note Error: Reference source not found (demonstrating that
    \[REDACTED\]).

[^137]: EchoStar Petition to Deny at 24-26 (arguing that divestiture
    "appears the only measure that is adequate to alleviate the
    competitive harm in this case").

[^138]: *See* Liberty Global Dec. 20, 2007 Response to Information and
    Document Request at 1 (stating that the Board of Directors must make
    all major strategic commercial decisions \[REDACTED\]); Liberty
    Media Dec. 17, 2007 Response to Information and Document Request at
    4-5; Liberty Media Dec. 17 Response to Information and Document
    Request, Ex. A at 21 (Liberty Media Bylaws); Liberty Global, Inc.
    *SEC Form 8-K* (June 15, 2005), Ex. 3.2, at 20 (Liberty Global
    Bylaws).

[^139]: *See United States v. Dairy Farmers of America*, 426 F.3d 850,
    861 (6th Cir. 2005) (holding that a transaction could result in
    anticompetitive effects where one corporation acquires partial
    interests in two competitors).

[^140]: Liberty Media Oct. 23, 2007 Response to Information and Document
    Request at 3-4.

[^141]: Liberty Global July 26, 2007 Response to Information and
    Document Request II.H at LGI.II.H 001782.

[^142]: *Id.* An additional \[REDACTED\]. *See* *id*.

[^143]: *See supra note Error: Reference source not found*

[^144]: Liberty Media Oct. 23, 2007 Response to Information and Document
    Request at 4.

[^145]: *Id.* (citing Liberty Global July 26, 2007 Response to
    Information and Document Request II.H at LGI.II.H 002482).

[^146]: *See* Liberty Global July 26, 2007 Response to Information and
    Document Request II.H at LGI.II.H 002482. \[REDACTED\].

[^147]: Liberty Global July 26, 2007 Response to Information and
    Document Request II.H at LGI.II.H 001782.

[^148]: Liberty Media Oct. 23, 2007 Response to Information and Document
    Request at 4 (citing Liberty Global July 26, 2007 Response to
    Information and Document Request II.H at LGI.II.H 018499-500 and
    LGI.II.H 002269).

[^149]: Liberty Media Oct. 23, 2007 Response to Information and Document
    Request at 2-4.

[^150]: *Id.* at 5.

[^151]: *Id.* at 3-4; U.S. Census Bureau, *2006 Puerto Rico Community
    Survey*, *available at*
    http://factfinder.census.gov/servlet/ADPTable?\_bm=y&-geo_id=04000US72&-context=adp&-ds_name=ACS_2006_EST_G00\_&-tree_id=306&-\_lang=en&-\_caller=geoselect&-format=
    (visited Feb. 8, 2008).

[^152]: According to the Applicants, DIRECTV-Puerto Rico's 2006 revenues
    were \[REDACTED\], of which the Applicants indicate that
    \[REDACTED\] is from LCPR's territory. LCPR's 2006 revenues were
    \[REDACTED\]. *See* Liberty Media Response to Information and
    Document Request Oct. 23, 2007 at 5; *see* *also* Liberty Global
    *SEC Form 10-K for the Fiscal Year Ended Dec. 31, 2006*, at II-164.

[^153]: Moreover, while the Applicants focus exclusively on Puerto Rico
    in making their *de minimis* argument, we note that Puerto Rico is
    not the only area where there is a competitive overlap between
    DIRECTV and Liberty Global. Indeed, DIRECTV Latin America and
    Liberty Global compete throughout certain countries in Latin
    America, which increases the magnitude of the harm and also increase
    incentives to coordinate. Liberty Global owns cable systems that
    pass more than 2.7 million homes in Puerto Rico, Brazil, Chile, and
    Peru. *See* Liberty Global, *SEC Form 10-K for the Fiscal Year Ended
    Dec. 31, 2006*, at I-9. These operations of Liberty Global comprise
    approximately 10 percent of the homes passed by operations owned by
    Liberty Global. DIRECTV Latin America provides service throughout
    Latin America. The DIRECTV, *SEC Form 10-K for the Fiscal Year Ended
    Dec. 31, 2006*, at 3. DIRECTV owns 74 percent of Sky Brasil Servicos
    Ltda, which provides service to Brazil. *Id.* Even if Puerto Rico is
    a small part of the companies' operations, the transaction will
    create additional points of competitive contact across Latin America
    that will affect the incentives to reduce competition in Puerto
    Rico. Moreover, because DIRECTV customers in Puerto Rico receive
    service from the same satellites as the DIRECTV customers in areas
    of Latin America that are also served by Liberty Global, any
    decisions regarding the quality of service could be easily
    implemented across a broad area. *Id*. at 12

[^154]: *See supra* note Error: Reference source not found.

[^155]: *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20604 ¶ 99.

[^156]: *Id*. at 20612-13 ¶ 127.

[^157]: *Id*. at 20604 ¶ 99.

[^158]: *See supra* note Error: Reference source not found
    (demonstrating that \[REDACTED\]).

[^159]: DIRECTV Sept. 14, 2007 Response to Information and Document
    Request II.H at DTV-II.H-049983.

[^160]: EchoStar alleges that "in the absence of divestiture, the
    Commission would also be required to reverse its prior finding of
    effective competition" for LCPR's territory because such finding
    "relied on the market share of a then independent DIRECTV." 
    EchoStar Petition at n.61 (citing *Liberty Cablevision of Puerto
    Rico*, Memorandum Opinion and Order, 21 FCC Rcd 11995, 11996, ¶ 5
    (2006)).  Our remedy addresses EchoStar's concern.  Moreover, the
    local franchising authority in Puerto Rico, the Telecommunications
    Regulatory Board of Puerto Rico, is free to file for recertification
    with the Commission should it believe that the competitive
    circumstances have changed and the finding of effective competition
    is no longer warranted.

[^161]: *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20604, 20608, 20612-13,
    20614 ¶¶ 101, 113, 127, 132.

[^162]: Application at 24-25.

[^163]: EchoStar raised similar concerns regarding the firewall proposed
    by the parties in their application. *See* EchoStar Petition at 26
    ("In this case, the proposed 'firewall' for Dr. Malone will
    certainly be ineffective in preventing coordinated action between
    DIRECTV and LCPR.").

[^164]: Letter from William M. Wiltshire, Harris Wiltshire & Grannis
    LLP, Counsel for DIRECTV, to Marlene H. Dortch, Secretary, FCC (Dec.
    21, 2007) ("DIRECTV Dec. 21, 2007 Ex Parte").

[^165]: *Id*., Attachment (Special Market Committee Charter) at III.

[^166]: *Id*., Attachment (Proposal) at II (Liberty Media Corp's
    Undertakings), and III (John C. Malone's Undertakings).

[^167]: *Id*., Attachment (Proposal) at IV (DIRECTV Group, Inc.'s
    Undertakings). Similar restrictions would not apply, however, to
    Liberty Media, Liberty Global or any other common director.

[^168]: *Id*.

[^169]: *News Corp.-Hughes Order,* 19 FCC Rcd at 515 ¶ 89.

[^170]: *Id*.

[^171]: *Id*. at 518-19 ¶ 97.

[^172]: *Id*. at 519 ¶ 98.

[^173]: *Id*. at 519 ¶ 100.

[^174]: *Id*.

[^175]: *Id*. at 518 ¶ 97.

[^176]: DIRECTV Dec. 21, 2007 Ex Parte, Attachment (Proposal) at I.G.
    For NASDAQ's standard for independence, *see* Rules of NASDAQ,
    4200(a)(15), IM-4200 (defining "Independent Director") *and* 4350(c)
    (requiring independent directors), *available at*
    http://www.complinet.com/nasdaq/display/display.html?rbid=1705&element_id=13
    (visited Feb. 1, 2008).

[^177]: An "Affiliated Entity" means "Liberty Media Corporation and its
    subsidiaries, Liberty Global, Inc. and its subsidiaries, and any
    other entity which is, or during the preceding five years has been,
    an 'affiliate' (as determined in accordance with the applicable
    rules and regulations of the Securities and Exchange Commission) of
    Dr. Malone, but excluding DIRECTV." DIRECTV Dec. 21, 2007 Ex Parte
    at Attachment (Proposal) at I.A. We are also concerned that the
    proposal relies upon the Securities and Exchange Commission's
    definition of "affiliate" rather than the Commission's definition of
    such term.

[^178]: Indeed, the relationships of the current Liberty Media and
    Liberty Global independent directors leave us with little comfort
    regarding the independence of the Special Committee. *See* Liberty
    Media Nov. 19, 2007 Response to Information and Document Request at
    LMC.SUPP.00191-00208 \[REDACTED\]; *supra* note Error: Reference
    source not found. We also note that while the definition of
    "Independent Director" prohibits individuals who have had any
    business or financial relationship with Malone in the preceding five
    years, nothing likewise prohibits any such relationships with any
    Affiliated Entity. It is therefore possible that individuals who
    hold equity, debt, or other interests in an Affiliated Entity, could
    serve as independent directors on the Special Committee. *See*
    DIRECTV Dec. 21, 2007 Ex Parte at Attachment (Proposal) at I.G.

[^179]: *News Corp.-Hughes Order,* 19 FCC Rcd at 519 ¶ 99 (quoting
    Clarke, *Corporate Law* § 5.4 at 183). The Applicants have proposed
    that the initial composition of the Special Committee be Ralph P.
    Boyd, Jr. (Chairman), Neil Austrian, and Peter Lund. However, the
    members of the Special Committee are elected by a majority of the
    independent directors, and this initial slate of directors can be
    changed simply by a Board resolution. DIRECTV Dec. 21, 2007 Ex
    Parte, Attachment (Proposal) at IV.B.1.

[^180]: *News Corp.-Hughes Order,* 19 FCC Rcd at 519 ¶ 99.

[^181]: *See* *supra* para 43.

[^182]: *See supra* note 6.

[^183]: *See* News *Corp.-Hughes Order,* 19 FCC Rcd at 519 ¶ 98.

[^184]: A recent example of Malone's influence (even absent voting
    rights) is demonstrated in the pending litigation between Liberty
    Media and IAC regarding IAC's proposal to separate the company into
    five publicly traded companies -- an action that Malone does not
    support but IAC does.  Liberty Media (including Malone) is unable to
    vote any IAC shares because, pursuant to an irrevocable proxy
    agreement, all of Liberty Media's shares are voted by Chairman and
    CEO of IAC Barry Diller. As a result, Diller controls approximately
    63.4 percent of the voting power of IAC (which includes all of
    Liberty Media's voting rights), and has the power to control seven
    of twelve seats on IAC's Board of Directors. Diller supported IAC's
    recent proposal to separate the company into five publicly traded
    companies over Malone's objections.  In response, on January 28,
    2008, Liberty Media sued to remove Diller and replace six other
    directors on the IAC Board with Liberty nominees (for a total of
    seven directors).  Liberty's complaint states that Diller is
    required under the proxy agreement "to vote against . . . \[any\]
    Contingent Matter . . . unless Liberty . . . \[has\] consented." 
    Liberty Request for Relief Pursuant to 8 Del. C. § 225(a), filed
    Jan. 28, 2008 at ¶ 45.  This dispute illustrates Liberty Media and
    Malone's influence even when they lack any voting power.  Analysts
    note that Diller is "using his proxy over Malone's votes to create
    something that Malone objects to" and "Liberty sees the move \[by
    Diller\] as an illegal effort to destroy its super voting rights."
    *See* Geraldine Fabrikant and Brooks Barnes, *A Battle of the Moguls
    Over IAC*, [New York Times]{.smallcaps}, Feb. 4, 2008, at
    <http://www.nytimes.com/2008/02/04/business/media/04diller.html?_r=1&8dpc&oref=slogin>
    (visited Feb. 5, 2008); Oliver Staley and Sophia Pearson, *IAC
    Shares Rise Over Skepticism of Malone Board Plan,*
    [Bloomberg.com]{.smallcaps}, Jan. 29, 2008, at http://www.bloomberg
    .com/apps/news?pid=20601087&sid=agVM1XaRfSLk&refer=home (visited
    Jan. 30, 2008);  Louis Hau, *Liberty Seeks Ouster from IAC Board*,
    [Forbes.com]{.smallcaps}, Jan. 28, 2008, at
    http://www.forbes.com/2008/01/28/iac-liberty-court-biz-cx_lh_0128biziac.html
    (visited Jan. 30, 2008); *Malone's Liberty Media Moves to Oust
    Diller from IAC Board,* [Broadcasting & Cable]{.smallcaps}, Jan. 28,
    2008, at http://www.broadcastingcable.com/article/CA6526545.html
    (visited Jan. 30, 2008); Geraldine Fabrikant, *Liberty Asks for
    Power to Push Out Diller at IAC*, [New York Times]{.smallcaps}, Jan.
    29, 2008, at
    http://www.nytimes.com/2008/01/29/business/media/29liberty.html?\_r=1
    &ref=todayspaper&oref=slogin (visited Jan. 30, 2008).

[^185]: *News Corp.-Hughes Order,* 19 FCC Rcd at 519 ¶ 97.

