**Before the**

Federal Communications Commission

Washington, D.C. 20554

+----------------------------------+---+------------------------------+
| In the Matter of                 | * | MB Docket No. 05-192         |
|                                  | * |                              |
| Applications for Consent to the  | ) |                              |
| Assignment and/or Transfer of    | * |                              |
| Control of Licenses              | * |                              |
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| Adelphia Communications          | * |                              |
| Corporation,                     | * |                              |
|                                  | ) |                              |
| (and subsidiaries,               | * |                              |
| debtors-in-possession),          | * |                              |
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| Assignors,                       | * |                              |
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| to                               | ) |                              |
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| Time Warner Cable Inc.           | * |                              |
| (subsidiaries),                  |   |                              |
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| Assignees;                       | * |                              |
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| Adelphia Communications          | * |                              |
| Corporation,                     | * |                              |
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| (and subsidiaries,               | * |                              |
| debtors-in-possession),          | * |                              |
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| Assignors and Transferors,       | * |                              |
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| to                               |   |                              |
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| Comcast Corporation              | * |                              |
| (subsidiaries),                  | ) |                              |
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| Assignees and Transferees;       | * |                              |
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| Comcast Corporation, Transferor, | * |                              |
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| Time Warner Inc., Transferee;    | * |                              |
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| Time Warner Inc., Transferor,    | * |                              |
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| Comcast Corporation, Transferee  | * |                              |
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+----------------------------------+---+------------------------------+

memorandum opinion and order

**Adopted: July 13, 2006 Released: July 21, 2006**

By the Commission: Chairman Martin, and Commissioners Tate and McDowell
issuing separate statements; Commissioner Copps dissenting and issuing a
statement; and 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. Adelphia Communications Corporation 6

B. Comcast Corporation 7

C. Time Warner Inc. 9

D. The Proposed Transactions 11

E. Application and Review Process 17

1\. Commission Review 17

2\. Federal Trade Commission Review 21

III\. STANDARD OF REVIEW AND PUBLIC INTEREST FRAMEWORK 23

IV\. APPLICABLE REGULATORY FRAMEWORK 33

A. Cable Ownership 34

B. Program Access 39

C. Program Carriage 43

V. Compliance with commission rules 44

A. National Cable Ownership Limit 45

B. Other Cable Ownership Rules 53

VI\. Analysis of Potential Harms in the Relevant Markets 59

A. Relevant Markets 59

1\. MVPD Services 61

a\. Product Market 61

b\. Geographic Market 64

2\. Video Programming 65

a\. Product Market 65

b\. Geographic Market 68

B. Introduction to Potential Harms 69

C. Potential Horizontal Harms 74

1\. MVPD Market 74

a\. Potential Effects on MVPD Competition 75

b\. Potential Effects on Cable Rates 84

c\. Potential for Increased Opportunity to Engage in Anticompetitive
Practices 87

d\. Potential Harms to Franchising Process 92

2\. Video Programming Market 97

a\. Nationally Distributed Programming 100

b\. Regional Programming 111

D. Potential Vertical Harms 115

1\. Access to Affiliated Programming 117

a\. Regional Sports Programming 122

\(i\) Introduction and Analytical Approach 122

\(ii\) Theories of Harm 130

b\. National and Non-Sports Regional Programming 166

2\. Access to Unaffiliated Programming/Exclusive Dealing 170

3\. Program Carriage Issues 180

VII\. Analysis of Other Potential Public Interest Harms 192

A. Broadcast Programming Issues 193

B. Viewpoint Diversity and First Amendment Issues 198

C. Deployment of Services Based on Economic Status or Race/Ethnicity 206

D. Potential Internet-Related Harms 212

E. Equipment and Interactive Television Issues 224

F. Impact on Employment Practices 228

G. Character Qualifications 232

VIII\. analysis of public interest benefits 241

A. Analytical Framework 243

B. Claimed Benefits 246

1\. Deployment of Advanced Services on Adelphia's Systems 246

2\. Clustering of Comcast and Time Warner Systems 264

3\. Resolution of Bankruptcy Proceeding 278

4\. Unwinding of Comcast's Interests in Time Warner Cable and Time
Warner Entertainment, L.P. 287

IX\. balancing public interest harms and benefits 294

X. Procedural Matters 301

A. City of San Buenaventura Petition to Condition Approval 301

B. Free Press Motion to Hold in Abeyance 307

C. TWE and Time Warner Cable Redemption Transactions 309

XI\. ordering clauses 311

Appendix A - Petitioners and Commenters

Appendix B - Remedies & Conditions

Appendix C - Modifications to Rules for Arbitration

Appendix D - Economic Appendix

Appendix E - Licenses and Authorizations to Be Transferred

# introduction

1.  In this Order, we consider the applications ("Applications")[^1] of
    Adelphia Communications Corporation and subsidiaries,
    debtors-in-possession ("Adelphia"), Time Warner Inc. ("Time
    Warner"), Time Warner Cable Inc. ("Time Warner Cable"),[^2] and
    Comcast Corporation ("Comcast") for consent to the acquisition by
    Time Warner Cable and Comcast of substantially all of the domestic
    cable systems owned or managed by Adelphia.[^3] The Applications are
    filed pursuant to sections 214 and 310(d) of the Communications Act
    of 1934, as amended ("Communications Act" or "Act"),[^4] and seek
    Commission consent to a number of license transfers related to a
    series of separate transactions[^5] that would result in (1) the
    sale of certain cable systems and assets of Adelphia to subsidiaries
    or affiliates of Time Warner; (2) the sale of certain cable systems
    and assets of Adelphia to subsidiaries or affiliates of Comcast; (3)
    the exchange of certain cable systems and assets between affiliates
    or subsidiaries of Time Warner and Comcast; and (4) the redemption
    of Comcast's interests in Time Warner Cable and Time Warner
    Entertainment Company, L.P. ("TWE").[^6] As discussed more fully
    below, the Applicants assert that approval of the Applications 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, including the Commission's remanded
    cable horizontal and vertical ownership limits.

2.  According to the Applicants, Comcast would serve approximately 26.8
    million subscribers, or 28.9% of all U.S. multichannel video
    programming distribution ("MVPD") subscribers as a result of the
    transactions. This would represent a net gain of approximately
    680,000 subscribers, or 0.73% of U.S. MVPD subscribers, over
    Comcast's pre-transaction reach of 26.1 million subscribers, or
    28.2% of U.S. MVPD subscribers. Time Warner would serve
    approximately 16.6 million subscribers post-transaction, or 17.9% of
    U.S. MVPD subscribers, representing a gain of approximately 3.5
    million subscribers over its pre-transaction total of 13.1 million
    subscribers. Comcast would have more consolidated franchised
    operations in Southern Florida, including West Palm Beach;
    Minnesota; New England, including Boston; Pennsylvania, including
    Philadelphia and Pittsburgh; and the mid-Atlantic region of
    Washington, D.C., Maryland and Virginia.[^7] Time Warner Cable would
    further consolidate its operations in Southern California, including
    Los Angeles; Maine; Western New York; North Carolina; Ohio,
    including Cincinnati, Cleveland, and Columbus; South Carolina; and
    Texas, including Dallas.[^8] As part of the initial phase of this
    transaction, Time Warner and Comcast separately would acquire
    Adelphia's cable assets, primarily consisting of cable systems
    serving approximately five million subscribers**,** for \$12.7
    billion in cash. Comcast would pay approximately \$3.5 billion in
    cash. Time Warner would pay approximately \$9.2 billion in cash. In
    addition, Time Warner Cable would issue publicly traded securities,
    approximately 16% of which would be issued to Adelphia stakeholders,
    with the remaining 84% to be held by Time Warner.[^9]

3.  The Applicants state that the transactions would generate
    substantial public interest benefits that are not otherwise
    achievable.[^10] Specifically, the claimed benefits include (1)
    accelerated deployment of advanced services (*e.g.,* high definition
    television ("HDTV"), high-speed data, video on demand ("VOD"),
    digital video recorders, and telephony) to customers currently
    served by Adelphia; (2) enhanced geographic rationalization (or
    "clustering") resulting both from the acquisition of Adelphia's
    systems and the system swaps between Comcast and Time Warner Cable,
    which would produce cost-saving operational, infrastructure, and
    marketing efficiencies; (3) Adelphia's emergence from bankruptcy and
    settlement of creditor claims; and (4) dissolution of Comcast's
    interests in TWE and Time Warner Cable consistent with the
    Commission's divestiture order.[^11] The Applicants further state
    that the improved regional coverage of each company's cable
    operations would provide the scale and scope necessary for them to
    compete more effectively with the substantially larger service
    footprints of direct broadcast satellite ("DBS") providers and
    incumbent local exchange carriers ("incumbent LECs").[^12] The
    Applicants assert that the public interest benefits resulting from
    the transactions are not otherwise obtainable because no other
    potential cable system operator can offer the efficiencies that Time
    Warner Cable and Comcast, based on the location of their current
    cable systems, are uniquely able to bring to the Adelphia properties
    through regionalized management and operation.[^13] According to the
    Applicants, while other potential purchasers of the Adelphia assets
    might bring a measure of improved performance and innovation to the
    systems, only Comcast and Time Warner Cable have the combination of
    capabilities, geographic correlation to Adelphia's systems, and
    proven track record necessary to maximize such benefits. The
    Applicants assert that, like the acquisition of the Adelphia
    systems, the swaps of systems between Time Warner Cable and Comcast
    will lead to greater "geographic rationalization" of the Applicants'
    cable systems, which they assert will provide various public
    interest benefits.[^14]

4.  To obtain Commission approval, the Applicants must demonstrate that
    the proposed transactions will serve the public interest,
    convenience, and necessity pursuant to sections 214 and 310(d) of
    the Communications Act.[^15] The Commission's review of the
    applications includes an assessment of whether the proposed
    transactions comply with specific provisions of the Communications
    Act, other statutes, and the Commission's rules.[^16] If the
    transactions 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.[^17] The Commission generally weighs any potential public
    interest harms of proposed transactions against any potential public
    interest benefits.[^18] Applicants have the burden of proving, by a
    preponderance of the evidence, that the proposed transactions, on
    balance, serve the public interest.

5.  Based on the record before us, and as discussed more fully below, we
    find that the grant of the Applications, as conditioned, serves the
    public interest. First, we find that the proposed transactions will
    comply with all applicable statutes and Commission rules. Second, we
    find that the potential public interest harms of the proposed
    transactions, as conditioned, are outweighed by the potential public
    interest benefits. In regard to the potential harms, we find that
    the proposed transactions may increase the likelihood of harm in
    markets in which Comcast or Time Warner have, or may have in the
    future, an ownership interest in Regional Sports Networks ("RSNs").
    The transactions may also trigger harms in the carriage of
    unaffiliated programming. Therefore, we impose remedial conditions
    to address our concerns. We do not find that the transactions will
    lead to any other public interest harms. We also find that the
    transactions likely will result in certain public interest benefits.
    More specifically, we find that the transactions are likely to
    accelerate deployment of Voice over Internet Protocol ("VoIP")
    service and advanced video services, such as local VOD programming,
    in Adelphia markets, and facilitate the resolution of the bankruptcy
    proceeding. Therefore, we find that on balance the public interest
    will be served by approval of the Applications subject to the
    conditions we impose herein.

# DESCRIPTION OF THE PARTIES

## Adelphia Communications Corporation

6.  Adelphia is the fifth largest multiple cable system operator ("MSO")
    in the United States and the seventh largest MVPD. Adelphia provides
    cable television service to approximately five million
    subscribers.[^19] In addition to analog and digital video services,
    it offers high-speed Internet and other advanced services, including
    digital video, VOD programming, and digital video recorder ("DVR")
    services, over Adelphia's broadband networks, primarily to
    residential customers in 31 states, with significant operations in
    and around Los Angeles, western Pennsylvania, Ohio, western New
    York, New England, southeast Florida, Virginia, and Colorado
    Springs. Adelphia does not own active programming services[^20] nor
    does it offer local telephone service to the public.[^21] In June
    2002, Adelphia and substantially all of its domestic subsidiaries
    filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy
    Code for relief to reorganize as an independent entity.[^22]
    Adelphia's board of directors approved the reorganization plan, and
    bidding for the company's assets ensued. In April 2005, Adelphia
    received supplemental bid protections from the U.S. Bankruptcy Court
    for the Southern District of New York regarding the sale of certain
    of its assets to Time Warner Cable and Comcast.[^23]

## Comcast Corporation

7.  Comcast is the nation's largest MVPD and would remain so upon
    completion of the transactions. Applicants state that, as of May 18,
    2005, Comcast served approximately 26.1 million subscribers in 35
    states and the District of Columbia, or 28.2% of MVPD subscribers
    nationwide.[^24] Of these, approximately 21.5 million were served as
    of that date by Comcast's wholly owned cable systems, and
    approximately 4.6 million were served by systems owned jointly by
    Comcast and other cable operators.[^25] Comcast states that upon
    completion of the transactions, it will serve approximately 26.8
    million cable subscribers, or 28.9% of MVPD subscribers.[^26]
    Approximately 23.3 million of these subscribers will be served by
    wholly owned systems, and 3.5 million will be served by systems
    owned jointly with others.[^27] Although Comcast expects to add
    approximately 1.8 million subscribers served by wholly owned systems
    through the transactions, its total number of subscribers served
    through jointly owned systems will decrease by approximately 1.1
    million, for a net increase of 680,000 attributable subscribers, or
    0.73% of U.S. MVPD subscribers.[^28] As a result of the acquisition
    of Adelphia systems and the cable system swaps with Time Warner,
    Comcast will consolidate its regional footprints in Pennsylvania;
    Minnesota; Southern Florida; the mid-Atlantic region of Washington,
    D.C., Maryland, and Virginia; and New England.

8.  In addition to basic cable service, Comcast offers premium movie
    channels, pay-per-view ("PPV") services, HDTV, VOD programming, DVR
    services, and interactive programming guides. Comcast provides
    facilities-based residential local telephone service to
    approximately 1.225 million customers.[^29] Comcast's VoIP service,
    "Comcast Digital Voice," is currently available to approximately 19
    million households in 30 markets.[^30] Comcast owns attributable
    interests in nine national video programming networks,[^31] eight
    regional sports networks ("RSNs"),[^32] three team-specific
    networks,[^33] and various other regional and local video
    programming networks.[^34] Comcast holds a 54% interest in the iN
    DEMAND Networks, which provides high definition content, including
    VOD and PPV services, and a joint venture interest in PBS Kids
    Sprout, a new VOD service for preschool children that launched as a
    network in fall 2005.[^35]

## Time Warner Inc. 

9.  Applicants state that as of May 18, 2005, Time Warner Cable owned or
    managed cable systems serving 13.1 million subscribers in 27 states,
    making it the nation's second largest cable MSO and third largest
    MVPD.[^36] As a result of the transactions, it would add 3.5 million
    basic video subscribers and would own systems serving 16.6 million
    basic subscribers nationally, or 17.9% of MVPD subscribers.[^37]
    Thus, Time Warner Cable expects to emerge as the second largest MVPD
    in the United States. As a result of the transactions, Time Warner
    Cable would consolidate its regional operations in Western New York,
    Ohio, Texas, Southern California, Maine, North Carolina, and South
    Carolina.[^38]

10. In addition to its cable systems, Time Warner's businesses include
    online interactive services, filmed entertainment, television
    networks, and publishing.[^39] Time Warner provides basic cable
    programming, digital cable programming, HDTV, VOD, subscription
    video on-demand ("SVOD"), and DVR service.[^40] Time Warner also
    provides high-speed Internet service to approximately 4.1 million
    residential subscribers, and it provides VoIP to approximately
    500,000 subscribers.[^41] Time Warner's America Online businesses
    include the AOL service, a subscription-based online service with
    more than 22.2 million members in the United States. In addition to
    AOL, America Online offers other interactive content and services
    such as AOL.com, AOL Instant Messenger, Moviefone, MapQuest, and
    Netscape.com.[^42] Time Warner's television networks business
    consists of domestic and international basic cable networks, pay
    television programming services, and The WB broadcast television
    network.[^43] Home Box Office, Inc., an indirect, wholly-owned
    subsidiary of Time Warner, operates Time Warner's pay television
    programming services, Home Box Office ("HBO") and Cinemax.[^44] Time
    Warner also owns a number of 24-hour local news channels.[^45]
    Additionally, Time Warner holds interests in several RSNs.[^46]

## The Proposed Transactions

11. *The Adelphia Transactions.*[^47] The proposed transactions involve
    a series of discrete agreements and transactions between and among
    the Applicants. First, pursuant to an asset purchase agreement
    between Adelphia and Time Warner NY Cable, LLC[^48] ("TWNY") and a
    separate asset purchase agreement between Adelphia and Comcast, TWNY
    and Comcast would each acquire portions of substantially all of the
    cable systems owned or operated by Adelphia.[^49] In exchange for
    systems serving approximately 3.7 million subscribers, Time Warner
    Cable would pay approximately \$9.2 billion in cash and would issue
    to Adelphia stakeholders shares of Time Warner Cable's Class A
    Common Stock, which are expected to represent approximately 16% of
    Time Warner Cable's outstanding common equity.[^50] Comcast would
    receive systems serving approximately 1.2 million subscribers and
    would pay approximately \$3.5 billion in cash.[^51] The Applicants
    represent that each of the Adelphia Transactions is conditioned on
    contemporaneous consummation of the other but clarify that these
    transactions are not dependent on the occurrence of the system swaps
    and redemption transactions between Time Warner and Comcast, as
    described below.

12. *The Time Warner/Comcast Swap Transactions*. Pursuant to an exchange
    agreement, upon consummation of the Adelphia Transactions,
    affiliates of Time Warner and Comcast would exchange certain cable
    systems owned by affiliates of Time Warner or Comcast, respectively,
    together with certain cable systems to be acquired in the Adelphia
    Transactions.[^52] In the swap transactions, Time Warner would
    receive Comcast systems located in Los Angeles, California;
    Cleveland, Ohio; and Dallas, Texas; and systems currently owned by
    Century-TCI Communications, L.P. in the Los Angeles, California area
    and by Parnassos Communications, L.P. and Western Cablevision, L.P.
    in Ohio and western New York. Comcast would receive Time Warner
    Cable systems serving portions of Philadelphia, Pennsylvania and
    certain systems currently owned by Adelphia located in the states of
    California, Colorado, Connecticut, Florida, Georgia, Kentucky,
    Massachusetts, Maryland, North Carolina, New Hampshire, New York,
    Pennsylvania, Tennessee, Virginia, Vermont, Washington, and West
    Virginia.[^53] As a result of the system swaps, Time Warner would
    gain approximately 2,192,667 subscribers from Comcast. Time Warner
    would transfer to Comcast approximately 2,002,680 subscribers.[^54]

13. *Time Warner Cable Redemption Transaction.* Prior to consummation of
    the Adelphia Transactions, and pursuant to the Time Warner Cable
    Redemption Agreement, Time Warner Cable would redeem Comcast's 17.9%
    equity interest in Time Warner Cable,[^55] now held in a
    Commission-mandated trust,[^56] in exchange for 100% of the common
    stock of a Time Warner Cable subsidiary that, at the closing of the
    redemption transaction, would own the Time Warner Cable systems
    located in or around Minneapolis, Minnesota; Memphis, Tennessee;
    Cape Coral, Florida; St. Augustine/Lake City/Live Oak, Florida; and
    Monroe, Louisiana, which together served approximately
    **\[REDACTED\]** subscribers as of November 2005.[^57] In addition,
    the Time Warner Cable subsidiary would hold \$1.9 billion in
    cash.[^58]

14. *TWE Redemption Transaction.* Under the TWE Redemption Agreement,
    TWE would redeem Comcast's 4.7% limited partnership interest in TWE
    in exchange for 100% of the membership interests of a limited
    liability company that would own the Time Warner Cable systems
    located in or around Jackson, Mississippi; Shreveport, Louisiana;
    and Houma, Louisiana, which served approximately **\[REDACTED\]**
    subscribers as of November 2005.[^59] In addition, the limited
    liability company would hold \$133 million in cash.[^60]

15. Finally, upon completion of the transactions, Time Warner Cable
    would become a publicly traded company, with Time Warner owning 84%
    of the common stock and holding 91% voting control of Time Warner
    Cable.[^61] Adelphia stakeholders collectively would hold the
    remaining 16% of Time Warner Cable. At the close of the
    transactions, independent directors would comprise half of the board
    of directors of Time Warner for three years.[^62]

16. Upon consummation of the Adelphia Transactions, certain Commission
    licenses held by Adelphia would be assigned or control would be
    transferred to Comcast, its subsidiaries, or affiliates, and other
    Adelphia licenses would be assigned to subsidiaries or affiliates of
    Time Warner Cable. In addition, upon consummation of the Time
    Warner/Comcast Swap Transactions, control of certain subsidiaries or
    affiliates of Time Warner Cable or Comcast, respectively, that hold
    licenses, including certain licenses acquired from Adelphia, would
    be transferred from Time Warner to Comcast or from Comcast to Time
    Warner, as the case may be. Finally, upon consummation of the Time
    Warner Cable Redemption Transaction and the TWE Redemption
    Transaction, first certain licenses would be assigned to a newly
    formed Time Warner Cable subsidiary on a *pro forma* basis, and then
    control of the new entity would be transferred from Time Warner to
    Comcast. The Applications, filed concurrently, seek Commission
    consent for those various assignments and/or transfers of control.

## Application and Review Process

### Commission Review

17. On May 18, 2005, pursuant to sections 214 and 310(d) of the
    Communications Act, Adelphia, Comcast, and Time Warner filed 210
    applications (excluding receive-only satellite earth stations)
    seeking Commission approval of the various assignments and transfers
    of control associated with the transactions. The Commission released
    a *Public Notice* on June 2, 2005 accepting the applications for
    filing and establishing the pleading cycle for public comment or
    petitions to deny.[^63] In addition to initial and reply comments,
    parties filed six petitions to deny.[^64] The Commission has also
    received over 26,172 informal comments. On December 5, 2005, the
    Chief of the Media Bureau requested additional information from the
    Applicants.[^65] Applicants' separately filed responses to those
    requests are included in the record.[^66]

18. *Standing/Petitions to Deny*.[^67] Section 309(d)(1) of the
    Communications Act, as amended,[^68] and section 78.22 of the
    Commission's rules[^69] require that a petition to deny contain
    specific allegations of fact sufficient to show that the petitioner
    is a party-in-interest and that grant of the application would be
    *prima facie* inconsistent with the public interest. Allegations of
    fact set forth in the petition must be supported by the affidavit of
    a person with personal knowledge of the facts recited.^.^[^70]

19. Applicants assert that the pleadings filed on behalf of CWA/IBEW,
    Free Press, NHMC, and TAC do not satisfy the statutory requirements
    of section 309(d)(1) because, among other things, they fail to
    demonstrate standing as a party-in-interest and/or fail to include
    an affidavit of a person or persons with personal knowledge in
    support of specific factual allegations sufficient to show that
    grant of the Applications would be *prima facie* inconsistent with
    the public interest. Therefore, Applicants urge the Commission to
    treat these pleadings as comments rather than as petitions to
    deny.[^71]

20. As an initial matter, we agree that the pleadings filed by CWA/IBEW
    and TAC fail to meet the requirements of section 309(d)(1) because
    neither group attached a sworn statement as required by statute.
    Thus, we conclude that CWA/IBEW and TAC are appropriately treated as
    informal objectors in the instant proceeding pursuant to Commission
    Rule 1.41.[^72] Nonetheless, we address fully the issues raised by
    these parties in the applicable sections of this order. However, the
    pleadings filed by Free Press and NHMC are accompanied by affidavits
    of persons with personal knowledge of the facts alleged in the
    petitions, which assert that grant of the Applications would be
    *prima facie* inconsistent with the public interest. Thus, we find
    that Free Press and NHMC, respectively, are parties in interest to
    this proceeding.[^73]

### Federal Trade Commission Review

21. In addition to Commission review, the proposed transactions are
    subject to review by federal antitrust authorities, in this instance
    by the Federal Trade Commission ("FTC").[^74] The FTC reviews
    communications mergers and transactions pursuant to section 7 of the
    Clayton Act, which prohibits mergers that are likely to lessen
    competition substantially in any line of commerce.[^75] FTC review
    is limited to an examination of the competitive effects of the
    transaction, without reference to other public interest
    considerations.

22. On January 31, 2006, the FTC announced that it had closed its
    investigation into the acquisition by Comcast and Time Warner Inc.
    of Adelphia's cable assets and the transactions pursuant to which
    Comcast and Time Warner Cable will swap various cable systems.[^76]
    The Chairman of the FTC, joined by two commissioners, stated that
    FTC staff had determined, and they agreed, that the proposed
    transactions were unlikely to substantially lessen competition in
    any geographic region in the United States in violation of Section 7
    of the Clayton Act.[^77] Further, the FTC Chairman concluded that
    evidence from the staff's investigation indicated that the proposed
    transactions are "unlikely to make the hypothesized foreclosure or
    cost-raising strategies profitable for either Comcast or TWC."[^78]

# STANDARD OF REVIEW AND PUBLIC INTEREST FRAMEWORK 

23. Pursuant to sections 214 and 310(d) of the Communications Act, the
    Commission must determine whether Applicants have demonstrated that
    the proposed transfers of control of licenses and authorizations
    held by Adelphia, Time Warner, and Comcast will serve the public
    interest, convenience, and necessity.[^79] In making this
    assessment, the Commission must first determine whether the proposed
    transactions would comply with the specific provisions of the
    Act,[^80] other applicable statutes, and the Commission's
    rules.[^81] If the transactions would not violate a statute or rule,
    the Commission considers whether they could result in public
    interest harms by substantially frustrating or impairing the
    objectives or implementation of the Act or related statutes.[^82]
    The Commission then employs a balancing process, weighing any
    potential public interest harms of the proposed transactions against
    any potential public interest benefits.[^83] The Applicants bear the
    burden of proving, by a preponderance of the evidence, that the
    proposed transactions, on balance, would serve the public
    interest.[^84] If the Commission is unable to find that the proposed
    transactions serve the public interest, or if the record presents a
    substantial and material question of fact, section 309(e) of the Act
    requires that the application be designated for hearing.[^85]

24. The Commission's public interest evaluation encompasses the "broad
    aims of the Communications Act,"[^86] which include, among other
    things, a deeply rooted preference for preserving and enhancing
    competition in relevant markets,[^87] accelerating private sector
    deployment of advanced services,[^88] ensuring a diversity of
    information sources and services to the public,[^89] 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.[^90] In
    conducting this analysis, the Commission may consider technological
    and market changes, and the nature, complexity, and speed of change
    of, as well as trends within, the communications industry.[^91]

25. The Commission's competitive analysis, which forms an important part
    of its public interest evaluation, is informed by traditional
    antitrust principles, but is not limited to them.[^92] 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.[^93] In addition to considering
    whether a transaction will reduce existing competition, therefore,
    the Commission also must focus on whether the transaction will
    accelerate the decline of market power by dominant firms in the
    relevant communications markets and the transaction's effect on
    future competition.[^94] The Commission's analysis 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, and create opportunities to disadvantage
    rivals in anticompetitive ways.[^95]

26. Where appropriate, the Commission's public interest authority
    enables it to impose and enforce narrowly tailored,
    transaction-specific conditions that ensure that the public interest
    is served by the transaction.[^96] Section 303(r) of the
    Communications Act authorizes the Commission to prescribe
    restrictions or conditions, not inconsistent with law, that may be
    necessary to carry out the provisions of the Act.[^97] Similarly,
    section 214(c) of the Act authorizes the Commission to attach to the
    certificate "such terms and conditions as in its judgment the public
    convenience and necessity may require."[^98] Indeed, unlike the role
    of antitrust enforcement agencies, the Commission's public interest
    authority enables it to rely upon its extensive regulatory and
    enforcement experience to impose and enforce conditions to ensure
    that a transaction will yield overall public interest benefits.[^99]
    Despite its 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)[^100] and that are
    reasonably related to the Commission's responsibilities under the
    Communications Act and related statutes.[^101]

27. The Applicants question both the jurisdiction of the Commission to
    determine whether these transactions are in the public interest and
    the elements of the public interest standard the Commission has
    applied since 1997.[^102] First, the Applicants assert that their
    licenses for CARS, Business Radio, and Private Operational Fixed
    services "do not constitute a material aspect of the Parties' cable
    television operations," and thus the Commission's jurisdiction to
    conduct a public interest review of the transactions is
    "tenuous."[^103] Applicants state that the Commission's
    consideration of the license transfers must "account for the nature
    of the licenses involved and their materiality to \[the\] business
    of the licensee."[^104] They fail to explain how they interpret
    materiality or cite any authority for this proposition. Applicants
    further suggest that the Commission should "routinely" approve
    merger transactions unless an opposing party submits *prima facie*
    evidence that a transaction is not in the public interest.[^105]

28. We reject Applicants' argument that the Commission's jurisdiction to
    conduct a public interest review of the transactions is "tenuous."
    Section 214(a) provides in pertinent part that no carrier shall
    acquire or operate any line, or extension thereof, "unless and until
    there shall first have been obtained from the Commission a
    certificate that the present or future public convenience and
    necessity require or will require the construction or operation, or
    construction and operation of such additional or extended
    line."[^106] Section 310(d) states in pertinent part that "\[n\]o
    construction permit or station license, or any rights thereunder,
    shall be transferred, assigned, or disposed of in any manner . . .
    to any person except upon application to the Commission and upon
    finding by the Commission that the public interest, convenience and
    necessity will be served thereby."[^107] Thus, according to the
    plain language of the statutory sections, each license application
    is subject to the Commission's public interest review and analysis,
    and may be granted subject to conditions as are necessary in the
    public interest. Moreover, we do not agree with Applicants that the
    authorizations and licenses associated with the instant transactions
    are insignificant or immaterial to their respective cable operations
    and service to the public. The parties have filed applications
    regarding 83 CARS licenses, 123 private land mobile radio and fixed
    microwave services, 346 television receive-only ("TVRO") licenses,
    and four section 214 authorizations to effectuate the acquisition
    and operation of Adelphia's owned or managed cable systems, as well
    as the subsequent system swaps between Comcast and Time
    Warner.[^108] Contrary to the Applicants' contention, the Commission
    is required under section 310(d) to conduct a full public interest
    review, which is particularly important here given the numerous
    licenses that are sought to be transferred in the instant
    transactions.[^109] The courts have stated that the contours of the
    Commission's public interest standard are a matter for the
    Commission's discretion based on its expertise and policy
    objectives.[^110] Although we investigate those issues raised by
    parties to the proceeding, we will analyze all relevant issues
    raised by the transactions that in our judgment may significantly
    affect the public interest.

29. Free Press maintains that section 314 of the Act imposes an
    additional standard of review beyond the standards embodied in
    sections 214 and 309, arguing that grant of the Applications in the
    form submitted would "likely cause a substantial loss of competition
    or creation of a monopoly in many geographic areas of the United
    States" in violation of section 314 of the Communications Act.[^111]
    Free Press claims that the proposed transactions would violate
    section 314 based on the increase in the national
    Herfindahl-Hirschmann Index (HHI) to over 1800, a level that Free
    Press claims the Department of Justice would consider to be
    indicative of a highly concentrated market.[^112] In addition to the
    increase in national HHI, Free Press argues that the "geographic
    rationalization" that would result from the transactions would
    further aggravate the anticompetitive effects.[^113] Free Press
    states that section 314 requires the Commission to deny the
    Applications or to impose conditions to alleviate the transactions'
    anticompetitive affects.[^114]

30. We disagree that the instant transactions implicate section 314 of
    the Communications Act. Section 314 applies to anticompetitive
    combinations of international radio and cable companies, as well as
    the anticompetitive operation of international telecommunication
    facilities.[^115] As explained in a recent decision by the Wireless
    Telecommunications Bureau, section 314 was included in the original
    1934 Communications Act to preserve competition in international
    communications.[^116] Congress feared that the then-existing
    competition in the international telecommunications market between
    high frequency radio companies providing radiogram services and
    submarine cable companies providing cablegram services might be
    eliminated in the future as a result of consolidation or mergers
    among those competitors.[^117] Accordingly, the Commission has held
    that section 314 "prohibits the acquisition of international
    facilities when the transfer would substantially lessen the
    competition between radio facilities on the one hand and cable
    facilities on the other."[^118] Free Press fails to present any
    substantial evidence that the transactions are likely to have
    anticompetitive effects on international competition. Based on the
    foregoing, we deny Free Press' request that we analyze the
    applications under section 314. Accordingly, we consider the
    concerns raised by Free Press in the context of our established
    public interest review standard.

31. Finally, we note that the transactions at issue involve a complex
    combination of cable system sales and swaps.[^119] The Applications
    reflect the cable system ownership that ultimately will result
    following the closing of *all* of the transactions. Our evaluation
    of the harms and benefits associated with this complex combination
    of transactions would likely change were one of the elements in the
    combination to be omitted. Approval of the Applications is
    conditioned, therefore, on consummation of all of the transactions
    underlying the Applications approved by this Order.[^120] In that
    regard, if certain transactions are not consummated, the Commission
    may require further consideration and/or reevaluation of the public
    interest findings set forth herein and may require Applicants to
    amend their Applications.[^121]

32. Further, our ruling does not address or resolve any state or local
    franchising requirements or authorizations necessary to be fulfilled
    or obtained before the transactions are consummated. Therefore, as
    set forth in the ordering clauses below, we will require the
    Applicants to provide notice to the Commission of any finding by an
    LFA of ineligibility to operate a cable system or denial of a
    franchise transfer application for any cable system that would have
    undergone a change in ownership as a result of the transactions
    described in the Applications. We examine the issues surrounding
    local franchising authority review in greater detail in the
    procedural section below.[^122]

# APPLICABLE REGULATORY FRAMEWORK

33. Our consideration of potential harms related to MVPD distribution
    and programming supply is informed by the regulatory framework
    governing cable ownership, program access, and program carriage.
    Below we summarize the statutory and regulatory provisions that
    pertain to these areas of concern.

## Cable Ownership

34. In section 613(f) of the Act, adopted as part of the Cable
    Television Consumer Protection and Competition Act of 1992, Congress
    directed the Commission to conduct proceedings to establish
    reasonable limits on the number of subscribers a cable operator may
    serve, the "cable ownership limit," and on the number of channels a
    cable operator may devote to its affiliated programming networks,
    the "channel occupancy limit."[^123] A principal goal of this
    mandate was to foster a diverse, robust, and competitive market in
    the acquisition and delivery of multichannel video programming[^124]
    by encouraging the development of alternative and new technologies,
    including cable and non-cable systems.[^125] Congress found that the
    cable industry, the dominant and increasingly horizontally
    concentrated medium for the delivery of multi-channel programming,
    faced virtually no competition at the local level and only limited
    competition at the regional and national level.[^126] The Senate
    Report concluded that increased horizontal concentration could give
    cable operators the power to demand that programmers provide "cable
    operators an exclusive right to carry the programming, a financial
    interest, or some other added consideration as a condition of
    carriage on the cable system."[^127] Additionally, Congress found
    that the increase in vertical integration between cable operators
    and programmers provided the incentives and opportunities for cable
    operators to favor affiliated over non-affiliated programmers and,
    similarly, for programmers to favor affiliated over non-affiliated
    operators in the distribution of video programming.[^128] Thus,
    given the absence of competition, Congress believed that certain
    structural limits were necessary.[^129]

35. Congress intended that the structural ownership limits mandated by
    section 613(f) would ensure that cable operators did not use their
    dominant position in the MVPD market, acting unilaterally or
    jointly, to unfairly impede the flow of video programming to
    consumers.[^130] At the same time, Congress recognized that multiple
    system ownership could provide benefits to consumers by allowing
    efficiencies in the administration, distribution, and procurement of
    programming, as well as by providing capital and a ready subscriber
    base to promote the introduction of new programming services.[^131]

36. In 1993, based on proceedings initiated pursuant to section 613(f),
    the Commission established the cable ownership and channel occupancy
    limits.[^132] The cable ownership limit, which has since been
    amended, prohibited any cable operator from serving more than 30% of
    all homes passed by cable systems nationwide.[^133] The channel
    occupancy limit, which remains in effect, prohibited a cable
    operator from carrying affiliated programming on more than 40% of
    its activated channels, up to 75 channels.[^134] In adopting these
    limits, the Commission found that the 30% cable ownership limit "is
    generally appropriate to prevent the nation's largest MSOs from
    gaining enhanced leverage from increased horizontal concentration,"
    while at the same time, "ensur\[ing\] that a majority of MSOs
    continue to expand and benefit from the economies of scale necessary
    to encourage investment in new video programming services and the
    deployment of advanced cable technologies."[^135] To reflect changed
    market conditions and allow for organic growth in subscribership,
    the Commission revised the 30% cable ownership limit in 1999 to
    permit a cable operator to reach 30% of all MVPD subscribers, rather
    than solely cable subscribers.[^136] The Commission found that the
    40% channel occupancy limit remains "appropriate to balance the
    goals of increasing diversity and reducing the incentive and ability
    of vertically integrated cable operators to favor their affiliated
    programming, with the benefits and efficiencies associated with
    vertical integration."[^137] The 75-channel maximum reflected the
    Commission's recognition that expanded channel capacity would reduce
    the need for channel occupancy limits as a means of encouraging
    cable operators to carry unaffiliated programming.[^138] The
    Commission also recognized that the dynamic state of cable
    technology required that it undertake periodic reviews of the
    channel occupancy limit.[^139]

37. On review, in *Time Warner Entertainment Co. v. FCC* ("*Time Warner
    II*"), the United States Court of Appeals for the District of
    Columbia Circuit reversed and remanded the Commission's decision
    imposing the cable ownership and channel occupancy limits.[^140] The
    court found that the limits unduly burdened cable operators' First
    Amendment rights,[^141] the Commission's evidentiary basis for
    imposing the limits did not meet the applicable standards of
    review,[^142] and the Commission had failed to consider sufficiently
    changes that had occurred in the MVPD market since passage of the
    1992 Act.[^143] The *Time Warner II* court did not vacate the
    rules.[^144]

38. In response to the court's remand, the Commission issued a Further
    Notice of Proposed Rulemaking to address how to revise the limits in
    compliance with the court's directives.[^145] The comments and
    evidentiary record compiled in response to the Cable Ownership
    Further Notice did not provide a sufficient evidentiary basis for
    setting new limits, and the Commission therefore released a Second
    Further Notice of Proposed Rulemaking, seeking updated and more
    specific comment on the pertinent issues.[^146] That proceeding is
    pending. Comcast and Time Warner will be expected to comply with any
    revised limits that the Commission may adopt in the pending
    rulemaking proceeding.