[^186]: While Liberty Media makes commitments, they are extremely
    narrow. For example, Liberty Media does not propose to create any
    Special Committee of the Board nor does Liberty Media even commit to
    submit an annual certification to the Commission. *See* DIRECTV Dec.
    21, 2007 Ex Parte, Attachment (Proposal) at II.

[^187]: *See* *supra* para. 43.

[^188]: Even this one-way communication ban has exceptions because the
    definition of DIRECTV Latin America "exclude\[es\] operations and
    entities in Mexico and Brazil." *See* DIRECTV Dec. 21, 2007 Ex
    Parte, Attachment (Proposal) at I.E.

[^189]: Malone has agreed to recuse himself from Liberty Global meetings
    that involve LCPR. *See* DIRECTV Dec. 21, 2007 Ex Parte, Attachment
    (Proposal) at III.B.

[^190]: *See* DIRECTV Dec. 21. Ex Parte, Attachment (Proposal) at
    IV.B.3; DIRECTV Jan. 4, 2008 Response to Information and Document
    Request, at Attachment B.

[^191]: *See* DIRECTV Dec. 21, 2007 Ex Parte, Attachment (Proposal) at
    V. The definition of LCPR also excludes "successors," so it may be
    possible for Liberty Global to trigger termination by spinning off
    LCPR into a new entity. *Id*. at I.J.

[^192]: Liberty Media has cited Commission decisions to argue that the
    insulation proposals submitted by Applicants include all of the
    protections of insulation remedies that the Commission has approved
    as well as additional safeguards. *See* Liberty Media Oct. 23, 2007
    Response to Information and Document Request at 10-11. Liberty Media
    specifically has cited *Applications of Viacom*, Memorandum Opinion
    and Order, 9 FCC Rcd 1577 (1994), *Applications of McCaw and AT&T*,
    Memorandum Opinion and Order , 9 FCC Rcd 5836 (1994), and
    *Applications of Telemundo Group, Debtor In Possession and Telemundo
    Group*, Memorandum Opinion and Order, 10 FCC Rcd 1104 (1994). We
    find that each of these cases is inapposite. At most, the cases
    stand for the proposition that the Commission has permitted
    insulation remedies where the entity that is subject to Commission
    regulation represents only a small part of the overall operations of
    a multi-faceted corporation and where the duties and
    responsibilities of the director(s) at issue were naturally
    severable from the regulated entity's operations. In this
    transaction, by contrast, there are no severable business units;
    each business unit of the companies has a media-industry focus; John
    Malone controls each company with more than 30 percent of the
    aggregate voting power; and the media expertise of Malone, among
    other directors, is integral to the operation of the overall
    businesses.

[^193]: If the Applicants choose to comply with the condition by making
    the connecting interests non-attributable, we will apply the
    Commission's cable attribution standards set forth in 47 C.F.R. §
    76.1000(b). We note that determining whether a particular interest
    is attributable is a fact-intensive inquiry, and, even where an
    interest may appear non-attributable under the bright-line
    attribution rules, the Commission retains the discretion to review
    individual cases that present unusual issues. Such would be the case
    where there are combined interests that are so extensive that they
    raise an issue of significant influence notwithstanding the fact
    that the interests do not come within the parameters of a particular
    attribution rule. *Review of the Commission's Regulations Governing
    Attribution of Broadcast and Cable/MDS Interests*, 14 FCC Rcd 12559,
    12581 ¶ 44 (1999).

[^194]: Within nine months of the adoption of this Order, the Applicants
    shall submit to the Commission a description of their plan for
    complying with this condition to ensure that their proposal
    satisfies the public interest concerns underlying the condition.

[^195]: *See* Michael H. Riordan and Steven Salop, [*Evaluating Vertical
    Mergers: A Post-Chicago Approach*,
    63](http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=1091&FindType=Y&ReferencePositionType=S&SerialNum=0105646951&ReferencePosition=523)
    [Antitrust]{.smallcaps} L. J. 513, 527-38 (1995) ("*Riordan and
    Salop*"); *see also* Thomas G. Krattenmaker & Steven C. Salop,
    [*Anticompetitive Exclusion: Raising Rivals' Costs to Achieve Power
    Over Price*,
    96](http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=1292&FindType=Y&ReferencePositionType=S&SerialNum=0101349519&ReferencePosition=234)
    [Yale L. J]{.smallcaps}. 209, 234-38 (1986).

[^196]: For example, satellite cable programming vendors may establish
    "different prices, terms, and conditions to take into account actual
    and reasonable differences in the cost of creation, sale, delivery,
    or transmission of satellite cable programming . . . ." [47 C.F.R. §
    76.1002(b)(2)](http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=1000547&DocName=47CFRS76.1002&FindType=L).

[^197]: *See*, *e.g.*, *Riordan & Salop* at 528-31. For foreclosure
    (either permanent or temporary) to be profitable, the withdrawal of
    the input subject to foreclosure must cause a change in the
    characteristics of the downstream product, causing some customers to
    shift to competing downstream products.

[^198]: Consumer inertia can cause demand to adjust slowly to changes in
    the price or quality of a product. For example, consumers may be
    slow to adjust their purchasing behavior when significant cost or
    effort is required to find and purchase alternative sources of
    supply. *See* Roy Radner, *Viscous Demand,* 112 [J. Econ.
    Theory]{.smallcaps} 189 (2003).

[^199]: *News Corp.-Hughes Order,* 19 FCC Rcd at 511-12 ¶80.

[^200]: *Id.*

[^201]: *Id.* at 511-12 ¶¶ 79-80.

[^202]: *Id.* at 529-533 ¶¶ 124-28. The Commission also considered and
    rejected an insulation remedy concerning programming negotiations.
    *Id.* at 528-29 ¶¶ 122-24.

[^203]: *Id*. at 531-32 ¶ 127 n.379.

[^204]: *Id.* at 551, 568 ¶¶ 169, 209.

[^205]: *Id.* at 551, 677, 680 ¶ 173, App. F(III)-(IV). A dispute
    related to contract renewal may be submitted to arbitration only
    after the existing agreement has expired. *Id.*

[^206]: Commenters also raise concerns about Liberty by alleging that
    TCI engaged in anticompetitive conduct under the leadership of John
    Malone. *See* EchoStar Petition at 2-5, 7, 22 (alleging that Liberty
    Media, when vertically integrated with TCI, operated "ruthlessly" in
    acquiring and creating programming, to the detriment of unaffiliated
    MVPDs). *Id.* at 3. Liberty Media was previously integrated with
    cable operator TCI. TCI was sold to AT&T, and eventually, to
    Comcast. *See News Corp.-Hughes Order*, 19 FCC Rcd at 486 ¶ 23. We
    find that these generalized criticisms about a
    predecessor-in-interest are insufficient to raise concerns with
    respect to our public interest analysis. We also note that these
    generalizations are tangential to the issues related to potential
    harms presented by the vertical integration of Liberty and DIRECTV
    or are not transaction specific.

[^207]: EchoStar Petition at 14-15; ACA Comments at 7-9; ACA Reply
    Comments at 8; CU Comments at 5-7; HITN Petition at 6.

[^208]: 1992 Cable Act § 2(a)(5).

[^209]: *Id*.

[^210]: *Id.*

[^211]: *Id.*

[^212]: *See* 47 U.S.C. § 548.

[^213]: *See Implementation of the Cable Television Consumer Protection
    and Competition Act of 1992; Development of Competition and
    Diversity in Video Programming Distribution: Section 628(C)(5) of
    the Communications Act: Sunset of Exclusive Prohibition, Renewal of
    the Commission's Program Access Rules and Examination of Programming
    Tying Arrangements, Report and Order and Notice of Proposed
    Rulemaking,* 22 FCC Rcd 17791, 17794, 17814 ¶¶ 3, 37 ("*2007 Program
    Access Order and NPRM*").

[^214]: *See id.* at 17811 ¶ 30.

[^215]: *See id.* at 17810 ¶ 29.

[^216]: *See id.* at 17816 ¶ 38 (quoting *Implementation of the Cable
    Television Consumer Protection and Competition Act of 1992,
    Development of Competition and Diversity in Video Programming
    Distribution: Section 628(C)(5) of the Communications Act,* 17 FCC
    Rcd 12124, 12139 ¶ 33 (2002) ("*2002 Program Access Order*")).

[^217]: *See 2007 Program Access Order and NPRM*, 22 FCC Rcd at 17815 ¶
    37.

[^218]: *See id.* at 17792, 17817 ¶¶ 1, 39.

[^219]: *See News Corp.-Hughes Order,* 19 FCC Rcd at 476-77 ¶ 4.

[^220]: *See id.* at 523, 531-32 ¶¶ 107, 127 & n.378 (stating that the
    conditions covered not only the programming agreements between
    DIRECTV and News Corp. networks but also agreements between DIRECTV
    and "Affiliated Program Rights Holders," a term that applied
    expressly to Liberty Media).

[^221]: Liberty Global owns 100 percent of LCPR. As discussed above,
    Liberty Media shares half of its directors with Liberty Global, and
    Malone chairs both boards. Although Liberty Media spun off Liberty
    Global in 2004, Liberty Media is subject to the program access rules
    by virtue of Malone's board membership and ownership interests. *See
    Application* at 23-25, n.44; s*ee also* Proxy Statement of Liberty
    Media at A-14 (September 7, 2007),
    http://www.libertymedia.com/ir/pdfs/LibertyMediaCorpProxy_09072007.pdf
    ("Although we no longer own Liberty Cablevision of Puerto Rico Ltd.
    ('LCPR'), FCC rules continue to attribute an ownership interest in
    LCPR to us, thereby subjecting us and satellite-delivered
    programming services in which we have an interest to the program
    access rules").

[^222]: *See, e.g.*, EchoStar Petition at 14-15; ACA Comments at 2, 6-7;
    RCN Comments at 1-4.

[^223]: EchoStar Petition at 14-15; ACA Comments at 2; ACA Reply
    Comments at 2.

[^224]: EchoStar Petition at 15. Under the attribution standards
    applicable to the program access rules, John Malone holds an
    attributable interest in Discovery. John Malone holds 5.47 percent
    of the outstanding shares and 31.08 percent of the overall voting
    power in Discovery Holding as of July 31, 2007, and Discovery
    Holding holds a 66.66 percent equity stake in Discovery. Malone also
    serves as Chair of Discovery Holding's Board of Directors. Thus, by
    virtue of his stock interest in Discovery Holding, which exceeds
    five percent, and his position on the Board of Discovery Holding,
    Malone holds a cognizable interest in Discovery under the program
    access attribution rules. *See* *supra* para. 12; *see also*
    Discovery Holding Company, *SEC Form 10-Q for the Quarterly Period
    Ending September 31, 2007,* at I-5; 47 C.F.R. § 76.1000(b) (defining
    cognizable interests).

[^225]: *See* Discovery Opposition at 4; *see also* Letter from Tara M.
    Corvo, Mintz Levin, Counsel to Discovery, to Marlene Dortch,
    Secretary, FCC (June 6, 2007) ("Discovery June 6, 2007 Ex Parte");
    Liberty Media Opposition of April 9, 2007 at 4 .

[^226]: Discovery asserts that imposing a program access condition on
    Discovery is unwarranted because Discovery is already subject to the
    program access rules and its co-owner Advance/Newhouse would not
    approve any withholding or discrimination strategy because it would
    be against Advance/Newhouse's interest as a holder of 33 percent of
    Discovery's equity. Furthermore, Discovery claims that
    Advance/Newhouse would be able to block any such strategy because
    any major action by Discovery requires approval of 80 percent of all
    shares. *See* Discovery June 6, 2007 Ex Parte (memorializing
    representations made by Discovery on June 5, 2007, to Commission
    staff with regard to Discovery's ownership structure). However,
    decisions to impose, increase, or change subscriber license fees of
    the Discovery Channel require only a simple majority vote.  *See*
    Discovery Holding July 10, 2007 Response to Information and Document
    Request I.D. at LMC.I.D.0000422-424 (Shareholders Agreement of
    Discovery Section 3.02 (Nov. 30, 1991)); *see also* Discovery
    Holding *SEC* *Amendment No. 2 to Form 10*, June 27, 2005, at Ex.
    10.1, 10.2, 10.3, 10.4 and 10.5 (the amendments to the shareholders
    agreement dated December 20, 1996; September 7, 2000; September,
    2001; and June, 23, 2003 do not affect the "majority provisions"
    contained in Section 3.02 of the 1991 Shareholders Agreement). In
    addition, on December 13, 2007, Discovery Holding announced that it
    would combine its interests in Discovery with Advance/Newhouse's
    interests in Discovery and Animal Planet into a newly created
    holding company. *See supra* note 44. It is not clear whether or how
    this restructuring would affect the ability of Advance/Newhouse to
    prevent Discovery from entering into any particular program carriage
    agreements.

[^227]: Congress essentially recognized that all MVPDs needed access to
    all vertically integrated satellite cable programming on
    non-discriminatory terms and conditions and that the Commission must
    therefore enforce prohibitions against unfair and discriminatory
    terms and conditions of carriage, including exclusive carriage
    arrangements, until competitive conditions significantly change.
    *See* 47 U.S.C. § 548(c)(2).

[^228]: Liberty Media's proffered conditions would apply to all of its
    programming, including the RSNs it is acquiring from News Corp. and
    any other satellite-delivered RSNs it may acquire during the term of
    the conditions. We address RSNs separately because, as described in
    the next section, we find that Liberty Media would have significant
    market power with respect to regional sports programming as a result
    of the transaction, and that additional remedies are necessary.

[^229]: *See* Liberty Media Opposition at 2 (Liberty Media committed in
    the Transfer Application 'to abide by all relevant conditions
    established by the Commission' when News Corp. acquired its interest
    in DIRECTV three years ago").

[^230]: The term "satellite cable programming vendor" means "a person
    engaged in the production, creation, or wholesale distribution for
    sale of satellite cable programming, but does not include a
    satellite broadcast programming vendor." 47 C.F.R. § 76.1000(i). The
    term "satellite cable programming" means "video programming which is
    transmitted via satellite and which is primarily intended for direct
    receipt by cable operators for their retransmission to cable
    subscribers, except that the term does not include satellite
    broadcast programming." 47 C.F.R. § 76.1000(h).

[^231]: The term "attributable interest" refers to the criteria
    referenced and set forth in 47 C.F.R. § 76.1000(b).

[^232]: *See supra* paras. 8-12, 29, 33-36; *see also* *2002* *Program
    Access Order*, 17 FCC Rcd at 12139 ¶ 33. On January 16, 2008,
    Discovery and Oprah Winfrey announced that they would jointly create
    the Oprah Winfrey Network ("OWN").  OWN will debut in 2009 on what
    is now the Discovery Health Channel.  *See* Discovery
    Communications, *Special Announcement:  Oprah Winfrey and Discovery
    Communications To Form New Joint Venture:  \"OWN:  The Oprah Winfrey
    Network\" *(press release), Jan. 15, 2008.

[^233]: Besides serving as the Chairman of the Board for each of
    Discovery Holding, Liberty Media, and Liberty Global, John Malone
    possesses at least 30 percent of the aggregate voting power for each
    company. *See* *supra* paras. 8-12; *see also* 47 C.F.R. §
    76.1000(b). Liberty Global and Liberty Media have 10 and eight board
    members, respectively. *See* Liberty Media, *Investor Relations --
    Corporate Governance,* at
    <http://www.libertymedia.com/ir/Board-of-Directors.htm> (visited
    Feb. 1, 2008); *see also* Liberty Global, *Board of Directors
    Liberty Global, Inc.,* at <http://www.lgi.com/directors.html>
    (visited Feb. 1, 2008). Including Malone, they share four directors
    in common. As noted previously, Liberty has conceded in proxy
    statements, and in its Application, that LCPR is attributable to
    Liberty. *See supra* note 221.

[^234]: Discovery Holding and Liberty Media have five and eight board
    members, respectively. Including Malone, they share four directors
    in common, and Liberty Media directors hold 80 percent of Discovery
    Holding's board seats. Discovery Holding, in turn, holds a 66.66
    percent equity interest in Discovery. Charles Tanabe serves as
    Secretary for both companies and Robert Bennett, a Liberty Media
    director, serves as President of Discovery Holding and sits on its
    Executive Committee. Paul Gould and M. LaVoy Robinson are the
    remaining two overlapping directors. *See* Discovery Holding,
    *Corporate Governance*, at
    http://www.discoveryholding.com/ir/directors_members.htm (visited
    Dec. 21, 2007); *see also* Discovery Holding Annual Report at 7,
    Apr. 28, 2006, at
    <http://www.discoveryholding.com/ir/pdfs/D34759_asprinted.pdf>;
    Liberty Media, *Investor Relations -- Corporate Governance,* at
    <http://www.libertymedia.com/ir/Board-of-Directors.htm> (visited
    Feb. 1, 2008); s*ee also supra* note 131.

[^235]: In implementing Section 19 of the 1992 Cable Act, which added
    Section 628 to the Communications Act, the Commission concluded that
    "the concept of undue influence between affiliated firms is closely
    linked with discriminatory practices and exclusive contracting, the
    direct regulation of which is to be undertaken pursuant Sections
    628(c)(2)(B), (C), and (D) based on externally ascertainable pricing
    and contracting information." *Implementation of Sections 12 and 19
    of the Cable Television Consumer Protection and Competition Act of
    1992; Development of Competition and Diversity in Video Programming
    Distribution and Carriage*, First Report and Order, 8 FCC Rcd 3359,
    3424 ¶ 145 (1993) ("*1992 Cable Act Implementation Order*"). The
    Commission also observed that "Section 628(c)(2)(A) can play a
    supporting role where information is available (such as might come
    from an internal 'whistleblower') that evidences 'undue influence'
    between affiliated firms to initiate or maintain anticompetitive
    discriminatory pricing, contracting, or product withholding." *Id.*
    The Commission determined that the best way to evaluate complaints
    of undue influence is to "compare the programming arrangement of the
    complaining distributor against the programming arrangements enjoyed
    by its competitors." *Id.* at 3363 ¶ 13.

[^236]: 47 U.S.C. § 548.

[^237]: *1992 Cable Act Implementation Order*, 8 FCC Rcd at 3363 ¶ 12.

[^238]: *Id.* at 3376 ¶ 46.

[^239]: *Id.* at 3377 ¶ 47.

[^240]: Id. at 3377 ¶ 48.

[^241]: Discovery Holding and Advance/Newhouse recently bought out Cox
    Communications' 25 percent interest in Discovery, and, as noted
    above, Discovery Holding has announced that it is combining its
    shares in Discovery with those of Advance/Newhouse into a newly
    formed holding company. *See supra* note 44; *see also* Discovery
    Communications, *Cox Communications and Discovery Communications
    Complete Exchange of Cox's Ownership Stake* (press release), May 14,
    2007. The program access rules conceivably could continue to apply
    to Discovery by virtue of John Malone's common interests in LCPR and
    Discovery. However, \[REDACTED\]. *See* DIRECTV Nov. 19, 2007
    Response to Information and Document Request at DTV-SUPP-00067
    (\[REDACTED\]); Liberty Global July 30, 2007 Response to Information
    and Document Request II.H at LGI.II.H.004753-LGI.II.H.004772
    (\[REDACTED\]). Moreover, Liberty Media may choose to divest LCPR as
    a means of complying with our Puerto Rico condition described above.
    *See supra* para. 63.

[^242]: The term "Affiliated Program Rights Holder" includes (i) any
    program rights holder in which Liberty Media or DIRECTV holds a
    non-controlling "attributable interest" (as determined by the FCC's
    program access attribution rules) or in which any officer or
    director of Liberty Media, DIRECTV, or of any other entity
    controlled by John Malone holds an attributable interest; and (ii)
    any program rights holder in which an entity or person that holds an
    attributable interest also holds a non-controlling attributable
    interest in Liberty Media or DIRECTV, provided that Liberty Media or
    DIRECTV has actual knowledge of such entity's or person's
    attributable interest in such program rights holder. As the
    Commission noted in New Corp.-Hughes, this commitment extends beyond
    the program access rules because DBS operators are not included
    within the exclusivity prohibition. *See* 47 C.F.R. § 1002(c).

[^243]: *See News Corp.-Hughes Order*, 19 FCC Rcd at 530-31 ¶ 126
    (explaining that loss of access to certain highly popular cable
    programming -- whether it is it news, drama, sports, music, or
    children's programming -- may harm the foreclosed unaffiliated
    competitor in the marketplace).

[^244]: These conditions are included in Appendix B.

[^245]: The term "Liberty Media" as used with respect to the program
    access and arbitration conditions includes any entity or program
    rights holder in which Liberty Media or John Malone holds an
    attributable interest. Thus, the term "Liberty Media" includes
    Discovery Communications. Liberty Media and DIRECTV are prohibited
    from acquiring an attributable interest in any non-broadcast
    national or regional programming service while these conditions are
    in effect if the programming service is not obligated to abide by
    such conditions.

[^246]: In committing not to offer its programming services on an
    exclusive basis, Liberty voluntarily forgoes the right enjoyed by
    all other vertically integrated programmers to seek approval of an
    exclusive programming contract under the public interest standard
    established in 47 U.S.C. § 548(c)(4).

[^247]: This condition would only be of significance in the event an
    Affiliated Program Rights Holder is not otherwise subject to the
    Commission's program access rules.

[^248]: *See* *also* 47 C.F.R. § 76.1003.

[^249]: We note that application of the relevant conditions of this
    Order are based on a network's ownership, as opposed to whether the
    content of the network's programming is "international" or
    "domestic." In other words, we acknowledge that international
    programming distributed in the United States falls within the
    definition of 'national and regional programming services' in the
    condition described above. However, we reject any suggestion that
    our conditions should apply to programming distributed outside the
    United States. *See* EchoStar Petition at 15-17; *see also* Letter
    from Linda Kinney, Counsel, EchoStar Satellite L.L.C., to Marlene H.
    Dortch, Secretary, FCC, Attachment ("News Corp/Liberty/DIRECTV
    Proposed Conditions") at 1 (Mar. 29, 2007) ("The program access
    protections should apply to both domestic and international
    programming and markets.")

[^250]: ACA Comments at 12-13.

[^251]: We note that the Commission recently concluded its review of the
    continued need for the prohibition against program exclusivity
    agreements, but concomitantly issued a Notice of Proposed Rulemaking
    seeking comment on whether and how the Commission should address
    additional program access concerns raised in this proceeding by
    small and rural MVPDs regarding allegedly onerous and unreasonable
    conditions imposed by some programmers for access to their content.
    *2007 Program Access Order and NPRM*, 22 FCC Rcd at 17867 ¶ 133. We
    note that ACA raised concerns with volume discounts as a form of
    non-cost-based discrimination in comments filed in response to the
    *2007 Program Access Order and NPRM. See* ACA Comments, MB Docket
    No. 07-198 (Jan. 4, 2008) at 17-18, 23.

[^252]: *See, e.g., News Corp.- Hughes Order*, 19 FCC Rcd at 534 ¶ 131.

[^253]: EchoStar Petition at 19-21. The Broadband Service Providers
    Association also supports arbitration-type procedures for the
    remedies phase of a program access complaint proceeding, which it
    submitted in MB Docket 07-18 and in this proceeding. Letter from
    John Goodman, Executive Director, Broadband Service Providers
    Association, to Marlene H. Dortch, Secretary, FCC at 1, Attachment
    ("Broadband Service Providers Association FCC Discussion Outline")
    at 3 (Feb. 1, 2008) ("BSPA Feb. 1, 2008 Ex Parte").

[^254]: EchoStar Petition at 19-20 n.48 ("The timing and means by which
    the Commission corrects the flaws in the program access regime is
    not relevant for this transaction's review. The Commission's task
    here is to design meaningful conditions that address merger-specific
    harms. Adopting an arbitration remedy in this proceeding does not
    prejudice the Commission's separate review of the program access
    rules.").

[^255]: *Id.* at 22 (referencing conduct of Liberty's
    predecessor-in-interest, TCI).

[^256]: Liberty Media Opposition of Apr. 9, 2007 at 24-25.

[^257]: *See News Corp.-Hughes Order,* 19 FCC Rcd at 552 ¶¶ 172-177.

[^258]: *See id.* at 533-34 ¶ 130 (confidential version), submitted in
    MB Docket No. 07-18.

[^259]: *See 2007 Program Access Order and NPRM,* 22 FCC Rcd at
    17868-69.

[^260]: David Lieberman, *Liberty Media Deals for DIRECTV: Malone Swaps
    News Corp. Shares for Control,* [USA Today,]{.smallcaps} Dec. 26,
    2006, at B.2; *see also* Andy Vuong, *John Malone: From Cable to
    Clubhouse,* [Denver Post,]{.smallcaps} Feb. 14, 2007, at C-01.

[^261]: [*News Corp.-Hughes Order,* 19 FCC Rcd at 535 ¶
    133](http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=4493&FindType=Y&ReferencePositionType=S&SerialNum=2004065576&ReferencePosition=535).

[^262]: *Adelphia Order,* 21 FCC Rcd at 8259 ¶ 124.

[^263]: *See News Corp.-Hughes Order,* 19 FCC Rcd at 525, 529 ¶¶ 113,
    124.

[^264]: Liberty Media's programming is now subject to the program access
    rules due to John Malone's common interests in Liberty Media and
    LCPR. Application at 23 n.44.

[^265]: *Cf. News Corp.-Hughes Order,* 19 FCC Rcd at 552-53 ¶¶ 172-79,
    642-48 App. D (confidential version), submitted in MB Docket 07-18.

[^266]: *See* Appendix B.

[^267]: EchoStar Petition at 11-13.

[^268]: ACA Reply Comments at 2; ACA Comments at 9-15.

[^269]: Liberty Media Opposition of Apr. 9, 2007 at 4-6.

[^270]: News Corp. Opposition of Apr. 9, 2007 at 15-18; Liberty Media
    Opposition of Apr. 9, 2007 at 25-27.

[^271]: *News Corp.-Hughes Order,* 19 FCC Rcd at 552 ¶ 172 (confidential
    version), submitted in MB Docket 07-18.