## Program Access

39. In section 628 of the Communications Act, adopted as part of the
    1992 Act, Congress directed the Commission to promulgate rules
    governing MVPDs' access to programming. At that time, Congress was
    concerned that most cable operators enjoyed a monopoly in program
    distribution at the local level.[^147] Congress found that
    vertically integrated program suppliers had the incentive and
    ability to favor their affiliated cable operators over nonaffiliated
    cable operators and programming distributors using other
    technologies.[^148] Section 628 is intended to foster the
    development of competition to traditional cable systems by
    facilitating competing MVPDs' access to cable programming services.
    DBS was among the technologies that Congress intended to foster
    through the program access provisions.[^149] As a general matter,
    the program access rules prohibit a cable operator, a satellite
    cable programming vendor[^150] in which a cable operator has an
    attributable interest, or a satellite broadcast programming
    vendor[^151] from engaging in "unfair methods of competition or
    unfair or deceptive acts or practices, the purpose or effect of
    which is to hinder significantly or to prevent any MVPD from
    providing satellite cable programming or satellite broadcast
    programming to subscribers or consumers."[^152] Thus, Congress
    acknowledged that access to satellite cable programming was
    essential to ensure competition and diversity in the satellite
    programming and MVPD markets.

40. The program access rules adopted by the Commission specifically
    prohibit cable operators, a satellite cable programming vendor in
    which a cable operator has an attributable interest, or a satellite
    broadcast programming vendor from (1) significantly hindering or
    prohibiting an MVPD from making satellite cable programming
    available to subscribers or consumers;[^153] (2) discriminating in
    the prices, terms, and conditions of sale or delivery of satellite
    cable programming;[^154] or (3) entering into exclusive contracts
    with cable operators unless the Commission finds the exclusivity to
    be in the public interest.[^155] Aggrieved entities can file a
    complaint with the Commission.[^156] Remedies for violations of the
    rules may include the imposition of damages and the establishment of
    reasonable prices, terms, and conditions for the sale of
    programming.[^157]

41. As required by statute, in 2002, the Commission examined the
    developments and changes in the MVPD marketplace in the ten years
    since the enactment of section 628 and considered whether the
    exclusivity prohibition in its program access rules should
    sunset.[^158] The Commission considered whether, without the
    exclusivity prohibition, vertically integrated programmers would
    have the incentive and ability to favor their affiliated cable
    operators over nonaffiliated MVPDs and, if they would, whether such
    behavior would harm competition and diversity in the distribution of
    video programming.[^159] The Commission held that access to all
    vertically integrated satellite cable programming continues to be
    necessary in order for competitive MVPDs to remain viable in the
    marketplace.[^160] The Commission also found that vertically
    integrated programmers retain the incentive to favor their
    affiliated cable operators over competing MVPDs.[^161] In that
    regard, the Commission found that cable operators continue to
    dominate the MVPD marketplace and that horizontal consolidation and
    clustering, combined with affiliation with regional programming,
    have contributed to cable's overall market dominance.[^162] In
    addition, the Commission determined that an economic basis for
    denying competitive MVPDs access to vertically integrated
    programming continues and concluded that such denial would harm
    competitors' ability to compete for subscribers.[^163] Accordingly,
    the Commission extended the prohibition on exclusive contracts for
    satellite-delivered cable and satellite-delivered broadcast
    programming for five years, until October 5, 2007.[^164]

42. 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 lineup would have a
    substantial impact)."[^165] The Commission found that an MVPD's
    ability to compete effectively with an incumbent cable operator is
    significantly harmed if it is denied access to "must have"
    vertically integrated programming, for which there is no good
    substitute.[^166] Further, the Commission recognized that "certain
    programming services, such as sports programming, or marquee
    programming, such as HBO, may be essential and for practical
    purposes, 'must haves' for program distributors and their
    subscribers . . . ."[^167] The Commission noted, however, "the
    difficulty of developing an objective process of general
    applicability to determine what programming may or may not be
    essential to preserve and protect competition."[^168] The Commission
    therefore declined to promulgate a generally-applicable rule that
    defined "essential programming services" in order to narrow the
    scope of the exclusivity prohibition.[^169]

## Program Carriage

43. Section 616 of the 1992 Cable Act requires the Commission to
    establish regulations governing program carriage agreements and
    related practices between cable operators or other multichannel
    video programming distributors and video programming vendors.[^170]
    Congress enacted section 616 based on findings that some cable
    operators had required certain non-affiliated program vendors to
    grant exclusive rights to programming, a financial interest in the
    programming, or some other additional consideration as a condition
    of carriage on the cable system.[^171] Accordingly, the Commission's
    rules implementing section 616 prohibit all MVPDs from (1) demanding
    a financial interest in any program service as a condition of
    carriage of the service on its system; (2) coercing any video
    programming vendor to provide exclusive rights as a condition of
    carriage; and (3) unreasonably restraining the ability of a video
    programming vendor to compete fairly by discriminating on the basis
    of affiliation or non-affiliation of vendors in the selection,
    terms, or conditions of carriage.[^172] The program carriage rules
    also specify complaint procedures and remedies for violations of
    these requirements. Complaints may be brought by aggrieved video
    programmers or MVPDs.[^173]

# Compliance with commission rules

44. In this section, we consider whether the transactions are likely to
    violate any Commission rules.[^174] Specifically, we consider
    whether Comcast and Time Warner will remain in compliance with the
    Commission\'s cable ownership limit, cable channel occupancy rule,
    and various cross-ownership rules.[^175] We find that the
    transactions will not result in a violation of any of these rules.

## National Cable Ownership Limit

45. The Applicants assert that both Time Warner and Comcast will remain
    in compliance with the Commission's cable ownership limit after the
    transactions are completed.[^176] Comcast contends that, following
    the transactions, it will have a national subscribership of 28.9% of
    all MVPD subscribers, falling within the 30% limit.[^177] Comcast
    states that it currently has approximately 26,100,352 attributable
    subscribers, or 28.2% of all MVPD subscribers.[^178] As a result of
    the transactions, it expects to gain approximately 680,000
    attributable subscribers, for a post-transaction total of
    approximately 26,780,352 attributable subscribers.[^179] Using a
    denominator of 92.6 million MVPD subscribers nationwide, Comcast
    calculates that its current national subscribership of 28.2% will
    increase by 0.73% to 28.9%.[^180]

46. Comcast's net gain of 680,000 attributable subscribers will result
    from the acquisition of certain Adelphia systems, followed by the
    acquisition of systems from Time Warner and the transfer of systems
    from Comcast to Time Warner, including systems acquired by Comcast
    from Adelphia. Specifically, Comcast will acquire 138,000
    subscribers from Adelphia that were not previously attributable to
    Comcast.[^181] Comcast also will acquire 100% ownership of the
    Adelphia/Comcast Joint Ventures, which operate cable systems serving
    approximately 1,082,138 subscribers.[^182] These subscribers,
    however, are currently attributable to Comcast and therefore are
    included in Comcast's pre-transaction total of 26,100,352
    subscribers.[^183] From Time Warner, Comcast will acquire cable
    systems serving 2,740,000 subscribers.[^184] Comcast will transfer
    to Time Warner systems serving 2,198,000 subscribers, including the
    Adelphia/Comcast Joint Venture systems.[^185]

47. Time Warner asserts that, upon completion of the transactions, it
    will serve fewer than 18% of the nation's MVPD subscribers.[^186]
    Time Warner will gain approximately 3.5 million attributable
    subscribers, for a total of 14.4 million attributable subscribers
    served by systems that are owned or managed by Time Warner.[^187]
    Bright House Networks manages an additional 2.2 million subscribers
    that are currently attributable to Time Warner through its interest
    in Time Warner Entertainment-Advance/Newhouse Partnership.[^188]
    Dividing the total of 16.6 million attributable subscribers by the
    Kagan estimate of 92.6 million MVPD subscribers results in a
    post-transaction national subscribership of 17.9%.[^189] Therefore,
    Time Warner will remain within the Commission's 30% limit.

48. Various parties question Comcast's subscriber figures or assert that
    its post-transaction reach will exceed the cable ownership limit.
    None of the parties, however, presents persuasive evidence that
    Comcast's national reach will exceed the limit as a result of the
    transactions. Using a Commission 2004 figure for the total number of
    households served by cable systems, EchoStar asserts that Comcast
    will control access to more than 35% of the nation's cable
    subscribers.[^190] For purposes of compliance with section 76.503,
    however, the relevant measure is a cable operator's reach in terms
    of all MVPD subscribers, not cable subscribers.[^191]

49. Free Press argues that both Time Warner and Comcast will have
    national subscriberships above 30% because all of Time Warner's
    cable systems should be attributed to Comcast, and vice versa.[^192]
    Free Press reasons that such cross-attribution is appropriate
    because the two companies have the ability to control or influence
    the programming decisions of iN DEMAND, a limited partnership in
    which they both own equity.[^193] Free Press invokes the
    Commission's rule that the interests of a limited partnership are
    attributable to a limited partner if that partner is materially
    involved in the video programming activities of the
    partnership.[^194] Free Press, however, misunderstands the
    application of the rule. First, Free Press does not assert that any
    subscribers are attributable to iN DEMAND because of any ownership
    interests iN DEMAND has in an MVPD. Second, where a partner has an
    attributable interest in a media entity, the Commission attributes
    to that partner all of the media interests held by that entity. It
    does not, however, attribute to that partner, without more, all of
    the interests held by other partners in the entity. Free Press has
    cited no basis under our attribution rules or precedent for its
    assertion. As we have noted, the attribution rules "identify what
    types of ownership interests or other relationships are sufficient
    that two legally separate entities should be treated as if they were
    commonly owned or managed or subject to significant common
    influence."[^195] Free Press has not indicated how Time Warner's
    interest in iN DEMAND gives it significant influence over or control
    of Comcast or how Comcast\'s interest in iN DEMAND gives it
    significant influence over or control of Time Warner such that Time
    Warner's systems should be attributed to Comcast or Comcast's
    systems should be attributed to Time Warner. Thus, if iN DEMAND had
    any ownership interests in an MVPD, they would be attributable to
    Time Warner and to Comcast, but Time Warner's and Comcast's
    attributable interests in iN DEMAND, without more, do not result in
    their cable systems being attributed to each other.

50. Free Press asserts that, based on information provided shortly after
    the Applications were filed, Comcast may significantly undercount
    subscribers, because Comcast rounded its numbers to the nearest
    thousand and, for several markets, provided post-transaction numbers
    that were smaller than the pre-transaction numbers provided by the
    Applicant transferring its system in those markets.[^196] However,
    in verifying Comcast's subscriber totals, we have relied on the more
    precise data that Comcast furnished under the protective order, and
    we have resolved the discrepancies for those DMAs where the pre- and
    post-transaction numbers did not match.[^197]

51. Our calculations of Comcast's post-transaction national
    subscribership are based on data the Applicants provided at the
    system level for June 2005. Our calculations comport with Comcast's
    post-transaction estimate of approximately 26,780,352 attributable
    subscribers.[^198] We accept Comcast's use of Kagan as a source of
    information on MVPD subscribership and find that the Kagan figure
    the Applicants cite constitutes an acceptable industry estimate. We
    note, however, that the figure of 92.6 million MVPD subscribers
    included in the Public Interest Statement has been superseded by
    more recent estimates. Using Kagan's estimate for the time period
    during which Comcast's subscriber figures were collected, we find
    that Comcast would have a national subscribership of 28.7% of U.S.
    MVPD subscribers as a result of the transactions.[^199]

52. As discussed above, the Commission currently is re-examining its
    cable ownership rule.[^200] Upon resolution of that proceeding, the
    Commission will either affirm the 30% limit or adopt a new limit. If
    the Commission adopts a new limit, the Applicants will be expected
    to come into compliance with that new limit. In this regard, Time
    Warner and Comcast have expressed their willingness to "take all
    steps necessary" to adhere to any new cable ownership limit that we
    may ultimately adopt.[^201]

## Other Cable Ownership Rules

53. The Applicants provide adequate assurances that they will comply
    with all other Commission cable ownership rules. We discuss these
    rules below.

54. *Limits on Carriage of Vertically Integrated Programming*. Section
    76.504 of the Commission's rules prohibits a cable operator from
    carrying affiliated programming networks on more than 40% of its
    activated channels. The rule does not apply to channel capacity in
    excess of 75 channels.[^202] The Applicants state that Time Warner
    and Comcast will remain in compliance with section 76.504 following
    the transactions.[^203] The Applicants note that the transactions
    will not involve the acquisition of any attributable interests in
    national or regional programming networks from Adelphia, and the
    agreements between Comcast and Time Warner will not involve the
    exchange of any interests in national or regional programming
    networks.[^204] Time Warner and Comcast have submitted signed
    affidavits certifying that the transactions will not result in any
    violation of the channel occupancy limit.[^205] Both affidavits
    state, however, that the companies are still reviewing the channel
    line-ups of the cable systems to be acquired and compiling the
    line-ups to be implemented after the transactions are consummated.
    Therefore, we require that, within 90 days after consummation of the
    transactions, Time Warner and Comcast each provide to the Commission
    another affidavit signed by a competent officer of the company
    certifying without qualification that the company is in compliance
    with the requirements of section 76.504. The merged entities also
    must comply with any revisions that the Commission may make to the
    channel occupancy limit, which has been remanded by the D.C.
    Circuit.[^206]

55. *Cable/SMATV Cross-Ownership Rule*. Section 76.501 of the
    Commission's rules prohibits cable operators from offering satellite
    master antenna television ("SMATV") service separate and apart from
    any franchised cable service in any portion of a franchise area
    served by the cable operator or its affiliates, unless the service
    is offered in accordance with the terms of a cable franchise
    agreement.[^207] The Applicants acknowledge that some of the
    Adelphia properties to be acquired may include a small number of
    SMATV systems.[^208] The Applicants state that they will "take
    immediate steps" to integrate any such SMATV systems that may fall
    within any Comcast or Time Warner franchise area into their
    respective cable distribution systems and will offer any cable
    service provided over such facilities in accordance with the terms
    and conditions of any applicable franchise agreement.[^209] To
    ensure that Time Warner and Comcast comply with the requirements of
    section 76.501(d) and (e) regarding cable and SMATV cross-ownership,
    we require that, within 60 days of consummation of the transactions,
    Time Warner and Comcast each provide to the Commission an affidavit
    signed by a competent officer of the company certifying that the
    requirements of section 76.501(d) and (e) have been satisfied.[^210]

56. *Broadcast Ownership Rules and Cable/BRS Cross-Ownership Rule*. Our
    rules impose various restrictions on the ownership of radio and
    television stations.[^211] In addition, cable operators are
    prohibited from providing broadband radio service ("BRS") within any
    portions of their franchise areas they actually serve if they use
    the BRS station as an MVPD.[^212] The Applicants state that neither
    Time Warner nor Comcast expects to own any attributable interest in
    any broadcast television or radio station or in any BRS station that
    post-transaction would implicate the broadcast ownership
    restrictions or the cable/BRS cross-ownership rule.[^213]

57. *Prohibition on Buy-Outs*. Section 76.505(a) of the Commission's
    rules prohibits local exchange carriers ("LECs") or their affiliates
    from acquiring more than a 10% financial interest, or any management
    interest, in a cable operator that provides cable service within the
    LEC's telephone service area.[^214] Section 76.505(e) defines a
    LEC's "telephone service area" as an area in which the LEC provided
    telephone exchange service as of January 1, 1993.[^215] The
    Applicants assert that none of them provided telephone exchange
    service as of January 1, 1993, and, thus, none has a "telephone
    service area" as defined by section 76.505(e) of the Commission's
    rules.[^216]

58. Section 76.505(b) of the Commission's rules prohibits a cable
    operator or its affiliates from acquiring more than a 10% financial
    interest, or any management interest, in a LEC providing telephone
    exchange service within the cable operator's franchise area.[^217]
    The Applicants state that neither Time Warner nor Comcast owns a
    financial interest of greater than 10% or has any management
    interest in a LEC providing telephone exchange service within any of
    the franchise areas of the systems they are acquiring pursuant to
    the transactions.[^218]

# Analysis of Potential Harms in the Relevant Markets

## Relevant Markets

59. In general, competition depends on having choices among products
    that are close substitutes for one other. If consumers have such
    choices, a single provider cannot raise its prices above the
    competitive level because consumers will switch to a substitute. The
    level of competition depends on what products are substitutes
    (product market), where those substitute products are available
    (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
    determine the impact of the transactions on market participants and
    potential entrants. 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 engage in anticompetitive
    actions such as raising prices or reducing output. Economic theory
    describes both how such anticompetitive actions can harm consumers
    and how the magnitude of the harm can be measured.

60. 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 programming
    market").[^219] The Applicants are significant participants in both
    of these product markets, and we therefore analyze the markets
    below. Specifically, we examine whether the transactions are likely
    to contravene Commission policy goals by analyzing the potential
    effects the transactions may have on MVPD competition and on the
    flow of video programming to consumers.[^220]

### MVPD Services

#### Product Market 

61. MVPDs include cable operators, direct broadcast satellite ("DBS")
    providers, and "overbuilders."[^221] 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 ensure that their direct competitors are
    unable to offer it to their subscribers.[^222]

62. CWA/IBEW argue that DBS and cable are not part of the same product
    market.[^223] They cite various papers and reports that conclude
    that high switching costs limit substitution between the two
    services,[^224] that only the presence of second cable operators
    will result in "significant cable price decreases,"[^225] and that
    DBS is a substitute for premium cable service, but not for the type
    of cable service that most subscribers use.[^226] In addition, they
    note that because DBS does not offer voice telephony or high-speed
    Internet access, it cannot offer the "triple play" bundle of
    services consumers are seeking.[^227] Finally, CWA/IBEW argue that
    DBS is disadvantaged by other barriers to competitive entry,
    including cable operators' exclusive access to programming and
    satellite providers' limited access to multiple dwelling
    units.[^228]

63. In past transaction reviews, in analyzing possible effects of the
    proposed transaction on the distribution of video programming, the
    Commission has found that the relevant product market is all MVPD
    services.[^229] This approach also is consistent with the
    Commission's traditional delineation of the product market for cable
    services.[^230] Therefore, consistent with applicable Commission
    precedent, we find that the relevant product market for evaluating
    the proposed transactions is "multichannel video programming
    service" distributed by all MVPDs.[^231]

#### Geographic Market 

64. In the past, the Commission has concluded that the relevant
    geographic market for MVPD services is local because consumers make
    decisions based on the MVPD choices available to them at their
    residences and are unlikely to change residences to avoid a small
    but significant increase in the price of MVPD service.[^232] In
    order to simplify the analysis, the Commission has aggregated
    consumers that face the same choice in MVPD products into larger
    relevant geographic markets.[^233] We find it appropriate to
    continue this approach here. 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 find that the franchise area of the local
    cable operator is the relevant geographic market for purposes of
    this analysis.

### Video Programming

#### Product Market

65. Companies that own cable 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 MVPDs for
    distribution to consumers.[^234] To provide multichannel video
    services to subscribers, MVPDs combine cable programming networks
    and broadcast television signals with distribution on their cable,
    satellite, or wireless distribution networks.[^235] 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"[^236] 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.[^237] Most cable programming networks and MVPDs
    also derive revenue by selling advertising time during the
    programming.[^238]

66. We find that markets that include video programming are classic
    differentiated product markets.[^239] Video programming differs
    significantly in terms of characteristics, focus, and subject
    matter. Programming is offered by over-the-air broadcast stations;
    national cable networks, including news, entertainment and hobby
    networks; and various regional networks, including, in particular,
    regional sports networks.[^240] Among cable programming networks,
    some offer programming of broad interest and depend on a large,
    nationwide audience for profitability; others also seek large
    nationwide audiences but offer content that is more focused in
    subject; and yet others seek nationwide distribution, but offer
    narrowly tailored programming, focusing on a "niche within a
    niche."[^241] Some cable programming networks do not seek a national
    audience but are regional or even local in scope, including regional
    sports and local or regional news networks.[^242] We have previously
    found 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.[^243]

67. 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 analysis, we will separate the video
    programming products offered by Comcast and Time Warner into two
    broad categories: (1) national cable programming networks and (2)
    regional cable networks, particularly regional sports networks.

#### Geographic Market 

68. 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.[^244] 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 regional sports
    networks ("RSNs") and other regional networks, we conclude, as we
    did in the *Comcast-AT&T* and *News Corp.-Hughes* transactions, that
    the relevant geographic market is regional.[^245] 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.[^246] 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.[^247]

## Introduction to Potential Harms

69. Transactions involving the acquisition of a full or partial interest
    in another company may give rise to concerns regarding "horizontal"
    concentration and/or "vertical" integration, depending on the lines
    of business engaged in by the two firms. A transaction is said to be
    horizontal when the firms in the transaction sell or buy products
    that are in the same relevant product and geographic markets and are
    therefore viewed as reasonable substitutes. Horizontal transactions
    can eliminate competition between the firms and increase
    concentration in the relevant markets. The reduction in overall
    competition in the relevant markets may lead to substantial
    increases in prices paid by purchasers or decreases in prices paid
    to sellers of products in the markets. The result in either case is
    that less output is sold.[^248]

70. Vertical transactions raise slightly different competitive concerns.
    Vertical relationships exist when upstream firms produce inputs that
    downstream firms use to create finished goods. Transactions are said
    to be vertical when upstream firms and downstream firms are
    combined. A merging of the firms, however, is not required for a
    vertical relationship to exist. Exclusive dealing arrangements
    between upstream and downstream firms, referred to as "vertical
    restraints," can accomplish the objectives of vertical
    integration.[^249]

71. At the outset, it is important to note that antitrust law and
    economic analysis have viewed vertical transactions more favorably
    than horizontal transactions in part because vertical transactions,
    standing alone, do not directly reduce the number of competitors in
    either the upstream or downstream markets.[^250] In addition,
    vertical transactions may generate significant efficiencies.[^251]
    Nevertheless, as discussed in greater detail below, vertical
    transactions also can have anticompetitive effects. In particular, a
    vertically integrated firm that competes both in an upstream input
    market and a downstream output market may have the incentive and
    ability to (1) foreclose rivals from inputs or customers or (2)
    raise the costs to rivals generally.

72. As explained above, our determinations about how the public interest
    might be harmed or served by the Applicants' proposal are based on
    the assumption that all of the proposed transactions will be
    consummated and would be different if only some of the proposed
    transactions were consummated. Our analysis is based on the facts
    and evidence presented in the record, and we consider the effects on
    the relevant markets and market participants by comparing current
    competitive conditions with the competitive landscape that is likely
    to result following the completion of all of the proposed
    transactions.

73. Below, we analyze the potential horizontal and vertical effects of
    the transactions on the markets for MVPD services and video
    programming. Where we find that the proposed transactions are likely
    to result in public interest harms, we also impose conditions that
    are narrowly targeted to address those harms.

## Potential Horizontal Harms

### MVPD Market

74. Commenters contend that the horizontal concentration resulting from
    the transactions would give Comcast and Time Warner market power at
    the national and/or regional levels, resulting in harm to
    competition in the MVPD market.[^252] Commenters assert that the
    Applicants' horizontal reach in national and regional markets would
    enable them to raise cable rates to their subscribers and secure
    exclusive agreements with, or more favorable terms from,
    unaffiliated programmers.[^253] Further, commenters assert that the
    post-transaction increased subscribership of Comcast and Time Warner
    would facilitate anticompetitive practices vis-à-vis second cable
    operators, adversely affect the local franchising process, and
    produce other public interest harms.[^254] We consider these
    allegations below, and conclude that any potential harms will be
    adequately addressed by the conditions we impose in Section VI.D.1.

#### Potential Effects on MVPD Competition

75. *Positions of the Parties*. Several commenters/petitioners assert
    that the proposed transactions would lead to a reduction in
    head-to-head competition in areas served by Time Warner or Comcast
    by deterring entry by overbuilders. In support of this claim,
    DIRECTV cites to a study as evidence that clustering creates a
    "fortress" that deters competitive entry.[^255] Free Press, CFA/CU,
    and the Florida Communities also suggest that increased
    consolidation would minimize competition from overbuilders.[^256]
    RCN notes that the Commission has recognized that head-to-head
    competition benefits consumers by spurring the incumbent cable
    operator to reduce prices, provide additional programming at the
    same monthly rate, improve customer service, and add new
    services.[^257] RCN warns that these benefits could be lost if Time
    Warner and Comcast were able to use their enhanced market power to
    engage in behavior that harms or deters competitors in the areas
    they serve.[^258] In analyzing the potential effects of the
    transactions, Free Press examines the transfers of ownership within
    DMAs, which generally are comprised of multiple franchise areas,
    rather than the transfers of ownership within franchise areas. Free
    Press concludes that the transactions are intended to eliminate
    head-to-head competition between Time Warner and Comcast in the
    country's most desirable DMAs.[^259]

76. Commenters argue that competition from DBS and other MVPDs would not
    constrain the anticompetitive effects arising from increased
    horizontal concentration.[^260] They claim that although incumbent
    local exchange carriers ("ILECs") have announced plans to enter the
    MVPD market, they have not done so.[^261] Commenters cite various
    obstacles to ILEC entry into the MVPD market, including the
    requirement to obtain numerous local franchise authority
    approvals,[^262] difficulties inherent in introducing a mass-market
    service using new technology,[^263] and the likelihood that the
    Applicants themselves will impede ILEC entry by withholding access
    to affiliated programming or entering into exclusive arrangements
    with unaffiliated programmers.[^264] DIRECTV states that, even
    without such obstacles, many of the areas in which the Applicants
    will operate post-transaction are not served by the ILECs that have
    announced plans for a video offering.[^265]

77. Free Press and other commenters propose that the
    Herfindahl-Hirschman Index (HHI) be used to analyze the competitive
    effects of the transactions.[^266] They point to the use of HHIs by
    the Department of Justice and the Federal Trade Commission,
    following the *Horizontal Merger Guidelines*, to measure
    concentration in markets in order to assess the likelihood that a
    particular merger would increase the merging parties' market power
    sufficiently to allow them to raise prices profitably.[^267] These
    commenters provide HHI calculations for regional and national
    markets based on the market shares of cable operators in each retail
    market. They claim that the size and change in regional and national
    HHIs calculated for the transactions are sufficient to raise
    competitive concerns.[^268]

78. Free Press argues that even if there is no direct competition within
    a franchise area, consumers benefit in terms of service and price
    when neighboring franchise areas are served by different cable
    operators.[^269] Free Press reasons that cable operators are less
    likely to raise prices or reduce service when consumers have a
    readily available basis for comparison.[^270] Noting that the
    Commission previously has endorsed the idea that the presence of a
    "benchmark" competitor reduces the likelihood of anticompetitive
    behavior,[^271] Free Press suggests that the increases in the HHIs
    it calculated for each of the top 25 DMAs demonstrate that these
    benchmarking opportunities would be reduced as a result of the
    transactions.[^272] Free Press asserts that the presence of a
    "benchmark" competitor also benefits programmers and local
    advertisers.[^273]

79. The Applicants disagree. They argue that the magnitude of any
    effects on benchmarking cannot, and should not, be gauged using HHI
    calculations.[^274] In addition, they assert that they face intense
    competition from overbuilders and DBS providers and that the major
    telephone companies soon will provide additional competitive
    pressure.[^275] They also note that the transactions would not
    reduce the number of competitive choices available to MVPD
    subscribers, because the Applicants do not currently compete for the
    same subscribers.[^276] They contend that Comcast and Time Warner
    are not horizontal competitors between which consumers have a
    choice.[^277]

80. *Discussion*. Given the conditions we impose in Section VI.D.1.
    below, we do not believe that approval of these transactions would
    cause a measurable negative impact on MVPD competition, including
    competition from overbuilders. Since there are almost no MVPD
    markets in which seller concentration will increase immediately as a
    result of the proposed transactions, traditional antitrust analysis
    of the effects of an immediate increase in seller market power does
    not apply.[^278] In particular, the commenters' use of HHI
    calculations is not appropriate within the context of these
    transactions. An important prerequisite for HHI analysis, as
    described in the *Horizontal Merger Guidelines*, is that the sellers
    compete for customers' business in the same product and geographic
    markets.[^279] A merger can cause prices to rise if it reduces the
    number of firms competing to supply the same product in the same
    geographic market. The proposed transactions, however, generally
    involve the acquisition of customers in geographic markets not
    previously served by the acquiring firm. There are only a few areas
    where the proposed transactions would eliminate competition between
    the Applicants -- areas where one Applicant has overbuilt another
    Applicant's service area -- and in those areas the overbuilding
    Applicant has relatively few subscribers.[^280] Therefore, with a
    few exceptions, individual customers would see no reduction in the
    number of firms competing to provide them MVPD service.[^281]

81. Accordingly, we find that the HHI calculations presented by
    commenters do not provide a feasible means of evaluating the
    competitive effects of the proposed transactions on the retail
    distribution market. By treating cable operators that serve
    different, geographically distinct sets of subscribers as direct
    competitors, commenters have calculated HHIs for markets in which
    firms are not directly competing with each other for customers.
    Consistent with our precedent, we find that the relevant geographic
    unit for the analysis of competition in the retail distribution
    market is the household.[^282] Since the Applicants generally
    operate in non-overlapping territories and do not compete with each
    other in the distribution markets they serve, the proposed
    transactions would not reduce the number of competitive alternatives
    available to the vast majority of households.[^283] The transactions
    therefore would not increase market concentration in the relevant
    geographic market for the retail distribution of cable services.
    Economic theory indicates that an acquiring firm will not be better
    able to raise prices if, as is the case here, consumers did not,
    pre-transaction, have a greater ability to choose an alternative
    supplier than they would post-transaction.[^284] Thus, the mere
    calculation of HHIs for a perceived "market" is insufficient to
    demonstrate harm resulting from a horizontal merger.[^285]

82. Similarly, we conclude that Free Press' examination of competition
    at the DMA level is misguided. Free Press argues that the
    transactions would result in an absence of head-to-head competition
    between Time Warner and Comcast in 22 of the top 40 DMAs, and in 119
    of the 210 Nielsen DMAs.[^286] In DMAs where both Time Warner and
    Comcast currently operate, however, they generally do not compete
    directly for subscribers.[^287] Their systems usually operate in
    adjacent franchise areas within a DMA, and consumers do not have the
    ability to choose between them. Accordingly, the elimination of Time
    Warner's or Comcast's presence in a particular DMA does not likely
    indicate the loss of head-to-head competition.

83. We do, however, agree with Free Press that adjacent service areas
    can provide a useful benchmark for consumers to compare price and
    service. As CWA/IBEW point out, the Los Angeles area is an example
    where all three Applicants currently operate in adjacent franchise
    areas.[^288] Following the transactions, only one of the Applicants,
    Time Warner, will operate in that metropolitan area. We recognized
    in the *SBC-Ameritech Order* that regulatory efficacy is enhanced
    when there are a "sufficient number of independent sources of
    observation available for comparison."[^289] We believe that not
    only regulators, but also consumers, can benefit from the ability to
    observe how different cable operators are serving proximate
    areas.[^290] Although benchmarking opportunities may be diminished
    in certain areas as a result of these transactions, we are unable,
    based on the record, to quantify any effects on competition that may
    occur. In the balancing of potential public interest harms against
    potential public interest benefits, we will consider the potential
    harms that may arise due to diminished benchmarking opportunities.
    In addition, our analysis of the data supplied by the Applicants and
    other parties indicates that potential harms to competition among
    MVPDs are likely to arise in some markets. As explained below, we
    are adopting remedial conditions to mitigate those harms.[^291]
    Because the conditions will mitigate potential harms to MVPD
    competition, we expect they also will diminish any potential loss of
    benchmarking opportunities.

#### Potential Effects on Cable Rates

84. *Positions of the Parties*. Several parties assert that approval of
    the transactions would lead to an increase in cable rates.[^292]
    CFA/CU state that GAO found that the rates charged by MSO systems
    are 5.4% above the rates of cable systems that are not owned by an
    MSO.[^293] CFA/CU and DIRECTV reference Commission reports that
    conclude that, not only do MSO systems charge more than systems that
    are not owned by an MSO, but clustering compounds this
    differential.[^294] They note that the Commission has found that an
    MSO system that is part of a regional cluster is likely to raise its
    already higher prices an additional two to three percent.[^295]
    Similarly, TAC argues that regional concentration results in higher
    prices to consumers, given an MVPD's enhanced ability to obstruct
    competition from overbuilders.[^296] CFA/CU and CWA/IBEW rely on HHI
    analyses to contend that Comcast's and Time Warner's increased
    market concentration would enable them to raise cable prices above
    competitive levels.[^297]

85. The Applicants reject claims that the transactions would lead to
    unjustified increases in cable prices.[^298] They cite competitive
    pressures from other MVPDs and emerging competition from telephone
    companies as a restraint on cable prices.[^299]

86. *Discussion*. We find the evidence regarding potential increases in
    cable rates to be insufficient to withhold approval of these
    particular transactions. Although CFA/CU state that cable systems
    that are part of a large MSO charge prices that are 5.4% higher than
    those that are not,[^300] the GAO study that CFA/CU cite already
    considered Adelphia to be a large MSO.[^301] Therefore, the study
    does not support CFA/CU's contention. Nor are we persuaded by
    CFA/CU's or CWA/IBEW's use of HHI analyses to predict that cable
    rates will increase as a result of these transactions.[^302] As
    explained above, these HHI calculations are not appropriate measures
    of concentration because they include firms that are not directly
    competing with each other in the same market.[^303] Moreover, the
    conditions we impose below with respect to access to RSNs will
    enhance competition among MVPDs in the affected markets.

#### Potential for Increased Opportunity to Engage in Anticompetitive Practices 

87. *Positions of the Parties*. MIC, a private cable operator in
    Florida, contends that approval of the transactions would reduce
    competitive alternatives and embolden Comcast to engage in
    anticompetitive practices.[^304] MIC alleges that expansion of its
    service in Collier County, Florida has been prevented by Comcast's
    predatory pricing schemes and exclusive long-term contracts with
    gated and condominium communities, which contain clauses for
    specific easements in conduits and control over cable inside
    wiring.[^305] MIC believes that Comcast's proposed acquisition of
    Time Warner's facilities in Collier County and Lee County would
    severely harm competition for bulk and condominium contracts in
    those counties because the two cable operators currently compete
    directly against each other for those contracts.[^306] MIC urges the
    Commission to deny the transfer of Time Warner's systems to Comcast
    in Collier and Lee Counties, or at a minimum, to order Comcast to
    cease its anticompetitive practices against MIC and to waive its
    exclusive agreements with gated and condominium communities.[^307]
    MIC currently has a complaint pending against Comcast in federal
    district court.[^308]

88. Similarly, RCN alleges that Comcast employs predatory pricing
    practices by offering deep discounts either to inhibit RCN's planned
    entry into a market or to lure RCN customers to Comcast.[^309] RCN
    claims that Comcast specifically targets RCN customers and does not
    offer the same discounts to other customers.[^310] RCN argues that
    Comcast's offers far exceed ordinary promotional discounts, and thus
    they constitute unfair anticompetitive tactics.[^311] RCN asserts
    that consumers are harmed to the extent that predatory prices drive
    competitors out of the market and to the extent that full-paying
    customers are subsidizing the predatory discounts.[^312] RCN asks
    that any Commission approval of the transactions be conditioned
    upon, among other things, uniform subscriber pricing throughout
    franchise areas.[^313]

89. The Applicants respond that this proceeding is not the proper forum
    in which to address MIC's and RCN's claims. The Applicants state
    that MIC's allegations arise under provisions of Florida's antitrust
    laws and that they will be adjudicated in a Florida court of
    competent jurisdiction.[^314] The Applicants dispute the merits of
    MIC's pending complaint and argue that even if the claims were
    valid, MIC fails to show how its allegations relate to the issues in
    this proceeding.[^315] The Applicants contend that the Commission
    has declined to regulate exclusive MVPD agreements with owners of
    multiple dwelling units ("MDUs")[^316] and advise that the correct
    procedure for asserting claims of predatory pricing is to file a
    complaint with the Commission.[^317] They add that, in any event,
    the transactions would not increase the likelihood of such predatory
    practices.[^318] In addition, the Applicants claim that the
    promotional offers RCN cites are irrelevant because they pertained
    to unregulated services.[^319] The Applicants state that promotional
    discounts are appropriate responses to the competition cable
    companies face from overbuilders and DBS providers.[^320] The
    Applicants deny that they offer promotional discounts only to those
    areas served by overbuilders.[^321] They argue that RCN's assertions
    do not meet the stringent requirements for establishing a legitimate
    predatory pricing claim, which the Supreme Court has noted are a
    rarity.[^322]

90. *Discussion*. We decline to deny the transfers as proposed or to
    impose the requested conditions related to these alleged
    anticompetitive practices. First, the Applicants correctly note that
    the Commission previously decided not to prohibit long-term,
    exclusive agreements with MDU owners.[^323] Second, although
    predatory pricing schemes are matters of serious concern, the
    allegations are not properly addressed in the context of these
    transactions. The Commission's uniform rate provisions do not
    prevent cable operators from making distinctions among reasonable
    categories of service and customers when providing discounts within
    a franchise area.[^324] Targeted pricing, however, can signal the
    anticompetitive use of market power by a dominant firm. As the
    Commission stated in the *Comcast-AT&T Order*, "although targeted
    pricing between and among established competitors of relatively
    equal market power may be procompetitive, targeted pricing discounts
    by an established incumbent with dominant market power may be used
    to eliminate nascent competitors and stifle competitive
    entry."[^325] We do not believe, however, that there is sufficient
    evidence for us to conclude that approval of these transactions
    would increase the Applicants' incentive or ability to resort to
    such tactics, because these transactions generally would not
    increase the market power of an incumbent (or the incumbent's
    successor in the case of a swap) within a franchise area. In any
    event, parties alleging specific claims of anticompetitive pricing
    schemes may follow the Commission's procedures for filing a
    complaint or seek redress in court.[^326]

91. Although MIC alleges that head-to-head competition would be
    diminished because Comcast and Time Warner compete directly against
    each other in Collier and Lee Counties for contracts to serve MDUs,
    [^327] Comcast avers that other entities can serve MDUs in those
    markets.[^328] MIC's complaint seems to be that long-term exclusive
    contracts between Comcast and MDU owners in these counties are a
    barrier to entry by other providers, such as MIC. This complaint
    does not constitute a transaction specific concern. Whether or not
    Comcast and Time Warner both continue to serve these counties, MIC
    would face the prospect of having to compete for bulk accounts that
    may be subject to long-term exclusive agreements. Moreover, to the
    extent MIC's complaint relates to the elimination of a potential
    provider of service to MDUs, it is not clear from the record that
    Comcast and Time Warner compete with each other to a meaningful
    extent today for these accounts. Comcast avers that it and Time
    Warner serve separate geographic areas within the counties, and the
    two cable providers have not overbuilt cable systems reaching the
    same homes in either county.[^329] MIC disputes that view and states
    that Time Warner is currently serving two large housing developments
    within Comcast's territory in Collier County. MIC notes that because
    the developments are near "a major route of current and potential
    development," Time Warner "could" become a significant competitor to
    Comcast in Collier County as development continues along that route
    "in the years ahead."[^330] We conclude that the potential harm to
    competition in this one county based on two instances of
    "overbuilding" to MDUs is not sufficient to create a material risk
    of public interest harm. 