[^272]: *Id.* at 552 ¶¶ 173-75 (confidential version), submitted in MB
    Docket 07-18.

[^273]: *Adelphia Order,* 21 FCC Rcd at 8275 ¶ 159.

[^274]: In *Adelphia*, the Commission implemented a similar remedy to
    prevent Comcast and Time Warner from harming MVPD competition by
    uniformly raising the prices paid by competing MVPDs for their
    affiliated RSNs -- costs that Comcast and Time Warner could offset
    with the increased profits earned by the RSNs. *Adelphia Order,* 21
    FCC Rcd at 8273-74 ¶¶ 155-57.

[^275]: As noted in Appendix B, the arbitrator must issue his or her
    final award within 30 days after being appointed. A party aggrieved
    by the arbitrator's final award may file with the Commission a
    petition seeking *de novo* review of the award. The petition must be
    filed within 30 days of the date the award is published, and the
    Commission shall issue its findings and conclusions not more than 60
    days after receipt of the petition, which may be extended by the
    Commission for one period of 60 days.

[^276]: EchoStar Petition at ii, iii, 12-13, 17; CU Comments at 2-3.

[^277]: EchoStar Petition at ii, iii, 17, 30; CU Comments at 2-3.

[^278]: EchoStar Petition at ii, 11-13, 30-31; CU Comments at 2-3; ACA
    Reply Comments at 8.

[^279]: Liberty Media Opposition of Apr. 9, 2007 at 6.

[^280]: EchoStar Petition at 18. EchoStar also urges the Commission to
    revisit the appropriate length of time for the RSN and
    retransmission consent conditions. It contends that no evidence
    exists to show the "anticompetitive risks associated with access to
    RSNs/broadcast affiliates and vertically-integrated MVPDs will not
    continue indefinitely, and more specifically will cease in six
    years." *Id.* We address this concern in para. 92, *infra.*

[^281]: Liberty Media Opposition of Apr. 9, 2007 at 5-6.

[^282]: *See* Appendix B; *see also* Liberty Media Opposition of Apr. 9,
    2007 at 1-6. Ownership will be determined in accordance with the
    attribution standards applicable to the Commission's program access
    rules. *See* 47 C.F.R.         § 76.1000, *et seq.* Liberty Media
    and DIRECTV are prohibited from acquiring an attributable interest
    in an RSN during the period of these conditions if the RSN is not
    obligated to abide by the conditions.

[^283]: *See News Corp.-Hughes Order,* 19 FCC Rcd at 555 ¶ 179;
    *Adelphia Order,* 21 FCC Rcd at 8276 ¶ 164.

[^284]: EchoStar contends that the Big 10 Network is an RSN and asks us
    to define an RSN in a manner that protects against alleged
    gamesmanship or uncertainty going forward. EchoStar also submitted a
    petition for declaratory ruling in the *News Corp.-Hughes* *Order's*
    docket asking the Commission to determine whether the Big 10 Network
    qualified as an RSN for purposes of the *News Corp.-Hughes*
    *Order's* arbitration conditions. Letter from Linda Kinney, Vice
    President of Law and Regulation, EchoStar, to Marlene H. Dortch,
    Secretary, FCC at 1-2, Att. (Petition for Declaratory Ruling in MB
    Docket 03-124) (July 26, 2007). Subsequently, EchoStar withdrew both
    requests that we address the status of the Big 10 Network because it
    had reached a carriage agreement with News Corp. Letter from Linda
    Kinney, Vice President of Law and Regulation, EchoStar, to Marlene
    H. Dortch, Secretary, FCC at 1 (Sept. 12, 2007).

[^285]: *News Corp.-Hughes Order,* 19 FCC Rcd at 543 ¶ 148.

[^286]: *Adelphia Order,* 21 FCC Rcd at 8275 ¶ 158.

[^287]: We note that Puerto Rico has its own sports leagues that MVPD
    subscribers are likely to find highly desirable. "Even though Puerto
    Rico is a United States territory, it is an autonomous nation when
    it comes to sports." *See* Craveonline, *Hoopsville.com*,
    http://www.hoopsvibe.com/fiba-world-basketball-championship/fiba-world-championship-news/puerto-rico-s-basketball-tradition-a-brief-history-ar45975.html
    (visited Feb. 4, 2008). Puerto Rico fields its own teams in both the
    Summer and Winter Olympics, as well as international competitions.
    "\[In the 2004 Summer Olympics, the Puerto Rican National Basketball
    Team's defeat of the United States NBA 'Dream Team'\] . . . the most
    lopsided defeat in U.S. basketball history . . . led to an increased
    sense of cultural identity and pride, and further contributed to
    basketball's status as a vital part of Puerto Rican culture." *Id.*
    Baseball is an especially popular sport in Puerto Rico. "In the
    common lives of the citizenry of . . . Puerto Rico, baseball is the
    primary sport in terms of participation, live attendance as well as
    television viewing . . . Mass participation in a particular sport
    sets up the environment for star players to emerge locally and
    eventually migrat\[e\] to Major League Baseball in the USA where
    fame and fortune awaits. Such Latin American stars become idols for
    their compatriots, thus generating greater interest in the sport,
    thus feeding on the popularity." *See* Zona Latina, "Watching
    Baseball on Television in Latin America,"
    http://www.zonalatina.com/Zldata230.htm (visited Feb. 4, 2008)
    ("www.zonalatina.com"). ". . . . \[A\]s much as 30% of the Major
    League Baseball players are of Latino descent, much higher than the
    11% in the population as a whole." *See* www.zonalatina.com. In
    2001, market research firm TGI, a division of the KMR Group, which
    in turn is a subsidiary of the WPP marketing and advertising group,
    interviewed more than 50,000 people throughout Latin America to
    determine their viewing patterns. Of the people who said that they
    frequently watch baseball on television, 24 percent were from Puerto
    Rico. *See* www.zonalatina.com; KMR Group,
    http://www.kmr-group.com/americas/utility.asp?p=91&r=8415.881
    (visited Feb. 4, 2008). KMR Group also operates Mediafax, which is
    the sole measurer television audiences in Puerto Rico, and is the
    counterpart to the Nielsen Company in the United States. *Hispanic
    TV Station Rankings by Market*, [Multichannel News]{.smallcaps},
    Oct. 17, 2005 at 18A.

[^288]: We note that this definition of RSN (most recently adopted in
    the *Adelphia Order*) applies only to this Order and only to
    negotiations involving access to RSN programming. This definition is
    intended to preclude Applicants from evading the condition by
    spreading highly valued sports programming among various programming
    services. *See* *Adelphia Order*, 21 FCC Rcd at 8275 ¶ 158 (defining
    RSN for purposes of program access).

[^289]: ACA Reply Comments at 2.

[^290]: ACA Comments at 9-10.

[^291]: *Id.* at 10-11.

[^292]: *Id.* at 11.

[^293]: News Corp. Opposition of Apr. 9, 2007 at 15-18. Though News
    Corp. states in its Opposition that the terms expire six years after
    the adoption date of the Order, the Order states that the condition
    expires six years after the release of the Order. *News Corp.-Hughes
    Order,* 19 FCC Rcd at 679 App. F(III).

[^294]: News Corp. Opposition of Apr. 9, 2007 at 16-18.

[^295]: ACA Reply Comments at 2.

[^296]: ACA Comments at 11-12.

[^297]: *Id.* at 12.

[^298]: *Id.*

[^299]: Liberty Media Opposition of Apr. 9, 2007 at 25.

[^300]: ACA Comments at 14. Those provisions are available to any "small
    cable company," defined in our rules as one that "serves a total of
    400,000 or fewer subscribers over one or more cable systems." 47
    C.F.R. § 76.901(e); s*ee also News Corp.-Hughes Order,* 19 FCC Rcd
    at 679 App. F; *Adelphia Order,* 21 FCC Rcd at 8339 App. B.

[^301]: ACA Comments at 15.

[^302]: ACA Comments at 14-15.

[^303]: Liberty Media Opposition of Apr. 9, 2007 at 256 (citing *Annual
    Assessment of the Status of Competition in the Market for the
    Delivery of Video Programming,* 21 FCC Rcd 2503, 2620 Table B-3
    (2006) ("*Twelfth Annual Video Competition Report"*)). Liberty Media
    states that, based on the *Twelfth Annual Video Competition Report,*
    ACA's proposed definition of 'small' likely would include the tenth
    largest MVPD in the nation." *Id.* The evidence Liberty Media cites
    to in support of its position, Table B-3 of the *Twelfth Annual
    Video Competition Report,* shows that Mediacom serves approximately
    1.5 percent of the nation's MVPD subscribers, and thus ranks 10th in
    the national market for the purchase of video programming. *See
    Twelfth Annual Video Competition Report,* 21 FCC Rcd at 2620 Table
    B-3.

[^304]: Liberty Media Opposition of Apr. 9, 2007 at 26.

[^305]: ACA mistakenly states that the *News Corp.-Hughes* program
    access-type conditions last for six years. ACA Comments at 17.
    Instead, that Order states that the conditions regarding program
    access type commitments apply to News Corp. and DIRECTV for as long
    as News Corp. has an attributable interest in DIRECTV and the
    program access rules are in effect. *News Corp.-Hughes Order,* 19
    FCC Rcd at 676 Appendix F (II).

[^306]: ACA Comments at 17.

[^307]: *Id.*

[^308]: Liberty Media Opposition of Apr. 9, 2007 at 26.

[^309]: News Corp. Opposition of Apr. 9, 2007 at 10-14.

[^310]: *See* NCTC Comments at 5-6.

[^311]: The *Adelphia Order* specifies that a small cable operator may
    disclose to its bargaining agent the date on which the operator's
    contract expires, notwithstanding a contractual term to the
    contrary. *Adelphia Order,* 21 FCC Rcd at 8339 Appendix B at (B)(5)
    (provisions applicable to small MVPDs).

[^312]: The Commission is seeking comment on the issue of non-disclosure
    agreements between programmers and MVPDs. *2007 Program Access Order
    and NPRM,* 22 FCC Rcd at 17867-68 ¶ 133.

[^313]: *Cf. News Corp.-Hughes,* 19 FCC Rcd at 552 ¶ 174. In *News
    Corp.-Hughes,* the Commission found that, once News Corp. was
    vertically integrated with DIRECTV, it would have the incentive and
    ability to temporarily foreclose its highly valued RSN programming
    from competing MVPDs. To prevent News Corp. from employing that
    foreclosure strategy, the Commission crafted an arbitration
    condition so that carriage of programming would continue
    uninterrupted if negotiations failed to produce a mutually
    acceptable set of prices, terms, and conditions, and so that parties
    would have a "useful backstop to prevent News Corp. from exercising
    its increased market power to force rival MVPDs to either accept
    inordinate affiliate fee increases for access to RSN programming
    and/or other unwanted programming concessions or potentially to cede
    critical content to their most powerful DBS competitor, DIRECTV." In
    other words, the RSN arbitration condition placed the parties in the
    same negotiating position as they would have been before the
    transaction. *Cf. id.* at 552 ¶¶ 172-74.

[^314]: Under the procedures set forth in the *News Corp.-Hughes Order*,
    notice can consist of a one-sentence letter expressing intent to
    arbitrate. A full demand consists of the following: (1) a final
    offer in the form of a contract; (2) a statement describing the
    nature of the dispute, (3) the names and addresses of all other
    parties, (4) the amount involved, and (5) the hearing locale
    requested. *News Corp.-Hughes Order,* 19 FCC Rcd at 631-32, 677-79
    App. B (Modifications to Rules for Arbitration Involving Regional
    Sports Networks), App. C (Modifications to Rules for Arbitration
    Involving Retransmission Consent), App. F(III) (Additional
    Conditions Concerning Access to Regional Sports Cable Programming
    Networks); American Arbitration Association, *Commercial Arbitration
    Rules and Mediation Procedures*, Rule R-4, at
    <http://www.adr.org/sp.asp?id=22440> (visited Jan. 25, 2008).

[^315]: *News Corp.-Hughes Order*, 19 FCC Rcd at 553 ¶ 176.

[^316]: ACA Comments at 9-11.

[^317]: *See News Corp.-Hughes Order,* 19 FCC Rcd at 555 ¶ 179; *see
    also Adelphia Order,* 21 FCC Rcd at 8276 ¶ 164.

[^318]: *News Corp.-Hughes Order,* 19 FCC Rcd at 572-73 ¶¶ 220-21.
    Commercial television broadcast station signals are carried by DBS
    operators pursuant to either mandatory carriage or retransmission
    consent agreements. Noncommercial television stations do not have
    retransmission consent rights. In markets where a DBS operator
    carries any station to subscribers within the station's local market
    (*i.e.,* "local-into-local" carriage), all broadcast television
    stations in the market have a right to mandatory carriage by that
    DBS operator (*i.e.,* the "carry-one, carry-all" requirement). 47
    C.F.R. § 76.66. Broadcasters also have the option of negotiating
    terms of retransmission with the DBS operator. The reciprocal
    bargaining obligation applies to retransmission consent negotiations
    between all broadcasters and MVPDs regardless of the designated
    market area in which they are located. *See* Satellite Home Viewer
    Extension and Reauthorization Act of 2004, Pub. L. No. 108-447, 118
    Stat 2809 (2004) (codified in scattered sections of 17 and 47
    U.S.C.) ("SHVERA"). Additionally, broadcasters and DBS operators are
    prohibited from entering into exclusive retransmission consent
    agreements (although terms, conditions, and prices may vary if based
    on competitive marketplace considerations), and they must negotiate
    in good faith. *See* 47 U.S.C. § 325(b)(3)(C)(ii), (iii); 47 C.F.R.
    §§ 76.64(l), 76.65. By statute and regulation, the exclusivity and
    good faith negotiation requirements are effective until January 1,
    2010. 47 U.S.C. § 325(b)(3)(C)(ii), (iii); 47 C.F.R. §§ 76.64(l),
    76.65(f).