#### Potential Harms to Franchising Process

92. *Positions of the Parties*. NATOA contends that approval of the
    transactions would undermine the ability of local franchising
    authorities ("LFAs") to serve the interests of their residents,
    frustrating congressional intent.[^331] NATOA argues that increased
    national and regional concentration would make it difficult for LFAs
    to enforce reasonable rates and quality customer service.[^332] Both
    NATOA and the Florida Communities aver that increased consolidation
    over the past several years has put LFAs in an unequal bargaining
    position with respect to cable operators, which increasingly ignore
    local community interests and needs.[^333] They warn that the
    transactions would shift the balance of power in franchising
    negotiations even further in favor of Comcast and Time Warner.[^334]
    More specifically, NATOA argues that the expanding regional
    dominance of Comcast and Time Warner would diminish the
    effectiveness of LFAs' primary tool of enforcement \-- denial of a
    franchise renewal.[^335]

93. NATOA contends that even if Comcast and Time Warner agree to honor
    Adelphia's commitments to LFAs, they may not fulfill them.[^336]
    NATOA provides several examples of Comcast's alleged failures to
    comply with the terms of various franchise agreements, including
    franchise agreements it assumed as a result of its merger with
    AT&T.[^337] In addition, NATOA claims that the Applicants,
    particularly Comcast, have a history of resisting LFAs' demands for
    public, educational and governmental ("PEG") channels.[^338]

94. NATOA argues that if the Commission approves the transactions, it
    must impose conditions that preserve the ability of LFAs to enforce
    franchise agreements and protect community interests.^.^[^339] NATOA
    requests that the Commission require that Time Warner and Comcast
    comply with any franchise terms previously agreed to by
    Adelphia.[^340] NATOA also urges the Commission to require that Time
    Warner and Comcast complete any build-out schedules that may be
    agreed to as part of the transfer negotiations with an LFA.[^341]
    NATOA believes that failure to adhere to any conditions required
    under the terms of an existing franchise agreement, an LFA's
    transfer approval, or the Commission's approval should be actionable
    immediately in federal court, and evidence of failure to comply with
    the Commission's conditions should be deemed an admission.[^342]
    NATOA also asks the Commission to condition approval on full and
    complete compliance with the obligations contained in the
    Communications Act and the Commission's rules regarding LFAs' rights
    to review transfer applications.[^343]

95. *Discussion*. It would be inefficient and impractical for the
    Commission to referee all the disputes that may arise from the
    numerous LFA reviews required by these transactions, including
    disputes relating to pre-existing franchise conditions arising from
    previous transfers. Our approval of the transactions does not affect
    the rights of LFAs to negotiate desired terms and conditions in
    their transfer approvals.[^344] Accordingly, we will not impose the
    conditions NATOA seeks.

96. We acknowledge that it may be more difficult for an LFA that denies
    a franchise renewal to find a replacement provider if the LFA's
    franchise area is in the midst of a regional cluster. Nevertheless,
    we cannot conclude that preserving or enhancing the attractiveness
    of individual franchise areas to other providers that one day may
    seek to replace the incumbent is a valid basis for the Commission to
    withhold or condition approval of the Applications. The conditions
    we impose regarding access to RSNs, however, should ameliorate any
    difficulties LFAs may encounter in attracting providers that are
    willing and able to replace the incumbent should the LFA deny a
    franchise renewal.

### Video Programming Market

97. The proposed transactions also involve competing purchasers in the
    upstream market for programming supply. Even though the firms are
    selling the programming to different retail customers, they are
    attempting to purchase it from the same suppliers. Thus, the
    proposed transactions would reduce the number of purchasers of
    programming and would increase Comcast's and Time Warner's market
    shares in certain programming markets, which could increase
    Applicants' market power in those markets.[^345] Economic theory
    generally suggests that the exercise of market power causes harm
    through the reduction of output purchased by the firm with market
    power.[^346]

98. Several parties are concerned that the transactions would enable
    Comcast and Time Warner to exercise undue buying power in the video
    programming market. According to these commenters, the horizontal
    reach of these entities nationally and in certain regions would
    establish them as gatekeepers that could "make or break" a national
    or regional programming network. Commenters urge the Commission to
    adopt conditions to ensure that the transactions do not impede the
    flow of video programming to consumers.

99. Below, we discuss the parties' positions and analyze whether the
    proposed transactions would confer on Comcast or Time Warner a
    degree of market power that could result in public interest harms
    with respect to video programming in national and regional markets.
    More specifically, and consistent with the objectives of section
    613(f) of the Communications Act, we consider whether the
    transactions are likely to unfairly impede the flow of programming
    to consumers by reducing the supply of video programming available
    for distribution.[^347] We conclude that adoption of a condition
    permitting the arbitration of disputes relating to commercial leased
    access will mitigate any potential public interest harms deriving
    from increased horizontal concentration resulting from the
    transactions. Moreover, as detailed in Sections VIII and IX below,
    we find that the transactions are likely to speed the deployment of
    local telephone service and advanced video programming offerings,
    including local VOD, to Adelphia's subscribers and expedite the
    resolution of Adelphia's pending bankruptcy proceeding and thereby
    minimize the costs borne by Adelphia and its stakeholders as a
    result of that process. Accordingly, approval of the transactions,
    as conditioned, is consistent with the congressional objective set
    forth in section 613(f) that the Commission should "account for any
    efficiencies and other benefits that might be gained through
    increased ownership or control" when setting limits on cable system
    ownership.[^348]

#### Nationally Distributed Programming

100. *Positions of the Parties*. Several commenters argue that the
     proposed transactions would result in public interest harms to the
     market for nationally distributed programming.[^349] They assert
     that Comcast's and Time Warner's increased subscriber reach would
     allow them, either unilaterally or in concert with each other, to
     determine which programmers survive in the video programming
     marketplace.[^350] They argue that the proposed transactions would
     limit programming diversity and would result in higher prices
     charged to consumers.[^351] They further argue that Comcast's and
     Time Warner's increased regional concentration, particularly in the
     top television markets, would magnify the alleged anticompetitive
     impact of their national reach.[^352]

101. Commenters note that the transactions would result in Comcast and
     Time Warner controlling programmers' access to a combined total of
     almost half of all MVPD subscribers.[^353] They assert that in
     order to generate the advertising revenue necessary for success, a
     national network must reach between 40 and 60 million
     subscribers.[^354] TAC[^355] asserts that 20 million subscribers
     represent a minimum distribution threshold below which Nielsen
     Media Research cannot provide reliable ratings.[^356] TAC claims
     that only 92 national, non-premium networks have reached 20 million
     subscribers, that 80 of them are affiliated with an MVPD or
     broadcast network, and that 70 are owned by one of the "big six"
     media companies (*i.e*., Disney, Viacom, NBC Universal, News Corp.,
     Time Warner and Comcast). TAC also states that of the 92 cable
     networks that have achieved 20 million subscribers, 90 are carried
     by both Comcast and Time Warner.[^357] TAC also asserts that new
     advertiser-supported networks must present to investors a credible
     path to 50 million subscribers within five to seven years in order
     to raise enough capital to enter the market. TAC contends that,
     because only 49.2 million MVPD subscribers would be available to
     new networks that are denied carriage by Comcast and Time Warner
     post-transaction, it would be impossible for new networks to enter
     the market without carriage by at least one of these firms.[^358]

102. TAC and Free Press assert that regional concentration resulting
     from the transactions, particularly in the top 25 DMAs, which
     include the financial,[^359] entertainment,[^360] and
     political[^361] capitals of the country, would magnify the harmful
     impact of national concentration.[^362] According to TAC, potential
     harms arising from control over these markets cannot be mitigated
     by competition from DBS, because with its subscriber base spread
     over the country, DBS cannot discipline such "pocket
     monopolies."[^363] TAC argues that viewers in the top geographic
     markets are the most attractive to advertisers because they contain
     the most viewers, the most affluent viewers, the trend-setting
     viewers, and a major press presence.[^364] Free Press also argues
     that carriage of a network by one MSO within a region creates
     pressure on other MSOs within that region to provide carriage, but
     networks could lose the ability to gain exposure as a result of the
     transactions because the number of DMAs with multiple MSOs would be
     reduced.[^365]

103. TAC also claims that Comcast and Time Warner generally make the
     same carriage decisions regarding particular networks and that
     because carriage by both is required for a nationwide network's
     long-term viability, other MVPDs are reluctant to carry a network
     that is not already carried by Comcast and Time Warner.[^366]
     BTNC's arguments are similar to TAC's. BTNC asserts that Comcast
     and Time Warner are not likely to provide widespread distribution
     of unaffiliated networks, and absent distribution agreements with
     Comcast or Time Warner, investors are not likely to provide
     financing, and smaller MVPDs are not likely to provide carriage, to
     minority owned, independent networks.[^367] In support of its
     allegations, TAC submits data showing that no network that failed
     to gain carriage with at least Comcast or Time Warner has succeeded
     in achieving the subscriber thresholds required for survival.[^368]
     TAC claims that of the networks it examined, only two networks --
     the NFL Network and Inspiration Network -- have surpassed the 20
     million subscriber threshold without carriage by Comcast and Time
     Warner; that "no network appears to have reached 20 million homes,
     with one of Time Warner or Comcast, but without Adelphia"; and that
     all of the networks it examined that are distributed to 25 million
     or more households are carried by both Comcast and Time
     Warner.[^369]

104. IBC raises concerns regarding nationally distributed ethnic
     programming.[^370] IBC estimates that Comcast has approximately two
     million cable subscribers who are Hispanic and argues that Comcast
     has become a critical gatekeeper for any new Hispanic programming
     content.[^371] According to IBC, Comcast provides programming
     content to its U.S. Hispanic subscribers by "backhauling" existing
     networks from Latin America. As a result, IBC argues, U.S.
     producers of Hispanic programming content have minimal access to
     Comcast's Hispanic audiences.[^372]

105. TAC and other commenters urge the Commission to impose conditions
     on the approval of the transactions in order to remedy or reduce
     the alleged potential harms. They request mandatory arbitration
     between Comcast/Time Warner and independent programmers to ensure
     that carriage decisions are reasonable and ask the Commission to
     establish leased access rates that allow independent programmers to
     gain distribution.[^373] TAC further proposes that 50% of any new
     networks added by either Comcast or Time Warner post-transaction be
     independent of affiliation with either the Applicants or
     broadcasters; that a two-stage arbitration process be instituted
     for carriage refusals involving allegations of discrimination; and
     that, alternatively, the Commission institute a "fast-track" 90-day
     complaint resolution process.[^374] BTNC requests that the
     Commission require Comcast and Time Warner to provide analog
     distribution to BTNC in markets where African Americans represent
     20% or more of the population and digital carriage in markets where
     African Americans represent between 5% and 20% of the
     population.[^375]

106. CWA/IBEW contend that the Commission should complete its cable
     horizontal ownership review before acting on the transfer
     applications.[^376] They assert that without determining the
     ownership limits necessary to protect consumers from
     anticompetitive behavior and to promote media diversity, the
     Commission cannot determine whether the instant transactions would
     result in anticompetitive harm.[^377]

107. Applicants reject that contention, asserting that the 30% cable
     horizontal ownership limit has been invalidated and that, in any
     case, neither Time Warner nor Comcast would exceed the limit
     following consummation of the transactions.[^378] Applicants
     maintain that because the proposed transactions would not result in
     either Comcast or Time Warner serving more than 30% of U.S. MVPD
     subscribers, the transactions would have only pro-competitive
     effects.[^379] Additionally, Applicants highlight the growth of
     competition in the downstream MVPD market and the court's remand of
     the Commission's horizontal and vertical ownership rules,
     suggesting that even levels of horizontal concentration well above
     30% would not pose a threat to unaffiliated programmers.[^380]
     Applicants assert that there is no uniform number of households to
     which cable networks must secure carriage in order to be viable,
     because networks have different cost structures, different ways of
     distributing their content, and different ways of recovering their
     costs.[^381] Applicants dispute TAC's assertion that Time Warner
     and Comcast can act individually to prevent an independent network
     from reaching viability.[^382] They state that post-transaction,
     there would be almost 66 million MVPD households that Comcast does
     not serve and more than 75 million that Time Warner does not serve,
     and thus neither could properly be blamed for TAC's inability to
     obtain carriage commitments.[^383] Applicants further dispute TAC's
     assertions that the Applicants' post-transaction subscribership in
     the top DMAs will result in harms.[^384] Regarding TAC's suggestion
     that there is a "high correlation" between the carriage decisions
     of Comcast and Time Warner, the Applicants assert that there can be
     no anticompetitive behavior inferred from two experienced cable
     operators declining carriage of an unproven network.[^385]

108. *Discussion*. As Applicants have correctly noted, both firms will
     remain below the Commission's 30% horizontal ownership limit.[^386]
     Moreover, Comcast will not control a larger share of the market
     than it did at the time we approved the *Comcast-AT&T*
     transaction.[^387] Indeed, its national subscriber reach will
     increase by less than 1% as a result of the transactions.[^388]

109. To address the allegations of potential public interest harm, we
     adopt a condition that will permit the use of commercial
     arbitration to resolve disputes about commercial leased
     access.[^389] Pursuant to this condition, programmers seeking to
     use commercial leased access may submit disputes about the terms of
     access to an arbitrator for resolution. The arbitrator will be
     directed to settle disputes about pricing in accordance with the
     formula set forth in the Commission's commercial leased access
     rules.[^390] The arbitration condition shall remain in effect for
     six years from adoption date of this Order. Moreover, we find that
     the remedial conditions we impose regarding program access,
     discussed below, will further mitigate any potential harms
     affecting programming supply.

110. We do not agree with CWA's assertion that the Commission must
     complete the cable ownership rulemaking before addressing the
     issues in this adjudicatory proceeding. The proposed transactions
     will result in a *de minimis* increase in Comcast's national
     subscriber reach, which will remain below 30%, and Time Warner will
     serve fewer than 18% of MVPD subscribers post-transaction, well
     below the Commission's 30% limit.[^391] In addition, Comcast and
     Time Warner will be required to abide by any ownership limits the
     Commission may adopt in its pending rulemaking proceeding and have
     pledged to do so.[^392] Finally, we find in Sections VIII and IX
     below that the transactions would result in significant public
     interest benefits, in particular the accelerated deployment of
     competitive, facilities-based local telephone service to Adelphia's
     subscribers and the timely resolution of Adelphia's bankruptcy
     proceeding. The realization of these benefits would be delayed
     substantially were we to defer consideration of the Applications
     until the Commission concludes its pending rulemaking proceeding.

#### Regional Programming

111. *Positions of the Parties*. CWA/IBEW contend that clustering gives
     cable operators control of entire metropolitan media markets,
     making the clustered MSOs "virtually indispensable to local and
     regional programmers seeking distribution."[^393] They claim that
     this increases the regional market power of cable operators,
     allowing them to obtain steep discounts from programmers for their
     content. CWA/IBEW note that one regional sports network (RSN) that
     was not vertically integrated with cable operators ceased operation
     because it was unable to obtain distribution over the larger MVPDs
     in its region.[^394] Victory Sports One (VSO), a network launched
     by owners of the Minnesota Twins Major League Baseball team in
     October 2003, ceased operation in May 2004. Similarly, BTNC relates
     that Florida's News Channel (FNC) was "put out of business" by
     Comcast when FNC refused to renegotiate its multi-year affiliation
     agreement with Comcast. BTNC also claims that Time Warner refused
     to carry FNC on its Florida cable systems after FNC declined to
     grant Time Warner a 50% ownership interest in FNC.[^395]

112. TCR Sports Broadcasting Holding, LLP ("TCR") d/b/a Mid-Atlantic
     Sports Network, Inc. ("MASN") asserts that the transactions would
     dramatically increase Comcast's share of MVPD households in the
     Washington and Baltimore DMAs, giving Comcast a "stranglehold" on
     the provision of MVPD services in the key areas that TCR has been
     assigned for the telecasting of Washington Nationals and Baltimore
     Orioles baseball games. TCR is an RSN that holds the underlying
     rights to produce and exhibit Washington Nationals and Baltimore
     Orioles baseball games. TCR claims that post-transaction, Comcast
     would pass 54% of all homes in the Washington DMA and 76% of all
     homes in the Baltimore DMA. TCR alleges that Comcast's share of
     MVPD subscribers in the Washington DMA would increase from 42% to
     53% and its share of MVPD subscribers in the Baltimore DMA would
     increase from 76% to 80%.[^396] After the transactions, TCR
     asserts, Comcast would be able to exercise enormous market power as
     a monopoly buyer of video programming content in the region.[^397]
     To remedy potential harms, TCR proposes that the Commission
     condition approval of the transactions, requiring Comcast to divest
     its interest in its RSN, CSN, and to carry TCR on "just and
     reasonable terms."[^398] In the alternative, TCR urges the
     Commission to prohibit Comcast from requiring a financial interest
     in any video programming service as a condition of carriage and
     from engaging in any other discrimination against unaffiliated
     programmers.[^399]

113. In their reply, Applicants assert that Comcast's
     transaction-related increase in concentration would be "quite
     modest" in the footprints of RSNs it controls.[^400] Moreover,
     Applicants assert that the pending cable ownership proceeding is
     the appropriate place to consider any concerns about regional
     concentration.[^401] Applicants dismiss TCR's proposed conditions,
     concluding that they merely restate existing program carriage
     rules, are not within the Commission's power, or should be
     considered, if at all, in connection with the program carriage
     complaint filed by TCR for that purpose.[^402]

114. *Discussion*. We find that there is a potential that Comcast's or
     Time Warner's market power could increase the price consumers will
     have to pay for programming, as TCR suggests, if an unaffiliated
     network is denied carriage and exits the market as a result, and if
     Comcast or Time Warner then buys the distribution rights, creates
     its own network, and withholds the programming from competitors,
     reducing retail competition.[^403] We address this concern below in
     Section VI.D.3.b. In the rulemaking context, the Commission has
     balanced the benefits of clustering -- such as the development of
     regional programming, upgraded cable infrastructure, and improved
     customer service -- with the likelihood of anticompetitive
     harm.[^404] A further notice of proposed rulemaking on the cable
     ownership rules is pending.[^405] That proceeding may provide an
     appropriate vehicle to address any general concerns about the
     effect of any industry trend toward increased clustering and assess
     the potential benefits and harms of such regional
     concentration.[^406] In particular, the Commission can re-examine
     in that proceeding the extent to which clustering may facilitate
     the creation of regional programming, increase the potential for
     foreclosure of unaffiliated regional programmers, or produce any
     other public interest benefits or harms. As noted above, Comcast
     and Time Warner will be subject to any revised limits the
     Commission may adopt in that proceeding and have pledged to do
     so.[^407] In addition, we note that the commercial leased access
     condition we adopt herein will address concerns regarding the
     transactions' effect on the carriage of unaffiliated programming,
     including regional programming.

## Potential Vertical Harms 

115. In this Section, we consider whether the Applicants would be more
     likely to engage in anticompetitive strategies with respect to the
     distribution of video programming as a result of the transactions.
     Both Comcast and Time Warner own cable systems, as well as popular
     national and regional programming networks. Adelphia, by contrast,
     owns only cable systems and does not own any programming networks.
     The transactions therefore would vertically integrate Comcast's and
     Time Warner's upstream programming assets with Adelphia's
     downstream cable systems. The acquisitions would expand the
     acquiring firms' subscriber reach in particular downstream markets
     by combining Adelphia's cable systems with their own. Time Warner's
     and Comcast's exchange of cable systems will further concentrate
     each firm's market share in particular regions. The question before
     us is whether the increased subscriber reach and new vertical
     integration established as a result of the transactions would
     increase the likelihood of various forms of vertical foreclosure
     and anticompetitive pricing, harming competition in the MVPD and
     programming supply markets and, ultimately, the public
     interest.[^408]

116. With respect to concerns about MVPDs' access to programming, we
     find that the transactions may increase the likelihood of harm in
     markets in which Comcast or Time Warner now hold, or may in the
     future hold, an ownership interest in RSNs, which ultimately could
     increase retail prices for consumers and limit consumer MVPD
     choice. We impose remedial conditions to mitigate these potential
     harms. We find such harms are not likely to arise with respect to
     affiliated national or non-sports regional programming, or
     unaffiliated programming. With respect to concerns relating to
     program carriage, we find that the transactions are likely to
     increase the incentive and ability of Comcast and Time Warner to
     deny carriage to RSNs that are not affiliated with them. We
     therefore adopt a further condition to mitigate these potential
     harms.

### Access to Affiliated Programming

117. *Economic 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.[^409] 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.

118. 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. However, the Commission's
     program access rules prohibit price discrimination by programming
     networks that are vertically integrated with a cable operator
     unless the price discrimination is based on market
     conditions.[^410]

119. Alternatively, a vertically integrated firm could disadvantage its
     downstream competitors by raising the price of an input to all
     downstream firms (including itself) to a level greater than that
     which would be charged by a non-vertically integrated supplier of
     the input. Such nondiscriminatory pricing is not prohibited by the
     Commission's program access rules.[^411] A vertically integrated
     cable operator might employ such a strategy to raise its rivals'
     costs. Because they would have to pay more for the programming,
     MVPD competitors would likely respond either by raising their
     prices to subscribers, not purchasing the programming, or reducing
     marketing activities. The vertically integrated MVPD could then
     enjoy a competitive advantage, because the higher price for the
     programming that it would pay would be an internal transfer that it
     could disregard when it sets its own prices. By forcing its
     competitors either to pay more for the programming and increase
     their retail rates, or forgo purchasing the programming, the
     vertically integrated MVPD could raise its prices to some extent
     without losing subscribers. The profitability of a uniform price
     increase would depend on the market share of the MVPD within the
     distribution footprint of the affiliated programming network.

120. 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).[^412] The Commission's program access rules generally
     prohibit exclusive dealing by vertically integrated programming
     networks, but terrestrially delivered programming is not covered by
     the rules.[^413] Theoretically, cable operators could move an
     affiliated network onto terrestrial delivery platforms and then
     withhold it from rival MVPDs. Because cable operators serve
     discrete franchise areas and generally do not compete against each
     other within franchise areas, a cable operator could narrowly
     target a foreclosure strategy to harm only its rivals by crafting
     exclusive distribution agreements that permit adjacent, non-rival
     cable operators to carry the affiliated programming and that
     exclude the programming only from rival firms competing in the
     cable operator's service areas.

121. 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 switch MVPDs to
     obtain the integrated firm's programming and do not immediately
     switch back to the competitor's product once the foreclosure has
     ended.  In markets exhibiting consumer inertia,[^414] 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.
     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. 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.

#### Regional Sports Programming 

##### Introduction and Analytical Approach

122. *Introduction.* As discussed in greater detail below, a number of
     commenters contend that the transactions would increase the
     likelihood that Comcast and/or Time Warner would seek to
     disadvantage their MVPD rivals by increasing the costs of
     affiliated regional sports programming, either in a discriminatory
     fashion or uniformly with respect to all buyers, or by permanently
     or temporarily withholding desirable programming from them.[^415]
     They urge the Commission to deny or condition its approval of the
     Applications.[^416]

123. We find that the transactions would enable Comcast and Time Warner
     to raise the price of access to RSNs by imposing uniform price
     increases applicable to all MVPDs, including their own systems, by
     engaging in so-called "stealth discrimination," or by permanently
     or temporarily withholding programming. As commenters contend, such
     strategies are likely to result in increased retail rates and fewer
     choices for consumers seeking competitive alternatives to Comcast
     and Time Warner.[^417] Accordingly, to mitigate the potential
     public interest harms, we adopt remedial conditions. Below we
     discuss our analytical approach and our findings regarding each
     theory of harm.

124. *Analytical Approach.* At the outset, we note that RSNs are often
     considered "must-have" programming.[^418] 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."[^419] 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. Applicants acknowledge that an MVPD that drops
     local sports programming risks subscriber defections and that MVPDs
     "will drive hard bargains to buy, acquire, defend or exploit
     regional sports programming rights."[^420]

125. Further, we conclude, as we did in the *Comcast-AT&T* and *News
     Corp.-Hughes* transactions, that for the analysis of potential
     harms deriving from access to regional programming, the relevant
     geographic market is regional.[^421] For RSNs, the relevant unit of
     analysis encompasses the area where particular highly valued sports
     programming is available to consumers. Sports programming generally
     is available only to consumers located within the authorized
     viewing zone for a team's programming.[^422] The relevant market
     does not necessarily encompass the entire RSN footprint, because
     many RSNs are distributed to consumers in more than one sports
     team's territories, and RSNs often are distributed to consumers
     located outside a particular team's authorized viewing zones.[^423]
     The record contains a limited amount of information on the viewing
     zones of individual sports teams. Because individual DMAs usually
     are entirely encompassed within the authorized viewing zone for a
     team's games and contain those fans that value its programming most
     highly, we find it reasonable to define the relevant geographic
     market for the analysis of harms concerning access to RSNs as any
     DMA that is home to a sports team.[^424]

126. We reject DIRECTV's contention that the appropriate unit of
     analysis here should be an entire RSN footprint.[^425] Although we
     chose the RSN footprint as the geographic market in the *News
     Corp.-Hughes Order*, we nonetheless analyzed data from each MVPD's
     smaller, individual service areas within the RSN footprint because
     as noted by DIRECTV, cable operators typically have a smaller
     service area than the entire footprint of an RSN.[^426] As noted
     above, an RSN may be distributed to areas outside the authorized
     viewing area of a particular sports team carried by that network,
     such that some viewers within the RSN footprint would not receive
     the same programming from the RSN that other viewers receive. Thus,
     by analyzing data from each MVPD's smaller, individual service
     areas within the RSN footprint, we were able to assess the
     transaction's impact in areas where all viewers are receiving
     similar RSN programming.[^427] Although DIRECTV's (and EchoStar's)
     service areas are large enough to provide service throughout the
     entire RSN footprint, we believe we must narrow the unit of
     analysis here to the DMA in order to assess more accurately the
     impact of the transactions. Using the DMA allows us here, as we did
     in *News Corp.-Hughes,* to examine the geographic area in which
     consumers are likely to place a similar value on the RSN
     programming at issue and to examine the transactions' impact in
     areas where viewers are likely to receive the same RSN programming.
     In addition, we note that because Applicants may use a zone pricing
     system for their RSNs,[^428] it would be possible for the
     Applicants to engage in a uniform price increase strategy that is
     limited to one of the zones of the RSN footprint. And, since the
     inner zone, which is the area where the highly valued sports
     programming is likely to be shown, contains the consumers that
     value the programming most highly, it is also the area where a
     uniform price increase is most likely to be profitable. We
     therefore believe that DMAs that are home to a professional sports
     team, which plays in either Major League Baseball, the National
     Basketball Association, the National Football League, or the
     National Hockey League, carried on the RSN are a reasonable
     approximation of the inner pricing zone of the RSN.

127. Our analysis extends beyond those markets where the Applicants
     currently own RSNs.[^429] As DIRECTV has noted, the Applicants'
     expanded regional clusters may provide them with an increased
     incentive and ability to launch their own RSNs in those
     areas.[^430] Thus, in assessing the areas likely to see the most
     significant impact of the transactions, we examine all DMAs that
     are home to professional sports teams where Comcast or Time Warner
     would own cable systems post-transaction. There appear to be
     opportunities for new RSNs to emerge in some markets even though,
     as Applicants have stated, many sports teams have long-term
     contractual commitments with existing RSNs.[^431] For example, in
     Los Angeles, it appears that the L.A. Clippers' and Anaheim Mighty
     Ducks' contracts with Fox SportsNet West and Fox SportsNet West 2
     could expire as early as 2007 or 2008.[^432] In addition, some
     sports teams may have the option of terminating their existing
     agreements (subject to certain penalties) to seek more lucrative
     deals.[^433] In the alternative, MVPDs may obtain valuable sports
     rights simply by acquiring an RSN.[^434]

128. To the extent that Applicants believe that their acquisition of
     cable systems in markets where they do not already own an RSN is
     unrelated to the incentive or ability to gain sports distribution
     rights in those markets, we disagree.[^435] It is the combination
     of RSN ownership and MVPD market share that makes anticompetitive
     strategies possible. Where Comcast's and Time Warner's cable
     systems, post-transaction, reach a sufficient percentage of any DMA
     that is home to a sports team, the potential gains from these
     strategies could be sufficient to justify the costs of employing
     them, including the cost to acquire the sports programming rights.

129. Having established the strategic importance of RSN programming to
     MVPDs and the appropriate geographic framework for the evaluation
     of potential public interest harms, we now turn to our assessment
     of claims regarding specific anticompetitive strategies. We
     consider the likelihood of harms deriving from a strategy to
     uniformly increase the rates paid by all MVPDs, to engage in
     stealth discrimination, and to permanently and temporarily
     foreclose RSN programming.

##### Theories of Harm

130. *Positions of the Parties: Uniform Price Increase.* DIRECTV alleges
     that the transactions would enable Comcast and Time Warner to harm
     competing MVPDs by increasing the rates for affiliated RSNs
     uniformly to all MVPDs, including themselves. DIRECTV states that
     even modest increases in Comcast's or Time Warner's market share
     could make a uniform price increase strategy profitable and thereby
     harm competition. According to DIRECTV, as a cable operator's
     footprint expands, it may claim more of the DBS subscribers who
     switch MVPDs in order to have access to RSN programming.[^436] At
     the same time, a DBS provider that refuses to accept a price
     increase from an integrated cable operator/RSN owner stands to lose
     more and more subscribers as that cable operator's footprint
     expands. DIRECTV contends that, under such circumstances, the DBS
     provider may lose less by accepting a price increase than it would
     by refusing to carry the RSN programming at a higher price,
     asserting that the market share of DBS firms is significantly lower
     in areas, such as Philadelphia, where they do not have access to an
     RSN.[^437] DIRECTV alleges that Comcast has in the past imposed a
     uniform price increase for CSN Chicago, which Comcast created after
     it acquired AT&T Broadband's cable system in Chicago. DIRECTV
     contends that Comcast charges almost twice as much as the previous
     RSN that sold the same programming.[^438] DIRECTV also contends
     that Time Warner and Comcast intend to make programming on
     SportsNet New York the "nation's most expensive RSN programming" on
     a per subscriber basis.[^439] Moreover, DIRECTV contends that the
     transactions would increase the incentive to increase prices
     uniformly, because Comcast is also a co-owner of SportsNet New York
     and would acquire an additional 10% of television households in
     that RSN's footprint.[^440]

131. Applicants assert that DIRECTV has not provided evidence that the
     transactions would create sufficient incentives to raise prices
     uniformly.[^441] According to the Applicants, this strategy could
     cause non-competing MVPDs to drop an RSN in response to a price
     increase, making the RSN unavailable in large portions of a service
     area.[^442] Applicants also refute claims that their alleged
     foreclosure strategies stunt DBS penetration, explaining that
     several DMAs have lower DBS penetration than Philadelphia.[^443]
     With regard to CSN Chicago, Comcast contends that its acquisition
     of AT&T Broadband's cable systems in Chicago did not increase
     incentives to create RSN programming it could withhold from MVPD
     competitors.[^444] Applicants further maintain that the prices
     DIRECTV complains of for CSN Chicago programming are substantially
     identical to the prices charged by the RSN that used to provide CSN
     Chicago's programming to Comcast and other cable operators.[^445]
     In addition, Comcast contends that the price it charges for
     SportsNet New York is reasonable and below that charged by the YES
     Network, an RSN in New York that carries New York Yankees'
     games.[^446] Moreover, Time Warner asserts that the alleged harms
     with respect to SportsNet New York are not transaction specific,
     because Time Warner is acquiring only a small number of subscribers
     in SportsNet New York's footprint.[^447]

132. "*Stealth Discrimination.*" DIRECTV and other parties contend that
     the transactions would increase the likelihood that Comcast or Time
     Warner will attempt to raise the costs of rival MVPDs by raising
     prices for affiliated RSNs in a discriminatory fashion that does
     not overtly violate the Commission's program access rules.
     According to DIRECTV, Comcast has used this strategy in Sacramento
     with respect to CSN West, which imposed terms and conditions of
     service that appeared to be nondiscriminatory on their face but
     nevertheless have allegedly had a discriminatory effect on DBS
     providers. [^448] Noting that this conduct is a "variation on
     uniform overcharge pricing," [^449] DIRECTV states that the program
     access rules do not necessarily constrain CSN West from setting its
     prices in this manner, which it refers to as "stealth" price
     discrimination.[^450] Applicants reject these contentions.