[^319]: *News Corp.-Hughes Order,* 19 FCC Rcd at 572-73 ¶¶ 220-21.

[^320]: *Id.*

[^321]: *Id.*

[^322]: *Id.*; *see also id.* at 572 ¶ 219.

[^323]: Application at 2 n.2, 18.

[^324]: Supplement to Application at 2. The letter states that "Liberty
    Media proposes to adopt each of the broadcast-related conditions
    imposed on News Corp. with respect to the two broadcast television
    stations it seeks to acquire." Supplement to Application at 1. It
    also states that Liberty Media "offers to abide by conditions with
    respect to WFRV-TV and WJMN-TV similar to those regarding access to
    local broadcast television programming that the FCC established in
    the *News Corp.-Hughes Order* \[*see* *News Corp.-Hughes Order*, 19
    FCC Rcd at 680-83 at App. F (IV)\]. These conditions include the
    provisions for commercial arbitration in the case of a negotiating
    impasse with other \[MVPDs\] regarding retransmission consent for
    WFRV-TV and WJMN-TV." Supplement to Application at 2. On April 18,
    2007 Liberty Media completed its purchase of the two broadcast
    stations. *See*
    http://www.cbscorporation.com/news/prdetails.php?id=2043 (visited
    February 22, 2008).

[^325]: Liberty Media Opposition of Apr. 9, 2007 at 6. EchoStar asks the
    Commission to confirm that the retransmission consent conditions
    will apply for at least a six-year period and that the transaction
    would restart that six-year clock. EchoStar Petition at 17; *see
    also* EchoStar Petition at 11-12 and n.29.

[^326]: EchoStar Petition at 18.

[^327]: Liberty Media Opposition of Apr. 9, 2007 at 5-6.

[^328]: ACA asks that we: clarify the rights of a collective bargaining
    agent (ACA Comments at 8-11, ACA Reply Comments at 2), extend the
    arbitration notice periods to prevent inadvertent loss of
    arbitration rights (ACA Comments at 11-12, ACA Reply Comments at 2),
    expand the definition of "small cable company" to include all ACA
    members (ACA Comments at 14-15, ACA Reply Comments at 2), and
    increase the terms of the conditions applicable to small and
    medium-sized cable companies from six to ten years (ACA Comments at
    2, 17).

[^329]: Liberty Media Opposition of Apr. 9, 2007 at 25-27; News Corp.
    Opposition of Apr. 9, 2007 at 15-18.

[^330]: *News Corp.-Hughes Order,* 19 FCC Rcd at 503 n.195 (citing
    three-year retransmission consent cycle requirements established
    under 47 C.F.R. §§ 76.64 and 76.66); *id*. at 576 n.628 (applying
    conditions for six years, or two retransmission cycles). As noted in
    Appendix B, the arbitrator must issue his or her final award within
    30 days after being appointed. A party aggrieved by the arbitrator's
    final award may file with the Commission a petition seeking *de
    novo* review of the award. The petition must be filed within 30 days
    of the date the award is published, and the Commission shall issue
    its findings and conclusions not more than 60 days after receipt of
    the petition, which may be extended by the Commission for one period
    of 60 days. For purposes of this Order, ownership shall be
    determined in accordance with the Commission's attribution rules
    applicable to broadcast licensees. 47 C.F.R. § 73.3555 Notes 1-3.
    Liberty Media and DIRECTV are prohibited from acquiring an
    attributable interest in a broadcast television station during the
    period of the conditions set forth in this Order unless the station
    is required to abide by such conditions.

[^331]: *News Corp.-Hughes Order,* 19 FCC Rcd at 682 App. F(IV). In that
    proceeding, the Commission found that the merger of DIRECTV and News
    Corp. could increase the risk of harm to News Corp.'s competitors
    and consumers by increasing News Corp.'s incentive to temporarily
    withhold its broadcast signals, behavior that would not be
    constrained by rules governing the carriage of local broadcast
    signals or by the program access rules. *Id*. at 568 ¶¶ 209-11. The
    substitution of Liberty Media for News Corp. does not suggest that
    the risk of harm is reduced.

[^332]: *See* para 92, *supra* Section V.C.2.

[^333]: *See* paras. 100-102, *supra* Section V.C.2.

[^334]: *News Corp.-Hughes Order,* 19 FCC Rcd at 572 ¶ 219; *see also
    id.* at 680 App. F(IV).

[^335]: Supplement to Application at 2 ("In light of Liberty Media's
    proposed acquisition of a controlling interest in WFRV-TV and
    WJMN-TV, Liberty Media offers to abide by conditions with respect to
    WFRV-TV and WJMN-TV similar to those regarding access to local
    broadcast television programming that the FCC established in the
    *News Corp.-Hughes Order*."); *see also* Liberty Media Opposition of
    Apr. 9, 2007 at 6. Although the Applicants describe their commitment
    as one by Liberty Media to abide by the *News Corp.-Hughes*
    broadcast programming conditions, which include the broadcast
    non-discrimination provision, Liberty Media states in its Opposition
    that such conditions would last only six years. However, the
    analogous *News Corp.-Hughes* condition does not terminate after six
    years.

[^336]: *See* Appendix B. Although commenters did not raise the issue of
    broadcast non-discrimination conditions explicitly, several
    commenters urge the Commission to adopt all of the News Corp.
    conditions in this transaction. Those conditions include a
    non-discrimination condition for broadcast programming. ACA Comments
    at 9; CU Comments at 2-3; *News Corp.-Hughes Order,* 19 FCC Rcd at
    676 App. F(I).

[^337]: Supplement to Application at 2; *see also News Corp.-Hughes
    Order,* 19 FCC Rcd at 676 App. F(IV). Appendix F(IV) from the *News
    Corp.-Hughes Order* includes a condition mandating compliance with
    the good faith and exclusivity provisions of the Satellite Home
    Viewer Improvement Act of 1999 ("SHVIA") for as long as the program
    access rules are in effect, notwithstanding the then-applicable
    sunset date of January 1, 2006 for the SHVIA provisions. SHVIA has
    subsequently been modified by SHVERA, and we therefore modify the
    relevant condition accordingly. *See supra* note 318; Appendix B. As
    mentioned above, the Applicants state that they will comply with the
    "broadcast" conditions for six years. Despite this misstatement of
    the duration of the non-arbitration broadcast conditions, we
    understand that Applicants intended to abide by the same conditions
    as those adopted in *News Corp.-Hughes*. *See* Liberty Media
    Opposition at 6; *see also* Supplement to Application at 2. The
    duration of each of the broadcast conditions set forth in Appendix B
    therefore is the same as the duration of each analogous condition in
    *News Corp.-Hughes.*

[^338]: Although the Commission has not defined the term "interactive
    television" ("ITV") for regulatory purposes under the Communications
    Act, the Commission has broadly characterized ITV as a service or
    suite of services that support subscriber-initiated choices or
    actions that are related to one or more video programming streams.
    *See Nondiscrimination in the Distribution of Interactive Television
    Services Over Cable*, 16 FCC Rcd 1321, 1323 ¶ 6 (2001) ("*ITV
    NOI*"). Services providing such capabilities may include
    video-on-demand, personal video recorder, gaming, email, TV-based
    e-commerce, interactive advertising, Internet access, and
    program-related enhanced content. *See Annual Assessment of the
    Status of Competition in the Market for the Delivery of Video
    Programming*, 17 FCC Rcd 26901, 26971 ¶ 170 (2002). In the *ITV
    NOI*, the Commission noted that ITV was rapidly developing, thus
    making it difficult to define with specificity the precise universe
    of services that might be encompassed within the term. For purposes
    of discussion, the *ITV NOI* instead attempted to identify the major
    technical resources or "building blocks" necessary for the provision
    of what it understood to be likely ITV services. The identified
    components were: (1) a video transmission capacity associated with
    interactive content (*e.g.,* the digital video stream), (2) a
    two-way connection (*e.g.*, via the Internet), and (3) specialized
    customer premises equipment (*e.g*., the interactive television
    set-top box). *ITV NOI*, 16 FCC Rcd at 1323225 ¶¶ 6, 10--13.

[^339]: EchoStar Petition at 23-24.

[^340]: *Id.* at 24. EchoStar states that program access rules apply to
    "satellite cable programming," defined as satellite delivered "video
    programming" that is intended primarily for retransmission to cable
    subscribers. EchoStar argues that because Congress has defined
    "interactive on-demand services" as a subset of "video programming,"
    interactive on-demand services are entitled to program access
    protections. *Id.* at 24 n.56. Because we find that the concerns
    raised by EchoStar are not transaction specific, we find it
    unnecessary to address this argument in this proceeding.

[^341]: *Id.* at 24 n.56.

[^342]: However, we note that video-on-demand networks that satisfy the
    definition of "satellite cable programming" are covered by the
    program access rules, and thus are subject to the program access
    conditions of this Order. *See* 47 U.S.C. § 548(i)(1); 47 U.S.C. §
    605(d)(1); 47 C.F.R. § 76.1000(h).

[^343]: EchoStar Petition at 23 ("Liberty should not be permitted to
    evade the programming protections adopted by the Commission through
    the use of these technologies.").

[^344]: *Id.* at 23-24.

[^345]: *Id.* at 23-24.

[^346]: DIRECTV Opposition of Apr. 9, 2007 at 19; Discovery Opposition
    at 7-9.

[^347]: The Viacom networks, such as MTV and Nickelodeon, fall into the
    second category.

[^348]: *See* 47 C.F.R. §76.1002(c)(2), (4). For example, the networks
    owned by Time Warner , such as HBO, fall into this category.

[^349]: For example, RCN contends that DIRECTV already has market power
    and that the transaction would enhance DIRECTV's ability to secure
    exclusive agreements with non-vertically integrated programmers for
    "must have" programming. RCN Comments at 4-5, Atts A, B; ACA Reply
    Comments at 9-10. As evidence of DIRECTV's "abuses" of its ability
    to enter into exclusive contracts, EchoStar notes that "DIRECTV's
    slate of exclusive programming has materially changed" since the
    Commission allowed DIRECTV to offer out-of-market NFL games on an
    exclusive basis in the News Corp.-Hughes transaction. EchoStar
    Petition at 22; *see also News Corp.-Hughes Order,* 19 FCC Rcd at
    600 n.797.

[^350]: EchoStar Petition at 22; RCN Comments at 7-8; *see also supra*
    note 206.

[^351]: RCN Comments in Docket 07-29 ("RCN Program Access Comments") at
    12-18, transmitted by letter from Richard Ramlall, Senior Vice
    Pres., Strategic and External Affairs, RCN, to Marlene Dortch,
    Secretary, FCC (Apr. 19, 2007) ("RCN Apr. 19, 2007 Ex Parte"); ACA
    Reply Comments at 10; EchoStar Petition at 22. ACA states that small
    and medium-sized cable operators are especially vulnerable to
    competitors' exclusive control over sports programming. ACA Reply
    Comments at 10. The Broadband Service Providers Association also
    raises general concerns regarding a variety of programming
    practices, such as DIRECTV's exclusive carriage of NFL Sunday
    Ticket. BSPA Feb. 1, 2008 Ex Parte at 1, Attachment at 4.

[^352]: Commenters criticize DIRECTV's contract with MLB for Extra
    Innings, which conferred exclusive rights to carry those games in
    the 2007 season on DIRECTV if no other MVPD matched DIRECTV's
    contract terms. Those contract terms included a requirement that any
    MVPD carrying Extra Innings must also carry The MLB Channel in
    programming packages that reach more than 80 percent of the MVPD's
    total residential subscribers. RCN Comments at 7; EchoStar Petition
    at 21; Statement of Robert A. DuPuy, President and CEO of Major
    League Baseball to the Committee on Commerce, Science and
    Transportation, U.S. Senate (Mar. 27, 2007),
    http://commerce.senate.gov/public/index.cfm?FuseAction:Hearings.Testimony&Hearing_ID=1838&Witness_ID=6562.
    Ultimately, Major League Baseball negotiated a deal that enabled
    other MVPDs to carry Extra Innings. Steve Donohue, *Solid Start for
    MLB Net: Big Launch Platform for '09 Channel in Out-of-Market Pact,*
    MultiChannel News, Vol. 28, Iss. 15 (Feb. 3, 2008).

[^353]: RCN expressed concern that exclusives with non-vertically
    integrated sports programmers harm competition. RCN Comments at 4;
    RCN Apr. 19, 2007 Ex Parte; RCN Program Access Comments at 13-15.