133. DIRECTV charges that Comcast's discriminatory pricing strategies
     with respect to CSN West are indicative of strategies Comcast and
     Time Warner are likely to employ elsewhere as a result of the
     transactions.[^451] According to DIRECTV, CSN West has a three-zone
     pricing structure, with the price per subscriber highest in the
     inner zone, less in the outer zone, and least in the "outer outer"
     zone. In order to obtain CSN West, DIRECTV alleges that it is
     required to carry (and pay for) its programming in the outermost
     zone, even though the RSN does not have rights to carry the
     Sacramento Kings in that zone. DIRECTV says that as a result, it is
     paying license fees for subscribers who cannot receive the Kings'
     games, thus inflating the total price that DIRECTV must pay to
     obtain CSN West for those subscribers that can view the Kings'
     games. [^452] While CSN West apparently distributes other
     programming, including the Sacramento Monarchs and NCAA basketball,
     DIRECTV alleges that the Kings are the only men's professional
     sports team carried by the RSN.[^453] DIRECTV has almost twice as
     many subscribers in the outermost zone as it does in the inner and
     outer zones, so that the effective rate of carrying the RSN per
     subscriber that can receive the Kings' games is high, according to
     DIRECTV.[^454] By contrast, DIRECTV alleges, cable operators'
     franchise areas are rarely greater than one of the zones.
     Therefore, a cable operator in the outermost zone can simply make
     the decision not to carry the network. [^455] DIRECTV concedes that
     larger cable MSOs in the region that can also be required to carry
     CSN West in all three zones would be similarly affected, but it
     asserts that Comcast, which reaches over 97% of subscribers in the
     outermost zone, would be insulated from these effects because the
     overcharge to itself is merely an intra-company transfer.[^456]
     Comcast explains that the NBA authorizes CSN West to distribute
     Sacramento Kings' games only to certain geographic areas.
     Accordingly, Comcast states that it uses pricing zones to charge
     more for programming in the NBA-approved viewing zones and less for
     the programming in geographic areas outside of NBA-approved viewing
     zones, where the Kings' games cannot be carried.[^457] Comcast
     explains that it charges MVPDs according to this price zone
     structure throughout the MVPD's service area and does not allow
     MVPDs to "pick and choose the areas in which they must distribute
     the service."[^458]

134. *Permanent Foreclosure.* Commenters also allege that the
     transactions would likely result in the withholding of RSNs by the
     use of exclusive distribution agreements that foreclose competing
     MVPDs from access to the programming, as is already done with
     respect to CSN Philadelphia, a terrestrially delivered RSN.[^459]
     DIRECTV states that Comcast's and Time Warner's additional retail
     market share resulting from the transactions would make permanent
     foreclosure of regional programming more likely, that the
     transactions would dramatically increase the number of markets in
     which such a strategy would be economically rational, and that
     Comcast has recently put in place a nationwide fiber network that
     could be used to deliver programming terrestrially.[^460] DIRECTV
     and MAP assert that **\[REDACTED\]** [^461] DIRECTV claims that,
     based on its own calculations, a strategy of permanent withholding
     of CSN West would be profitable if **\[REDACTED\]** of DBS
     subscribers switched to Comcast to obtain the RSN.[^462] DIRECTV
     asserts that the strategy also would be profitable in CSN
     Mid-Atlantic's footprint if **\[REDACTED\]** of DBS subscribers
     switched to Comcast.[^463] In response, Comcast asserts that
     DIRECTV has not alleged a transaction-specific harm for any
     Comcast-affiliated RSN except possibly CSN Mid-Atlantic.[^464]
     Comcast asserts that DIRECTV's analysis with respect to that
     network has failed to produce any evidence that would justify the
     imposition of RSN-related conditions. According to Comcast, even
     assuming the validity of the analysis, which it disputes, the
     analysis concludes that for permanent foreclosure to be worthwhile,
     Comcast would need to gain an implausibly high number of
     subscribers.[^465] Further, Comcast rejects as purely speculative
     DIRECTV's analyses of markets in which neither Comcast nor Time
     Warner has an ownership interest in any RSN \-- markets in which
     DIRECTV claims the transactions will enable the Applicants to
     secure sports team rights currently locked up by other distributors
     in order to launch new RSNs.[^466]

135. With respect to allegations that it will adopt a strategy of
     terrestrial distribution of its affiliated RSNs, Comcast counters
     that it uses a terrestrial distribution network for only one
     regional sports network, CSN Philadelphia, and that the business
     case for doing so is unique to that market.[^467] It explains that
     when the RSN was created, there was a pre-existing regional network
     with a terrestrial distribution system already in place. The
     pre-existing network planned to cease operations, and the
     terrestrial distribution network it had used was capable of
     reaching all MVPD licensees that Comcast wished to reach with its
     new network. Comcast asserts that it has found satellite
     distribution to be more efficient and cost-effective in all other
     situations to date, explaining that its regional sports networks
     are typically delivered to a wide geographic region, which is
     generally determined by the areas in which the network has obtained
     the rights to distribute the underlying sports programming.[^468]
     Comcast states that the deployment and extension of terrestrial
     networks is highly capital intensive and that it generally has
     found satellite delivery to be the most economical method of
     serving the large geographic areas that RSNs typically serve.[^469]
     In addition, Comcast asserts that it would suffer adverse
     regulatory consequences if it were to deliver RSNs terrestrially
     and withhold them from competitors.[^470]

136. *Temporary Foreclosure.* Commenters cite the *News Corp.-Hughes
     Order* in support of arguments that the transactions are likely to
     facilitate temporary foreclosure. DIRECTV notes that temporary
     withholding can occur whenever there is an impasse in carriage
     negotiations and that the practice is not illegal under existing
     regulations, including the program access rules.[^471] DIRECTV
     states that the risk of temporary withholding is even greater here
     than it was in the *News Corp.-Hughes* transaction because (1)
     Applicants have a much greater share of several regional markets
     than did DIRECTV at that time; and (2) Applicants have demonstrated
     their willingness to engage in anticompetitive tactics, as
     demonstrated by Comcast's alleged "stealth discrimination" in
     Sacramento.[^472]

137. The Applicants assert that the instant transactions differ
     significantly from the *News Corp.-Hughes* transaction, in which
     the Commission found that there were no reasonably available
     substitutes for News Corp.'s RSN programming and that ownership of
     that programming would give DIRECTV significant market power in the
     relevant geographic markets.[^473] The Applicants explain that the
     acquisition by News Corp. of an interest in DIRECTV created "an
     entirely new vertical relationship between the nation's largest DBS
     provider with the leading owner of RSNs," while the instant
     transactions involve "no material vertical effects."[^474] The
     Commission found that the *News Corp.-Hughes* transaction would
     give DIRECTV the incentive and ability to temporarily withhold
     access to RSN programming, because such withholding would provide a
     credible means of raising the prices charged to competing cable
     operators for RSN programming.[^475] The Commission therefore
     conditioned its approval of the transaction on compliance with a
     series of safeguards against temporary withholding of RSNs,
     including mandatory arbitration of carriage disputes.[^476]

138. DIRECTV has submitted an analysis of the profitability of temporary
     foreclosure based on the economic analysis used in the *News
     Corp.-Hughes Order*.[^477] DIRECTV has followed the general
     principles of the model that the Commission used in that
     proceeding, while accounting for several differences in the manner
     in which service is sold to consumers. [^478] Given these
     assumptions, DIRECTV estimates the level of profits (or losses)
     that the Applicants would earn from temporarily foreclosing
     DIRECTV's access to particular RSN programming. DIRECTV finds that
     temporary foreclosure of DIRECTV's access to CSN Mid-Atlantic and
     CSN West would be profitable prior to the transactions.[^479] It
     also indicates that temporary foreclosure would become more
     profitable following the transactions in the CSN Mid-Atlantic
     footprint. DIRECTV performs a similar calculation for six other RSN
     footprints where Comcast's or Time Warner's share of cable
     subscribers following the transactions would be at least 40%.[^480]
     DIRECTV reports that temporary foreclosure could be profitable
     following the transactions in these areas as well.[^481]

139. The Applicants criticize DIRECTV's analysis on the grounds that the
     transactions should be analyzed using the same indicator of a
     transaction-specific harm due to temporary foreclosure as that used
     in the *News Corp.-Hughes Order*. [^482] Pursuant to the *News
     Corp.-Hughes* analysis, a transaction-specific harm occurs when
     temporary foreclosure is unprofitable prior to that transaction and
     becomes profitable due to the transaction. The Applicants point
     out, however, that for the RSNs examined by DIRECTV, the point at
     which temporary foreclosure becomes profitable for Comcast is
     essentially identical both prior to and after the
     transactions.[^483]

140. *Discussion.* Based on the record and our own independent economic
     analysis in the Economic Appendix, we conclude that the
     transactions will increase the Applicants' incentive and ability to
     adopt a uniform price increase strategy for RSN programming and
     that the program access rules will not likely deter such conduct.
     As noted above, the program access rules do not prohibit a
     vertically integrated programmer from increasing prices charged to
     competing MVPDs if the price increase is not discriminatory or if
     the programming is delivered terrestrially. Moreover, we find that
     a uniform price increase has no effect on the actual costs borne by
     an RSN's affiliated MVPD because, as DIRECTV states, the "payment
     goes from one pocket into another."[^484] Thus, the prospect of
     charging itself a higher rate for an affiliated RSN would not deter
     Comcast or Time Warner from charging a uniformly higher rate to DBS
     operators or other competing MVPDs. Uniform price increases will,
     in turn, result in higher cable prices and fewer alternatives for
     consumers.[^485] Applicants have not submitted economic data
     analysis or similar evidence to refute commenters' claims.[^486]

141. Based on our review and analysis of the record, we conclude that
     even small increases in Comcast's and Time Warner's market shares
     may increase their incentives to increase the price of their RSNs
     uniformly.[^487] A downstream firm that wholly owns the upstream
     affiliate has an incentive to raise the price of its programming
     for both itself and its competitors in order to raise rivals'
     costs.[^488] In the MVPD market, a vertically integrated cable
     operator will likely charge the highest price that its DBS rivals
     are willing to pay for a vertically-integrated RSN. DBS operators'
     willingness to pay such prices increases as the footprint of the
     vertically integrated cable operator increases, because DBS
     operators know that if they fail to carry the RSN, more of their
     subscribers will switch to cable to gain access to such
     programming.[^489]

142. As explained in greater detail in the Economic Appendix, the loss
     in subscribers is greatest when an MVPD does not carry an RSN that
     is carried by competing MVPDs.[^490] In that situation, an MVPD
     will pay more for an RSN than it would if its competitors did not
     carry the RSN. Since the market price of the affiliated RSN has no
     impact on the carriage decision of an affiliated MVPD, the RSN will
     be distributed in most, if not all, of the area served by the
     affiliated MVPD. As the footprint of the affiliated MVPD in the
     relevant geographic market covers more of the service territory of
     a competing MVPD, the overall willingness to pay of a competing
     MVPD will rise.[^491] This occurs because, unlike unaffiliated
     MVPDs that may choose not to carry an increasingly expensive RSN,
     the affiliated MVPD does not react to increases in the price of the
     RSN.

143. We estimate the willingness to pay for an RSN affiliated with one
     of the Applicants prior to the transactions and estimate the
     percentage change in this price following the transactions. Since
     the transactions at issue involve a large number of system swaps,
     we do not examine the impact of the change in size of each
     individual Applicant. Rather, we estimate the change in the
     willingness to pay based on the change in the size of the largest
     Applicant serving a given DMA. In its simplest form, the economic
     model predicts that the percent change in the fee of the affiliated
     RSN is equal to the percent change in the footprint of the largest
     Applicant.[^492] Consistent with the *Horizontal Merger
     Guidelines*, we consider a price increase to be significant only if
     it is at least five percent. We choose this threshold not only
     because it is consistent with the *Horizontal Merger
     Guidelines*,[^493] but also because we believe that price increases
     of five percent or more would likely harm rival MVPDs' ability to
     compete and/or be passed on to consumers in some form, such as
     increased rates or reductions in quality or customer service.

144. We first evaluated the potential for a uniform price increase in
     all 210 DMAs. Under this initial, simplest form of the model, we
     found that there is a potential for an increase in the RSN's
     affiliation fee of at least five percent in 36 of the 94 DMAs
     affected by the transactions.[^494] As indicated in our discussion
     of the relevant geographic market, above, we then refined our
     analysis by focusing on so-called "key DMAs." "Key DMAs" are those
     DMAs that are home to a professional sports team that plays in one
     of the following leagues Major League Baseball, the National
     Basketball Association, the National Football League, or the
     National Hockey League. These DMAs are most likely to be within the
     "inner zone" of an RSN where the sports programming is most popular
     and where the largest shifts in subscribers would be likely to
     occur if the RSN were withheld. We find a potential for an increase
     in the RSN's affiliation fee of at least five percent in 15 of the
     39 key DMAs. These DMAs are Atlanta, Boston, Buffalo, Charlotte,
     Cincinnati, Cleveland, Columbus, Dallas, Jacksonville,[^495] Los
     Angeles, Miami, Minneapolis, Pittsburgh, San Diego, and
     Washington.[^496] In these DMAs, a uniform price increase is likely
     to extract at least an additional \$4.2 million per market in RSN
     fees from unaffiliated MVPDs under conservative assumptions in our
     model.[^497] In the aggregate, over \$290 million in additional
     fees could be extracted from MVPDs in these 15 DMAs.[^498] These
     MVPDs can in turn be expected to recoup these additional fees from
     consumers or by reducing expenditures for marketing or other
     activities.

145. *Impact of Lack of RSN Access on a Uniform Price Increase
     Strategy.* One of the factors that may influence the size of a
     uniform price increase applied to RSN programming is the impact on
     a competing MVPD of not having access to that RSN. Lack of access
     to RSN programming can decrease an MVPD's market share
     significantly. The Applicants have argued that DIRECTV's and
     EchoStar's lack of access to CSN Philadelphia has not had a
     significant impact on DBS market share in Philadelphia and that
     DIRECTV's estimates of the effect are fatally flawed.[^499] We
     disagree.

146. Evidence supports DIRECTV's contention that DBS penetration levels
     are lower when DBS providers cannot offer the local RSN to their
     subscribers than they are when DBS providers carry the local RSN,
     as demonstrated by our analysis of DBS market share in all 210
     Nielsen DMAs using Nielsen data for the 2004-2005 television
     season.[^500] Our analysis indicates that DBS penetration in 81
     DMAs falls below the DBS nationwide share of MVPD households
     calculated by Nielsen.[^501] There are three DMAs where the games
     of some of the local professional sports teams are not available to
     DBS subscribers: Charlotte, Philadelphia, and San Diego.[^502] Only
     four out of 210 DMAs have a lower DBS market share than San Diego,
     and only seven out of 210 DMAs have a lower market share than
     Philadelphia. The market share in San Diego is 9.5%, which is 59%
     below the national market share. The market share in Philadelphia
     is 10.9%, which is 53% below the national figure.[^503] Thus, the
     aggregate market shares appear to indicate that DBS providers have
     unusually low market shares in markets where they cannot provide
     local sports programming to their subscribers.

147. In addition to comparing DBS market shares across DMAs, a method
     that fails to consider many factors that may influence DBS
     penetration levels, we have used a regression analysis to estimate
     the effect of withholding RSNs on DBS operators' market shares.
     This enables us to examine the factors that influence DBS market
     share and to separate out the effect of RSN access from the other
     factors that could affect DBS market shares.

148. There are two studies in the record that use regression analysis to
     estimate the impact on DBS market shares when the local RSN is not
     available to DBS operators. Each of the studies uses a different
     source of data to produce similar findings. Using information on
     the number of DBS subscribers from Media Business Corporation,
     DIRECTV finds that the proportion of homes subscribing to DBS in
     the Philadelphia DMA is 51% lower than it would be if the RSN were
     made available to DBS.[^504] DIRECTV reports that it does not find
     a statistically significant effect from withholding RSN access in
     San Diego.[^505] EchoStar has also submitted a regression analysis,
     conducted in 2003, using its internal subscriber counts. EchoStar's
     analysis indicates that EchoStar's penetration in the Philadelphia
     DMA is about **\[REDACTED\]** lower than it would be if it had
     access to CSN Philadelphia.[^506]

149. Our own regression analysis uses data from the Cable Price Survey,
     as well as Nielsen's data regarding the number of households that
     subscribe to DBS.[^507] We find that the percentage of television
     households that subscribe to DBS service in Philadelphia is 40%
     below what would otherwise be expected given the characteristics of
     the market and the cable operators in the DMA. In the San Diego
     DMA, lack of access to RSN programming is estimated to cause a 33%
     reduction in the households subscribing to DBS service.[^508] The
     analysis does not show a statistically significant effect on
     predicted market share caused by withholding regional sports
     programming in Charlotte.

150. Comcast's own documents indicate that Comcast, too, recognizes
     **\[REDACTED\]** .[^509] [^510] Thus, Comcast's own documents
     suggest that **\[REDACTED\]** . Although Comcast claims this
     document does not represent the company's official position, it
     nevertheless casts doubt on Comcast's claims that RSN access has no
     impact on DBS penetration.[^511]

151. We conclude that there is substantial evidence that a large number
     of consumers will refuse to purchase DBS service if the provider
     cannot offer an RSN. The results of RSN withholding in Charlotte do
     not undermine this conclusion. The Charlotte Bobcats are a
     relatively new team and do not yet have a strong enough following
     to induce large numbers of subscribers to switch MVPDs. There is no
     evidence to suggest that the popularity of RSNs or of local
     professional sports teams will decline in the future and every
     indication that access to RSNs will continue to be an important
     determinant of market share. The circumstances that create an
     incentive to engage in a uniform price increase are likely to exist
     with respect to most RSNs. Because the failure to carry an RSN can
     have a significant impact on the profitability of an MVPD facing
     direct competition, competing MVPDs will be willing to pay a high
     price in order to ensure that they obtain RSN programming.

152. *Other Influences on the Profitability of Uniform Price Increase
     Strategy.* The record demonstrates that the Applicants have
     established joint ventures that have enhanced their ability to
     impose uniform price increases. In particular, Comcast and Time
     Warner share ownership of SportsNet New York, and Comcast and
     Charter share ownership of Comcast/Charter Sports Southeast.[^512]
     One potential risk of raising an affiliated RSN's price is that
     non-competing cable operators in the RSN's footprint may decline to
     purchase the network. In several instances, however, Applicants
     have shared ownership in the RSN with other local, non-rival cable
     operators.[^513] Forming joint ventures with non-competing cable
     operators immunizes the vertically integrated cable operator from a
     uniform price increase's impact, because the higher price the
     non-competing cable operator pays is offset by the higher returns
     gained from its share of the RSN's profits. Indeed, if the RSN
     ownership shares match each cable operator's share of the total
     subscribers that receive the RSN's programming, then a uniform
     price increase will have no impact on each cable operator's
     profits.[^514] The formation of joint ventures with non-competing
     cable operators, therefore, significantly increases the likelihood
     that these other cable operators will purchase the RSN programming
     regardless of price.[^515] For example, Applicants' internal
     documents indicate **\[REDACTED\]** [^516] . This evidence suggests
     that MVPDs can use a joint venture as a vehicle by which to
     implement a uniform price increase strategy.

153. We agree with DIRECTV that Applicants' use of "net effective rate"
     provisions also establishes a means by which Comcast and Time
     Warner can absorb a uniform price increase while raising the costs
     of programming to their MVPD rivals.[^517] For example, under the
     agreement establishing the joint venture that owns SportsNet New
     York, Comcast and Time Warner have the right to **\[REDACTED\]**
     [^518] **\[REDACTED\]** [^519] These provisions are consistent
     with, and eliminate the cost to cable operators of, a potential
     strategy of engaging in a uniform price increase because Comcast
     and Time Warner can incorporate the share of profits their
     programming divisions stand to receive from affiliated RSNs when
     evaluating the rate their cable divisions should pay for such
     programming.[^520] As DIRECTV explains regarding the use of such a
     provision **\[REDACTED\]** .[^521]

154. We are not persuaded by Time Warner's contention that a joint
     venture structure mitigates the likelihood that it could use the
     net effective rate provision in the SportsNet New York agreement to
     impose a uniform price increase strategy.[^522] Though an MVPD may
     have only partial RSN ownership, the costs it incurs as the result
     of a uniform price increase for that programming are nonetheless
     lower than the costs an unaffiliated MVPD would incur, because even
     partial ownership entitles an owner to a share of profits from
     advertising and other sources, as well as from the increased
     programming fees.[^523]

155. *Conditions.* Our analysis demonstrates that the transactions are
     likely to result in a public interest harm based on the ability of
     Applicants to impose uniform price increases on carriage of RSN
     programming. This could not only harm consumers of existing MVPDs
     but also could hamper entry by new MVPD competitors, thereby
     denying consumers the significant benefits of emerging MVPD
     competition. Because the program access rules do not afford a
     remedy for allegations of competitive harm due to uniform price
     increases, we determine that conditions are necessary to mitigate
     the foregoing potential harms.[^524]

156. To mitigate potential harms from uniform price increases, as well
     as other strategies discussed below, we impose a remedy based on
     commercial arbitration such as that imposed in the ­*News
     Corp.-Hughes Order*. The arbitration remedy, as set forth in
     Appendix B, will constrain Comcast's and Time Warner's ability to
     increase rates for RSN programming uniformly or otherwise
     disadvantage rival MVPDs via anticompetitive strategies. Likewise,
     as we did in the *News Corp.-Hughes Order*, we also condition our
     approval on a requirement that Comcast, Time Warner, and their
     covered RSNs, regardless of the means of delivery, refrain from
     engaging in specific unfair practices proscribed by the
     Commission's program access rules. [^525] Specifically, we prohibit
     Comcast, Time Warner, and their existing or future covered RSNs,
     regardless of the means of delivery, from offering any such RSN on
     an exclusive basis to any MVPD, and we prohibit Comcast and Time
     Warner from entering into an exclusive distribution arrangement
     with any such RSN, regardless of the means of delivery.[^526] In
     addition, we require that Comcast, Time Warner, and their covered
     RSNs, regardless of the means of delivery, make such RSNs available
     to all MVPDs on a non-exclusive basis and on nondiscriminatory
     terms and conditions. We also prohibit Comcast and Time Warner
     (including any entity with which it is affiliated) from unduly or
     improperly influencing (i) the decision of any covered RSN,
     regardless of the means of delivery, to sell programming to an
     unaffiliated MVPD; or (ii) the prices, terms, and conditions of
     sale of programming by a covered RSN, regardless of the means of
     delivery, to an unaffiliated MVPD. For enforcement purposes,
     aggrieved MVPDs may bring program access complaints against Comcast
     and Time Warner or their covered RSNs using the procedures set
     forth in the Commission's program access rules.[^527]

157. We adopt this condition to ensure that the exclusive contracts and
     practices, non-discrimination, and undue or improper influence
     requirements of the program access rules will apply to Comcast,
     Time Warner, and their covered RSNs, regardless of the means of
     program delivery. As in the *News Corp.-Hughes Order*, this program
     access condition will apply to Comcast, Time Warner, and their
     covered RSNs for six years, provided that if the program access
     rules are modified this condition shall be modified to conform to
     any revised rules adopted by the Commission.[^528] Comcast's and
     Time Warner's satellite-delivered networks will continue to be
     subject to the program access rules even after the conditions
     imposed herein expire.

158. For purposes of the foregoing conditions 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.[^529] The 100-hour programming minimum is based on the minimum
     amount of regional sports programming that commenters contended
     could harm competitors if it were withheld from them.[^530] We note
     that for some sports in which relatively few games are played
     during the regular season, however, that criterion would allow a
     network to carry an entire season of a team's games without being
     considered an RSN. We therefore added a percentage of programming
     figure in our definition as an alternative method of measuring the
     programming time required to fit the definition of RSN. In
     assessing which percentage to use, we noted that there are examples
     of regions with five or more teams of the type described in
     subheading 1 with significant regional interest, and a programming
     threshold of 20% would enable a network to carry a full season of
     sporting events by combining the games of such teams, without being
     considered an RSN. On the other hand, setting the threshold too low
     might prevent a network from carrying even a single game of
     significant local interest. Therefore we have selected 10% as our
     alternative threshold measure.[^531]

159. As discussed above, we find that the Applicants will have an
     incentive to increase the price of affiliated RSNs in a number of
     markets as a result of the transactions. Our analysis described
     above highlights the transaction-specific incentives for Comcast
     and Time Warner to impose uniform price increases in 15 DMAs, but,
     in fashioning a remedy for potential pricing harms, we cannot view
     the 15 DMAs in isolation from other markets in which the applicants
     own RSNs. Because arbitration outcomes may be affected by the
     general price level and price trends for RSNs, the imposition of an
     arbitration condition for only some of the Applicants' affiliated
     RSNs could give Applicants the incentive to increase the prices of
     affiliated RSNs not subject to the condition. In this way, the
     Applicants could defeat the remedial effects of an arbitration
     condition were it limited only to a subset of markets.

160. While the conditions are intended to remedy the potential harms
     from uniform price increases, these conditions will also provide
     protection, if necessary, against "stealth discrimination,"
     permanent foreclosure, and temporary foreclosure.[^532] Thus, we
     need not determine the degree to which the transactions increase
     the profitability of any of these strategies.

161. The arbitration and program access conditions apply in two
     situations. First, they apply to RSNs currently managed or
     controlled by Comcast or Time Warner. These are the RSNs that
     Comcast or Time Warner can ensure abide by the conditions. Second,
     the conditions, on a going-forward basis, forbid the Applicants
     from acquiring an attributable interest in, an option to purchase
     an attributable interest in, or one that would permit management or
     control of an RSN during the period of the conditions set forth in
     Appendix B if the RSN is not obligated to abide by the
     conditions.[^533] This approach is intended to prevent the
     development of contractual provisions that could circumvent the
     conditions and will ensure that Comcast and Time Warner take the
     conditions into account when structuring or restructuring
     investments in the future, such that a new or restructured
     financial interest is accompanied by a contractual obligation by
     the RSN to abide by the conditions.

162. We conclude that technological change may alter the economics of
     the various delivery modes. Further, we note that Comcast already
     operates regional terrestrial distribution networks in
     **\[REDACTED\]** locations.[^534] Should Comcast or Time Warner
     later determine that terrestrial delivery is the most
     cost-effective means of distributing their existing RSNs or RSNs
     they may acquire or develop, the Commission's program access rules
     would not prevent either firm from withholding such programming
     from their rivals or from imposing discriminatory pricing.
     Accordingly, we apply the arbitration condition and the prohibition
     on exclusive contracts or other behaviors proscribed by the program
     access rules described herein regardless of the means of delivery
     to protect against public interest harms. We note that Comcast
     alleges that terrestrial delivery is not economical.[^535] If it
     becomes economical because of the possibility of permanent
     withholding, our conditions will ensure that such anticompetitive
     behavior does not result. Comcast and Time Warner will be able to
     factor our conditions into their decision whether to invest in
     terrestrial delivery, and our conditions will ensure that the
     economics are not influenced by the possibility of anticompetitive
     behavior.

163. We accept, however, Applicants' explanation that Philadelphia is a
     unique case.[^536] The method of delivery in Philadelphia was not
     chosen for the purposes of enabling anticompetitive behavior.
     Rather, the programming was delivered terrestrially before the
     network was acquired by Comcast. Accordingly, though we apply the
     conditions discussed above to covered RSNs regardless of delivery
     mode, we do not require that Comcast SportsNet Philadelphia be
     subject to those conditions to the extent it is not currently
     available to MVPDs. With regard to MVPDs that currently have
     contracts for SportsNet Philadelphia, both the program access and
     arbitration conditions will apply as set forth above.

164. As we concluded in the *News Corp.-Hughes* proceeding, the 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.[^537]
     Accordingly, as in *News Corp.-Hughes*, the arbitration condition
     shall remain in effect for six years from the adoption date of this
     Order.[^538] 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.

165. Six months prior to the expiration of the conditions, the
     Commission shall issue a report on regional sports network access
     and carriage issues both on an industry-wide basis and specifically
     with respect to the Applicants. After issuing the report, the
     Commission, in its discretion, may determine if further action is
     warranted. Moreover, the Commission intends to review, evaluate and
     improve the effectiveness of the complaint resolution procedures
     prescribed in Sections 76.1003 and 76.1302 of our rules.[^539]

#### National and Non-Sports Regional Programming

166. *Positions of the Parties*. EchoStar and RCN assert that the
     proposed transactions would give Time Warner and Comcast an
     enhanced incentive and ability to withhold national and non-sports
     regional programming.[^540] According to EchoStar, Comcast's
     expanded share of the national MVPD market would result in an
     increased incentive and ability to engage in vertical foreclosure
     strategies.[^541] RCN contends that its difficulties in obtaining
     PBS Kids and PBS Sprout VOD programming, programming that is
     developed by a joint venture controlled by Comcast, shows Comcast's
     desire to use the bargaining power of "must have" PBS Kids and PBS
     Sprout VOD programming content as leverage to impose onerous terms
     on RCN.[^542] RCN contends that PBS Kids and PBS Sprout VOD qualify
     as "must have" programming because RCN suffered an 83% drop in VOD
     usage when RCN did not carry PBS Kids.[^543] EchoStar and RCN urge
     the Commission to condition approval of the transactions so that
     the program access rules would apply to all programming owned by
     Comcast and Time Warner, including terrestrially delivered
     programming.[^544] RCN further recommends that Comcast and Time
     Warner be required to waive non-disclosure clauses in their
     programming contracts, to arbitrate program access disputes, and to
     be prohibited from entering into exclusive contracts for
     programming and program-related enhancements.[^545] EchoStar asks
     the Commission to impose a la carte[^546] and nondiscrimination
     conditions,[^547] which would apparently apply to all video
     programming affiliated with either Comcast or Time Warner.
     Applicants oppose the requests for conditions, stating that there
     is no basis for applying the program access rules to
     terrestrially-delivered programming because there is no indication
     that the transactions would cause any programming to shift to
     terrestrial delivery.[^548] Responding to RCN's contention that
     Comcast entered into an exclusive distribution agreement with PBS
     Sprout to harm RCN, PBS Sprout explains that it chose Comcast's VOD
     distributor, Comcast Media Center ("CMC"), as its exclusive
     distributor because CMC offered competitive rates for transmission
     and one-stop-shopping for a variety of technical services.[^549]
     Furthermore, PBS Sprout avers that several national networks for
     children's programming exist and that therefore PBS Kids and PBS
     Sprout programming does not qualify as "must have."[^550]

167. *Discussion.* We conclude that the transactions are not likely to
     cause public interest harms relating to access to the Applicants'
     national or non-sports regional programming. Thus, it is
     unnecessary to impose the commenters' and petitioners' proposed
     remedial conditions.

168. With respect to nationally distributed programming, we find that
     the existing program access rules will ensure that competing MVPDs
     have access to programming networks that are affiliated with
     Comcast or Time Warner and that the terms and conditions of that
     access do not unfairly disadvantage competing MVPDs.[^551] All of
     the national programming networks affiliated with Comcast and Time
     Warner are delivered by satellite and are therefore subject to the
     program access rules. The record is devoid of evidence
     demonstrating that the transactions would increase the economic or
     technical feasibility of distributing affiliated national
     programming terrestrially. Furthermore, there is no evidence in the
     record that Applicants plan to pursue such a strategy. With respect
     to RCN's claims that PBS Kids and PBS Sprout programming qualify as
     "must have," we note that several substitutes exist for that
     programming.[^552] Furthermore, as discussed below, entering into a
     national programming market poses fewer barriers to entry than the
     market for regional sports programming.

169. Similarly, we find that the transactions are not likely to result
     in public interest harms due to the foreclosure of Applicants'
     non-sports regional programming. Although some of Comcast's and
     Time Warner's local and regional networks are delivered
     terrestrially and therefore are not subject to the program access
     rules, the record does not indicate that an MVPD's lack of access
     to this programming would harm competition or consumers.[^553]
     Moreover, entry into the market for regional non-sports programming
     is not hindered by a lack of content, as is the case with respect
     to regional sports programming, for which there is a limited supply
     of distribution rights to desirable local sporting events. Because
     the transactions are not likely to create public interest harms
     with respect to national and non-sports regional programming, the
     conditions advocated by commenters are unnecessary. EchoStar's
     proposed a la carte condition, in particular, lacks any apparent
     connection to the issues raised by the transactions, and EchoStar
     has not demonstrated that the proposed condition would remedy a
     transaction-specific harm. Accordingly, we decline to adopt the
     suggested conditions.

### Access to Unaffiliated Programming/Exclusive Dealing

170. To provide all the programming their subscribers desire, Comcast
     and Time Warner must have access to program 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 other than Time Warner
     or Comcast; and (2) programming from networks that are not
     vertically integrated with any cable operator.[^554] 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.[^555]

171. *Positions of the Parties*. According to EchoStar, by increasing
     Comcast's and Time Warner's subscriber reach, the transactions
     would increase each firm's ability to obtain preferential terms
     from unaffiliated programmers, which ultimately would harm
     consumers.[^556] EchoStar urges the Commission to impose a
     condition prohibiting Comcast from entering into exclusive
     distribution agreements with unaffiliated programming networks or
     from obtaining other preferential terms or conditions.[^557]
     DIRECTV contends that the proposed transactions would significantly
     expand the geographic areas in which exclusive agreements would be
     economically rational, to the detriment of competing MVPDs and
     ultimately to consumers.[^558] DIRECTV urges the Commission to
     address potential harms to competing MVPDs by prohibiting exclusive
     deals between Comcast or Time Warner and any unaffiliated RSN in
     markets where prescribed levels of regional concentration would
     result post-transaction.[^559] TCR and CWA/IBEW ask that we
     prohibit exclusive agreements by Time Warner and Comcast with
     RSNs.[^560] CFA/CU also ask us to prohibit exclusives with
     unaffiliated programmers.[^561]

172. Applicants oppose the requested conditions, contending that an
     MVPDs' ability to enter into exclusive arrangements generally has
     been deemed to promote competition by allowing competing MVPDs to
     differentiate their service offerings and provide consumers with a
     wide range of better services.[^562] Applicants state that the
     Commission has previously considered and rejected proposals to
     extend program access requirements to non-vertically integrated
     programmers on grounds that such action would contradict
     congressional intent.[^563]

173. *Discussion.* We find that the transactions will not increase the
     likelihood of public interest harms deriving from the Applicants'
     ability to enter into exclusive contracts with unaffiliated
     programmers. First, the transactions will not enhance the
     Applicants' incentive or ability to enter into exclusive contracts
     with programming networks that are vertically integrated with cable
     operators other than Comcast or Time Warner. The program access
     rules generally do not allow programmers that are vertically
     integrated with a cable operator to enter into exclusive contracts
     or discriminate against unaffiliated MVPDs. In implementing the ban
     on exclusivity, the Commission sought to achieve Congress' goal of
     establishing "a video programming marketplace that is competitive
     and diverse."[^564] We do not believe that the transactions will in
     any way weaken the existing regulatory structure or somehow permit
     the Applicants to skirt the existing rules. In any event, Congress
     recognized that there is some value in certain exclusivity
     arrangements, as Congress permits the Commission to approve such
     agreements if it finds them to be in the public interest and does
     not prohibit the use of exclusive agreements by non-vertically
     integrated programming networks.[^565]

174. Second, the record does not indicate that the transactions at issue
     here are likely to materially enhance the Applicants' incentive or
     ability to enter into exclusive contracts with non-vertically
     integrated programmers. A cable operator will enter into an
     exclusive distribution agreement with a non-vertically integrated
     programming network only if doing so is more profitable for both
     parties than a non-exclusive arrangement. The profitability
     analysis involves weighing the costs and benefits of an exclusive
     agreement with the costs and benefits of a non-exclusive agreement.
     The costs of entering into an exclusive agreement include the costs
     to compensate the programming network for revenue the network loses
     when its programming is not sold to competing MVPDs. These costs
     may be recovered from any additional revenue earned by the cable
     operator due to its acquisition of new subscribers as a result of
     the exclusivity agreement. Costs may also be recovered from
     increased rates charged to the cable operators' existing customers
     due to the loss of competition from rival MVPDs that are unable to
     offer the programming.[^566] Since the exclusivity agreement
     enables the cable operator to differentiate its program offerings,
     the fraction of customers that leave the cable operator in response
     to a price increase is less than it otherwise would have been. The
     critical feature in this calculation is the degree to which MVPD
     customers are willing to switch from one MVPD to another to obtain
     certain desired programming or to avoid rate increases. The higher
     the switching rate to gain access to exclusive content, the more
     likely an exclusive contract is to be profitable for the
     programming network and a cable operator. This effect is countered
     by the willingness of existing customers to defect to the competing
     MVPD in search of lower rates.

175. Commenters have argued that Comcast's and Time Warner's increased
     horizontal reach will serve to increase their incentives to enter
     into exclusive contracts. As the area served by a cable operator
     increases, the number of customers that can be captured from
     competing MVPDs is also likely to increase. This would have the
     effect of increasing the total amount that the cable operator would
     be willing to pay for an exclusive license. However, an exclusive
     programming contract with a cable operator generally allows the
     programming network to be carried by other non-competing cable
     operators, so that it is the willingness to pay of all cable
     operators that influences the programming network's decision on
     whether to offer an exclusive license.[^567] In this case, the
     total willingness to pay for an exclusive arrangement by all cable
     operators in an area would not be affected by consolidation among
     cable operators, because the number of customers that could be
     captured by all cable operators from competing MVPDs (*e.g.,* DBS)
     would remain unchanged. Consequently, the amount of revenue that
     could be paid to the programmer also would be unchanged, as would
     the programmer's incentives to offer an exclusive license.[^568]
     The record does not indicate that the transactions would materially
     reduce the costs of coordinating a regional cable-only exclusive
     distribution agreement such that the strategy would become
     profitable where it is not already profitable today.

176. We note that the only exclusive arrangement raised in the record
     concerning a network that is not affiliated with the Applicants --
     one between Time Warner and Carolina Sports Entertainment Network
     ("C-SET") \-- was ultimately not commercially viable, as C-SET has
     ceased operations.[^569] Though some of the programming formerly
     carried on C-SET is now available on News 14 Carolina, which is
     carried exclusively on Time Warner, the fate that befell C-SET
     indicates that even exclusive arrangements with a cable operator
     serving more than 50% of the market can fail to meet revenue
     targets if the programming is not sufficiently valuable to
     customers.[^570]

177. DIRECTV alleges that Time Warner considered entering into an
     exclusive arrangement in Cleveland that would have harmed DBS
     competition. DIRECTV claims that in Cleveland, **\[REDACTED\]**
     .[^571] DIRECTV claims that developments in Charlotte and Cleveland
     are indicative of foreclosure strategies Comcast and Time Warner
     are likely to pursue as a result of the transactions with respect
     to programming they do not own.[^572] Applicants claim that these
     concerns are misplaced.[^573]

178. Although commenters contend that Comcast's increased subscriber
     reach will give it sufficient market power to demand that
     unaffiliated programmers refuse to deal with other MVPDs, we have
     no evidence to support that theory and thus cannot conclude that
     such harm would occur as a result of these transactions,
     notwithstanding Time Warner's actions in Charlotte or Cleveland. In
     addition, Time Warner's decision not to acquire exclusive rights to
     the new RSN in Cleveland, which was made after the transactions
     were already proposed, suggests that the transactions have not
     enhanced the profitability of such an arrangement.[^574] Absent
     *prima facie* evidence indicating that Comcast or Time Warner are
     more likely as a result of the transactions to gain exclusive
     rights for highly valued programming, resulting in harm to
     competition and consumers, we lack any basis for concluding that
     the transactions are likely to produce public interest harms with
     respect to programming that is not affiliated with these firms.

179. Finally, we conclude that the Act's cable horizontal ownership
     (Section 613) and program carriage (Section 616) provisions are
     broad enough to address potential harms to the public in this area,
     should they later materialize.[^575] Section 613 of the Act is
     intended, in part, to prevent any single cable operator from
     achieving market power to the degree that it can manipulate the
     programming market to reduce the flow of video programming to the
     public. As we have stated in analyzing other potential harms, the
     transactions will leave Time Warner's subscribership levels well
     below the Commission's existing horizontal limits, and Comcast's
     horizontal reach will be almost equivalent to the horizontal reach
     the Commission approved in the *Comcast-AT&T Order.* Although the
     Commission's horizontal ownership limits remain the subject of an
     ongoing proceeding, we have no evidence that the proposed
     horizontal reach of either Comcast or Time Warner will allow either
     cable operator to demand or profit from exclusive contracts with
     programming networks. Section 616 of the Act expressly prohibits
     cable operators from coercing programming networks into exclusive
     arrangements as a condition of carriage.[^576] There is no evidence
     in the record to suggest that the Applicants will violate this
     prohibition in the future, but we will entertain any complaint by
     any party if the situation later arises.