[^354]: RCN Comments at 2-3, Attachments A, B. RCN refers to Senator
    John Kerry's letter to the Commission, dated Feb. 1, 2007, and
    Commissioner Martin's response on Feb. 22, 2007 stating their
    concerns over an exclusive baseball agreement between Major League
    Baseball and DIRECTV. RCN criticizes DIRECTV's use of other
    exclusive programming agreements, such as NASCAR Hot Pass, discussed
    above in paragraphs 112-113. RCN Comments at 2-3, Attachments A, B.

[^355]: RCN Comments at 1-2, 8-10; ACA Reply Comments at 10.

[^356]: EchoStar Petition at 21.

[^357]: DIRECTV Opposition of Apr. 9, 2007 at 3-4, 5, 7; Liberty Media
    Opposition of Apr. 9, 2007 at 19-20.

[^358]: DIRECTV Opposition of Apr. 9, 2007 at 5, 9.

[^359]: *Id.* The transaction will not increase DIRECTV's market share.
    *Id.* at 7.

[^360]: *Id.* at 5-9; Liberty Media Opposition of Apr. 9, 2007 at 20.
    The Applicants explain that EchoStar, Time Warner, and Comcast would
    be permitted to continue offering exclusives, and that RCN could
    enter into new exclusive agreements. DIRECTV Opposition of Apr. 9,
    2007 at 5-6; Liberty Media Opposition of Apr. 9, 2007 at 20.

[^361]: DIRECTV Opposition of Apr. 9, 2007 at 7.

[^362]: EchoStar alleged in the News Corp.-Hughes proceeding that Rupert
    Murdoch's influence on DIRECTV (via his ownership of News Corp.)
    would increase incentives to "gain exclusivity or other undue
    advantages over competing distributors." DIRECTV Opposition of Apr.
    9, 2007 at 7.

[^363]: *Id.* at 8.

[^364]: *Id.* at 4.

[^365]: *Id.*

[^366]: RCN Comments at 6; ACA Reply Comments at 10.

[^367]: RCN Comments at n.21.

[^368]: Liberty Media Opposition of Apr. 9, 2007 at 21.

[^369]: DIRECTV Opposition of Apr. 9, 2007 at n.15.

[^370]: *Id.* at 4-6.

[^371]: *2002 Program Access Order,* 17 FCC Rcd at 12127 ¶¶ 6-7.

[^372]: *Id.* (citing 1992 Cable Act § 2(a)(2)). As noted above, Liberty
    Media has agreed to abide by restrictions on its dealings with
    vertically integrated programming networks by offering to comply
    with the program access rules as a condition to this transaction.
    *See supra* Section V.C.2.a.(i)*.*

[^373]: *2002 Program Access Order,* 17 FCC Rcd at 12141, 12143-44 ¶¶
    40, 45.

[^374]: EchoStar alleges that, absent a divestiture, the transaction
    could enable DIRECTV-Puerto Rico and LCPR to foreclose EchoStar's
    access to programming in Puerto Rico. *See* EchoStar Petition at 25.
    We note that EchoStar did not provide any evidence to substantiate
    this claim. Even so, our remedy regarding Puerto Rico addresses
    EchoStar's concern.

[^375]: *Comcast-AT&T Order*, [17 FCC Rcd
    at](http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=4493&FindType=Y&ReferencePositionType=S&SerialNum=2002721892&ReferencePosition=23274)
    23286; *AT&T-MediaOne Order*, 15 FCC Rcd at 9854-55; *Adelphia
    Order,* 21 FCC Rcd at 8281-83 ¶¶ 174-78. Comcast, Time Warner, and
    EchoStar all serve national subscriber bases that are larger than or
    comparable to DIRECTV's subscriber base, and thus, to the extent an
    exclusive arrangement is made more feasible by a large national
    footprint, these MVPDs are well-positioned to compete against
    DIRECTV for exclusive distribution rights.

[^376]: We note that EchoStar has stated that it did not lose a
    significant number of its baseball package subscribers when Extra
    Innings initially entered into a *de facto* exclusive agreement with
    DIRECTV. EchoStar President Carl Vogel has said that the switch had
    a "'small incremental impact' on the 50,000 MLB subscribers."
    *EchoStar's Ergen Believes DTV Transition Will Be Pushed Off*,
    [Communications Daily]{.smallcaps}, Aug. 13, 2007, 2007 WLNR
    15819868.

[^377]: 47 C.F.R. § 76.1300, *et seq*.

[^378]: Application at iii, 4.

[^379]: *See* Appendix B ("Neither News Corp. nor DIRECTV will
    discriminate against unaffiliated programming services in the
    selection, price, terms or conditions of carriage."). The Commission
    adopted the condition in *News Corp.-Hughes* to deal with concerns
    about unaffiliated programmers' ability to secure carriage by
    DIRECTV. *See News Corp.-Hughes Order,* 19 FCC Rcd at 523-34 ¶¶
    107-08.

[^380]: As in the *News Corp.-Hughes Order,* we clarify that aggrieved
    programmers and MVPDs may seek relief for any alleged violations of
    this condition by using the existing enforcement mechanisms found at
    section 76.1003 of the Commission's rules. 47 C.F.R. § 76.1003 *see
    also* *News Corp.-Hughes Order,* 19 FCC Rcd at 523-24 ¶ 107.

[^381]: HITN Petition at 1-2.

[^382]: HITN Withdrawal of Petition at 1.

[^383]: 47 C.F.R. § 25.701(f)(2).

[^384]: Letter from David S. Turetsky, Dewey & LeBoeuf LLP, Counsel to
    HDNet LLC to Marlene H. Dortch, Secretary, FCC (Nov. 13, 2007) at 3.

[^385]: *Id.*

[^386]: *Id.* at 4.

[^387]: *Id.*, Attachment ("Proposed Transaction Conditions") at 1-8.

[^388]: Letter from William M. Wiltshire, Harris, Wiltshire & Grannis
    LLP, Counsel for DIRECTV, to Marlene H. Dortch, Secretary, FCC (Nov.
    20, 2007) at 2; Letter from Tara M. Corvo, Counsel to Discovery
    Communications, LLC, to Marlene H. Dortch, Secretary, FCC (Nov. 20,
    2007) at 1-3 (noting that "the decision to accept, and later
    terminate, advertisements from HDNet was made by Discovery for
    appropriate business reasons without input from, or knowledge of,
    Liberty Media, DIRECTV, Discovery Holding or John Malone.").

[^389]: Letter from David S. Turetsky, Dewey & LeBoeuf LLP, Counsel to
    HDNet LLC, to Marlene H. Dortch, Secretary, FCC (Dec. 6, 2007) at 1.

[^390]: Letter from Kathleen Wallman, Wallman Consulting, LLC, Advisor
    to WealthTV, to Marlene H. Dortch, Secretary, FCC (Dec. 13, 2007) at
    1 ("WealthTV Dec. 13, 2007 Ex Parte").

[^391]: *Id.*

[^392]: *Id.; see also* Letter from Kathleen Wallman, Wallman
    Consulting, LLC, Advisor to WealthTV, to Marlene H. Dortch,
    Secretary, FCC (Jan. 29, 2008) at 1 ("WealthTV Jan. 29, 2008 Ex
    Parte"). Specifically, WealthTV asks the Commission to require
    DIRECTV to reserve five percent of the merged firm's capacity for
    independent programming that is not affiliated with any MVPD or
    broadcaster and to allocate 80 percent of that capacity to
    "independent programmers" at any given time with at least 80 percent
    of such independent programmers receiving distribution on the first
    or second most widely distributed tiers. WealthTV proposes that the
    merged firm fulfill the terms of this condition within two years, by
    either adding new capacity or via the attrition of existing
    contracts. In addition, it states that the Commission should not
    allow programming affiliated with Liberty Media or John Malone to be
    added until the 5 percent set-aside has been met. WealthTV Dec. 13,
    2007 Ex Parte at 2.

[^393]: Letter from William M. Wiltshire, Harris, Wiltshire & Grannis
    LLP, Counsel for DIRECTV, to Marlene H. Dortch, Secretary, FCC (Dec.
    21, 2007) ("DIRECTV Dec. 21, 2007 Ex Parte") at 2. Moreover, DIRECTV
    notes that 42 percent of the programming it carries is not
    vertically integrated. *Id.* at 2. WealthTV counters that this
    figure does not reflect the amount of "general appeal"
    non-vertically integrated programming that DIRECTV carries. *See*
    WealthTV Jan. 29, 2008 Ex Parte at 2; *see also* Letter from
    Kathleen Wallman, Wallman Consulting, LLC, Advisor to WealthTV, to
    Marlene H. Dortch, Secretary, FCC (Feb. 19, 2008) at 1. In response,
    DIRECTV notes that the figure does accurately reflect the amount of
    non-vertically integrated programming it carries and that WealthTV
    improperly narrows the scope of programming represented in that
    figure to non-vertically integrated "general appeal" programming.
    DIRECTV contends that by narrowing the category of programming in
    this manner, WealthTV is asking the Commission to favor one type of
    programming over others. Letter from William M. Wiltshire, Counsel
    for DIRECTV, to Marlene H. Dortch, Secretary, FCC (Feb. 6, 2008) at
    2-3.

[^394]: ACA Comments at 18-20; CU Comments at 6-7; NCTC Comments at 6;
    ACA Reply Comments at 3.

[^395]: NCTC Comments at 6. ACA states that all the *News Corp.-Hughes*
    conditions (program access and arbitration) should remain in place,
    at a minimum, for the full term of the *News Corp.-Hughes Order.*
    ACA Comments at 18-19; ACA Reply Comments at 3-4. The *News
    Corp.-Hughes* program access conditions apply to News Corp. for as
    long as the Commission deems News Corp. to have an attributable
    interest in DIRECTV and the Commission's program access rules remain
    in effect. The RSN and retransmission consent conditions terminate
    on January 14, 2010. *News Corp.-Hughes Order,* 19 FCC Rcd at 676
    App. F.

[^396]: NCTC Comments at 8. For example, NCTC states that programming
    services affiliated with News Corp. may have entered into or
    modified agreements with DIRECTV in anticipation of this
    transaction.

[^397]: EchoStar Petition at 28-30; CU Comments at 5-7.

[^398]: EchoStar Petition at 28-29; CU Comments at 4-5.

[^399]: CU Comments at 6-7; EchoStar Petition at 29-30.

[^400]: EchoStar Petition at 30-31.

[^401]: News Corp. Opposition of Apr. 9, 2007 at 5.

[^402]: *Id.* at 8-9.

[^403]: *Id.*; Liberty Media Opposition of Apr. 9, 2007 at 12-13. The
    Transitional Services Agreement between Liberty Media and Fox Sports
    Net, Inc. enables the transferred RSNs to obtain certain basic
    administrative services. Via the Technical Services Agreement, FSN
    will provide technical services for a period of up to five years to
    Liberty Media. The Fox Sports Net License Agreement provides the
    transferred RSNs with FSN "backdrop feed" programming until 2011 for
    time periods when there are no games involving local teams. The
    Production Services Agreement identifies the programming that will
    be produced by the transferred RSN and provided to FSN and the terms
    upon which it will be provided for a period of one year. The Sports
    Access Agreement authorizes Sports Access to provide news services
    with access to the RSN programming service for news gathering and
    monitoring and to excerpt highlights for news programming. The
    Webpage Services Agreement outlines how Fox Interactive Media, Inc.
    will provide certain web-based services to the transferred RSNs as
    long as the RSNs continue to receive the FSN backdrop feed pursuant
    to the Fox Sports Net License Agreement. The National Advertising
    Sales Representation Agreement with National Advertising Partners
    provides national advertising sales to the transferred RSNs through
    2011. The Regional Sports Network License Agreement authorizes Fox
    College Sports to use high school and college events produced by the
    transferred RSNs to be carried on the Fox College Sports pay
    television service (through 2011). The Fox Sports Direct ("FSD")
    Representation Agreement continues FSD's representation of the
    transferred RSNs for purposes of out-of-market distribution of the
    RSN programming on DIRECTV and EchoStar, and is terminable in the
    event that DIRECTV and/or EchoStar agree to separate one or more of
    the RSNs from the FSD agreements. The Global Affiliation Letter
    Agreement requires Liberty Media and DIRECTV to honor existing
    Global Affiliation Agreements that provide for carriage of various
    Fox Networks, including the transferred RSNs, during the term of
    such agreements or until one or more of the RSNs is severed from a
    particular Global Affiliation Agreement. The RSN Subsidiary
    Non-Compete Agreement prohibits News Corp. and its affiliates from
    competing with the RSNs in their service areas for a period of five
    years after the closing. The DTV Non-Competition Agreement prohibits
    News Corp. from competing with DIRECTV in the DBS market for a
    four-year period and from soliciting executive officers or members
    of senior management from DIRECTV for a period of two years. Liberty
    Media Opposition of Apr. 9, 2007 at 12-16.

[^404]: Liberty Media Opposition of Apr. 9, 2007 at 12.

[^405]: News Corp. Opposition of Apr. 9, 2007 at 14.

[^406]: DIRECTV Opposition of Apr. 9, 2007 at 18.

[^407]: *Id.*

[^408]: Liberty Media Opposition of Apr. 9, 2007 at 17-18.

[^409]: *Id.*

[^410]: *Id.* at 18; DIRECTV Opposition of Apr. 9, 2007 at 18-19.
    DIRECTV notes that its by-laws provide that the Audit Committee has
    the "sole authority to review, consider and pass upon any Related
    Party Transaction, and no such transaction shall be effected without
    the approval of or authorization of a majority of the Audit
    Committee, provided that the committee may ratify any such
    transaction." The Audit Committee is composed of at least three
    independent members. Those independent members have a fiduciary duty
    to DIRECTV shareholders and have no tie to News Corp. DIRECTV
    Opposition of Apr. 9, 2007 at 18-19 (citing *News Corp.-Hughes,* 19
    FCC Rcd at 659, App. E, Committees, Section 3(d)).

[^411]: News Corp. Opposition of Apr. 9, 2007 at 7, 12-13. In addition,
    News Corp. notes that even if Carey retains his position on the
    DIRECTV board, the *News Corp.-Hughes Order* states that the program
    access conditions apply only for "as long as the FCC deems News
    Corp. to have an Attributable Interest in DIRECTV," and that Carey's
    board membership would be attributable to him, not News Corp. News
    Corp. Opposition of Apr. 9, 2007 at 13 (citing *News Corp.-Hughes
    Order*, 19 FCC Rcd at 676 App. F). However, we note that Carey has
    already resigned his post on News Corp.'s board. *See* News
    Corporation, *News Corporation Appoints James Murdoch and Natalie
    Bancroft to Board of Directors, Murdoch to Join Office of the
    Chairman Effective Immediately, Bancroft Appointment Effective Upon
    and Subject to Closing of Dow Jones Acquisition, Chase Carey Resigns
    from Board* (press release), Dec. 7, 2007 ("News Corp. Press
    Release").

[^412]: News Corp. Opposition of Apr. 9, 2007 at 10-12.

[^413]: *News Corp.-Hughes Order*, 19 FCC Rcd at App. F(II).

[^414]: We note that Chase Carey has already resigned from the News
    Corp. Board. *See* News Corp. Press Release, *supra* note 411.

[^415]: News Corp. will not retain any right to appoint directors. *See*
    DIRECTV Dec. 17, 2007 Response to Information and Document Request
    at 2; *see also* Application, Share Exchange Agreement at § 6.8.2.

[^416]: *News Corp.-Hughes Order*, 19 FCC Rcd at App. F(II).

[^417]: 47 C.F.R. § 76.1003(g). Thus, provided that an MVPD submits its
    complaint within the period specified by the Commission's program
    access complaint provision, the MVPD can obtain remedies for
    violations of the program access conditions even after this
    transaction closes.

[^418]: We base these conclusions on a review of all the transaction
    documents and programming agreements between News Corp. and DIRECTV.
    *See* News Corp. July 10, 2007 Response to Information and Document
    Request at III.A and III.B; *see also* DIRECTV July 10, 2007
    Response to Information and Document Request at III.A and III.B;
    Liberty Media July 10, 2007 Response to Information and Document
    Request at I.A.

[^419]: *See* Liberty Media July 10, 2007 Response to Information and
    Document Request I.A. at LMCI.A.0000112-138 \[\[REDACTED\]\],
    LMCI.A.0000140-194 \[\[REDACTED\]\], LMCI.A.0000196-202
    \[\[REDACTED\]\]; LMC I.A. 0000204-210 \[\[REDACTED\]\],
    LMCI.A.0000219-224 \[\[REDACTED\]\], LMCI.A.0000225-234
    \[\[REDACTED\]\], LMCI.A.0000237-243 \[\[REDACTED\]\],
    LMCI.A.0000253-282 \[\[REDACTED\]\], LMCI.A.0000285-298
    \[\[REDACTED\]\], LMCI.A.0000301-314 \[\[REDACTED\]\],
    LMCI.A.0000317-334 \[\[REDACTED\]\], LMCI.A.0000337-348
    \[\[REDACTED\]\], LMCI.A 0000351-362 \[\[REDACTED\]\],
    LMCI.A.0000379-388 \[\[REDACTED\]\], LMCI.A.0000391-397
    \[\[REDACTED\]\], LMCI.A.0000401-404 \[\[REDACTED\]\],
    LMCI.A.0000407-412 \[\[REDACTED\]\], LMCI.A.0000415-424,
    \[\[REDACTED\]\], LMCI.A.0000426-433 \[\[REDACTED\]\].

[^420]: *News Corp.-Hughes Order,* 19 FCC Rcd at 551 ¶ 169.

[^421]: News Corp. Opposition of Apr. 9, 2007 at 14-15.

[^422]: That condition states: "By year end 2004, DIRECTV must provide
    local broadcast channels to subscribers in an additional 30
    designated market areas ("DMAs") beyond what had been previously
    funded, projected or planned by Hughes/DIRECTV." *News Corp.-Hughes
    Order,* 19 FCC Rcd at 683, App. F(VI). The term "local-into-local"
    refers to the delivery of local television broadcast signals by a
    satellite carrier into a local market pursuant to Section 338 of the
    Communications Act and Section 76.66 of the Commission's rules. 47
    U.S.C. § 338(a)(1); 47 C.F.R. § 76.66(a)(6). A satellite carrier may
    deliver local television broadcast signals to subscribers in a DMA
    provided it delivers the signals of all other qualified television
    stations in that DMA that request carriage. *See* 47 U.S.C. §
    338(k)(3) and 47 C.F.R. § 76.66(b).

[^423]: Letter from Susan Eid, DIRECTV, to Marlene H. Dortch, Secretary,
    FCC, MB Docket No. 03-124 (Dec. 22, 2004) (stating that DIRECTV met
    the condition in the *News Corp.-Hughes Order* to provide
    local-into-local service by the end of 2004 to subscribers in an
    additional 30 DMAs beyond what had been previously funded,
    projected, or planned by Hughes/DIRECTV). *See* Letter from William
    Wiltshire, Harris, Wiltshire & Grannis LLP, Counsel to DIRECTV, to
    Marlene H. Dortch, Secretary, FCC (Jan. 30, 2008) ("DIRECTV Jan. 30,
    2008 Ex Parte").

[^424]: DIRECTV Jan. 30, 2008 Ex Parte at 1.

[^425]: DIRECTV Opposition at 12-13; DIRECTV Jan. 30, 2008 Ex Parte at
    1.

[^426]: Application at 6-7; DIRECTV Oct. 3, 2007 Ex Parte (DIRECTV will
    provide local broadcast signals in HD format "to 100 DMAs after the
    successful launch and implementation of its two new satellites, D10
    and D11."); Letter from William M. Wiltshire, Harris, Wiltshire &
    Grannis LLP, Counsel for DIRECTV, to Marlene H. Dortch, Secretary,
    FCC (Aug. 23, 2007)("DIRECTV Aug. 23, 2007 Ex Parte").

[^427]: NDB Petition at 4-5, 10-13; National Association of Broadcasters
    ("NAB") Comments at 1-2; NAB Reply Comments at 1-2. *See* *also,
    e.g.*, Michigan Broadcasters Reply Comments at 1; Mississippi
    Broadcasters Reply Comments at 4-5; Missouri Broadcasters Reply
    Comments at 1-2; Nebraska Broadcasters Reply Comments at 1-2; Ohio
    Association of Broadcasters/Virginia Association of Broadcasters
    ("OAB/VAB") Reply Comments at 2-3, 5; Letter from Suzanne D.
    Goucher, President & CEO, Maine Association of Broadcasters to FCC
    (Apr. 10, 2007) ("Maine Broadcasters Apr. 10, 2007 Ex Parte") at 1.
    They claim that News Corp. has failed to provide local-into-local
    coverage in 68 small market DMAs, including Lima, Ohio (#196);
    Presque Isle, Maine (#204); Marquette (#180) and Alpena (#208),
    Michigan; Cheyenne, Wyoming-Scottsbluff (#195) and North Platte
    (#204), Nebraska; and Harrisonburg (#181) and Charlottesville
    (#182), Virginia.

[^428]: NAB Comments at 2 (citing *News Corp.-Hughes Order,* 19 FCC Rcd
    at 617 ¶ 334); NDB Petition at 11-13; Mississippi Broadcasters Reply
    Comments at 4-5; Nebraska Broadcasters Reply Comments at 1-2. *See
    also* Letter from Linda C. Compton, President and CEO, Indiana
    Broadcasters Assoc., to Marlene H. Dortch, Secretary, FCC (Dec. 6,
    2007) at 1; Letter from Ann Arnold, President, Texas Assoc. of
    Broadcasters (Nov. 29, 2007) at 1; Letter from George R. Borsari,
    Jr., Borsari & Paxson, Counsel for NDB, to Marlene H. Dortch,
    Secretary, FCC (Apr. 16, 2007) ("NDB Apr. 16, 2007 Ex Parte") at 3
    (citing *News Corp.-Hughes Order*, 19 FCC Rcd at 616 ¶ 332 (stating
    that News Corp. will finance the launch of a new generation of
    satellites as early as 2006 and no later than 2008, which "will
    enable DIRECTV to provide local broadcast channels in all 210
    DMAs")).

[^429]: *See*, *e.g.,* NDB Petition at 4-5; OAB/VAB Reply Comments at 2;
    NDB Apr. 16, 2007 Ex Parte at 7-8.

[^430]: OAB/VAB Reply Comments at 3-4 (delivery of local-into-local
    service to smaller markets is economically and technically feasible,
    as demonstrated by DIRECTV's service to Zanesville, Ohio (DMA#203)
    and by EchoStar's service to Harrisonburg (DMA#181) and
    Charlottesville, Virginia (DMA #182)); Maine Broadcasters Apr. 10,
    2007 Ex Parte at 1.

[^431]: OAB/VAB Reply Comments at 3 (asserting that two additional
    satellites that DIRECTV intends to deploy in 2007 "could easily be
    used to deliver local-into-local satellite television service to the
    remaining 68 television markets"); Maine Broadcasters Apr. 10, 2007
    Ex Parte at 1.

[^432]: Letter from George R. Borsari, Jr., Borsari & Paxson, Counsel
    for NDB, to Marlene H. Dortch, Secretary, FCC (Dec. 6, 2007) ("NDB
    Dec. 6, 2007 Ex Parte"); NDB Apr. 16, 2007 Ex Parte at 5.

[^433]: NDB Petition at 5; OAB/VAB Reply Comments at 3 (claiming
    EchoStar currently offers service to 176 DMAs).

[^434]: NDB Apr. 16, 2007 Ex Parte at 3-4, 6-7 (noting that subscribers
    must flip an A-B antenna switch to disengage from DIRECTV and
    receive the signals of their local stations over the air).

[^435]: NDB Apr. 16, 2007 Ex Parte at 7-8.

[^436]: NDB Petition at 5-6, 10 (citing NAB comments in the *News
    Corp.-Hughes* proceeding); Michigan Broadcasters Reply Comments at
    1-2; NAB Reply Comments at 1-2; OAB/VAB Reply Comments at 3; Maine
    Broadcasters Apr. 10, 2007 Ex Parte at 1; NDB Apr. 16, 2007 Ex Parte
    at 5-6 (citing Clayton Antitrust Act, 15 U.S.C. § 12 *et seq*.;
    Sherman Antitrust Act, 15 U.S.C. § 1 *et* *seq*.).

[^437]: For example, Mississippi Broadcasters states that local news and
    Emergency Alert System messages broadcast on TV are not received by
    DIRECTV subscribers in the rural DMAs of Biloxi-Gulfport (#160),
    Hattiesburg-Laurel (#165), Greenwood-Greenville (#184), and Meridian
    (#185). Mississippi Broadcasters Reply Comments at 2-4. *See also*
    NDB Petition at 5-6; Letter from Harriet J. Lange, President, Kansas
    Assoc. of Broadcasters, to Kevin J. Martin, Chairman, FCC (Jan. 11,
    2008).

[^438]: NDB Petition at 7-8 (noting that the Commission has recognized
    that competition between DBS and cable services has increased in
    those markets in which DBS broadcast satellite providers offer
    local-into-local service); NDB Apr. 16, 2007 Ex Parte at 4 (arguing
    that viewers that receive distant signals are excluded from the
    local stations' ratings, in turn reducing local station revenues).
    *See also* Mississippi Broadcasters Reply Comments at 2-4; NAB Reply
    Comments at 1-2; Letter from Sue Toma, Executive Director, Iowa
    Broadcasters Assoc.; Letter from Sens. Kent Conrad and Byron Dorgan,
    U.S. Senate, to Kevin Martin, Chairman, FCC (May 7, 2007); Letter
    from Rep. Mary Gaskill, Iowa House of Representatives, to Royce
    Sherlock, Media Bureau, FCC (Oct. 23, 2007); Letter from Sen. Judith
    Saffirini, Texas State Senate, to Kevin J. Martin, Chairman, FCC
    (Oct. 29, 2007). NDB further contends that DIRECTV deliberately
    failed to follow through installation of local-into-local service in
    Bismarck, North Dakota. Supplemental filing from George R. Borsari,
    Jr., Borsari & Paxson, Counsel for NDB (Aug. 20, 2007) at 1-5.
    DIRECTV denies that it planned to install the service. Letter from
    William M. Wiltshire, Harris, Wiltshire, & Grannis LLP, Counsel for
    DIRECTV, to Marlene H. Dortch, Secretary, FCC (Oct. 25, 2007)
    ("DIRECTV Oct. 25, 2007 Ex Parte").