### Program Carriage Issues

180. Commenters contend that the proposed transactions would give
     Comcast and Time Warner market power over unaffiliated national and
     regional programmers to the detriment of consumers. Commenters
     argue that without sufficient conditions, Comcast and Time Warner
     would be able to use their post-transaction market power to "make
     or break" unaffiliated programmers simply by choosing not to carry
     them and that Comcast and Time Warner would be more likely as a
     result of the transactions to favor their affiliated networks over
     unaffiliated networks in carriage decisions.

181. As discussed below, we find that the leased access condition we
     adopt herein will address concerns about Comcast's and Time
     Warner's incentive and ability to discriminate against unaffiliated
     programming networks. We find that additional measures are
     necessary with respect to unaffiliated regional sports networks to
     mitigate the potential harms deriving from the increased vertical
     integration and increased regional concentration produced by the
     transactions. Accordingly, we adopt a condition allowing
     unaffiliated RSNs to use commercial arbitration to resolve disputes
     regarding carriage on Comcast or Time Warner cable systems.

182. *Positions of the Parties: Nationally Distributed Programming*.
     Several commenters contend that Comcast and Time Warner have the
     financial incentive and ability to favor their affiliated
     programming over unaffiliated programming because they are
     producers and packagers of video programming.[^577] TAC contends
     that vertically integrated media companies like Time Warner and
     Comcast have a strong disincentive to embrace new networks, which
     compete with their affiliated networks for viewers, advertising
     dollars, and channel capacity.[^578] TAC presents data showing that
     Comcast and Time Warner routinely choose to carry their own
     networks and those owned by other large media companies, while
     rejecting other networks, and that they tend to carry their own
     networks and those owned by other large media companies on linear
     tiers (*i.e*., analog basic tiers or digital tiers), while
     relegating other networks to VOD, which TAC views as an inferior
     carriage option.[^579] Specifically, TAC argues that of 114
     "independent" networks seeking national carriage in recent years,
     Comcast launched only one on a national, non-premium basis, and it
     was a channel owned by the National Football League.[^580] Time
     Warner also launched only one "independent" channel, The Sportsman
     Channel, on a national, non-premium basis. In contrast, TAC
     contends that Comcast and Time Warner carry about half of their
     affiliated networks nationally.[^581] TAC argues that absent
     appropriate conditions, the proposed transactions likely would
     prevent the emergence of new channels that are unaffiliated with
     large media companies.[^582]

183. CWA/IBEW agree with TAC that Comcast and Time Warner would be more
     likely to favor their affiliated programming and discriminate
     against unaffiliated programmers as a result of the
     transactions.[^583] CWA/IBEW, TAC, and Free Press support proposed
     conditions to ensure that programmers unaffiliated with Applicants
     or other large media companies gain carriage on Comcast's and Time
     Warner's cable systems.[^584]

184. Applicants respond that they do not control the viability of
     independent networks. They reject TAC's assertion that in the
     present context "independent networks" should exclude networks
     independently owned by other large media companies.[^585] They
     state that TAC's arguments should be raised and addressed, if at
     all, in the Commission's pending cable horizontal and vertical
     ownership proceeding. Applicants contend that TAC's arguments are
     belied by a robust programming marketplace.[^586] Applicants
     further assert that TAC's claims directly contradict the court's
     recognition in *Time Warner II* that customers with access to an
     alternative MVPD may switch providers, thereby constraining
     whatever market power the first MVPD may be thought to have.[^587]

185. *Regional Programming*. TCR raises concerns regarding the
     transactions' effects on an unaffiliated RSN's ability to obtain
     carriage on Comcast and Time Warner systems where either Applicant
     owns a competing RSN.[^588] According to TCR, to evaluate whether
     the post-transaction entity would have an increased incentive and
     ability to engage in anticompetitive foreclosure strategies
     regarding RSNs, the Commission should apply a three-prong inquiry
     that asks (1) whether the post-transaction company would have a
     large enough share of the relevant MVPD households such that the
     MVPD's decision not to carry a competing programmer's offering
     would cause a competing programmer to exit the market or would
     deter a potential entrant from entering; (2) whether the company
     owns affiliated programming from which it could benefit by the
     reduction in programming competition; and (3) whether any
     additional profits attained by the reduction of competition in the
     regional market would outweigh the lost earnings from carriage of
     the competing programming on the MVPD's own systems.[^589] TCR
     maintains that the transactions satisfy each of these criteria and
     therefore are likely to have anticompetitive effects.

186. TCR notes that Comcast owns and operates a regional sports network,
     CSN Mid-Atlantic, that carries a substantial amount of regional
     sports programming in the Baltimore and Washington DMAs.[^590] As
     set forth in its separately-filed program carriage complaint, TCR
     alleges that Comcast has refused unlawfully to carry TCR's network,
     MASN, which has the right to exhibit the Washington Nationals
     baseball games, in order to protect its own competing RSN.[^591]
     TCR contends that Comcast has also attempted to leverage its market
     power to dissuade other MVPDs from carrying TCR's competitive
     regional sports content.[^592] TCR asserts that other MVPDs have
     been intimidated by Comcast and thus far have refused to sign
     affiliation agreements for MASN.[^593]

187. TCR claims that Comcast's subscribers in the Washington DMA have
     not responded to the unavailability of MASN by switching to
     alternative MVPDs that carry MASN.[^594] TCR contends that
     post-transaction, Comcast would be able to deny MASN access to more
     cable homes in the Washington DMA, driving MASN from the
     market.[^595] TCR states that Comcast would then secure the
     distribution rights to the Washington Nationals games for its own
     network, thereby extending its downstream market power into the
     upstream programming market.[^596] Using pre-transaction and
     post-transaction data on ten DMAs in which Comcast owns an RSN, TCR
     argues that the tipping point for the successful foreclosure of an
     unaffiliated RSN, *i.e*., the point at which foreclosure becomes
     profitable, is approximately 49% of MVPD subscribers in a DMA and
     that Comcast's post-merger subscriber share in the Washington DMA
     will be 53%.[^597]

188. Applicants assert that the proposed transactions present no threats
     to independent programmers.[^598] They contend that much of TCR's
     petition recounts assertions made in its program carriage complaint
     against Comcast and that TCR fails to establish grounds for the
     imposition of any conditions on the proposed transactions.[^599]
     Applicants claim that Comcast's decision not to carry TCR's
     programming is not the product of discrimination based on
     affiliation and that TCR's real concern involves a contractual
     dispute regarding TCR's right to exhibit the Baltimore Orioles'
     baseball games.[^600] Applicants further contend that the market
     for regional programming networks is robust.[^601] They dispute
     TCR's calculation of post-transaction concentration, claiming that
     MASN's footprint includes nearly twice as many subscribers as TCR
     claims and that Comcast's post-transaction share of subscribers in
     that footprint would be much smaller than TCR contends.[^602]
     Applicants further assert that since Adelphia is not carrying MASN,
     the transactions will not result in a loss of programming to
     consumers who currently receive it.[^603]

189. *Discussion.* We find that the leased access condition we adopt
     above is sufficient to address concerns regarding the carriage of
     nationally distributed and non-sports regional programming.[^604]
     With respect to regional sports programming, based on the record,
     we find that the transactions will increase the incentive and
     ability of Comcast and Time Warner to deny carriage to RSNs that
     are not affiliated with them. As noted above, the programming
     provided by RSNs is unique because it is particularly desirable and
     cannot be duplicated.[^605] Moreover, as a result of the
     transactions, the sports rights with a regional interest become
     more valuable to the Applicants. Accordingly, post-transaction Time
     Warner and Comcast will have an increased incentive to deny
     carriage to rival unaffiliated RSNs with the intent of forcing the
     RSNs out of business or discouraging potential rivals from entering
     the market, thereby allowing Comcast or Time Warner to obtain the
     valuable programming for its affiliated RSNs. We further find that
     once this occurs, Comcast and Time Warner would have the incentive
     to raise its rival MVPDs' costs through a uniform price increase or
     engage in other anticompetitive strategies such as withholding the
     programming from its rival MVPDs. We find that this strategy would
     be made less likely by the arbitration and program access
     conditions that we adopt but recognize that Comcast and Time Warner
     nevertheless may be more likely to succeed in foreclosing an
     unaffiliated RSN as a result of the transactions. As a result,
     consumers could be unable to view the RSN's programming or could
     have to pay higher costs for the programming. Accordingly, to
     prevent such behavior, we adopt a further condition requiring
     Comcast and Time Warner to engage in commercial arbitration with
     any unaffiliated RSN that is unable to reach a carriage agreement
     with either firm, should the RSN elect to use the arbitration
     remedy.

190. *Condition.* To constrain Comcast's and Time Warner's ability to
     unlawfully refuse carriage to unaffiliated RSNs, we impose a remedy
     based on commercial arbitration such as that imposed in the ­*News
     Corp.-Hughes Order*, as set forth in Appendix B. Under the carriage
     condition, for a period of six years from the adoption date of this
     Order, and in lieu of filing a program carriage complaint with the
     Commission, an RSN unaffiliated with any MVPD that has been denied
     carriage by Comcast or Time Warner may submit its carriage claim to
     arbitration within 30 days after the denial of carriage or within
     ten business days after release of this Order, whichever is later.
     The arbitration rules would be the same as those for the MVPDs,
     except that the arbitrator has 45 days to issue a decision, to
     accommodate deciding the threshold issue of whether carriage should
     be required. The Commission shall issue its findings and
     conclusions not more than 60 days after receipt of a petition for
     review of the arbitrator's award, which may be extended by the
     Commission for one period of 60 days.

191. We impose this commercial arbitration condition as an alternative
     for unaffiliated RSNs to our existing program carriage complaint
     procedures. By establishing an additional procedure and specific
     time frames for a full resolution of an unaffiliated RSN's
     complaint, we seek to alleviate the potential harms to viewers who
     are denied access to valuable RSN programming during protracted
     carriage disputes. The timely resolution of carriage disputes is
     particularly important given the seasonal nature of RSN
     programming.

# Analysis of Other Potential Public Interest Harms

192. We consider below whether the proposed transactions are likely to
     lead to public interest harms with respect to the carriage of
     broadcast signals; diversity; deployment of services based on
     economic status; race and ethnicity; employment practices; Internet
     related content, applications, or services; and equipment and
     interactive television. We also consider allegations that
     Applicants lack the requisite character qualifications to hold
     Commission licenses. We conclude that the transactions are not
     likely to result in the potential harms alleged by commenters and
     petitioners. We find that some of the concerns raised are not
     transaction-specific and are more appropriately addressed in other
     proceedings. We further find that the character qualifications
     issues raised in the record do not warrant denial of the
     applications or the imposition of conditions.

## Broadcast Programming Issues

193. Several commenters allege that the transactions will harm local
     broadcast service. Specifically, commenters assert that increased
     regional cable concentration post-transaction will affect the
     ability of local broadcast stations to gain carriage on Comcast and
     Time Warner systems through retransmission consent negotiations, to
     reach agreements with Comcast and Time Warner about the carriage of
     multicast digital signals and about other digital transition
     issues, and to disseminate programming and viewpoints of interest
     to local communities.

194. Free Press asserts that the level of ownership concentration
     resulting from the transactions will create regional monopolies and
     monopsonies in the top 25 DMAs and will thereby have a "dramatic
     impact" on the negotiating power of broadcast licensees. It alleges
     that Comcast and Time Warner will be able to dictate the terms of
     and freely deny carriage to licensees, causing viewers to suffer as
     a consequence.[^606] More specifically, Free Press anticipates that
     Comcast and Time Warner may force broadcasters to accept the
     downgrading of their digital signals to analog quality or place the
     local broadcast digital signals on more expensive programming
     tiers. Free Press concludes that the additional regional market
     power exercised by Comcast and Time Warner post-transaction would
     delay the national transition to digital TV by increasing the
     conflict between broadcasters and cable operators.[^607] Echoing
     these concerns, NAB urges the Commission to adopt conditions to
     ensure that large, regionally clustered cable systems will
     negotiate reasonably with local broadcast stations for
     retransmission consent and for the carriage of digital signals,
     including multicast programming streams.[^608] NAB indicates that
     such conditions would serve the public interest by promoting the
     widespread dissemination of information from a multiplicity of
     sources, including those not under the control of the cable
     operator.[^609]

195. KVMD, the licensee of Station KVMD-DT, Channel 23, in Twentynine
     Palms, California,[^610] contends that the transfer of Adelphia
     cable systems to Comcast and Time Warner may harm localism by
     preventing viewers from receiving its Spanish-language, local news
     and public affairs, sports, and lifestyle programming.[^611] KVMD
     asserts that, without carriage on a cable system, its array of
     programs might otherwise be unavailable to many viewers in the Los
     Angeles market. KVMD fears that Comcast and Time Warner, after they
     acquire Adelphia's Los Angeles systems, will attempt to remove
     certain communities from the KVMD market.[^612] KVMD states that
     unless Comcast and Time Warner continue to carry the independent
     stations currently carried by Adelphia, the proposed transactions
     will not serve the Commission's localism policies.[^613]

196. Applicants urge the Commission to disregard the issues relating to
     broadcast signal carriage and retransmission consent as not
     transaction-specific, or, in the alternative, as lacking merit. In
     addition, they maintain that requests by commenters to address
     problems generally related to the digital transition or to alter
     the retransmission consent negotiation process are unrelated to the
     instant transactions.[^614] More specifically, Applicants contend
     that concerns about must carry and retransmission consent are more
     appropriately handled on an industry-wide basis, rather than in the
     context of merger review.[^615] Applicants charge that KVMD's
     concerns relate to the statutory market modification procedures
     under the must-carry regime and should not be resolved in the
     context of the instant proceeding.[^616]

197. *Discussion.* There are currently several open Commission
     rulemaking proceedings in which examination of the myriad technical
     and policy issues surrounding the digital transition are being
     addressed. Further, we expect cable operators to abide by the
     Commission's policies regarding material degradation of a
     television signal.

## Viewpoint Diversity and First Amendment Issues 

198. Several commenters assert that the transactions would reduce
     programming and viewpoint diversity by granting Comcast and Time
     Warner gatekeeper control over video and broadband platforms.[^617]
     Free Press maintains that the ability of Comcast or Time Warner to
     accept or reject advertising or other programming content based on
     its perceived political orientation or willingness to address
     controversial subjects has "a chilling effect" that deprives the
     public of new perspectives and ideas.[^618] Free Press and CWA/IBEW
     assert that the proposed transactions would result in irreparable
     harm to "the First Amendment principle of diversity in
     communication" and would enhance the ability of Comcast and Time
     Warner to influence public debate in 14 of the top 25
     markets.[^619] Free Press states that the Commission is responsible
     for preventing the concentration of the mass media and means of
     communication in the hands of a few private corporations and must
     foster diversity of content.[^620] NHMC states that regardless of
     the carriage of specific stations or networks, the Commission
     should impose conditions on the transactions that require
     Applicants to provide programming that responds to local community
     needs.[^621]

199. In addition, Free Press asserts that the transactions would result
     in sufficient concentration in the markets for high-speed Internet,
     cable programming, and cable advertising to permit Comcast and Time
     Warner to exclude from public consideration or inhibit discussion
     of positions and perspectives that they oppose for economic or
     ideological reasons.[^622] Free Press asserts that it does not
     matter whether the companies' refusal to sell advertising or the
     decision to block e-mail from politically-oriented web addresses
     may be justified as a matter of editorial discretion or network
     management.[^623] The companies' past behavior is relevant,
     according to Free Press, because it demonstrates that Comcast and
     Time Warner already possess the power to interfere with political
     discourse, and the geographic concentration that will result from
     grant of the Applications will aggravate this effect.[^624]

200. NATOA similarly states that additional regional concentration
     resulting from the transactions could enable Comcast and Time
     Warner to exercise control over political speech from local
     officials and prevent local voters from hearing contrary
     perspectives.[^625] NATOA maintains that the transactions would
     give Comcast and Time Warner vastly increased control over
     political speech, including the ability to use their media services
     to "bombard" local residents with "self-serving" advertisements
     urging acceptance of unfavorable renegotiations of franchise
     agreements.[^626] Lastly, NATOA criticizes the Applicants for using
     their growing regional and national market power to default on
     their responsibilities to support PEG channels.[^627]

201. In contrast, several commenters contend that the proposed
     transactions would increase programming diversity, and other
     commenters argue that Commission restrictions on the ownership of
     cable systems could harm the public interest. [^628]

202. Similarly, Applicants reject allegations that the transactions
     would threaten the number of available media voices or frustrate
     the Commission's diversity goal.[^629] They disagree with
     commenters who assert that the transactions would diminish
     "head-to-head" competition, contending that the transactions would
     not reduce horizontal competition. Thus, Applicants contend,
     consumers would not experience a reduction in the number of MVPDs
     among which they could choose or the number of available "media
     voices."[^630] Comcast and Time Warner assert that they have
     "repeatedly demonstrated their clear business interest in offering
     a wide array of programming options to their customers and have
     continually offered more diversity, rather than less."[^631]
     Responding to commenters who fear a decline in political discourse
     if the transactions are approved, Applicants state that such
     assertions are "misguided" and that Comcast and Time Warner have
     long provided a considerable amount of diverse, locally oriented
     material through their regional programming and through VOD
     service.[^632]

203. Further, Applicants assert that cable operators' speech is
     protected under the First Amendment and that any limit on speech in
     favor of viewpoints advocated by Free Press is "the very antithesis
     of the First Amendment."[^633] Applicants reject assertions that
     consolidation will stifle diversity in advertising, noting that
     local advertisers may also purchase advertising time from broadcast
     stations or from non-broadcast programming networks carried on
     Comcast and Time Warner systems.[^634] Moreover, Applicants claim
     that they exercise no control over the majority of advertising
     content carried on their cable systems and lack the ability or
     desire to dominate or suppress any advertising message. In response
     to Free Press' claims that Applicants have declined to carry
     advertisements from competing ISPs, Applicants state that they have
     a right to decline advertisements that, they believe, will subject
     them to liability, that will reflect unfavorably on their
     companies, or that promote competing businesses.[^635]

204. *Discussion.* Although some commenters fear that Comcast and Time
     Warner will reject programming or issue advertisements and thereby
     stifle viewpoint diversity, to the extent that commenters are
     seeking a right of access to cable systems to disseminate issue
     advertising, neither the Communications Act nor the Commission's
     rules mandate such rights of access to cable systems.[^636] We
     decline to adopt such a right in the context of this specific
     transaction. To the extent commenters raise concerns about
     Applicants' compliance with local franchise agreements as they
     pertain to the establishment and operation of PEG channels, they
     are encouraged to raise such concerns with local franchise
     authorities.[^637]

205. Finally, we recognize that commenters' arguments may be relevant to
     issues addressed in our proceeding to examine the Commission's
     cable horizontal ownership limits. In its *Cable Ownership Second
     Further Notice*, the Commission sought comment on the ability and
     incentive of individual cable operators or groups of cable
     operators to restrict the flow of programming to the
     consumer.[^638] The *Cable Ownership Second Further Notice*
     solicits comment on the role and weight diversity concerns should
     play in setting cable ownership limits.[^639]

## Deployment of Services Based on Economic Status or Race/Ethnicity

206. In its petition to deny, NHMC challenges Applicants' claims that
     the proposed transactions will accelerate the deployment of
     advanced telecommunications service, new cable programming
     services, and, generally, improved service to local
     communities.[^640] NHMC states that the rapid deployment of
     advanced service and cable programming does not serve the public
     interest when a large segment of the population is excluded.[^641]

207. NHMC explains that there has been a significant history of
     "electronic redlining" in minority communities, particularly in the
     deployment of advanced services, but also in the provision and
     maintenance of basic services such as telephone and cable
     service.[^642] NHMC claims that providers have sometimes failed to
     provide certain services to minority communities or have provided
     inferior services.[^643] NHMC states that economic redlining is
     contrary to the public interest, adding that no service provider
     should deny services to a group of potential customers because of
     the community's ethnicity or income levels. NHMC asks that the
     transfer applications be denied, or, in the alternative, be
     conditioned to address these concerns. NHMC proposes that the
     Commission establish enforceable benchmarks for customer service
     and the deployment of service, including advanced services to
     minority communities.[^644] NHMC requests that if the Applications
     are approved, the Commission should impose conditions that ensure
     that the upgrade of Adelphia systems -- a public interest benefit
     on which Comcast relies -- takes place in a timely manner in
     minority neighborhoods.[^645]

208. NATOA expresses similar concerns that, in upgrading the Adelphia
     systems, the Applicants will attempt to "cherry pick" neighborhoods
     for the deployment of advanced services or new cable services by
     claiming that the provision of such services is not subject to the
     relevant Adelphia cable franchise agreement.[^646] NATOA states
     that where LFAs have negotiated build-out schedules with Adelphia,
     or with the Applicants as part of the transfer negotiation, the
     Commission must condition its approval of the Applications on the
     Applicants' compliance with these negotiated terms.[^647]

209. Comcast and Time Warner assert that they will complete their
     upgrades to the Adelphia cable systems in a fair and
     non-discriminatory manner. In addition, both Comcast and Time
     Warner emphatically deny that they have engaged in or will engage
     in any sort of economic or other redlining.[^648] They state that
     both companies are deeply committed to upgrading their cable
     systems and improving services for all of their subscribers,
     including those in low income areas, and detail a number of
     instances in which deployment of their services, including advanced
     services, occurred first in minority or low income areas.[^649]

210. *Discussion.* The Commission is deeply committed to ensuring that
     broadband and advanced services are deployed to all Americans,
     regardless of their race, ethnicity, or income level.[^650]
     Deployment of facilities or the provision of services in a
     discriminatory manner would be contrary to section 1 of the
     Communications Act[^651] and the fundamental goal of the 1996 Act
     to bring communications services "to all Americans."[^652]

211. Based on the record, we find no evidence that Applicants have
     engaged in discriminatory deployment in the past or that such
     behavior is likely in the future. Accordingly, we decline to deny
     the Applications on this basis or to condition the grant on
     benchmarks for deployment of service.

## Potential Internet-Related Harms

212. Several commenters assert that the proposed transactions would
     reduce competition in the market for residential high-speed
     Internet access or would facilitate discrimination by Comcast or
     Time Warner against unaffiliated providers of Internet content or
     applications.[^653] We find, however, that the evidence does not
     demonstrate that the transactions are likely to result in
     anticompetitive conduct or interference with subscriber access to
     Internet content or applications on the part of either Time Warner
     or Comcast.

213. Free Press contends that the Supreme Court's *Brand X*
     decision[^654] allows cable providers to block any content or
     service offered over cable broadband facilities, and that the
     transactions would give Time Warner and Comcast greater incentives
     to do so.[^655] In particular, Free Press claims that as a result
     of increased regional and national concentration, Comcast and Time
     Warner might block their customers' access to non-affiliated
     providers of VoIP (such as Vonage) and video programming
     competitors (such as TiVo or Netflix) and has blocked e-mail
     traffic.[^656]

214. Free Press urges the Commission to adopt ISP access and
     interoperability conditions similar to those imposed by the Federal
     Trade Commission and the Commission in connection with *AOL-Time
     Warner* transaction.[^657] In the alternative, Free Press proposes
     that the post-transaction entities be prohibited from
     discriminating against providers of content, video, or voice
     services offered via broadband.[^658] CWA/IBEW propose that the
     Commission require "interoperability of network devices" and
     content neutrality on Comcast's and Time Warner's post-transaction
     broadband platforms.[^659] IBC proposes that the Commission require
     Comcast and Time Warner to program their set-top boxes to be
     Internet-accessible and to devote one cable channel to Internet
     access via television.[^660]

215. In response to these allegations, the Applicants state that
     "\[t\]he record is entirely void of any evidence that Comcast or
     Time Warner have ever degraded, blocked or otherwise discriminated
     against any packets delivered by any IP-enabled service
     application."[^661] They emphasize that their desire to satisfy
     their subscribers and compete against other Internet providers
     provides sufficient incentive for them to allow their subscribers
     "unfettered access to all the content, services and applications
     that the Internet has to offer."[^662]

216. The Applicants aver that market forces will ensure that consumers'
     needs are met because the Applicants face strong competition from
     other providers of broadband services. Further, they explain that
     they need flexibility to experiment with business models to respond
     to the dynamic marketplace and they should not be restricted in
     their ability to invest in and expand their networks to satisfy
     their customers.[^663] The Applicants also contend that direct
     enforcement of the Commission's broadband Policy Statement would be
     difficult to administer and would hamper the Applicants' efforts to
     resolve issues related to copyright protection, peer-to-peer
     applications, spam, and identity theft.[^664]

217. *Discussion*. We conclude that the transactions are not likely to
     increase incentives for either Comcast or Time Warner to engage in
     conduct that is harmful to consumers or competition with respect to
     the delivery of Internet content, services, or applications given
     the competitive nature of the broadband market. We agree with
     Applicants that competition among providers of broadband service is
     vigorous. Broadband penetration has rapidly increased over the last
     year with more Americans relying on high speed connections to the
     Internet for access to news, entertainment and communication.[^665]
     Increased penetration has been accompanied by more vigorous
     competition. In turn, greater competition limits the ability of
     providers to engage in anticompetitive conduct, a concern of some
     commenters, since subscribers would have the option of switching to
     alternative providers if their access to content were blocked or
     degraded. In particular, incumbent LECs' share of the U.S.
     broadband market has gradually increased over the past few years
     through increased deployment and increasingly aggressive
     pricing.[^666] Statistics collected by the Commission indicate that
     the percentage of broadband subscribers served by cable modem
     service has decreased over time, from 58% in 2003 to 56% in 2005,
     while the percentage served by DSL has increased from 38% to
     41%.[^667] Additionally, consumers have gained access to more
     choice in broadband providers. For example, while the percentage of
     zip codes served by only one broadband provider has dropped from
     16.4% in 2003 to 9.3% in 2005, the percentage of zip codes served
     by four or more broadband providers has increased from 43.7% in
     2003 to 59.7% in 2005.[^668]

218. This growth in the number of providers is reflected in an
     increasing number of subscribers to new broadband technologies. For
     example, cable modem service and DSL service are facing emerging
     competition from deployment of cellular, WiFi, and WiMAX-based
     competitors, and broadband over power line (BPL) providers.[^669]
     Commission statistics indicate that satellite and wireless
     broadband lines more than doubled between June 2004 and June 2005,
     from 422,000 to 970,000, with BPL lines surveyed for the first time
     in June 2005.[^670] Some analysts project that some of these
     technologies have the potential to reduce further cable's share of
     the broadband market beyond the projected continued losses to DSL,
     particularly in rural areas.[^671] Press reports indicate that both
     DBS providers have signed distribution agreements with WildBlue
     Communications, Inc., a provider of satellite-broadband Internet
     service.[^672]

219. The only specific factual allegation in the record concerns an
     instance of e-mails being inadvertently blocked by a Comcast
     firewall provider.[^673] In this regard, Free Press alleges that
     Comcast blocked e-mails generated by an organization called "After
     Downing Street" ("ADS"), resulting in e-mails containing a
     reference to ADS being blocked for one week, without notice to ADS
     or subscribers. Free Press asserts that, although the problem was
     blamed on an anti-spam measure deployed by Symantec under contract
     with Comcast, when ADS contacted Symantec directly, the block was
     immediately removed.[^674] There is no evidence that the block was
     motivated by subjective judgments regarding the content being
     transmitted or that it was anything other than the result of a
     legitimate spam filtering effort by Symantec. Comcast states that
     it uses Symantec Corporation's Brightmail software solution to
     filter out spam e-mails. To avoid giving "unscrupulous spam senders
     a roadmap for avoiding filters," Symantec does not explain how it
     determines which e-mails are spam. However, Symantec did explain to
     Comcast that it had received thousands of complaints from end
     users, saying that ADS e-mails were spam. Comcast stated that the
     e-mails were blocked "because they exhibited many signature
     characteristics of unwanted bulk e-mail."[^675] ISPs' blocking of
     spam is a common and generally approved practice,[^676] and there
     is nothing in the record here to suggest that the blockage was
     other than the automatic functioning of the anti-spam software.

220. There is, other than this, no record evidence indicating that
     Comcast or Time Warner has willfully blocked a web page or other
     Internet content, service, or application via its high speed
     Internet platforms. Commenters and petitioners do not offer
     evidence that Time Warner and Comcast are likely to discriminate
     against Internet content, services, or applications after the
     proposed transactions are complete; nor do they explain how the
     changes in ownership resulting from the transactions could increase
     Time Warner's or Comcast's incentive to do so. If in the future
     evidence arises that any company is willfully blocking or degrading
     Internet content, affected parties may file a complaint with the
     Commission.[^677]

221. Moreover, the AOL-Time Warner transaction -- the source of some
     remedies proposed by commenters -- is inapposite here. In the
     *AOL-Time Warner Order*, the Commission supplemented a condition
     imposed by the FTC that required AOL Time Warner to give
     unaffiliated ISPs open access to its cable systems.[^678] The
     Commission's condition required that if AOL Time Warner provided
     such unaffiliated open access voluntarily or otherwise, it must do
     so on nondiscriminatory terms.[^679] The nondiscrimination
     provision was premised on the Commission's view that Time Warner
     might leverage AOL's dominance in the narrowband ISP market into
     dominance of the high-speed Internet access market.[^680] As a
     consequence, the Commission feared that unaffiliated ISPs would be
     unable, or less likely, to gain nondiscriminatory access to Time
     Warner's systems for the purpose of offering service to Time
     Warner's subscribers over its cable facilities.[^681]

222. In these transactions, however, the systems Comcast acquires from
     Time Warner will cease to be vertically integrated with AOL, and
     the Adelphia systems acquired by Comcast will remain unintegrated
     with AOL. Therefore, the underlying basis for imposing a
     nondiscrimination condition on Comcast is absent here.[^682]

223. The Commission also has recently adopted a *Policy Statement* on
     broadband access to the Internet.[^683] This statement reflects the
     Commission's view that it has the jurisdiction necessary to ensure
     that providers of telecommunications for Internet access or
     Internet Protocol-enabled (IP-enabled) services are operated in a
     neutral manner. To ensure that broadband networks are widely
     deployed, open, affordable, and accessible, the Commission adopted
     four principles embodied in that *Policy Statement*:

> \(1\) consumers are entitled to access the lawful Internet content of
> their choice; (2) consumers are entitled to run applications and use
> services of their choice, subject to the needs of law enforcement; (3)
> consumers are entitled to connect their choice of legal devices that
> do not harm the network; and (4) consumers are entitled to competition
> among network providers, application and service providers, and
> content providers. [^684]

The Commission held out the possibility of codifying the *Policy
Statement*'s principles where circumstances warrant in order to foster
the creation, adoption, and use of Internet broadband content,
applications, services, and attachments, and to ensure consumers benefit
from the innovation that comes from competition. Accordingly, the
Commission chose not to adopt rules in the *Policy Statement*.[^685]
This statement contains principles against which the conduct of Comcast,
Time Warner, and other broadband service providers can be measured.
Nothing in the record of this proceeding, however, demonstrates that
these principles are being violated by Comcast or Time Warner or that
the transactions before us create economic incentives that are likely to
lead to violations. Additionally, the vigorous growth of competition in
the high-speed Internet access market further reduces the chances that
the transactions are likely to lead to violations of the principles.

## Equipment and Interactive Television Issues

224. Free Press asserts that, post-transaction, Comcast and Time Warner
     would exert significant influence on the market for personal video
     recorders ("PVRs") and other consumer electronic devices, such as
     wireless routers that are designed to be attached to cable or
     residential broadband service.[^686] Free Press contends that, with
     control of more than 40% of the national cable market, Comcast and
     Time Warner would effectively be allowed to set the standards and
     terms under which manufacturers would be allowed to attach devices
     to cable networks.[^687] Consequently, states Free Press, competing
     services such as TiVo would be at a considerable disadvantage
     unless they acquiesce to the demands of Comcast and Time Warner
     regarding content control, price, or associated services.[^688]

225. Free Press also raises a number of concerns regarding interests
     Comcast and Time Warner would acquire in companies that develop
     electronic program guides ("EPGs") and interactive television
     ("ITV") software.[^689] As a result of the transactions, Time
     Warner would acquire Adelphia's interest in ICTV, a privately-held
     interactive TV software provider.[^690] Pursuant to the
     transactions, Comcast would acquire Adelphia's existing interest in
     Sedna Patent Services, a developer of EPGs, increasing its
     ownership interest to 47.49%. Free Press notes that Comcast
     currently holds and is increasing its financial interests in
     interactive TV entities that provide advanced services such as
     EPGs, PVRs, VOD, interactive advertising, enhanced programming,
     portals, and games.[^691] Free Press alleges that the combination
     of these assets with the enhanced regional and national market
     power Comcast and Time Warner would have post-transaction will give
     them the ability to dominate the ITV market through anticompetitive
     practices.[^692] Based on these assertions, Free Press seeks
     conditions on the grant of the Application that would constrain
     Applicants and their iN DEMAND partnership from "imposing
     exclusivity or equity as a condition of providing games or other
     interactive services."[^693]

226. Applicants state, in response, that Free Press "fundamentally
     misunderstands" the process utilized by the cable industry to set
     standards for cable-ready devices, cable modems, and other
     cable-related equipment.[^694] Applicants explain that Cable
     Television Laboratories, Inc., a cable industry non-profit research
     and development consortium, develops industry specifications that
     are subjected to public comment and review by expert industry
     organizations.[^695] Applicants contend that Free Press has failed
     to explain how or why Comcast or Time Warner would be able to alter
     this established process as a result of the transactions.[^696]
     Moreover, Applicants state that the current marketplace for
     cable-ready equipment is thriving, with many consumer electronics
     manufacturers able to offer two-way cable-ready products, including
     interactive program guides, video on-demand, and other two-way
     cable services without the need for a set-top box.[^697]
     Additionally, Applicants state that Free Press is "incorrect" in
     asserting that competing services such as TiVo would be at a
     considerable disadvantage unless they acquiesce to the demands of
     Comcast and Time Warner regarding content control, price, or
     associated services. They maintain that TiVo has continued to
     expand with new product offerings, and that in late 2006, Comcast
     and TiVo plan to introduce a new set-top device with TiVo user
     interface.[^698] Finally, Applicants counter that Free Press has
     failed to provide any evidence that Comcast or Time Warner will
     possess market power with respect to ITV products such as VOD,
     DVRs, and EPGs post-transactions.[^699] They add that financial
     investments by Comcast and Time Warner in ITV-related entities
     represent "minor" investments and that many companies are investing
     in the competitive and dynamic ITV products market.[^700]

227. *Discussion.* We conclude that the claims of harms to the
     equipment, EPG, and ITV markets are speculative and not specific to
     the transactions under review. We do not find sufficient record
     evidence to support the arguments raised by Free Press that the
     transactions would create the incentive for Applicants to impede
     technological developments in the emerging ITV market. Time
     Warner's assumption of an equity interest in ICTV is not evidence
     of the incentive or ability to dominate the ITV market, as Free
     Press speculates. ICTV is not a major ITV software provider and is
     not in a position to control software development in this emerging
     industry.[^701] Moreover, Applicants have affirmatively stated that
     ICTV is not currently a major ITV software provider likely to
     dominate in this developing market. Likewise, we are not persuaded
     that Comcast's financial interests in entities that develop
     consumer equipment, EPG, and ITV software present a
     transaction-specific harm. Specifically, Comcast's acquisition of
     Adelphia's 2.11% interest in Sedna represents only a modest
     increase in Comcast's existing ownership interest. The Commission
     will continue to monitor developments in the equipment and ITV
     sectors.

## Impact on Employment Practices 

228. NHMC states that Comcast has made "scant progress" in its hiring of
     Hispanic employees and that, despite having 50% turnover in the
     last three years, Comcast has chosen not to add a Hispanic
     representative to its board of directors.[^702] NHMC notes that
     Hispanic employment at Comcast lags behind the national average and
     that, as of 2002, only 3% of Comcast's officials and managers were
     Hispanic.[^703] Accordingly, NHMC requests that the Commission
     adopt conditions requiring Comcast to submit quarterly reports on
     its national, regional, and local recruitment and employment of
     minorities and to increase its employment of minorities in
     decision-making positions over time.[^704]

229. Applicants state that no commenter has presented any facts that
     would justify a "wholly unprecedented" intervention by the
     Commission into the details of the employment relationship between
     Comcast and its workers. Applicants contend that Comcast provides
     equal opportunities in employment and is succeeding in its efforts
     to establish a diverse workforce.[^705] Applicants also describe
     several Comcast initiatives that highlight its commitment to
     minority hiring and its compliance with the Commission's Equal
     Employment Opportunity (EEO) Rules.[^706] Applicants reject the
     claim that Comcast's employment of Hispanics lags when compared to
     national statistics.[^707] Applicants assert that imposition of
     quarterly reporting conditions to monitor Comcast's minority
     recruiting efforts would be unreasonable and unnecessary.[^708]
     Finally, Applicants assert that Comcast is complying with all of
     the Commission's EEO rules for MVPDs, including the reporting
     requirements, and that NHMC has failed to demonstrate why more
     should be required of Comcast.