[^439]: DIRECTV Opposition at 11-12.

[^440]: DIRECTV Jan. 30, 2008 Ex Parte at 1.

[^441]: DIRECTV Opposition at 12 (broadcasters "seek to dictate the
    manner by which DIRECTV will deliver a seamless, integrated local
    service, rather than allowing market forces to determine the best
    mix of technologies for achieving this goal").

[^442]: *Id.*

[^443]: DIRECTV Aug. 23, 2007 Ex Parte at 1.

[^444]: DIRECTV Aug. 23, 2007 Ex Parte at 2 (attaching Benjamin Klein,
    Andres Lerner, Emmett Dacey, *An Economic Analysis of DIRECTV
    Providing Local-Into-Local Service via Satellite In All 210 DMAs*).
    *See also* Letter from George R. Borsari, Jr., Borsari & Paxson,
    Counsel for NDB, to Marlene H. Dortch, Secretary, FCC (Oct. 29,
    2007) (providing its own analysis). The parties dispute the accuracy
    of the reports regarding the amount of satellite capacity available
    for local-into-local service, as well as the cost of providing the
    service. *See, e.g*., DIRECTV Oct. 25, 2007 Ex Parte; Letter from
    William M. Wiltshire, Harris, Wiltshire, & Grannis LLP, Counsel for
    DIRECTV, to Marlene H. Dortch, Secretary, FCC (Nov. 6, 2007); NDB
    Dec. 6, 2007 Ex Parte.

[^445]: DIRECTV Aug. 23, 2007 Ex Parte at 2.

[^446]: DIRECTV Opposition at 12-14, n.43. Although DIRECTV provides
    local-into-local service in markets serving 94 percent of TV
    households, EchoStar and DIRECTV together provide local-into-local
    service in markets serving more than 97 percent of TV households.
    *Id.*

[^447]: *Id.* at 13. The Applicants also contend that NDB's Petition
    fails to comply with the requirements of Section 25.154(a) of the
    Commission's rules. 47 C.F.R. § 25.154(a). DIRECTV Opposition at 11
    n.34; Liberty Media Opposition at 7. Assuming this were true, we
    would still be able to consider NDB's comments as an informal
    objection under Section 25.154(b). *See Pacific Gas and Electric
    Company*, Memorandum Opinion and Order, 18 FCC Rcd 22761, 22766 n.47
    (2003); *see also Nextel License Holdings 4, Inc.*, 17 FCC Rcd 7028,
    7033 ¶ 16 (2002) (noting that there is no standing requirement to
    file an informal objection).

[^448]: DIRECTV Jan. 30, 2008 Ex Parte.

[^449]: *Id.* at 1.

[^450]: *Id.*

[^451]: *Id.* at 4.

[^452]: *Id.*

[^453]: Application at 16; Liberty Media Consolidated Opposition to
    Petitions at 30.

[^454]: For instance, we consider "any efficiencies and other benefits
    that might be gained through increased ownership or control." 47
    U.S.C. § 533(f)(2)(D).

[^455]: *News Corp.-Hughes Order*, 19 FCC Rcd at 610 ¶ 317;
    *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20630 ¶ 189-90; *Bell
    Atlantic-NYNEX Order*, 12 FCC Rcd at 20064 ¶ 158; *SBC*-*Ameritech
    Order*, 14 FCC Rcd at 14825 ¶ 255; *Comcast-AT&T Order*, 17 FCC Rcd
    at 23313 ¶ 173.

[^456]: *News Corp.-Hughes Order,* 19 FCC Rcd at 610 ¶ 317;
    *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20630 ¶ 190; *Comcast-AT&T
    Order*, 17 FCC Rcd at 23313 ¶ 173*;* *see also 1992 Horizontal
    Merger Guidelines* § 4 (Rev. 1997).

[^457]: *News Corp.-Hughes Order,* 19 FCC Rcd at 611 ¶ 317;
    *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20630 ¶ 190.

[^458]: *News Corp.-Hughes Order*, 19 FCC Rcd at 610-11 ¶ 317;
    *EchoStar-DIRECTV HDO,* 17 FCC Rcd at 20630-31 ¶ 190.

[^459]: *Application of Western Wireless Corp. and ALLTEL Corp. for
    Consent to Transfer Control of Licenses and Authorizations*, 20 FCC
    Rcd 13053, 13100 ¶ 132 (2005) ("*ALLTEL-WWC Order*").

[^460]: *News Corp.-Hughes Order*, 19 FCC Rcd at 611 ¶ 318;
    *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20631 ¶ 192 (citing
    *SBC*-*Ameritech Order*, 14 FCC Rcd at 14825 ¶ 256).

[^461]: *ATT-Bell South Order*, 22 FCC Rcd at 5662 ¶ 203.

[^462]: *News Corp.-Hughes Order*, 19 FCC Rcd at 477 ¶ 4.

[^463]: *Id*.

[^464]: *See id.* at 552-55 ¶¶ 172-79, 572-76 ¶¶ 218-26.

[^465]: Moreover, as discussed above, we are imposing on Liberty Media
    similar conditions to those imposed on News Corp. with respect to
    any RSN that Liberty Media now owns or later acquires.

[^466]: Public Interest Statement at 19-20.

[^467]: Consumers Union Comments at 3-7; NCTC Comments at 6-7; EchoStar
    Petition at 26-33.

[^468]: EchoStar Petition at 32-33.

[^469]: *Id.* at 9.

[^470]: *See, e.g.,* NCTC Comments at 6; EchoStar Petition at 28-29

[^471]: Liberty Media Opposition at 11-16; News Corp. Opposition at 8-9.

[^472]: Consumers Union Comments at 5-6; EchoStar Petition at 29-30.

[^473]: News Corp., *SEC Form 8-K* (filed Dec. 7, 2007).

[^474]: News Corp. Reply at 6-7.

[^475]: *Id.* at 6.

[^476]: *Id.* at 5 (citing SEC Definitive Proxy Statement).

[^477]: *Id.* at 5-6.

[^478]: *Id*. at 6.

[^479]: EchoStar Petition at 7-9, 32.

[^480]: *Id*. at 9.

[^481]: Letter from Counsel for Liberty Media Corp. to Ms. Marlene
    Dortch, Secretary, FCC (Feb. 16, 2007); Liberty Media Opposition at
    5-6.

[^482]: Also, as discussed above, we are imposing on Liberty Media
    remedial conditions to mitigate any competitive harms that might
    result from the vertical integration that will remain.

[^483]: Public Interest Statement at 20-21; Liberty Media Opposition at
    30.

[^484]: Public Interest Statement at 20; Liberty Media Opposition at 30.

[^485]: Public Interest Statement at 21.

[^486]: EchoStar Petition at 33.

[^487]: *See News Corp.-Hughes Order*, 19 FCC Rcd at 611-12 ¶ 320.

[^488]: *See id.*, 19 FCC Rcd at 611-615 ¶¶ 320-28.

[^489]: *See* 47 U.S.C. §§ 310(d), 309(a), (d).

[^490]: *See SBC-AT&T Order*, 20 FCC Rcd at 18300 ¶ 16; *Verizon-MCI
    Order*, 20 FCC Rcd at 18443 ¶ 16; *Sprint-Nextel Order*, 20 FCC Rcd
    at 13976 ¶ 20; *News Corp.-Hughes Order*, 19 FCC Rcd at 483 ¶ 15;
    *Comcast-AT&T Order*, 17 FCC Rcd at 23255 ¶ 26.

[^491]: *See* *SBC-AT&T Order*, 20 FCC Rcd at 18300 ¶ 16; *Verizon-MCI
    Order*, 20 FCC Rcd at 18443 ¶ 16; *Comcast-AT&T Order*, 17 FCC Rcd
    at 23255 ¶ 26; *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20574 ¶ 25.

[^492]: If we are unable to find that the proposed transaction serves
    the public interest for any reason, or if the record presents a
    substantial and material question of fact, Section 309(e) of the Act
    requires that we designate the application for hearing. 47 U.S.C. §
    309(e).

[^493]: *See*, *e.g.*, 47 C.F.R. § 76.100, *et seq.*; *Implementation of
    the Cable Television Consumer Protection and Competition Act of
    1992, Development of Competition and Diversity in Video Programming
    Distribution: Section 628(c)(5) of the Communications Act*, 17 FCC
    Rcd 12124 (2002).

[^494]: Application at 26 -27. *See* 47 C.F.R. §§ 25.116(b)(4) and (d).

[^495]: *2003 First Space Station Reform Order*, 18 FCC Rcd 10760, 10814
    ¶¶ 138-40 (2003).  *See also* Appendix B of that Order (eliminating
    section 25.116(b)(3)).

[^496]: 47 C.F.R. § 1.4000.

[^497]: Motion at 1.

[^498]: If Weinstein believes that his landlord is violating the OTARD
    rule by restricting his ability to install an antenna, his remedy is
    to file a petition for declaratory ruling with the Commission as set
    forth in 47 C.F.R. § 1.2.

[^499]: *See* Appendix B.

[^500]: *See* 47 C.F.R. § 76.1000(b).

[^501]: *Review* *of the Commission's Regulations Governing Attribution
    of Broadcast and Cable/MDS Interests*, 14 FCC Rcd. 12559, 12581 ¶ 44
    (1999).

[^502]: The term "Liberty Media" as used in this Appendix includes any
    entity or program rights holder in which Liberty Media or John
    Malone holds an attributable interest. Thus, the term "Liberty
    Media" includes Discovery Communications. Liberty Media and DIRECTV
    are prohibited from acquiring an attributable interest in any
    non-broadcast national or regional programming service while these
    conditions are in effect if the programming service is not obligated
    to abide by such conditions.

[^503]: In committing not to offer its programming services on an
    exclusive basis, Liberty voluntarily forgoes the right enjoyed by
    all other vertically integrated programmers to seek approval of an
    exclusive programming contract under the public interest standard
    established in 47 U.S.C. § 548(c)(4).

[^504]: The term "Affiliated Program Rights Holder" includes (i) any
    program rights holder in which Liberty Media or DIRECTV holds a
    non-controlling "attributable interest" (as determined by the FCC's
    program access attribution rules) or in which any officer or
    director of Liberty Media, DIRECTV, or of any other entity
    controlled by John Malone holds an attributable interest; and (ii)
    any program rights holder in which an entity or person that holds an
    attributable interest also holds a non-controlling attributable
    interest in Liberty Media or DIRECTV, provided that Liberty Media or
    DIRECTV has actual knowledge of such entity's or person's
    attributable interest in such program rights holder. As the
    Commission noted in New Corp.-Hughes, this commitment extends beyond
    the program access rules because DBS operators are not included
    within the exclusivity prohibition. *See* 47 C.F.R. § 1002(c).

[^505]: This condition would only be of significance in the event an
    Affiliated Program Rights Holder is not otherwise subject to the
    Commission's program access rules.

[^506]: *See* Discussion *supra* at Section V.C.2 concerning exclusive
    arrangements with unaffiliated programmers.

[^507]: 47 C.F.R. § 76.1003.

[^508]: For purposes of this Section IV, ownership shall be determined
    in accordance with the Commission's attribution rules applicable to
    the ownership of broadcast licensees, 47 C.F.R. § 73.3555 Notes 1-3.
    Liberty Media and DIRECTV are prohibited from acquiring an
    attributable interest in a television broadcast station during the
    period of the conditions set forth in this Appendix if the broadcast
    station is not obligated to abide by such conditions.

[^509]: A first-time request for carriage does not include a request for
    previously carried broadcast programming that has experienced a
    change in ownership.

[^510]: The Commission has previously defined small cable companies as
    those with 400,000 or fewer subscribers. We adopt that definition
    for the purposes of this condition. *See* *Implementation of
    Sections of the Cable Television Consumer Protection and Competition
    Act of 1992*, 10 FCC Rcd 7393 (1995); *see also* 47 C.F.R.
    §76.901(e).

[^511]: *See* 47 C.F.R. § 76.1000, *et. seq*.

[^512]: Ownership will be determined in accordance with the attribution
    standards applicable to the Commission's program access rules. *See*
    47 C.F.R. § 76.1000, *et seq.* Liberty Media and DIRECTV are
    prohibited from acquiring an attributable interest in an RSN during
    the period of the conditions set forth in this Appendix if the RSN
    is not obligated to abide by such conditions.

[^513]: A first-time request for carriage does not include a request for
    a previously carried RSN that has experienced a change in ownership.

[^514]: We clarify that, by "possession," we mean actual possession or
    control.

[^515]: *See supra* note 510.

[^516]: During the pendency of this transaction, Liberty Media has
    proposed to purchase two broadcast stations, WFRV-TV in Green Bay,
    Wisconsin, and its satellite station WJMN-TV in Escanaba, Michigan.