230. *Discussion.* The Commission has administered regulations governing
     the EEO responsibilities of cable television operators since
     1972.[^709] These regulations prohibit discrimination in hiring on
     the basis of race, color, religion, national origin, age, or
     gender.[^710] Moreover, they require cable operators and other
     MVPDs to reach out in recruiting new employees to ensure that all
     qualified individuals have an opportunity to apply for job
     vacancies,[^711] a requirement the Commission has held to mean that
     MVPDs must widely disseminate information concerning all job
     vacancies.[^712] Specifically, the Commission's EEO outreach rules
     have three prongs that MVPDs must satisfy: (1) they must widely
     disseminate information concerning each full time job vacancy,
     except for vacancies filled in exigent circumstances; (2) they must
     provide notice of each full-time job vacancy to recruitment
     organizations that have requested such notice; and (3) they must,
     depending on the staff size and market size of the MVPD employment
     unit, complete either one or two longer-term recruitment
     initiatives each year (*e.g*., mentoring programs, scholarships, or
     internships).[^713]

231. NHMC fails to raise a substantial and material question of fact
     regarding Comcast's compliance with the Commission's cable EEO
     outreach rules. The petition to deny presents no specific evidence
     regarding Comcast's alleged failure to "make progress" in its
     hiring of Hispanic employees. NHMC does not assert that Comcast has
     neglected to disseminate widely its employment vacancy information
     to attract qualified applicants. Nor does it assert that Comcast
     has failed to send vacancy notices to organizations that have
     requested such information or that it has failed to initiate and
     complete longer-term outreach measures as required by the
     Commission's rules. Comcast has described several measures that,
     generally, appear to indicate compliance with the EEO rules. It
     participates annually in job fairs to disseminate information about
     employment opportunities at Comcast; it works with organizations
     that can assist it in reaching Hispanic professionals seeking
     employment; and it has established the Comcast University as a
     longer term initiative to provide training and instructional
     support to Comcast employees seeking management and promotional
     opportunities at the company. Based on the record before us, we can
     discern no reason to impose reporting conditions to monitor
     Comcast's outreach and recruiting efforts.[^714] Thus, we deny
     NHMC's request for reporting conditions or any other conditions
     relevant to its EEO rule compliance.

## Character Qualifications 

232. Two commenters allege that Comcast does not possess the requisite
     character qualifications, as required under section 310(d) of the
     Act, to hold the Adelphia licenses.[^715] CWA challenges Comcast's
     character qualifications based on alleged violations of the
     National Labor Relations Act ("NLRA"). CWA charges that Comcast has
     engaged in a concerted campaign to deny its employees their legal
     rights, under the NLRA, to union representation and collective
     bargaining for wages, benefits, and working conditions.[^716]
     According to CWA, statements have been made to employees at various
     Comcast systems that employees at the transferred cable systems
     will have no guarantee of employment after the transfer.[^717] CWA
     asserts that the provision of quality telecommunications service
     requires a skilled, experienced, and well-trained workforce and
     that the Commission should adopt several conditions to ensure such
     a workforce is preserved if it approves the transactions. CWA urges
     the Commission to impose a condition to ensure that employees will
     not be asked or forced to reapply for their jobs and that workers
     in transferred franchises will not lose their jobs as a result of
     ownership changes.[^718] In addition, CWA asks that we require the
     new employer to respect and recognize the collective bargaining
     status of its employees that existed prior to the transfer, retain
     current compensation for transferred employees based on the
     transactions, and permit transferred workers to participate in
     Comcast and Time Warner benefit programs. Finally, CWA asserts that
     Comcast and Time Warner should be required to recognize the
     existing contracts of employees with collective bargaining
     agreements and abide by the "spirit of the law."[^719]

233. TCR maintains that, in reviewing the character qualifications of an
     applicant or licensee, the Commission should determine whether the
     applicant has violated antitrust or other laws protecting
     competition. TCR alleges that Comcast is using its market power to
     discriminate and act in an anti-competitive manner by refusing to
     negotiate with TCR and discriminating in favor of its affiliated
     RSNs.[^720] TCR has formally raised its concerns regarding
     Comcast's refusal to carry its regional sports networks, MASN, with
     the Commission in a program carriage complaint.[^721]

234. Responding to CWA, Comcast asserts that it respects workers' rights
     to organize and adds that the company will continue to abide by
     relevant labor laws and the current or future terms of bargaining
     unit agreements it has with IBEW and CWA.[^722] Comcast pledges to
     "respect existing contracts" with Adelphia employees following the
     proposed transactions.[^723] In its view, employees should have the
     freedom to choose whether to work in a union environment, and as a
     result of its corporate policies, including benefits, wages, and
     job enrichment programs, Comcast employees frequently opt against
     unionizing.[^724]

235. Applicants contend that the Commission should not act on
     allegations raising labor law issues, as such allegations are
     better left to the NLRB, which is tasked with resolving claims of
     unfair labor practices. They state that the matters in litigation
     before the NLRB do not form a basis for a character qualifications
     issue and that the cited cases are "isolated incidents" that do not
     reflect Comcast's general corporate policy and practices.[^725]
     Applicants assert that many of the incidences raised by CWA in its
     comments have already been adjudicated, and, in most instances,
     decisions were rendered in Comcast's favor.[^726] Accordingly,
     Applicants urge the Commission to deny the requests to impose
     labor-oriented conditions.[^727]

236. Comcast asserts that TCR "ignores longstanding Commission
     precedent" that merger transactions are not the appropriate fora
     for disposition of complaint proceedings.[^728] Comcast states that
     inasmuch as TCR's carriage complaint mirrors its arguments and
     request for conditions in the instant matter, consideration of
     those carriage issues in this proceeding would be
     duplicative.[^729] Nonetheless, Comcast contends that TCR has
     failed to prove that post-transactions Comcast will possess
     sufficient market power as a distributor of RSN programming in the
     Baltimore/Washington area to force MASN to exit the market.[^730]

237. *Discussion.* Pursuant to statute, the Commission evaluates the
     "citizenship, character, financial, technical, and other
     qualifications"[^731] of the Applicants when conducting its
     analysis of a proposed transaction. As part of this assessment, the
     Commission examines any alleged Commission-related misconduct,
     *i.e*., violations of the Communications Act or the Commission's
     rules and policies,[^732] as well as other behavior.[^733]
     Generally, the Commission considers three types of adjudicated
     non-Commission related misconduct: (1) felony convictions; (2)
     fraudulent misrepresentations to governmental units; and (3)
     violations of antitrust or other laws protecting competition.[^734]

238. The character qualifications allegations raised by commenters do
     not raise a substantial and material question of fact warranting
     designation for hearing; nor have commenters justified imposition
     of labor-oriented conditions. Commenters have not raised issues
     concerning Commission-related conduct or the types of adjudicated
     non-Commission misconduct relevant under the *Character Policy
     Statement.*[^735]

239. Further, Comcast has stated emphatically that it will abide by
     labor laws, as well as current and future bargaining unit
     agreements with CWA and IBEW.[^736] In addition, Comcast pledges to
     comply with current contracts with Adelphia employees
     post-transaction.[^737] Time Warner states that there is no
     requirement that Adelphia employees must "reapply" for their jobs,
     and that it intends to bargain in good faith with the bargaining
     representative at any locations "where such obligation
     applies."[^738] We see no reason not to accept Comcast's and Time
     Warner's good faith representations. Moreover, the respective LFAs
     have not alleged that union labor or other employment issues at
     local cable systems have resulted in poor or inadequate customer
     service to their customers. In the absence of such concerns, we see
     no reason to impose specific conditions regarding bargaining unit
     employees.

240. We note that commenters have other, more appropriate, avenues for
     obtaining relief regarding these non-transaction specific issues.
     Indeed, it appears that CWA and TCR have appropriately resorted to
     other fora for redress of their disputes with Comcast. We note
     CWA's and Comcast's recitation of several adjudicated NLRB
     decisions.[^739] Further, as previously noted, TCR has filed with
     the Commission a program carriage complaint that seeks
     individualized relief from Comcast's alleged refusal to carry TCR's
     regional sports networks. The Media Bureau will address TCR's
     complaint in a separate proceeding.

# analysis of public interest benefits

241. The Applicants state that the main benefit of the transactions is
     that they will result in faster deployment of advanced services on
     the Adelphia systems. More specifically, the Applicants contend
     that the proposed transactions would produce the following four
     public interest benefits: (1) accelerated deployment of advanced
     digital video services, VoIP service, and high-speed Internet
     service to former Adelphia subscribers; (2) enhanced competition
     and pro-consumer efficiencies achieved through increased
     "geographic rationalization," or clustering of Applicants'
     respective cable systems; (3) the resolution of Adelphia's
     bankruptcy proceedings; and (4) the unwinding of Comcast's
     interests in TWE and TWC.

242. Although we reject some benefits proffered by the Applicants, we
     find that the proposed transactions will produce public interest
     benefits. First, we find that the transactions likely will
     accelerate the deployment of VoIP service and advanced video
     services in former Adelphia service areas. Second, while increased
     clustering may result in certain efficiencies and cost savings, we
     find that Applicants have failed to sufficiently quantify the cost
     savings or adequately explain how the cost savings will flow
     through to consumers. We also find that the Applicants have not
     demonstrated that increased clustering will enhance competition
     with DBS providers and LECs to the benefit of consumers. Therefore,
     we do not give weight to these claims. Third, we find that the
     transactions will facilitate the resolution of Adelphia's
     bankruptcy proceedings. Finally, we conclude that the unwinding of
     Comcast's interests in TWE and TWC is not a cognizable benefit,
     because it effectuates compliance with a prior Commission order. We
     discuss in detail our findings below.

## Analytical Framework

243. In addition to assessing the potential public interest harms of a
     proposed transaction, the Commission also evaluates whether the
     transaction is likely to produce direct public interest
     benefits.[^740] Then, the Commission must determine whether the
     potential public interest benefits outweigh the potential harms,
     such that approval of the associated license transfers may be
     deemed to serve the public interest.[^741] For example,
     efficiencies created by a proposed transaction can mitigate
     anticompetitive harms if they enhance a firm's ability and
     incentive to compete and therefore result in lower prices, improved
     quality, enhanced service, or new products.[^742] Under Commission
     precedent, the Applicants bear the burden of demonstrating that the
     potential public interest benefits of the proposed transactions
     outweigh the potential public interest harms. [^743]

244. 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 unlikely to be
     realized by other means that entail fewer anticompetitive effects.
     Second, the claimed benefit must be verifiable.[^744] 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.[^745] Speculative benefits that cannot be verified will be
     discounted or dismissed.[^746] 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 magnitude
     of benefits is calculated net of the cost of achieving them.[^747]
     Third, benefits must flow through to consumers.[^748]

245. Finally, the Commission applies a "sliding scale approach" to its
     ultimate evaluation of benefit claims. Under this sliding scale
     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.[^749]

## Claimed Benefits

### Deployment of Advanced Services on Adelphia's Systems

246. Comcast and Time Warner claim that they would upgrade Adelphia's
     systems to enable the delivery of new or improved advanced services
     and to speed and expand the rollout of advanced services that
     already have been introduced. These services include (1) advanced
     video services (digital cable, HDTV, DVR, VOD, and SVOD); (2) VoIP
     service; and (3) high-speed Internet service.[^750]

247. The Applicants claim that the transactions would allow Time Warner
     and Comcast to bring their technological leadership to Adelphia's
     cable systems and that their track records for upgrading and
     operating broadband networks should serve as proof of their
     commitment to deliver the same results for Adelphia
     subscribers.[^751] The Applicants provide examples of their past
     accomplishments, stating, for example, that Comcast spent nearly
     \$8 billion to upgrade systems it acquired from AT&T Broadband in
     2002.[^752] In addition, Comcast asserts that it exceeded its
     projected timetable for the upgrades and deployments of advanced
     services on the AT&T Broadband systems.[^753] Time Warner states
     that it has invested \$5 billion since 1996 on plant-related
     rebuilds and that it was the first MSO to complete a digital
     upgrade of all of its cable systems, finishing in 1991.[^754]

248. Applicants compare Comcast's, Time Warner's, and Adelphia's cable
     systems, penetration rates, and services in order to demonstrate
     Adelphia's sub-par performance. For instance, they note that
     Adelphia lags behind Comcast and Time Warner in the provision of
     two-way service offerings and in penetration levels for high-speed
     Internet, VoIP service, and advanced video services.[^755]
     According to Time Warner, approximately 15% of the existing
     Adelphia plant to be acquired by Time Warner has not been upgraded
     to 750 MHz. Time Warner and Comcast claim to provide services to
     over 99% of their subscribers on cable systems with 750 MHz
     capacity and two-way capabilities.[^756] According to Applicants,
     Adelphia's basic cable penetration rate of 48.1% lags behind
     Comcast's 52.6% and Time Warner's 56.7% penetration rates.[^757]
     Applicants state that only 2.8% of Adelphia's basic tier
     subscribers subscribe to HDTV service, while 6.7% of Comcast's and
     5.3% of Time Warner's basic tier subscribers subscribe to HDTV
     service.[^758] According to Applicants, Adelphia has 126,000 DVR
     subscribers compared to Comcast's 575,000 and Time Warner's
     998,000.[^759] In addition, Applicants state that Adelphia offers
     VOD to 60% of its subscribers, compared to approximately 90% and
     100% for Comcast and Time Warner, respectively.[^760]

249. Among the advanced video services Comcast and Time Warner plan to
     offer on Adelphia systems is local VOD. Comcast's and Time Warner's
     local VOD offerings include content such as high school and college
     sports; educational programs and special events, often presented in
     partnership with schools and community organizations; PSAs; local
     news; and political programming.[^761] Currently, Time Warner
     offers local VOD programming to virtually all of its cable
     divisions, with an average of 50 hours of local content per
     week.[^762] Adelphia does not offer local VOD content to its
     subscribers and does not have any plans to initiate such service in
     the near future.[^763]

250. The Applicants also claim that they would provide Adelphia
     subscribers with VoIP service. Comcast states that it currently can
     provide its VoIP service, Comcast Digital Voice, to 19 million
     households in 30 markets and is on track to deploy the service to
     approximately 32 million homes by the end of 2006. Comcast
     increased the availability of its Digital Voice Service by seven
     million households since November 2005.[^764] As of September 30,
     2005, Time Warner had launched its VoIP service, Digital Phone, in
     all of its 31 divisions. As a result, it now provides service to
     854,000 subscribers and can provide service to three quarters of
     homes passed. [^765] Time Warner claims to be adding thousands of
     additional subscribers per month.[^766] By comparison, Adelphia
     does not offer cable telephony to its subscribers and has cancelled
     plans to launch service on its own.[^767]

251. Finally, Applicants claim that they would improve high-speed
     Internet service for Adelphia customers and increase penetration
     rates in Adelphia's service areas.[^768] According to Applicants,
     while Adelphia offers high-speed Internet service to 96.2% of its
     subscribers, only 14.4% of homes passed subscribe to the service.
     In contrast, Comcast's penetration is 18.3%, and Time Warner's is
     20.8%. Time Warner states that it currently has over 4.3 million
     high-speed Internet subscribers and recently launched a redesigned
     version of its Road Runner service and faster download speeds in
     all divisions. Time Warner's standard service offers a downstream
     speed of 5 Mbps, and its premium service offers speeds up to 8
     Mbps.[^769] Comcast states that it currently has 8.1 million
     customers and that service is available to 40 million homes.
     Comcast's high-speed service offers speeds up to 6 Mbps downstream
     and 768 kbps upstream.[^770]

252. In support of their claims, Applicants provide details regarding
     projected investments and timetables for the completion of upgrades
     and the rollout of services. Comcast and Time Warner state that
     they have earmarked \$800 million collectively to upgrade the less
     advanced Adelphia cable systems. Specifically, Comcast states that
     it has set aside over \$150 million over the next two years for
     capital improvements to the Adelphia systems, and Time Warner has
     allocated \$650 million costs to be invested in the systems it
     acquires.[^771] Time Warner indicates that \$275 million will be
     devoted to upgrading Adelphia systems to 750 MHz.[^772] Comcast
     expects that most of the set-aside capital will be spent on
     "upgrade revisits," which is additional work that must be completed
     on systems that Adelphia considers upgraded, but Comcast considers
     insufficient, for the delivery of advanced services.[^773] Comcast
     claims that a vast majority of the expenditures would be for
     upgrades and system improvements that currently are not
     contemplated by Adelphia's management.[^774] In total, Comcast
     estimates that it will need to invest nearly **\[REDACTED\]** in
     the current Adelphia systems to deliver advanced services and
     maintain these systems at Comcast's standards.[^775]

253. The Applicants claim that some of Adelphia's current 750 MHz
     systems need to be "hardened" in order to provide VoIP service,
     which will require the installation of new network equipment and
     other upgrades necessary to bring the Adelphia systems up to
     industry standards. Time Warner plans to commence upgrading
     Adelphia systems within 120 to 180 days post-closing.[^776] Within
     90 to 180 days, Time Warner hopes to launch Digital Phone service,
     starting with Adelphia systems that already are upgraded to 750 MHz
     and in close proximity to Time Warner's existing operations, where
     it has the infrastructure, office operations, backbone network, and
     connectivity to incumbent LEC rate centers already in place.[^777]
     Within 120 to 180 days, Time Warner plans to roll out VOD service
     on Adelphia systems that are in close proximity to existing Time
     Warner systems and are currently VOD-capable. Time Warner plans to
     initiate the service on those Adelphia systems, because the
     infrastructure and resources are already in place. Time Warner does
     not indicate when the upgrades will be completed. Comcast has not
     indicated when it plans to launch telephony service or VOD in
     Adelphia's service areas. It states, however, that it plans to
     invest **\[REDACTED\]** to upgrade Adelphia systems for cable
     telephony and projects that telephony service will be substantially
     deployed in 2007.[^778] Comcast states that it has designated
     **\[REDACTED\]** in capital expenditures to upgrade and deploy VOD
     services but does not indicate when VOD will be deployed on
     Adelphia's systems.[^779]

254. Commenting in support of the Application, many non-profit
     organizations echo predictions that Applicants would offer new and
     better services to Adelphia's subscribers and that they would
     improve conditions in Adelphia cable markets.[^780] DIRECTV
     asserts, however, that none of the claimed benefits regarding
     improved services to Adelphia's subscribers are
     transaction-specific, because they could be achieved by any of the
     parties who bid in the bankruptcy court's asset auction. Thus,
     DIRECTV concludes, unless the Applicants are claiming that they can
     offer better service to Adelphia subscribers and have a better
     track record than other bankruptcy bidders, the claimed benefits
     are not transaction- specific.[^781] Citing the *News Corp.-Hughes
     Order*, DIRECTV further claims that we cannot consider the
     Applicants' set-aside capital earmarked for improvements as a
     benefit, because Adelphia had other options for exiting
     bankruptcy.[^782]

255. The Applicants reject DIRECTV's objections, claiming that any
     comparisons between the Applicants and other potential acquirers of
     Adelphia are barred by section 310(d) of the Communications
     Act.[^783] Further, the Applicants assert that it is improper for
     the Commission to consider whether other potential bidders have a
     better track record in deploying advanced services. The Applicants
     state that the Commission must focus on the claimed benefits
     submitted in the Application without reference to whether other
     bankruptcy bidders could deliver the same benefits.

256. *Discussion*. As the Commission has stated many times, the
     deployment of advanced video services is a recognized public
     interest benefit.[^784] In reviewing previous transactions, the
     Commission also has found that accelerated deployment of high-speed
     Internet service and the provision of competitive, facilities-based
     telephony service are cognizable public interest benefits.[^785] In
     this case, we have considered whether Adelphia subscribers are more
     likely than not to obtain additional or superior advanced video
     services, VoIP service, and high-speed Internet service
     post-transaction or to obtain these services more quickly than
     would otherwise be the case. Thus, we find it more likely than not
     that the proposed transactions will have a positive impact on the
     deployment of certain advanced services to Adelphia subscribers.

257. We also find it likely that Comcast and Time Warner will improve
     the quality and availability of advanced services on Adelphia's
     systems and that Adelphia subscribers will benefit from the
     transactions in this regard. Comcast's and Time Warner's timely
     deployment of advanced services on their own systems, especially
     those systems that Comcast acquired from AT&T Broadband, suggests
     that they will further deploy advanced video services,
     facilities-based telephony service, and high-speed Internet service
     on Adelphia's systems. We also find that the Applicants have
     provided sufficient information to conclude that the upgrades
     likely will occur in the near future. In addition, Comcast and Time
     Warner have quantified the investments they will make in order to
     deliver these benefits.

258. In particular, we find the proposed transactions likely will result
     in accelerated deployment of VoIP service in Adelphia service
     areas. Comcast and Time Warner currently offer VoIP service, and
     both have plans to continue their rollouts. Comcast already has
     launched VoIP service and projects that it will be fully deployed
     on its own systems in 2006.[^786] As noted above, while Comcast has
     not stated when it will initiate upgrades and deployment, it
     projects that VoIP service will be substantially deployed on the
     acquired Adelphia systems in 2007. Time Warner's Digital Phone
     service has been launched in all of its cable divisions and is
     available to over three-quarters of homes passed.[^787] Time Warner
     also states that it will begin upgrades and initiate deployment of
     VoIP service in three to six months. In comparison, Adelphia does
     not offer or have plans to offer cable telephony to any of its
     customers.[^788]

259. We also find that the transactions likely would accelerate the
     completion of upgrades on Adelphia's systems and the deployment of
     advanced video services. In particular, we find it likely that the
     Applicants would be able to provide local VOD content sooner than
     Adelphia could absent the transactions. Adelphia does not offer
     local VOD currently and has no plans to provide this type of
     programming in the near future. At the same time, however, we find
     that Adelphia, on its own, is continuing to make system
     improvements and is providing its customers with some of the same
     advanced video services as Comcast and Time Warner provide.[^789]
     Thus, we find it likely that Adelphia, on its own, could continue
     to provide improvements in its advanced video service offerings.
     [^790] It is likely, however, that large-scale upgrades and service
     improvements would be delayed significantly due to the bankruptcy
     proceedings. Thus, the transactions likely would accelerate the
     system upgrades and deployment of new and/or improved services.
     Although the Applicants have not given definitive time tables for
     initiating and completing the planned system upgrades and
     deployment of new and advanced services, we expect that Comcast and
     Time Warner have sufficient incentives to carry out the proposed
     improvements in a timely manner, because doing so serves the goal
     of maximizing revenues and competing effectively with LECs and DBS
     providers.

260. We are unable to conclude from the information submitted in the
     record, however, that Comcast and Time Warner will provide
     significantly better or higher quality high-speed Internet service
     in Adelphia service areas. While Comcast and Time Warner offer
     examples of their efforts to innovate and improve their high-speed
     Internet service offerings, neither provides specific plans to
     initiate better service or increase penetration rates on Adelphia's
     systems. Nor do Applicants explain how their high- speed Internet
     service is superior to Adelphia's. Unlike VoIP service, which
     Adelphia does not offer, as of year-end 2004, Adelphia offered
     high-speed Internet service to approximately 97% of homes passed by
     its plant.[^791] In addition, Adelphia's current high-speed
     Internet offerings appear to be comparable to Time Warner's and
     Comcast's.[^792] In 2005, Adelphia increased its subscribership for
     high-speed Internet service by 24% to 1.6 million.[^793] Therefore,
     we do not give weight to the claim that the transactions will
     result in faster deployment, higher penetration rates, or better
     quality high-speed Internet service.

261. With respect to DIRECTV's objections, we find that the deployment
     of advanced services is a transaction-specific benefit. We
     recognize that Adelphia had other options for exiting bankruptcy,
     and that these other options potentially could yield
     transaction-specific consumer benefits. We note, however, that the
     Commission does not have to find that a proposed transaction or
     merger is the only means to achieve a claimed benefit. Instead, we
     must determine whether a transaction will more likely than not
     result in the claimed benefit.[^794] When determining whether a
     proposed benefit is transaction-specific, we ask whether the
     benefit likely will be accomplished in the absence of either the
     proposed transaction or another means having comparable or lesser
     anticompetitive effects. For instance, we consider alternative
     business solutions available to the merging firms, such as
     divestiture, licensing, or joint ventures.[^795] We do not measure
     the proposed benefits of a pending transaction against the
     potential harms and benefits resulting from an alternative
     transaction.[^796] If we did, we would be required to compare all
     proposed mergers with conjectural applications not before the
     Commission. Such analysis would be inconsistent with section 310 of
     the Act and is beyond the scope of our analytical framework for
     evaluating proposed transactions.[^797] DIRECTV also suggests that
     the Commission should disregard the Applicants' track record for
     providing services, because they did not rank the highest in
     customer service in various surveys.[^798] We reject the notion
     that the Applicants must show that they are the best performing
     cable operators in order for us to consider their track records for
     completing upgrades, deploying new services, and customer service
     responses when determining whether a claimed benefit likely would
     materialize or would flow through to consumers.[^799]

262. We likewise disagree with DIRECTV that the capital set-aside for
     upgrades is not transaction-specific. DIRECTV's reliance on the
     *News Corp.-Hughes Order* is misplaced. In *News Corp.-Hughes*,
     News claimed that Hughes, as a wholly owned subsidiary of GM, had a
     limited ability to attract outside finances because it had issued
     only a tracking stock, and its parent company was not fully
     financing Hughes. As a claimed benefit to the proposed transaction,
     News Corp. suggested that Hughes more easily could seek outside
     financing because it would no longer be a subsidiary of GM. The
     Commission found the proposed benefit not to be
     transaction-specific, because there were other means besides the
     proposed merger for Hughes to gain access to capital. For instance,
     the Commission noted that GM could have split-off Hughes so the
     company had a separately traded stock.[^800] News Corp. was not
     proposing to invest capital into the company or promising specific
     outside financing as a direct result of the transaction. Here, in
     contrast, as a direct result of the transactions at issue,
     Applicants, combined, are proposing to invest between \$800 million
     and **\[REDACTED\]** to undertake upgrades and advanced services
     rollouts.[^801] Given Adelphia's bankruptcy, it is not apparent
     that other sources of capital are readily available. We find,
     therefore, that the capital contributions proposed by the
     Applicants are transaction-specific and that the benefit would not
     be likely to occur, or would not occur as quickly, absent the
     proposed transactions.

263. As a condition to the merger, commenters ask the Commission to
     monitor Comcast's and Time Warner's deployment of advanced
     services, particularly in rural and minority areas, to determine
     whether the transactions would have any negative impact on
     consumers, workers, or communities, and whether the upgrades and
     deployments happen in a timely manner.[^802] As we have stated, we
     find that the transactions likely will accelerate system upgrades
     and deployment of new and/or improved services. In particular, we
     find that the transactions likely will result in the availability
     of a new telephony service in the Adelphia service areas, an
     offering that would compete with service provided by incumbent
     LECs. We are satisfied that the Applicants have demonstrated their
     intention to initiate the upgrades and implement new services. Both
     Comcast and Time Warner have submitted various upgrade and
     deployment plans, which lend support to their assurances that they
     intend to provide new services in the near future. In addition,
     Comcast and Time Warner repeatedly have assured the Commission of
     their intentions to implement advanced video services and VoIP
     service in a timely manner. We have no reason to conclude that
     these representations were not made in accordance with the
     Commission's candor and truthfulness requirements. Finally, market
     forces and shareholder expectations provide significant incentives
     for the Applicants to deliver on the promised new services.
     Accordingly, we deny CWA's request to condition our approval of the
     license transfers.

### Clustering of Comcast and Time Warner Systems

264. We have observed over the years that MSOs have engaged in the
     strategy of "clustering," whereby many of the largest MSOs have
     concentrated their operations by acquiring cable systems in regions
     where the MSO already has a significant presence, while giving up
     other holdings scattered across the country. This strategy is
     accomplished, as it is in the transactions under review here,
     through purchases and sales of cable systems, or by system
     "swapping" among MSOs.[^803] The proposed transactions would result
     in more clustered operations for Comcast in Pennsylvania;
     Minnesota; Southern Florida; the mid-Atlantic region (Washington,
     D.C., Maryland, and Virginia); and New England, and for Time Warner
     in Western New York, Ohio, Texas, Southern California, Maine, North
     Carolina, and South Carolina.[^804] Applicants claim that the
     increased clustering of their respective cable systems resulting
     from the transactions would lead to public interest benefits.

265. First, Applicants claim that by further clustering their cable
     systems through the Adelphia acquisition and cable system swaps
     between Comcast and Time Warner, Comcast and Time Warner would be
     better positioned to compete effectively against DBS providers for
     video and Internet access services and against LECs for the
     provision of the "voice-video-data triple play."[^805] According to
     Applicants, increased clustering would give each Applicant larger
     regional footprints, ones more closely approaching the national
     footprints of the DBS providers and the regional footprints of the
     major incumbent LECs.[^806] Applicants claim that their newly
     enlarged footprints would create "a more robust competitive
     environment in response to the DBS industry's national marketing
     campaigns."[^807] The Applicants also contend that enhancing their
     footprints is crucial to enabling them to compete effectively with
     LECs, who are beginning to provide facilities-based video services
     in conjunction with their current voice and Internet service
     offerings.[^808]

266. Second, Applicants contend that the location of the existing Time
     Warner, Comcast, and Adelphia cable properties present a unique
     opportunity to achieve efficiencies and enhance the rollout of
     advanced services to consumers currently served by more fragmented
     systems.[^809] In particular, Applicants claim clustering would
     create overhead efficiencies, more efficient deployment of
     management and other employees over larger, more contiguous service
     areas, and infrastructure efficiencies, such as consolidation of
     head-end facilities.[^810] Applicants expect to provide more
     efficient service to consumers through in-house technical
     assistance located closer to the communities of the acquired
     systems, improved coordination of technicians and truck fleets
     through centralized facilities, and enhanced responsiveness of
     customer account executives. Time Warner estimates that its
     transaction-related cost savings would be in the range of \$200
     million, principally from the elimination of redundant corporate
     and regional operations and reductions in programming costs.[^811]
     Applicants state that the efficiencies would produce consumer
     benefits through increased investment in programming and cable
     infrastructure upgrades.[^812] Neither Applicant attempts to
     quantify the flow-through of these benefits to consumers.

267. Applicants claim that enhanced clustering would create marketing
     efficiencies that are particularly important with respect to the
     rollout of new services that require aggressive and expensive
     marketing campaigns to educate and attract consumers.[^813]
     Applicants state that the advertising and marketing efficiencies
     would enable them to improve penetration and retention rates and
     would allow them to mount cost-effective advertising campaigns in
     competition with DBS providers that offer service nationally and
     LECs that provide service in expansive regional footprints.[^814]
     For instance, Time Warner states that it currently serves less than
     10% of the Los Angeles DMA, making it inefficient to purchase local
     mass media advertising to generate awareness of its services. As a
     result, Time Warner states, it currently does not purchase radio,
     print, or television advertising in the Los Angeles market.[^815]
     Ultimately, according to Time Warner, the mass marketing and
     additional advertising made possible by increased clustering would
     lead to greater consumer awareness of competitive offerings, more
     vigorous competition, and greater choice.[^816]

268. DIRECTV contends that any benefits resulting from the clustering
     achieved by the exchange of cable systems between Comcast and Time
     Warner should be discounted, because these changes in ownership are
     not related to the acquisition of the Adelphia systems.[^817]
     Further, DIRECTV contests Applicants' claim that the cable system
     swaps are necessary to improve service for Adelphia subscribers or
     improve services on existing systems.[^818] DIRECTV also contends
     that the Applicants have failed to validate, quantify, or show how
     increased clustering would provide a benefit that would flow
     through to consumers.[^819] In support of its position, DIRECTV
     submits an analysis that studies whether there is a relationship
     between the size of the Applicants' clusters and the availability
     or penetration rates of advanced services.[^820] DIRECTV contends
     that if additional clustering benefits consumers, then the analysis
     should find less availability and lower penetration rates of
     advanced services in smaller cable systems than in larger clustered
     systems.[^821] The analysis concludes, however, that the
     availability of advanced services, such as HSD and telephony
     service, is often the same for Comcast's and Time Warner's small
     systems as it is for larger clusters,[^822] and therefore it
     concludes that there is no systematic relationship between the
     availability of advanced services and system or region size.[^823]
     In addition, DIRECTV's analysis does not find a statistically
     significant relationship between penetration rates and cluster
     size.[^824]

269. In response, the Applicants acknowledge that the two aspects of the
     proposed transactions theoretically are independent of each other,
     but maintain that neither the swaps without the acquisitions, nor
     the acquisitions without the swaps, would produce the benefits that
     these transactions combined would produce.[^825] The Applicants
     explain that it is the "unique convergence of the location of
     systems currently owned by the Applicants and the systems owned by
     Adelphia" that would produce the described efficiencies and
     benefits.[^826]

270. The Applicants also dispute DIRECTV's econometric study, arguing
     that the study misses the point, because they are not claiming that
     clustering alone will lead to the more rapid deployment of advanced
     services. Thus, the Applicants assert that the regressions testing
     the relationship between penetration rates and the size of cable
     system clusters do not undermine their claim that the transactions
     will benefit Adelphia subscribers by resulting in accelerated
     deployment of advanced services. [^827] In addition, the Applicants
     question DIRECTV's methodology, claiming that the study is too
     imprecise and underdeveloped to support the conclusions.[^828] The
     Applicants state that the study "reveals only that clusters of
     different sizes have varying penetration rates and availability
     levels for certain advanced services." They contend that
     "\[s\]tanding alone, this showing is meaningless, as the study
     never makes a serious attempt to explain why these differences
     occur."[^829] In addition, the Applicants state that the relevant
     issue is not a comparison of the availability and penetration rates
     of advanced services among different Comcast and Time Warner
     systems, but a comparison of availability and penetration rates for
     Adelphia systems before and after being integrated with Comcast and
     Time Warner's existing operations.[^830]

271. *Discussion.* The Commission has noted previously that clustering
     can have both procompetitive and anticompetitive effects.[^831] The
     Commission also has found that the potential benefits from
     clustering, including marketing efficiencies and the deployment of
     facilities-based telephony and Internet access services, outweigh
     any potential anticompetitive effects of clustering on competition
     in product markets such as local programming or advertising.[^832]
     In addition, the Commission has noted that clustering can increase
     economies of scale and size, and thus enable cable operators to
     offer an increased variety of broadband services at reduced prices
     to customers in geographic areas that are larger than single cable
     franchise areas. Therefore, the Commission has noted that
     clustering can make cable operators more effective competitors to
     LECs whose local service areas are usually much larger than a
     single cable franchise area.[^833] The Commission also has stated
     that clustering can provide a means of improving efficiency,
     reducing costs, and attracting increased advertising.[^834] On the
     other hand, the Commission has noted that clustering can present a
     barrier to entry for the most likely potential overbuilder (*i.e*.,
     an adjacent cable operator).[^835] Moreover, as DIRECTV notes in
     its comments, the Commission has stated in its *Competition
     Report,* that "\[w\]hile clustering may help reduce programming and
     other costs as claimed by commenters, \[the Commission's\] findings
     show that these lower costs are not being passed along to
     subscribers in the form of lower monthly rates."[^836]

272. We agree with the Applicants and reiterate the Commission's
     previous findings that clustering can lead to certain efficiencies
     and cost savings.[^837] We find, however, that the Applicants have
     failed to provide sufficient supporting evidence for us to verify
     and quantify the claimed efficiencies and cost savings or to
     determine the extent to which they would flow through to consumers.
     Although Time Warner claims that the cost savings would amount to
     \$200 million, it fails to explain how the figure was derived or
     provide any other support for this figure. Nor do the Applicants
     explain why the transactions would lead to certain savings, such as
     savings in programming costs.[^838] Comcast has not claimed that
     the transactions would result in any operational cost savings for
     the company at all.

273. Although additional clustering may enable Comcast and Time Warner
     to increase their marketing efforts in a more cost-efficient
     manner, or perhaps, to participate more fully in national marketing
     campaigns, the Applicants have not claimed that it would create
     cognizable benefits, such as reduced prices, enhanced service
     offerings, or improved service quality. Nor have they claimed that
     the advertising and marketing efficiencies would spur such
     beneficial responses from DBS providers or LECs. If potential cost
     savings would only reduce the Applicants' costs and would not
     result in reduced prices or other benefits to consumers, than the
     alleged cost saving are not a cognizable benefit of the proposed
     transaction.

274. Moreover, DIRECTV correctly asserts, the Commission is more likely
     to discount claimed efficiencies if they result in a reduction of
     fixed costs rather than marginal costs, because reductions in fixed
     costs are unlikely to lead to a reduction in prices that could
     counteract the potential anticompetitive effects of a
     transaction.[^839] As the Commission has stated previously,
     benefits generally are considered cognizable only to the extent
     that they can mitigate any anticompetitive effects of a
     transaction.[^840] Here, the Applicants have not distinguished, nor
     is it clear, whether the claimed cost savings in marketing would
     result in a reduction in marginal cost or a reduction in fixed
     cost. Therefore, we cannot determine whether it is likely that the
     reductions in advertising costs would likely be passed on to
     consumers.[^841] Thus, while more cost-effective advertising
     campaigns may financially benefit the Applicants by decreasing
     their costs, it is unclear whether they would result in a net
     increase in consumer surplus, which can be balanced against any
     anticompetitive effects of a transaction. What is important is the
     extent to which these lower costs can lead to lower prices, not
     whether they lead to lower cost structure for the Applicants.[^842]

275. We also are not persuaded that the transactions would lead to a
     more competitive environment for the provision of the triple play
     of services -- video, voice, and data. Cable operators are
     currently the only service providers offering the triple play
     package on a widespread basis. DBS providers currently do not offer
     facilities-based telephony service; thus, cable is competing with
     DBS providers only for a package of video and Internet
     services.[^843] While two LEC providers, Verizon and AT&T, recently
     entered the video services market in a few communities around the
     country,[^844] for the most part LECs are currently providing video
     programming services primarily through agreements with DBS
     providers.[^845] Thus, the Applicants have failed to show that
     further clustering is necessary to effectively compete with DBS
     providers and LECs in the provision of triple play services. By
     their own admission, Comcast and Time Warner are leaders in their
     industry for the provision of advanced video services and have
     consistently upgraded their systems over the years to provide new
     and better quality services. Accordingly, the Commission does not
     find that the increased clustering will result in a better
     competitive environment for video programming service. Therefore,
     we cannot give weight to this claimed benefit.

276. As for the deployment of telephony service, we reiterate the
     Commission's previous findings that clustering could better
     position cable operators as potential providers of the service. As
     noted in Section VIII.B.1, to the extent that the transactions,
     through clustering or through the proposed upgrades and deployment
     schedules, result in the addition of competitive, facilities-based
     telephony service in Adelphia service areas or to unserved areas
     where Applicants currently operate cable systems, we find that
     consumers could benefit.

277. We reject DIRECTV's contention that we should ignore potential
     benefits from the increased clustering that are attributable to the
     cable system swaps between Comcast and Time Warner. As stated
     previously, what is before us in this proceeding is the sum of all
     proposed transactions, both the acquisitions and the swaps. The
     Applicants explain that "\[i\]t is the unique convergence of the
     location of systems currently owned by the Applicants and the
     systems owned by Adelphia" that allows the Applicants to achieve
     benefits from additional clustering.[^846] The Applicants further
     contend "\[n\]either a swap of existing systems independent of the
     Adelphia system acquisitions, nor the acquisition of Adelphia
     systems independent of systems swaps, would produce a level of
     geographic rationalization capable of providing the competitive
     benefits and efficiencies described by the Applicants."[^847] That
     one might have occurred without the other is immaterial for
     purposes of assessing whether the transactions are likely to
     produce the claimed public interest benefits. Therefore, when we
     consider the potential public interest benefits resulting from
     increased clustering, we will consider the clusters that are
     created pursuant to the combination of the acquisitions and the
     cable system swaps.

### Resolution of Bankruptcy Proceeding

278. The transactions before the Commission are an integral part of
     Adelphia's plan to emerge from bankruptcy. Adelphia plans to sell
     the assets of the majority of the Debtors pursuant to a sale under
     section 363 of the Bankruptcy Code ("the Sale"),[^848] and to sell
     the Debtors' equity interests in two joint ventures pursuant to a
     plan of reorganization recently filed with the bankruptcy court
     ('the Joint Venture Plan").[^849] If the Commission did not approve
     these transactions, the Applicants would not be able to consummate
     the Sale and Joint Venture Plan in their current forms. The
     Applicants argue that implementation of the Sale and Joint Venture
     Plan would resolve the Adelphia bankruptcy in a manner that
     advances the policies of bankruptcy laws[^850] and that the
     Commission has an obligation to promote these policies as a part of
     its public interest review of the transactions.[^851]

279. The Applicants contend that consummation of the Sale and Joint
     Venture Plan would (1) maximize recovery to creditors;[^852] (2)
     fund the settlement of the fraud suit brought by the SEC that will
     benefit certain defrauded Adelphia investors;[^853] and (3) move
     Adelphia's cable systems from management that has been distracted
     by a complicated, costly, and time-consuming bankruptcy to
     well-respected, stable management.[^854] The Applicants argue that
     if the Commission were to deny its approval of the transactions, it
     would jeopardize these benefits and frustrate the efficient and
     economical administration of the bankruptcy laws. Adelphia would be
     required to negotiate and execute a new sale arrangement or develop
     a stand-alone plan of reorganization. The Applicants argue that
     this outcome would be contrary to public policy, because Adelphia
     would incur substantial additional costs while it pursued these
     efforts and because the terms of its transactions with Time Warner
     and Comcast are most likely to maximize value to its
     stakeholders.[^855] The Applicants assert that because the
     debtor-in-possession and the bankruptcy court have decided that
     these transactions are the best way for Adelphia to emerge from
     bankruptcy,[^856] the Commission is "required to accommodate that
     decision to the greatest extent possible" in its public interest
     analysis.[^857]

280. DIRECTV maintains that the Applicants have failed to show that
     resolving the Adelphia bankruptcy by means of these transactions
     promotes the public interest. DIRECTV contends that other
     alternatives for the disposition of Adelphia's cable systems would
     present fewer competitive concerns.[^858] DIRECTV also argues that
     the Applicants have not established that Adelphia is a "failing
     firm" and therefore cannot assert a failing firm defense to justify
     transactions that otherwise would be found to have unacceptable
     anticompetitive effects.[^859] Finally, DIRECTV states that the
     Commission's obligation to consider the national policies
     underlying the bankruptcy laws does not supersede the Commission's
     duty under section 310(d) to ensure that the transactions serve the
     "public interest, convenience and necessity."[^860] DIRECTV notes
     that the bankruptcy court's role is to protect the rights of
     creditors, while the Commission is charged with a broader mandate
     to protect the public interest.[^861] No other party commented on
     this issue.

281. The Applicants respond that the obligation to consider the
     bankruptcy laws does not supersede, but rather is an integral part
     of, the Commission's public interest analysis.[^862] And, they
     emphatically dispute DIRECTV's assertions that the proposed
     transactions have anticompetitive effects.[^863]

282. *Discussion.* Facilitating the successful resolution of a
     bankruptcy proceeding is a factor in our analysis of potential
     public interest benefits. Both the Applicants and DIRECTV
     acknowledge as much,[^864] and the Commission has so indicated in
     previous decisions.[^865]

283. We agree with DIRECTV, however, that the Commission's public
     interest inquiry under section 310(d) is in no way superseded by an
     obligation to refrain from disturbing the resolution of the
     bankruptcy court proceedings. The bankruptcy court considers
     whether the Adelphia transactions would maximize benefits to
     creditors.[^866] The Commission has a mandate to evaluate whether
     these transactions would frustrate or promote the aims of the
     Communications Act, including the goals of preserving and enhancing
     competition in relevant markets, accelerating private sector
     deployment of advanced services, and managing spectrum in the
     public interest. The principal duty of the proponents of Adelphia's
     plan to emerge from bankruptcy is to maximize creditor recovery.
     These aims are not congruent, although they are not necessarily in
     opposition.

284. Often the competitive landscape is little changed by license
     transfers from a debtor-in-possession. For example, the
     debtor-in-possession frequently transfers its licenses to itself as
     the reorganized entity.[^867] The effect on competition in such
     cases is minimal, and there is no need for an extensive balancing
     of potential competitive harms against the benefits of facilitating
     the debtor's emergence from bankruptcy.[^868] The transactions
     before us, however, are more complicated than an infusion of new
     capital and ownership interests that enable an existing business to
     continue. Pursuant to the proposed transactions, the debtor,
     Adelphia, would cease to exist as a major independent cable
     operator, and two large participants in the MVPD market would
     acquire the majority of its cable systems. Furthermore, the
     acquiring companies are also transferring existing cable systems
     between themselves for purposes unrelated to Adelphia's bankruptcy
     proceedings. The benefits of resolving the Adelphia bankruptcy are
     only tangentially related to the transactions between the other two
     Applicants. Thus, while we recognize the benefit of bringing an end
     to the Adelphia bankruptcy, it is simply a part of our overall
     public interest analysis of these complex, multi-part transactions.

285. We disagree with DIRECTV that we should disregard the benefit of
     resolving the Adelphia bankruptcy by means of these transactions
     because of the possibility that other transactions could have
     permitted Adelphia to emerge from bankruptcy with fewer competitive
     concerns, perhaps even as a stand-alone entity. [^869] As discussed
     above, pursuant to the language of section 310(d), the Commission
     must examine whether the transactions before it will serve the
     public interest without regard to other possible
     transactions.[^870] Thus, we will not speculate about the
     competitive effects of other hypothetical transactions. Finally, we
     do not find that the Applicants relied on a "failing firm" defense
     to justify possible competitive harms caused by the transactions.
     The Applicants specifically deny that they rely on such a
     defense.[^871] They maintain that no such justification is needed,
     because the proposed transactions would not cause anticompetitive
     effects.[^872]

286. We conclude that the resolution of Adelphia's bankruptcy proceeding
     would provide a public interest benefit insofar as it would
     compensate creditors and other stakeholders, and avoid the
     considerable expense associated with arranging an alternative
     disposition of Adelphia's assets. We recognize this benefit as we
     conduct the public interest review of the transactions, but we do
     not give this benefit the same weight we might if the transactions
     before us related solely to the sale of the debtor's assets or if
     these transactions were the only way to resolve Adelphia's
     bankruptcy proceeding.

### Unwinding of Comcast's Interests in Time Warner Cable and Time Warner Entertainment, L.P.

287. Prior to Comcast's acquisition of AT&T, AT&T owned a 27.64% limited
     partnership interest (the "TWE Interest") in Time Warner
     Entertainment, L.P. ("TWE") and Time Warner Inc. held the remaining
     72.36%. TWE was formed in 1992 to own and operate substantially all
     of the businesses of Warner Bros., Inc., HBO, and the cable
     television systems owned and operated by Time Warner prior to that
     time. TWE owned cable systems serving 11.32 million subscribers and
     managed systems owned by Time Warner outside of TWE that served an
     additional 1.48 million subscribers; TWE was the second largest
     MVPD after AT&T. AT&T acquired the TWE Interest through its
     acquisition of MediaOne Group, Inc.[^873]

288. The Commission conditioned its approval of Comcast's acquisition of
     AT&T by requiring that Comcast and AT&T adequately insulate the TWE
     Interest from the newly merged company by (a) placing the TWE
     Interest in a divestiture trust (the "TWE Trust"), (b) placing any
     non-cash assets into the TWE Trust if the TWE restructuring ("TWE
     Restructuring") took place,[^874] (c) ultimately divesting itself
     of the TWE Interest, and (d) abiding by the restrictions set forth
     in Appendix B of the *Comcast-AT&T Order*.[^875] The *Comcast-AT&T
     Order* requires the trustee of the TWE Trust to divest the TWE
     Interest no later than five years from the closing of the
     Comcast-AT&T transaction.[^876] Following the closing of the
     Comcast-AT&T transaction, as anticipated, the TWE Restructuring
     took place and, as a result, the TWE Trust received non-cash
     consideration in the form of stock of a newly-formed company, Time
     Warner Cable, Inc. ("Time Warner Cable").[^877]

289. If the proposed transactions are approved, the TWE Interest will be
     unwound by the redemption of Comcast's interests in Time Warner
     Cable and TWE in exchange for subsidiaries holding certain cable
     systems and cash.[^878] The Applicants claim that the divestiture
     of the TWE Interest (which now includes stock of Time Warner Cable)
     is a public interest benefit that the Commission should recognize
     in considering the proposed transactions, because the divestiture
     would be realized two years earlier than if the TWE Trust remains
     the legal owner of the TWE Interest for the full five-year term of
     the TWE Trust.[^879] The Applicants note that the TWE Interest,
     which has been passed to Comcast from US West as a result of a
     transaction that occurred 12 years ago, has long been disfavored,
     and the Commission has before it an opportunity, by granting the
     Applications, to facilitate the unwinding of the TWE Interest
     before the required divestiture date.[^880] In addition, they
     assert that the proposed divestiture of the TWE Interest would
     ensure that the parties realize fair value from the disposition of
     the investment, a result that the Applicants argue the Commission
     expressly recognized as important to the accomplishment of public
     interest goals in the Comcast-AT&T Order.[^881] The Applicants
     further contend that the grant of the applications would reduce,
     rather than increase, media ownership concerns by expeditiously
     unwinding the TWE Interest, because the TWE Interest would no
     longer be associated with Comcast.[^882]

290. DIRECTV and CWA/IBEW counter that Comcast's divestiture, or more
     appropriately, the trustee's divestiture, of the TWE Interest is
     not a cognizable benefit. They allege that it is not
     transaction-specific, as there are other ways in which Comcast
     could divest those interests and do so without anticompetitive
     effects. They argue that, in this case, divestiture is not a
     free-standing public interest benefit, but rather a pre-existing
     obligation imposed on Comcast in order to avoid potential harm to
     competition and diversity in video programming that would otherwise
     have resulted from its acquisition of AT&T. Further, the opponents
     allege that the transactions would not divest Comcast of its direct
     voting interest in Time Warner, which would remain subject to the
     trust and divestiture requirements, and the transactions would not
     reduce reporting and monitoring conditions the Commission has
     placed on both Applicants.[^883]

291. The Applicants respond that the Commission has "recognized the
     complexities associated with the divestiture." They represent that,
     because the TWE Interest is being voluntarily unwound by the
     parties now, rather than through a forced sale at the end of the
     divestiture period, the proposed transactions in and of themselves
     are a public benefit. They further allege that but for the
     transactions, divestiture would not likely occur until the end of
     the specified period.[^884]

292. *Discussion*. We agree with DIRECTV and CWA/IBEW that although the
     unwinding of the TWE Interest is a public interest benefit, it is
     not a benefit that derives from the instant transactions. The
     Commission accounted for the benefit associated with the
     divestiture of the TWE Interest when it conditioned its approval of
     the Comcast-AT&T transaction thereon. The Applicants have,
     therefore, already received the benefit of their agreement to
     divest the TWE Interest.

293. We likewise reject the Applicants' suggestion that unwinding the
     TWE Interest as part of the instant transactions rather than at the
     end of the term of the TWE Trust is a public interest
     benefit.[^885] The Applicants confuse a divestiture by the
     Applicants and a divestiture by the TWE Trust. The assets were
     divested by Comcast when the Comcast-AT&T transaction closed. The
     trustee now has title to the assets. It is for the trustee to
     decide when to divest the assets in accordance with the terms of
     the TWE Trust, not the Applicants.[^886] Accordingly, the
     Applicants' suggestion that absent the transaction a divestiture
     would not occur prior to the end of the term of the TWE Trust
     implies that the Applicants, and not the trustee, control the
     timing of any divestiture. It also suggests a lack of independence
     on the part of the trustee, something we assume that the Applicants
     did not mean to imply.

# balancing public interest harms and benefits

294. The Commission has evaluated separately the potential public
     interest harms and benefits of the proposed transactions. We now
     weigh the potential harms against the potential benefits to
     determine if, on balance, the proposed transactions serve the
     public interest, convenience, and necessity.[^887] We find, on
     balance, the public interest will be served by approval of the
     Applications subject to the conditions we impose herein.

295. *Potential Harms.* Based on our review of the record, we find that
     the transactions may increase the likelihood of harm in markets in
     which Comcast or Time Warner now hold, or may in the future hold,
     an ownership interest in RSNs, which ultimately could increase
     retail prices for consumers and limit consumer MVPD choice.
     Specifically, we find that the transactions would enable Comcast
     and Time Warner to raise the price of access to RSNs by imposing
     uniform price increases applicable to all MVPDs, including their
     own systems. Such a strategy is likely to result in increased
     retail rates and fewer choices for consumers seeking competitive
     alternatives to Comcast and Time Warner. Moreover, it is likely to
     hamper new entrants in their efforts to obtain must have sports
     programming.

296. As noted previously, our program access rules do not prohibit
     nondiscriminatory price increases. While a price increase imposed
     on an RSN's affiliated MVPD would have no actual cost effect,
     higher rates imposed on DBS operators or other competing MVPDs
     would result in higher prices and fewer alternatives for consumers.
     Our evidence indicates that a large number of consumers will refuse
     to purchase DBS service if the provider cannot offer RSNs.
     Therefore, DBS providers or other competing MVPDs will be willing
     to pay a high price to obtain RSN programming. As a result, uniform
     price increases for RSNs likely will lead to DBS providers raising
     consumer fees or offering fewer services.

297. The arbitration conditions imposed herein are intended to constrain
     Comcast's and Time Warner's incentives to increase rates for RSN
     programming uniformly or otherwise disadvantage rival MVPDs using
     anticompetitive strategies. In addition, with respect to program
     access, the condition is intended to provide protection, if
     necessary, against permanent foreclosure, temporary foreclosure,
     and "stealth discrimination." For disputes related to access to RSN
     programming, the arbitration and program access conditions apply to
     any RSN, regardless of the means of delivery, that is currently
     managed or controlled by Comcast or Time Warner and prohibit
     Comcast or Time Warner from acquiring an attributable interest in,
     an option to purchase an attributable interest in, or one that
     would permit management or control of an RSN during the period of
     the conditions set forth in Appendix B if the RSN is not obligated
     to abide by the conditions.[^888] We also condition our approval of
     the transactions on a prohibition against the use of exclusive
     contracts or other behaviors proscribed by the Commission's program
     access rules with respect to Comcast's and Time Warner's affiliated
     RSNs, regardless of the means of delivery.

298. In addition, we conclude that the transactions will increase
     Comcast's and Time Warner's incentive and ability to deny carriage
     to unaffiliated RSNs, and also may create public interest harms
     with respect to the carriage of unaffiliated national and
     non-sports regional programming. Our condition permitting the use
     of arbitration to resolve disputes involving commercial leased
     access mitigates potential public interest harms identified by
     commenters. The program carriage arbitration condition we adopt
     will alleviate the potential harms to viewers who are denied access
     to valuable RSN programming during protracted carriage disputes.

299. *Potential Benefits.* We conclude that the transactions likely will
     result in the accelerated deployment of VoIP service and advanced
     video services, such as local VOD programming, in Adelphia markets.
     We also find that the transactions will facilitate the resolution
     of the bankruptcy proceeding. However, we conclude that the
     Applicants have not provided sufficient information to show that
     post-transaction the Applicants will improve or further deploy
     high-speed Internet service to Adelphia subscribers. In addition,
     while we find that the increased clustering may result in synergies
     and cost saving efficiencies for the Applicants, we conclude that
     the Applicants have failed to quantify sufficiently or verify the
     cost savings or adequately explain how the cost savings will flow
     through to consumers. We also conclude that the increased
     clustering is not likely to enhance competition with LECs for the
     provision of the triple play of services (video, voice, and data).
     Finally, we conclude that Comcast's unwinding of its TWE interest
     is not a transaction-specific benefit.

300. *Balancing.* As noted in Section VIII.A, in balancing the public
     interest harms and benefits, we employ a sliding scale approach.
     Under that approach, we examine the likelihood and the magnitude of
     the potential public interest harms. Here, we find that the
     proposed transactions, as conditioned, will not likely result in
     potential public interest harms. We also find that the transactions
     will result in some public interest benefits, particularly, the
     accelerated deployment of VoIP service and advanced video services
     in Adelphia's markets. Accordingly, after reviewing the record and
     weighing the potential harms against the potential benefits, we
     conclude that, on balance, the proposed transactions, as
     conditioned, would serve the public interest, convenience, and
     necessity.

# Procedural Matters 

## City of San Buenaventura Petition to Condition Approval

301. Numerous local franchising authorities ("LFAs") have jurisdiction
     in the areas where the Applicants provide service. Pursuant to
     section 617 of the Act, LFAs whose franchise agreements require LFA
     approval of the sales of cable systems have 120 days from the date
     of the Applicants' request for a franchise transfer to render a
     decision.[^889] The Applicants represent that as of March 31, 2006,
     the transfer of 3,268 cable franchises (equivalent to 99.1% of the
     affected franchises, according to the Applicants) had been approved
     or did not require approval. In addition, The Applicants reported
     that several of their franchise transfer applications had been
     denied, without prejudice, and that the Applicants continue to seek
     approval in those communities.[^890]

302. City of San Buenaventura objects to the Applications on the grounds
     that they seek approval for assignment of CARS licenses[^891]
     without referencing the necessary local approvals needed to
     transfer the underlying cable systems.[^892] Citing the staff
     decision in *Letter to Jill Abeshouse Stern* as precedent, City of
     San Buenaventura urges the Commission to condition its approval of
     the Applications on the approval of the relevant franchising
     authorities for the transfer of the franchise rights for the
     underlying cable systems.[^893]

303. The Applicants counter that a condition restricting transfer of the
     cable systems pending LFA review is unwarranted for several
     reasons.  First, they take issue with application of *Stern* to the
     transactions at hand.  They assert that the decision, issued in
     1989 at the Bureau level, holds only that approval of a CARS
     transfer or assignment application is not dependent upon prior
     local approval.[^894]   Applicants add that imposing such a
     condition on the instant transactions would be impractical given
     the complexity of the transactions and the need for multiple local,
     state, and federal agencies to grant approval.[^895]  Finally, the
     Applicants contend that there are no CARS facilities to be
     transferred in the transactions that provide service to the City of
     San Buenaventura and therefore Commission approval cannot be
     conditioned on the city's LFA review.[^896]    

304. *Discussion.* Both the Applicants and the City of San Buenaventura
     use *Stern* to buttress their arguments. The Applicants argue that
     Commission grant of the CARS licenses is "permissive" in nature and
     not dependent on prior approval by an LFA to the transfer of the
     local cable system franchise. The City of San Buenaventura contends
     that, notwithstanding the permissive nature of the Commission's
     authorizations, in *Stern* the Bureau recognized the rights of LFAs
     to approve by prohibiting the consummation of the underlying
     transactions until the LFA approved the transfer of the underlying
     franchise. As the Bureau indicated in *Stern*, the Commission's
     approval of a CARS assignment application does not circumvent the
     local franchise approval process in any way.[^897]  Nonetheless, in
     granting the single CARS application at issue in that case, the
     Bureau chose to impose a condition that the transaction not be
     consummated until the local franchise authority approved the
     transfer of the franchise for the underlying cable system.[^898] In
     view of the numerous CARS licenses and authorizations affected by
     the transactions under review herein, we deem such an approach
     impractical. Numerous LFAs must approve the transfers of Adelphia's
     systems to Comcast and Time Warner, as well as transfers between
     Time Warner and Comcast.  To condition our approval on the
     completion of multiple local review processes would not benefit the
     smooth processing of the Applications at the federal level.[^899]
     Were we to impose such a condition, the Commission would be placed
     in the untenable position of having to monitor numerous local
     franchise transfer proceedings and any associated judicial
     proceedings to determine when individual licenses may be
     transferred.[^900]

305. Commission rules afford the Applicants 60 days after Commission
     approval of the license transfers to consummate the underlying
     transactions, which should provide them adequate time to secure the
     necessary franchise approvals.[^901]  If the Applicants require
     additional time, they may request an extension of the 60-day
     period.[^902] As discussed previously in this Order, if any aspect
     of the transactions fails to transpire, and the Commission deems
     that aspect material to its public interest analysis, it may
     warrant re-evaluation of the transactions based on those
     developments.[^903] If the Applicants are unable to obtain the
     necessary LFA approvals, we will require that they notify the
     Commission in writing and identify the communities and relevant
     CARS authorizations for the related franchise transfer applications
     that have been denied, as well as the number of subscribers
     attributable to the cable systems in those communities.[^904]

306. Moreover, the requested condition is not necessary to protect the
     integrity of the local transfer review process.  If the franchise
     agreement establishes the right of the City of San Buenaventura or
     any other LFA to approve the franchise transfer, Commission
     approval of the license transfers will not override the authority
     of the City of Buenaventura, and it can enforce its right with or
     without the requested condition.  Accordingly, we decline to adopt
     it.   

## Free Press Motion to Hold in Abeyance

307. On October 31, 2005, Free Press filed a Motion to Hold in Abeyance,
     asking the Commission to hold the Adelphia proceeding in abeyance
     pending the filing and Commission's review of then-proposed
     applications for the transfer of Susquehanna Cable Company's
     ("Susquehanna") cable systems to Comcast. Free Press asserts that
     the Commission can meaningfully review the combined effects of the
     instant transactions and the Susquehanna transfer on regional
     concentration only if it considers them together. Comcast opposes
     the motion, asserting that it raises issues that are irrelevant and
     unrelated to the transactions.[^905] Further, Comcast states that
     grant of the motion would effectively deny Applicants a fair and
     expeditious review of their long-pending Applications, thereby
     harming Applicants as well as Adelphia consumers who are "awaiting
     the benefits that the proposed Adelphia Transactions will
     bring.[^906]

308. In response to the Commission's information request, Comcast filed
     subscriber data pertaining to its then-30% equity interest in
     Susquehanna Cable Company.[^907] Further, on December 20, 2005,
     Comcast filed an application seeking consent for the acquisition of
     the Susquehanna cable systems.[^908] No petitions to deny or other
     comments in opposition were filed regarding the transfer
     application. The Media Bureau granted the application and approved
     the transfer of Susquehanna's cable assets to Comcast on April 13,
     2006, during the pendency of this proceeding.[^909] Thus, we have
     taken account of and attributed to Comcast Susquehanna's 226,117
     subscribers in the context of our review of the Applications,
     including the effect on Comcast's horizontal reach. Accordingly,
     there is no need to hold the Applications in abeyance to achieve
     the relief that Free Press desires. Therefore, we deny Free Press'
     motion.[^910]

## TWE and Time Warner Cable Redemption Transactions

309. Under the current terms of the trust established pursuant to the
     *Comcast-AT&T Order,* any non-cash consideration received by the
     trustee in return for trust assets is to remain in the trust unless
     the Commission's Media Bureau approves its distribution to
     Comcast.[^911] Pursuant to the Time Warner Cable Redemption
     Agreement and TWE Redemption Agreement, Comcast is to acquire the
     ownership interests in certain entities holding cable systems and
     related assets in exchange for its interests in Time Warner Cable
     and TWE. Accordingly, Comcast seeks approval to acquire the
     ownership interests of these directly and not through the trust
     upon consummation of the transactions.[^912]

310. We find there is no public interest reason for denying Comcast's
     request. We have determined above, pursuant to a full public
     interest analysis, that approval of the license transfer
     Applications in this proceeding, as conditioned, will benefit the
     public interest. The purpose of Section 5(e) of the trust agreement
     is to ensure that assets acquired by the trust will remain in trust
     pending a review by the Media Bureau. In this case, the Commission
     has reviewed Comcast's proposed acquisition of cable systems
     currently held by TWC and TWE. These acquisitions represent
     substantial progress toward Comcast's continuing effort to unwind
     the TWE Interest in compliance with the *Comcast-AT&T Order.*
     Consistent with the Commission's intent in requiring the unwinding
     of the TWE Interest, Comcast's acquisition of the TWC and TWE
     systems will sever the joint ownership of those systems by Comcast
     and Time Warner. Because we have found that Comcast's acquisition
     of these and other systems subject to the transactions will benefit
     the public interest, the additional regulatory approval required by
     Section 5(e) of the trust agreement is unnecessary and would serve
     only to delay ultimate consummation of the transactions, without
     any concomitant public interest benefit. Accordingly, we grant
     Comcast's request.

# ordering clauses

311. Accordingly, having reviewed the Applications and the record in
     this matter, IT IS ORDERED, pursuant to sections 4(i), 4(j),
     214(a), 214(c), 309, and 310(d) of the Communications Act of 1934,
     as amended, 47 U.S.C. §§ 154(i), 154(j), 214(a), 214(c), 309,
     310(d), that the Applications for Consent to the Assignment and/or
     Transfer of Control of various licenses from and/or between
     Adelphia Communications Corp., Time Warner Cable, Inc., and Comcast
     Corp. ARE GRANTED subject to the conditions set forth herein and in
     Appendix B.

312. IT IS FURTHER ORDERED that the above grants shall include authority
     for Comcast and Time Warner consistent with the terms of this Order
     to acquire control of (a) any license or authorization issued for
     any system that is part of these transactions during the
     Commission's consideration of the Applications or the period
     required for consummation of the transactions, (b) construction
     permits held by such systems that mature into licenses after
     closing, (c) applications filed by such systems that are pending at
     the time of consummation of the transfers of control or
     assignments, and (d) licenses that may have been inadvertently
     omitted from the Applications that are held by such systems.

313. IT IS FURTHER ORDERED that approval IS CONDITIONED as set forth in
     Sections VI.C-D, and Appendix B.

314. IT IS FURTHER ORDERED that within 60 days after consummation of the
     transactions, Time Warner and Comcast each provide to the Office of
     the Secretary of the Commission an affidavit, signed by a competent
     officer of the companies, certifying that the requirements of
     section 76.501 of the Commission's rules, 47 C.F.R. § 76.501, have
     been satisfied.

315. IT IS FURTHER ORDERED that within 90 days after consummation of the
     transactions, Time Warner and Comcast each provide to the Office of
     the Secretary of the Commission an affidavit, signed by a competent
     officer of the companies, certifying without qualification that the
     requirements of section 76.504 of the Commission's rules, 47 C.F.R.
     § 76.504, have been satisfied.

316. IT IS FURTHER ORDERED that Comcast's request for approval to
     acquire, upon consummation of the transactions, ownership interests
     in entities holding cable systems and related assets, in exchange
     for its interests in Time Warner and TWE, hitherto held in trust,
     is granted. This grant of approval encompasses regulatory approvals
     required by Section 5(e) of the Trust Agreement[^913] for
     distribution of trust assets to be redeemed pursuant to the Time
     Warner Redemption Transaction and the TWE Redemption Transaction
     under the terms of the trust agreement pursuant to *Comcast-AT&T
     Order.*[^914]

317. IT IS FURTHER ORDERED that the license transfers approved herein
     must be consummated and notification provided to the Commission
     within 60 days of public notice of approval pursuant to Commission
     rule 78.35(e).[^915] The above grants are limited to Commission
     licenses and authorizations, and shall not be deemed to constitute
     independently sufficient authorizations to operate the related
     cable systems.[^916] If Applicants are unable to consummate any of
     the license transfers contained in the Applications because LFA
     approvals are still pending, or for any other reason, Applicants
     must submit written notice to the Commission prior to the
     expiration of the 60-day deadline. If Applicants are unable to
     consummate consistent with the provisions of Commission rule
     78.35(e), Applicants must seek an extension of time within which to
     consummate or withdraw the affected license transfer or assignment
     applications. Written notice must include (1) the reason for the
     inability to consummate any of the transfers or assignments; (2)
     identification of the affected cable systems, including community
     and number of subscribers attributable to each cable system;
     and (3) identification of the relevant CARS, wireless or other
     authorization. In this regard, if Applicants' failure to consummate
     would result in violation of any Commission rule, Applicants must
     file within 30 days of the action that results in violation of the
     rule(s) the necessary applications to remedy the violation.
     Applicants must provide notice within seven days of the final
     outcome of any proceeding which affects their ability to operate a
     system that would have undergone a change in ownership as a result
     of the transfers described in the transactions.

318. IT IS FURTHER ORDERED that pursuant to sections 4(i), 4(j), 214(a),
     214(c), 309, and 310(d), of the Communications Act of 1934, as
     amended, 47 U.S.C. §§ 154(i), 154(j), 214(a), 214(c), 309, 310(d),
     that the Petitions to Deny filed by Free Press et. al.,
     Communications Workers of America and International Brotherhood of
     Electrical Workers, The America Channel LLC and National Hispanic
     Media Coalition ARE DENIED except to the extent otherwise indicated
     in this Order.

319. IT IS FURTHER ORDERED that pursuant to sections 4(i), 4(j), 214(a),
     214(c), 309, and 310(d), of the Communications Act of 1934, as
     amended, 47 U.S.C. §§ 154(i), 154(j), 214(a), 214(c), 309, 310(d),
     that the Motion to Hold in Abeyance filed October 31, 2005, by Free
     Press, Center for Creative Voices in Media, Office of Communication
     of the United Church of Christ, Inc., U.S. Public Interest Research
     Group, Center for Digital Democracy, CCTV, Center for Media &
     Democracy, Media Alliance, National Hispanic Media Coalition, the
     Benton Foundation, and Reclaim the Media IS DENIED.

320. IT IS FURTHER ORDERED that pursuant to sections 4(i), 4(j), 214(a),
     214(c), 309, and 310(d), of the Communications Act of 1934, as
     amended, 47 U.S.C. §§ 154(i), 154(j), 214(a), 214(c), 309, 310(d),
     that the Petition to Condition Approval of Application to Transfer
     Control of CARS Stations filed by the City of Buenaventura,
     California and the Petition of TCR Sports Broadcasting Holding,
     L.L.P. to Impose Conditions or, in the alternative, To Deny Part of
     the Proposed Transaction ARE DENIED except to the extent otherwise
     indicated in this Order.

321. IT IS FURTHER ORDERED THAT pursuant to sections 4(i), 4(j), 214
     (a), 214(c), 309, and 310(d), of the Communications Act of 1934, as
     amended, 47 U.S.C. §§ 154(i), 154(j), 214(a), 214(c), 309, 310(d),
     and 47 C.F.R. § 1.46 of the Commission's rules, the Motion for
     Extension of Time of Black Television News Channel, LLC to File
     Comments is DENIED.

322. 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**

**Petitioners and Commenters**

**[Petitions to Deny and/or to Condition Approval]{.underline}**

City of San Buenaventura, California ("City of San Buenaventura")

Communications Workers of America and International Brotherhood of
Electrical Workers ("CWA/IBEW")

Free Press, Center for Creative Voices in Media, Office of Communication
of the United Church of Christ, Inc., U.S. Public Interest Research
Group, Center for Digital Democracy, CCTV, Center for Media & Democracy,
Media Alliance, National Hispanic Media Coalition, The Benton
Foundation, and Reclaim the Media ("Free Press")

National Hispanic Media Coalition ("NHMC")

TCR Sports Broadcasting Holding, L.L.P. ("TCR")

The America Channel, LLC ("TAC")

**[Initial Comments]{.underline}**

Adam Thierer and Daniel English ("Thierer and English")

Americans for Prosperity\*

Americans for Tax Reform\*

Black Leadership Forum, Inc.\*

DIRECTV, Inc. ("DIRECTV")

EchoStar Satellite L.L.C. ("EchoStar")

Faith and Family Broadcasting Coalition ("FFBC")

Florida Communities of Clay County, Lee County, Orange County, Polk
County, and St. Lucie County ("Florida Communities")

FreedomWorks\*

IBC Worldwide, LTD. ("IBC")

KVMD Licensee Co., LLC ("KVMD")

Marco Island Cable ("MIC")

National Black Chamber of Commerce, Inc.\*

National Braille Press\*

National Congress of Black Women, Inc.\*

National Conference of Black Mayors, Inc.\*

NDN\*

RCN Telecom Services, Inc. ("RCN")

Urban League of Greater Hartford, Inc.\*

**[Reply Comments]{.underline}**

Alliance for Community Peace\*

ArtServe\*

Association of Hispanic Advertising Agencies\*

Black Entertainment & Telecommunications Association\*

Black Television News Channel ("BTNC")[^917]

Communications Workers of America and International Brotherhood of
Electrical Workers ("CWA/IBEW")

Congreso de Latinos Unidos\*

Consumer Federation of America and Consumers Union ("CFA/CU")

Cuban American Publishers Association\*

El Heraldo de Broward and Viva Broward!\*

IBC Worldwide, LTD. ("IBC")

Florida Hispanic Legislative Caucus\*

Heart of Los Angeles Youth\*

Hispanas Organized for Political Equality\*

Hispanic Unity of Florida\*

Latin Chamber of Commerce of Broward County\*

Ministerial Alliance Against the Digital Divide\*

National Association of Broadcasters ("NAB")

National Association of Telecommunications Officers and Advisors,
Reclaim the Media, CCTV, Center for Media & Democracy, Citizens for
Independent Public Broadcasting, and Alliance for Community Media
("NATOA")

National Hispanic Corporate Council\*

National Hispanic Foundation for the Arts\*

Oiste?\*

Puerto Rican/Hispanic Chamber of Commerce of Broward County\*

TCR Sports Broadcasting Holding, L.L.P. ("TCR")

TELEMIAMI, Inc.\*

The Heartland Institute

TV One\*

Westwood Community Development Corporation\*

WDLP Broadcasting Co. LLC\*

\* Filed a letter in support of the transactions.

> **APPENDIX B**
>
> **Remedies and Conditions**
>
> **A. Definitions**
>
> For purposes of the conditions set forth below, the following
> definitions apply:
>
> "Comcast" means Comcast Corporation and its subsidiaries, affiliates,
> parents, successors, and assigns.
>
> "Time Warner" means Time Warner Cable Inc. and its subsidiaries,
> affiliates, parents, successors, and assigns.
>
> "Regional Sports Network" and "RSN" mean 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.

**B. Conditions**

1\. Program Access Conditions

a\. Comcast, Time Warner, and their existing or future Covered RSNs,
regardless of the means of delivery, shall not offer any such RSN on an
exclusive basis to any MVPD, and Comcast, Time Warner, and their Covered
RSNs, regardless of the means of delivery, are required to make such
RSNs available to all MVPDs on a non-exclusive basis and on
nondiscriminatory terms and conditions.[^918]

b\. Comcast and Time Warner will not enter into an exclusive
distribution arrangement with any such Covered RSN, regardless of the
means of delivery.[^919]

c\. Neither Comcast nor Time Warner (including any entity with which it
is affiliated) shall unduly or improperly influence (i) the decision of
any Covered RSN, regardless of the means of delivery, to sell
programming to an unaffiliated MVPD; or (ii) the prices, terms, and
conditions of sale of programming by a Covered RSN, regardless of the
means of delivery, to an unaffiliated MVPD.[^920]

d\. These exclusive contracts and practices, non-discrimination, and
undue or improper influence requirements of the program access rules
will apply to Comcast, Time Warner, and their Covered RSNs for six
years, provided that if the program access rules are modified this
condition shall be modified to conform to any revised rules adopted by
the Commission.[^921]

e\. For enforcement purposes, aggrieved MVPDs may bring program access
complaints against Comcast, Time Warner, or their Covered RSNs using the
procedures found at Section 76.1003, 47 C.F.R. § 76.1003, of the
Commission's rules.

2\. Commercial Arbitration Remedy

a\. An aggrieved MVPD may submit a dispute over the terms and conditions
of carriage of an RSN subject to these conditions (i) that Comcast or
Time Warner currently manages or controls or (ii) in which Comcast or
Time Warner, on or after the date of adoption of this Order and during
the period of this condition, acquires either an attributable interest,
an option to purchase an attributable interest, or one that would permit
management or control of the RSN (a "Covered RSN").[^922]

b\. Following the expiration of any existing contract, or 90 days after
a first time request for carriage, an MVPD may notify the Covered RSN
and either Time Warner or Comcast, as appropriate, within five business
days that it intends to request commercial arbitration to determine the
terms of the new affiliation agreement.

c\. Upon receiving timely notice of the MVPD's intent to arbitrate,
either Time Warner or Comcast, as applicable, shall ensure that the
Covered RSN allows continued carriage 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.

d\. Carriage of the disputed programming during the period of
arbitration is not required in the case of first time requests for
carriage.[^923]

e\. The period following the Covered RSN's receipt of timely notice of
the MVPD's intent to arbitrate and before the MVPD's filing for formal
arbitration with the American Arbitration Association ("AAA"), shall
constitute a "cooling off" period during which time negotiations are to
continue.

f\. 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
fifteenth business day after the expiration of the RSN contract and no
later than the end of the twentieth business day following such
expiration. If the MVPD makes a timely demand, either Time Warner or
Comcast, as applicable, shall ensure that the Covered RSN participates
in the arbitration proceeding.

g\. The AAA will notify the Covered RSN, Time Warner or Comcast, as
appropriate, and the MVPD upon receiving the MVPD's formal filing.

h\. Either Time Warner or Comcast, as appropriate, shall ensure that the
Covered RSN files 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.

i\. The MVPD's final offer may not be disclosed until the AAA has
received the final offer from the Covered RSN.

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

3\. Rules of Arbitration

a\. 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
Appendix **C**. The arbitrator shall issue his decision within 30 days
from the date that the arbitrator is appointed.

b\. 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, however, modify the requirement that they engage in final-offer
arbitration.

c\. 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.

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

e\. 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:

i\. current or previous contracts between MVPDs and RSNs in which
Comcast or Time Warner do 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);

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

iii\. contracts between MVPDs and RSNs on whose behalf Comcast or Time
Warner have negotiated, made before Comcast or Time Warner acquired
control of the systems swapped and acquired in the Adelphia
transactions;[^924]

iv\. offers made in such negotiations;

v\. internal studies or discussions of the imputed value of Covered RSN
programming in bundled agreements;

vi\. other evidence (including internal discussions) of the value of
Covered RSN programming;

vii\. changes in the value of programming agreements for RSNs in which
Time Warner or Comcast do not have an attributable interest;

viii\. changes in the value or costs of the Covered RSN's programming,
or in other prices relevant to the relative value of the Covered RSN
programming (e.g., advertising rates).

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

g\. 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.

h\. 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 Covered RSN in an amount representing the difference 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 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 Covered 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.

i\. 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.

4\. Review of Award by the Commission

a\. A party aggrieved by the arbitrator's 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.

b\. 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.

c\. 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.

d\. 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 attorney fees)
of the arbitration.

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

5\. Provisions Applicable to Small MVPDs: An MVPD meeting the definition
of a "small cable company"[^925] may appoint a bargaining agent to
bargain collectively on its behalf in negotiating carriage of an Covered
RSN and either Time Warner or Comcast, as applicable, shall ensure that
the Covered RSN may not refuse to negotiate carriage with such an
entity. 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 Covered RSN expires.

6\. Additional Provisions Concerning Arbitration: Not earlier than 60
business days and 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 Covered RSN must provide the MVPD with a copy of
the conditions imposed in this Order. No later than ten business days
after receiving a first time request for carriage, the Covered RSN must
provide the requesting MVPD with a copy of the conditions imposed in
this Order.

7\. The foregoing arbitration condition shall remain in effect for six
years from the adoption date of this Order. 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.

**APPENDIX C**

**Modifications to Rules for Arbitration**

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

2\. **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.

3\. **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 which is based on the following criteria:

The arbitrator shall be a lawyer admitted to the bar of a state of the
United States or the

District of Columbia;

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

The arbitrator shall have prior experience in mediating or arbitrating
disputes

concerning media programming contracts;

The arbitrator shall have negotiated or have knowledge of the terms of
comparable

cable programming network contracts.

4\. **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 the terms
of a protective order.

5\. **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
party's costs and expenses (including reasonable attorneys' fees)
against the offending party.

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

7.  **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.

**APPENDIX D**

1.  This appendix explains the economic analysis undertaken by the
    Commission to evaluate the potential harms deriving from the
    increased vertical integration of regional sports programming
    networks and cable systems that may result from the transaction
    under review. It presents an economic model of a uniform price
    increase strategy. The model sets forth the most important
    determinants of the strategy's profitability. The model indicates
    that one of the most important elements is consumer response to an
    MVPD's failure to carry an RSN. Accordingly, the appendix describes
    the estimation of this response. We also assign values to the
    remaining variables in the model and calculate the signs and
    magnitudes of the changes in the individual markets due to the
    transactions.

# A Model of UnifoRm PricE Increases

323. Standard economic models of raising rivals' costs assume that firms
     are able to engage in price discrimination. However, the Commission
     rules do not permit vertically integrated video programmers to
     engage in price discrimination except within certain narrow
     limits.[^926] Accordingly, the standard models pertaining to
     raising rivals' costs do not fit the institutions of the
     multichannel video programming industry perfectly because the
     integrated firm would need to raise the costs of both rivals and
     non-rival firms in order to comply with the Commission's rules.
     However, a model is available, furnished by Lexecon, on behalf of
     DIRECTV. Lexecon's simple model of raising rivals' costs
     illustrates the process by which a vertically integrated RSN has an
     incentive to increase its prices when there is an increase in size
     of the MVPD with which it is integrated.[^927] Using its framework,
     Lexecon estimates the maximum amount that a competing MVPD would be
     willing to pay for access to an integrated RSN. This amount would
     be the price that would make the competing MVPD indifferent as to
     whether to pay the price and carry the programming or decline to
     carry the programming and suffer a subscriber loss because the
     programming is not available.

324. The extent of subscriber losses when an MVPD does not carry
     particular programming is a critical factor in determining the
     price an MVPD is willing to pay for that programming. In turn, the
     loss of subscribers incurred by an MVPD that does not carry the
     programming is influenced by whether any competing MVPDs carry the
     programming. If a competing MVPD does carry the programming, the
     loss of subscribers is likely to be greater than if a competing
     MVPD does not carry the programming, because some fraction of the
     consumers who value the programming will switch to an MVPD that
     does carry the programming. Of course, even if none of the MVPDs in
     the market carry the programming, there still may be a loss in
     customers when particular programming is no longer offered, because
     MVPD service would be less valuable to some customers without the
     desired programming.

325. To determine the maximum amount a competing MVPD would be willing
     to pay for video programming, we compare the profits that the
     competing MVPD would earn if it carried the video programming with
     the profits that it would earn if it did not carry the programming.
     The maximum willingness to pay for the programming is the price
     that would yield the same level of profits regardless of whether
     the programming were carried.

326. The competing MVPD's profits from carrying or not carrying the
     video programming depend on whether the other MVPDs competing for
     subscribers in the market carry the programming. To assist us in
     our analysis, we adopt a simplifying assumption used by Lexecon. We
     assume that other unintegrated MVPDs that serve the market would
     have the same willingness to pay as the competing MVPD and,
     therefore, whenever the price of the video programming is low
     enough to induce the competing MVPD to carry it, the other
     unintegrated MVPDs will also carry the video programming. If the
     price of the video programming is so high that the competing MVPD
     will not carry it, then we assume that the price will also be too
     high for other unintegrated MVPDs. Since the price of the video
     programming does not influence the carriage decision of the
     Applicant's MVPD, which is integrated with the video programming,
     we assume that the programming will always be carried by the
     Applicants.

327. Formally, the profits earned by the competing MVPD that carries the
     programming is equal to
     ![](media/image1.wmf){width="1.1805555555555556in"
     height="0.2638888888888889in"}, where
     ![](media/image2.wmf){width="0.3055555555555556in"
     height="0.2222222222222222in"} is the share of households
     purchasing service from the competing MVPD if all the MVPDs serving
     the market carry the programming; N is the number of households in
     the market; P~0~ is the per subscriber price of the video
     programming at issue; and π is the profit the competing MVPD earns
     on an additional subscriber, excluding the price of the programming
     at issue.

328. The expression that represents the profits that the competing MVPD
     would earn if it did not carry the programming is more complex. We
     need to take into account that the other MVPDs' carriage decisions
     will depend on whether they are integrated with the programming
     network at issue. First, we consider the profits that would be
     earned in the portions of the market served by the competing MVPD
     and other unintegrated MVPDs. Since we have assumed that the other
     unintegrated MVPDs have the same willingness to pay as the
     competing MVPD, they will make the same carriage decision and,
     therefore they will also refuse to carry the programming. The
     profits the competing MVPD earns in areas of the market served by
     unintegrated MVPDs equals
     ![](media/image3.wmf){width="0.8611111111111112in"
     height="0.2638888888888889in"}, where
     ![](media/image4.wmf){width="0.2916666666666667in"
     height="0.2222222222222222in"} is the share of households
     purchasing service from the competing MVPD if all MVPDs serving
     this portion of the market do not carry the programming, and
     ![](media/image5.wmf){width="0.2777777777777778in"
     height="0.2638888888888889in"} is the number of households in the
     portion of the market that is served by unintegrated MVPDs. The
     profits the competing MVPD earns in areas of the market served by
     the Applicant is equal to
     ![](media/image6.wmf){width="0.8333333333333334in"
     height="0.2638888888888889in"}, where
     ![](media/image7.wmf){width="0.3055555555555556in"
     height="0.2222222222222222in"} is the share of households
     purchasing service from the competing MVPD if the competing MVPD
     does not carry the programming but the MVPD serving this portion of
     the market carries the programming, and
     ![](media/image8.wmf){width="0.25in" height="0.2638888888888889in"}
     is the number of households in the portion of the market the
     Applicants serve. These two terms can then be combined to obtain
     the total profits that the competing MVPD would earn if it does not
     carry the programming at issue:
     ![](media/image9.wmf){width="1.7916666666666667in"
     height="0.2638888888888889in"}. The maximum willingness to pay is:

![](media/image10.wmf){width="2.9166666666666665in"
height="0.5555555555555556in"} (1)

This is the price that equalizes the profits of the competing carrier
when it carries the programming and the profits earned when it does not
carry the programming.[^928]

329. We further modify this result by introducing the concept of
     bargaining power. It may not be possible for the Applicant's
     programming network to extract fully from the competing MVPD all of
     its additional profits earned from carrying the network. Therefore,
     we introduce a parameter for the bargaining power of the
     programmer, γ~0~, that lies between 0 and 1. DIRECTV's analysis
     implicitly assumes that γ~0~ is equal to 1 and that the programmer
     can obtain a price equal to the MVPD's maximum willingness to pay.
     We allow for cases where this may not be true. Therefore the price
     that will be paid by the competing MVPD for the Applicant's
     programming is:

![](media/image11.wmf){width="3.1666666666666665in"
height="0.5555555555555556in"} (2)

330. To examine the transactions' effect on the price of programming, we
     need to examine which of the elements in equation (2) might change
     due to the transactions. The number of households in the portion of
     the market that is served by the Applicant's cable operations,
     ![](media/image8.wmf){width="0.25in"
     height="0.2638888888888889in"}, will change in those markets
     affected by the transactions. We will use
     ![](media/image12.wmf){width="0.25in" height="0.25in"} as the
     post-transaction value for the number of households in the portion
     of the market the Applicant serves. In addition, the level of
     bargaining power may change. We will use γ~1~ to represent the
     bargaining power of the Applicant's programming network after the
     transactions. We do not believe the reactions of consumers,
     measured by the σ terms, are likely to change due to the
     transactions. Nor are the per subscriber profits, net of the cost
     of the programming at issue (π), likely to change due to the
     transactions. Therefore, the price of the Applicant's programming
     at issue following the transactions will be:

![](media/image13.wmf){width="3.138888888888889in"
height="0.5555555555555556in"} (3)

331. Equations (2) and (3) can be combined to obtain the predicted
     increase in the price of the Applicant's programming due to the
     transactions. The percentage increase in the price of the
     affiliated video programming network is:

![](media/image14.wmf){width="3.5277777777777777in"
height="1.1111111111111112in"} (4)

Two simplifying assumptions can be used to illustrate the underlying
behavior being modeled. One assumption is that the transactions do not
influence the amount of bargaining power that the Applicant's video
programming network possesses (i.e. γ~0~ = γ~1~). The second assumes
that the share of households purchasing the competing MVPD's service is
the same when neither it nor any other MVPD available in the area
carries the video programming at issue and when the competing MVPD and
any other MVPD available in the area do carry the video programming
(i.e. ![](media/image15.wmf){width="0.75in"
height="0.2222222222222222in"}). With these assumptions, the percentage
increase in the price of the Applicant's video programming network
becomes:

![](media/image16.wmf){width="1.3333333333333333in" height="0.5in"} (5)

332. Under these two simplifying assumptions the percentage increase in
     the uniform price of the Applicant's programming network is equal
     to the percentage increase in the households that are in the area
     served by the Applicant's cable systems.

# Estimating ConSumer responses to THE withholding of REGIONAL sports programming

333. In order to evaluate the likelihood of uniform price increases, we
     need information on how consumers react when regional sports
     programming is not available from some of the MVPDs in a market.
     The model set forth above requires estimates of the number of
     subscribers who will shift in the event that highly valued sports
     programming is unavailable. We base our estimates of this effect on
     instances in which sports programming has been withheld from MVPDs.

334. There are three areas in the United States where regional sports
     programming networks are not offered for sale to DBS operators:
     Charlotte, North Carolina; Philadelphia, Pennsylvania; and San
     Diego, California.[^929] We examine the fraction of television
     households subscribing to DBS service in these areas and use
     regression analysis to compare that to the fraction subscribing to
     DBS in locations where regional sports programming is available
     from DBS operators.

## Empirical Model

335. We follow Wise and Duwadi (2005) in the specification of a model to
     examine DBS penetration and the variables that affect it.[^930] The
     model estimates the impact of cable prices, cable system
     characteristics, population demographics, and DBS program offerings
     on the percent of television households subscribing to DBS service.
     Each observation in our data corresponds to an incumbent cable
     system responding to the 2005 FCC Cable Price Survey.[^931] The
     survey provides information on the service rates and
     characteristics of the responding cable operators' cable systems.
     We use an estimate from Nielsen Media Research of the number of
     households subscribing to "alternative delivery systems" in a
     county to construct our measure of DBS penetration. Demographic
     variables are also available at the county level from the 2000
     Census.

336. We use a partial log-linear functional form where the dependent and
     continuous independent variables are transformed using the natural
     logarithm.[^932] We estimate the following equation:

LN DBS PENETRATION = Β~0~ + Β~1~·LN CABLE PRICE + Β~2~·LN CABLE CHANNELS
+

Β~3~·PHILLY + Β~4~·SANDIEGO + Β~5~·CHARLOTTE + Β~6~·KEYDMA + Β~7~·
DBSOVERAIR +

Β~8~· CABLECOMP + Β~9~·HDTV + Β~10~·INTERNET + Β~11~·LN INCOME +
Β~12~·LN MULTIDWELL + Β~13~·LN LATITUDE + ε

Where:

> LN DBS PENETRATION is the log of the percent of television households
> subscribing to an "alternative delivery system" in the county
> containing the responding cable system;
>
> LN CABLE PRICE is the log of the recurring monthly charge for the
> basic tier plus the next additional package of channels offered by the
> responding cable system;[^933]
>
> LN CABLE CHANNELS is the log of the number of cable channels offered
> by the responding cable system on the basic tier plus the next
> additional package of channels;
>
> PHILLY is an indicator variable taking on the value of 1 when the
> responding cable system is located in the Philadelphia DMA;
>
> SANDIEGO is an indicator variable taking on the value of 1 when the
> responding cable system is located in the San Diego DMA;
>
> CHARLOTTE is an indicator variable taking on the value of 1 when the
> responding cable system is located in the Charlotte DMA;
>
> KEYDMA is an indicator variable taking on the value of 1 when the
> responding cable system is located in a DMA that is home to a
> professional sports team that is a member of Major League Baseball,
> the National Basketball Association, the National Football League, or
> the National Hockey League;
>
> DBSOVERAIR is an indicator variable taking on the value of 1 when one
> or both DBS operators offer local broadcast signals in the DMA where
> the responding cable system is located;
>
> CABLECOMP is an indicator variable taking on the value of 1 when the
> cable system competes against a second cable operator;
>
> HDTV is an indicator variable taking on the value of 1 when the
> responding cable system offers one or more channels in high-definition
> format;
>
> INTERNET is an indicator variable taking on the value of 1 when the
> responding cable system offers high-speed Internet access;
>
> LN INCOME is the log of the median household income in the county
> containing the responding system;
>
> LN MULTIDWELL is the log of the percent of households in multiple
> dwelling units ("MDUs") in the county containing the responding
> system;[^934] and
>
> LN LATITUDE is the log of the latitude of the county containing the
> responding system.

337. We use instrumental variables to account for possible endogeneity
     of the cable price and the number of cable channels. We use the
     natural logs of system capacity (MHz) and the number of subscribers
     served nationally by the cable system owner, as well as the number
     of networks with which the cable system owner is vertically
     integrated, as excluded instruments. We perform estimation using
     the generalized method of moments.

## Results

338. **Table A-1**

DBS Penetration and RSN Access

  ----------------------- ----------------------- -----------------------
  **Independent           **Dependent Variable:   
  Variables**             LN DBS PENETRATION**    

                          **Coefficient**         **z-statistic**

  LN CABLE PRICE          2.37\*                  2.32

  LN CABLE CHANNELS       -1.10\*                 -2.56

  PHILLY                  -0.52\*                 -6.47

  SANDIEGO                -0.41\*                 -4.90

  CHARLOTTE               -0.23                   -1.57

  KEYDMA                  0.13\*                  2.30

  DBSOVERAIR              -0.08                   -1.31

  CABLECOMP               0.34                    1.41

  HDTV                    -0.13                   -1.64

  INTERNET                -0.09                   -0.76

  LN INCOME               -0.36\*                 -2.91

  LN MULTIDWELL           -0.39\*                 -10.40

  LN LATITUDE             -0.03                   -0.17

  CONSTANT                -0.92                   -0.33

  Observations            676                     

  Centered R-Squared      0.22                    

  F-Statistic (13, 662)   40.57                   

  Hansen J Statistic      24.56                   
  ----------------------- ----------------------- -----------------------

*\* - significant at 95% confidence level*

339. The results from the estimation indicate that DBS penetration is
     lower in two of the three areas where DBS operators have not been
     able to carry regional sports programming even after accounting for
     other factors that affect consumers' decisions to purchase DBS
     service. In the case of the independent variables that are
     expressed as logarithms, the estimated coefficients represent
     elasticities --- the percent change in the DBS penetration rate
     resulting from a one percent change in the value of the independent
     variable. This is not true for indicator variables. They measure
     the change in the natural logarithm of the DBS penetration rate
     when the indicator variable takes on a value of 1. Therefore, to
     evaluate the economic significance of access to regional sports
     programming by DBS operators, we would like to know the impact of
     unavailability of RSNs on the percent of households purchasing DBS
     service. We calculate this value by using the regression equation
     coefficients and the underlying data to predict the log of the DBS
     penetration rate in Philadelphia and San Diego.[^935] We calculate
     the weighted average of this value using the number of basic
     subscribers to the responding cable system as weights. The
     predicted DBS penetration rate in the DMA is the exponential of
     this value. We calculate this value a second time assuming that the
     regional sports programming is available (variable PHILLY = 0 and
     variable SANDIEGO = 0). We find that, in Philadelphia, the
     regression predicts a DBS penetration rate of 8.6% when the
     regional sports programming is not available and a rate of 14.5% if
     the programming were made available. In San Diego, the predicted
     rate when the programming is not available is 7.4%, and if the
     programming is available, the penetration rate would be 11.1%.
     Therefore, we predict that DBS penetration is 40.5% lower in
     Philadelphia and 33.3% lower in San Diego than it would be if
     regional sports programming were available.

340. These results are best viewed as estimates of the impact of not
     having access to regional sports programming on an entrant in the
     MVPD market. The regional sports programming in Philadelphia and
     San Diego has not been available to DBS operators since 1997.[^936]
     We therefore view the regression results as an imprecise estimate
     of the impact on DBS operators if regional sports programming were
     withdrawn from the operators after having been available for an
     extended period of time. An alternative approach to estimating the
     effects of RSN withdrawal involves examining viewership statistics.
     An average of **\[REDACTED\]** to **\[REDACTED\]** of households
     with access to CSN Philadelphia or CSN Mid-Atlantic view the
     network in a four-week period and an average of **\[REDACTED\]** to
     **\[REDACTED\]** in a one-week period.[^937] A reasonable estimate
     of the households that would switch MVPDs to retain access to
     regional sports programming may be that it is comprised of those
     that watch an RSN on a weekly basis.

341. An estimate of the minimum number of consumers likely to switch
     MVPDs can also be developed from instances in which regional sports
     programming has been withheld for short periods of time. In the
     *News Corp.-Hughes Order*, the Commission's staff estimated the
     effect of withdrawing the Yankees Entertainment and Sports Network
     (YES), a regional sports network carrying New York Yankees baseball
     games and New Jersey Nets basketball games, from Cablevision in
     2002 and 2003.[^938] Cablevision is a cable operator whose cable
     systems are entirely within the New York DMA. DIRECTV was able to
     carry this regional sports programming during the period when
     Cablevision was unable to carry the programming. The number of
     additional subscribers that DIRECTV acquired during each month of
     the withdrawal was estimated using confidential information
     submitted under the protective orders in the proceeding. The
     resulting analysis is not available in the current record. Instead
     we rely on the *News Corp.-Hughes* analysis of Cablevision's SEC
     filings to examine the impact of temporary withholding of regional
     sports programming.[^939] The analysis indicates that, out of the 3
     million subscribers and 4.3 million homes passed by Cablevision, it
     lost approximately 64,000 subscribers during the year it did not
     carry YES. This equates to a loss of 2.1% of its subscribers and
     1.5% of its share of households.

# Applying the Uniform price increase model to regional sports networks

342. We use equation (4), above, to predict the transactions' impact on
     RSN affiliation fees. The equation requires a number of values.
     Since EchoStar and DIRECTV are the Applicants' largest competitors,
     we focus our analysis on the uniform price increase that would
     result if one of them were the target of the strategy. However, as
     the name indicates, a uniform price increase would be borne by all
     MVPDs.

343. *Homes Passed by the Applicants.* The Applicants have submitted
     estimates of the number of basic subscribers to cable systems they
     manage in each DMA for the period prior to and following the
     transactions.[^940] We adjust these totals by also including basic
     subscribers served by systems that are attributed to, but not
     managed by, the Applicants. Since the Applicants are unable to
     provide subscriber counts by DMA for some attributable non-managed
     systems, we must estimate the likely number of subscribers to these
     systems.[^941] Eighty-three DMAs are affected by this estimation
     procedure. We allocate the total number of current basic
     subscribers reported by the Applicants for each attributed
     non-managed entity to each of the communities served by the entity
     based on historical estimates of the basic cable subscribers in
     each of the communities. These community-level estimates are then
     aggregated at the DMA level to obtain an estimate of the number of
     attributable subscribers in each DMA. We then calculate an estimate
     of the fraction of homes each Applicant passes by dividing the
     number of attributable subscribers in each DMA by the total number
     of cable subscribers in the DMA as estimated by Nielsen Media
     Research.

344. *Relative Market Shares of Competing MVPDs.* The uniform price
     increase model requires information on the change in the relative
     market shares of competing MVPDs when they do or do not carry the
     RSN.[^942] Our estimates of the impact of withholding based on the
     situations in San Diego and Philadelphia indicate that the share of
     households purchasing DBS service is between 33% and 40% lower in
     those DMAs than in areas where DBS can carry regional sports
     programming. We do not have any sources to estimate the impact on
     the market share of a DBS operator that does not carry regional
     sports programming when the unintegrated cable operator also does
     not carry the programming. Intuitively, we would expect the impact
     to be relatively minor since subscribers would have no incentive to
     switch between MVPDs. However, it is possible that there would be
     some impact, as some households might drop MVPD service altogether
     if regional sports programming becomes unavailable. Accordingly, we
     adopt two estimates of this value: 0% and 2%.[^943]

345. *Bargaining Power.* The RSN's relative bargaining power is
     reflected in the γ~0~ and γ~1~ terms in equation (4). We do not
     have any information on the relative bargaining power of the
     parties; however, as long as the transactions do not change the
     amount of bargaining power, the relative increase in RSN
     affiliation fees is not influenced by the amount of bargaining
     power. As equations (2) and (3) indicate, bargaining power does
     influence the absolute price level. Throughout our analysis, we
     adopt a standard solution to bargaining games by assuming that the
     parties split the gains from trade (γ~0~ = γ~1~ = 0.5).[^944]

346. *Profit Margin of the Competing MVPD.* The uniform price increase
     model requires the per-subscriber profit margin earned by the
     competing MVPD in order to use equations (2) and (3) to estimate
     the absolute impact of the transactions on RSN affiliation fees. No
     other party has proffered an alternative value, and we adopt
     DIRECTV's estimate of \$23 per subscriber.[^945]

347. *Predicting the Transactions' Effect on RSN Affiliation Fees.*
     Using the values developed in the previous paragraphs, we estimate
     the percentage change, as a result of the transactions, in the
     affiliation fee of an RSN that is owned by the largest Applicant in
     a DMA using equation (4). We must make assumptions about the loss
     of subscribers if the MVPD chooses not to carry the RSN that other
     MVPDs in the area do carry. We adopt the assumption that the MVPD's
     share of subscribers would fall by 15% over an extended period of
     time.[^946] This value is less than the estimated effect in
     Philadelphia and San Diego and **\[REDACTED\]** the fraction of
     households that watch Comcast's established RSNs on a weekly basis.
     We examine two sets of further assumptions to construct these
     estimates. The first set of assumptions relies on the simplifying
     assumption that the MVPD's market share when neither it nor a
     competing MVPD carries an RSN is the same as when both MVPDs carry
     the RSN (![](media/image15.wmf){width="0.75in"
     height="0.2222222222222222in"}). Under this simple assumption, the
     percentage change in the affiliation fee of the RSN simplifies to
     equation (5). The alternative assumption accounts for the
     possibility that some consumers will not purchase MVPD service when
     an RSN is not carried. Specifically, we assume that 2% of current
     MVPD customers would not purchase MVPD service if regional sports
     were not available from any of the MVPDs in the market.[^947]

348. There are 94 DMAs that are affected by the transactions. Under the
     simple assumption, the model of uniform price increases predicts
     that RSN fees will increase by at least 5% in 39 of the DMAs. When
     the alternative assumption is used, the model predicts increases of
     at least 5% in 36 DMAs. Table A-2 presents the estimated impact of
     the transactions in each of 39 Key DMAs.[^948] In addition, we
     estimate the net present value of the absolute increase in payments
     to an RSN using equations (2) and (3).[^949] Under either scenario,
     15 Key DMAs are predicted to see an increase in RSN fees of at
     least 5%. The net present value of the increased payments for
     carriage of the RSNs in these 15 Key DMAs is **\[REDACTED\]**
     million under the simple assumption and **\[REDACTED\]** million
     under the alternative assumption.

349. **Table A-2**

+------------+-------------+------------+---------------+-------------+
| **Key      | **Percent   |            | **Estimated   |             |
| DMA**      | of Homes    |            | Change in RSN |             |
|            | Passed**    |            | Affiliation   |             |
|            |             |            | Fee and Net   |             |
|            | **by        |            | Present Value |             |
|            | Largest     |            | of Change in  |             |
|            | Applicant** |            | Payments to   |             |
|            |             |            | RSN**         |             |
+------------+-------------+------------+---------------+-------------+
|            | **Before    | **After    | (![](media/i  | (![](       |
|            | Tr          | Tra        | mage15.wmf){w | media/image |
|            | ansaction** | nsaction** | idth="0.75in" | 17.wmf){wid |
|            |             |            | heigh         | th="0.75in" |
|            |             |            | t="0.22222222 | height="0   |
|            |             |            | 22222222in"}) | .2222222222 |
|            |             |            |               | 222222in"}) |
+------------+-------------+------------+---------------+-------------+
| Atlanta,   | 49.6%       | 55.1%      | 11.1%         | 8.5%        |
| GA         |             |            |               |             |
|            |             |            | \$ 13.2       | \$ 11.4     |
|            |             |            | million       | million     |
+------------+-------------+------------+---------------+-------------+
| Baltimore, | **\[R       | **\[RE     | **\           | **\[R       |
| MD         | EDACTED\]** | DACTED\]** | [REDACTED\]** | EDACTED\]** |
+------------+-------------+------------+---------------+-------------+
| Boston, MA | 85.8%       | 94.4%      | 10.1%         | 8.5%        |
|            |             |            |               |             |
|            |             |            | \$ 5.1        | \$ 4.5      |
|            |             |            | million       | million     |
+------------+-------------+------------+---------------+-------------+
| Buffalo,   | 78.7%       | 95.3%      | 21.2%         | 17.7%       |
| NY         |             |            |               |             |
|            |             |            | \$ 5.0        | \$ 4.3      |
|            |             |            | million       | million     |
+------------+-------------+------------+---------------+-------------+
| Charlotte, | 57.6%       | 63.8%      | 10.7%         | 8.4%        |
| NC         |             |            |               |             |
|            |             |            | \$ 6.0        | \$ 5.2      |
|            |             |            | million       | million     |
+------------+-------------+------------+---------------+-------------+
| Chicago,   | **\[R       | **\[RE     | 0.0%          | 0.0%        |
| IL         | EDACTED\]** | DACTED\]** |               |             |
|            |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| C          | 61.9%       | 68.9%      | 11.4%         | 9.1%        |
| incinnati, |             |            |               |             |
| OH         |             |            | \$ 4.9        | \$ 4.2      |
|            |             |            | million       | million     |
+------------+-------------+------------+---------------+-------------+
| Cleveland, | 44.2%       | 77.8%      | 75.9%         | 56.3%       |
| OH         |             |            |               |             |
|            |             |            | \$ 32.3       | \$ 28.0     |
|            |             |            | million       | million     |
+------------+-------------+------------+---------------+-------------+
| Columbus,  | 50.1%       | 58.4%      | 16.5%         | 12.6%       |
| OH         |             |            |               |             |
|            |             |            | \$ 6.9        | \$ 6.0      |
|            |             |            | million       | million     |
+------------+-------------+------------+---------------+-------------+
| Dallas, TX | 49.2%       | 53.8%      | 9.4%          | 7.2%        |
|            |             |            |               |             |
|            |             |            | \$ 11.7       | \$ 10.1     |
|            |             |            | million       | million     |
+------------+-------------+------------+---------------+-------------+
| Denver, CO | **\[R       | **\[RE     | 0.0%          | 0.0%        |
|            | EDACTED\]** | DACTED\]** |               |             |
|            |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| Detroit,   | **\[R       | **\[RE     | 0.0%          | 0.0%        |
| MI         | EDACTED\]** | DACTED\]** |               |             |
|            |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| Green Bay, | 60.4%       | 60.4%      | 0.0%          | 0.0%        |
| WI         |             |            |               |             |
|            |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| Houston,   | **\[R       | **\[RE     | 0.0%          | 0.0%        |
| TX         | EDACTED\]** | DACTED\]** |               |             |
|            |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| Ind        | **\[R       | **\[RE     | 0.0%          | 0.0%        |
| ianapolis, | EDACTED\]** | DACTED\]** |               |             |
| IN         |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| Jac        | 66.4%       | 84.3%      | 27.0%         | 21.9%       |
| ksonville, |             |            |               |             |
| FL         |             |            | \$ 7.4        | \$ 6.4      |
|            |             |            | million       | million     |
+------------+-------------+------------+---------------+-------------+
| Kansas     | **\[R       | **\[RE     | 0.0%          | 0.0%        |
| City, KS   | EDACTED\]** | DACTED\]** |               |             |
|            |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| Los        | **\[R       | **\[RE     | **\           | **\[R       |
| Angeles,   | EDACTED\]** | DACTED\]** | [REDACTED\]** | EDACTED\]** |
| CA         |             |            |               |             |
+------------+-------------+------------+---------------+-------------+
| Memphis,   | 56.4%       | 55.5%      | -1.5%         | -1.2%       |
| TN         |             |            |               |             |
|            |             |            | \$ -0.6       | \$ -0.5     |
|            |             |            | million       | million     |
+------------+-------------+------------+---------------+-------------+
| Miami, FL  | 61.5%       | 69.4%      | 13.0%         | 10.4%       |
|            |             |            |               |             |
|            |             |            | \$ 9.7        | \$ 8.4      |
|            |             |            | million       | million     |
+------------+-------------+------------+---------------+-------------+
| Milwaukee, | 75.2%       | 75.2%      | 0.0%          | 0.0%        |
| WI         |             |            |               |             |
|            |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| Mi         | **\[R       | **\[RE     | **\           | **\[R       |
| nneapolis, | EDACTED\]** | DACTED\]** | [REDACTED\]** | EDACTED\]** |
| MN         |             |            |               |             |
+------------+-------------+------------+---------------+-------------+
| Nashville, | 60.2%       | 60.2%      | 0.0%          | 0.0%        |
| TN         |             |            |               |             |
|            |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| New        | 6.8%        | 6.8%       | 0.0%          | 0.0%        |
| Orleans,   |             |            |               |             |
| LA         |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| New York,  | 23.0%       | 23.0%      | 0.0%          | 0.0%        |
| NY         |             |            |               |             |
|            |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| Orlando,   | **\[R       | **\[RE     | 0.0%          | 0.0%        |
| FL         | EDACTED\]** | DACTED\]** |               |             |
|            |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| Phi        | 79.2%       | 80.9%      | 2.2%          | 1.8%        |
| ladelphia, |             |            |               |             |
| PA         |             |            | \$ 2.7        | \$ 2.3      |
|            |             |            | million       | million     |
+------------+-------------+------------+---------------+-------------+
| Phoenix,   | 0.0%        | 0.0%       | 0.0%          | 0.0%        |
| AZ         |             |            |               |             |
|            |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| P          | 41.6%       | 66.6%      | 60.2%         | 43.9%       |
| ittsburgh, |             |            |               |             |
| PA         |             |            | \$ 23.7       | \$ 20.5     |
|            |             |            | million       | million     |
+------------+-------------+------------+---------------+-------------+
| Portland,  | **\[R       | **\[RE     | **\           | **\[R       |
| OR         | EDACTED\]** | DACTED\]** | [REDACTED\]** | EDACTED\]** |
+------------+-------------+------------+---------------+-------------+
| S          | 74.0%       | 74.0%      | 0.0%          | 0.0%        |
| acramento, |             |            |               |             |
| CA         |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| Salt Lake  | **\[R       | **\[RE     | 0.0%          | 0.0%        |
| City, UT   | EDACTED\]** | DACTED\]** |               |             |
|            |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| San        | 80.0%       | 80.0%      | 0.0%          | 0.0%        |
| Antonio,   |             |            |               |             |
| TX         |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| San Diego, | 26.9%       | 35.7%      | 32.5%         | 20.7%       |
| CA         |             |            |               |             |
|            |             |            | \$ 11.4       | \$ 9.9      |
|            |             |            | million       | million     |
+------------+-------------+------------+---------------+-------------+
| San        | 91.0%       | 91.7%      | 0.8%          | 0.7%        |
| Francisco, |             |            |               |             |
| CA         |             |            | \$ 0.7        | \$ 0.6      |
|            |             |            | million       | million     |
+------------+-------------+------------+---------------+-------------+
| Seattle,   | **\[R       | **\[RE     | 0.0%          | 0.0%        |
| WA         | EDACTED\]** | DACTED\]** |               |             |
|            |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| St. Louis, | **\[R       | **\[RE     | 0.0%          | 0.0%        |
| MO         | EDACTED\]** | DACTED\]** |               |             |
|            |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| Tampa, FL  | **\[R       | **\[RE     | 0.0%          | 0.0%        |
|            | EDACTED\]** | DACTED\]** |               |             |
|            |             |            | \-            | \-          |
+------------+-------------+------------+---------------+-------------+
| W          | 45.9%       | 61.0%      | 33.0%         | 24.7%       |
| ashington, |             |            |               |             |
| DC         |             |            | \$ 33.2       | \$ 28.8     |
|            |             |            | million       | million     |
+------------+-------------+------------+---------------+-------------+

**APPENDIX E**

**Licenses and Authorizations to Be Transferred**

The consolidated applications filed by Adelphia, Time Warner and Comcast
include Commission authorizations and licenses listed in this Appendix.
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. Additional applications may have to be filed to identify any
additional authorizations involved in these transactions. The
transactions involve a series of discrete phases or steps

**Part 78 -- Cable Television Relay Service (CARS)**[^950]

Licenses to be assigned to **Time Warner NY Cable LLC**

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

CAR-20050520AF-08 Adelphia CAVS of San Bernardino, LLC (DIP) WAX-28

CAR-20050520AG-08 Adelphia California Cablevision, LLC (DIP) WLY-433

CAR-20050520AH-08 Adelphia Communications of CA, LLC (DIP) KD-55007

CAR-20050520AI-08 Adelphia Communications of CA, LLC (DIP) WSJ-903

CAR-20050520AJ-08 CDA Cable, Inc. (DIP) WAD-611

CAR-20050520AK-08 CDA Cable, Inc. (DIP) WHZ-765

CAR-20050523AA-08 Century TCI-California, LP (DIP) WLY-269

CAR-20050523AB-08 FrontierVision Operating Partners, LP (DIP) WSA-48

CAR-20050523AC-08 FrontierVision Operating Partners, LP (DIP) WAD-626

CAR-20050523AD-08 FrontierVision Operating Partners, LP (DIP) WGZ-433

CAR-20050523AE-08 FrontierVision Operating Partners, LP (DIP) WGZ-434

CAR-20050523AF-08 FrontierVision Operating Partners, LP (DIP) WHZ-446

CAR-20050523AG-08 FrontierVision Operating Partners, LP (DIP) WLY-609

CAR-20050523AH-08 FrontierVision Operating Partners, LP (DIP) WLY-205

CAR-20050523AI-08 FrontierVision Operating Partners, LP (DIP) WLY-335

CAR-20050523AJ-08 FrontierVision Operating Partners, LP (DIP) WLY-399

CAR-20050523AK-08 Highland Carlsbad Operating Subsidiary, Inc. WGV-957

CAR-20050523AL-08 Kootenai Cable, Inc. (DIP) WGZ-269

CAR-20050523AM-08 Kootenai Cable, Inc. (DIP) WLY-662

CAR-20050523AN-08 Mountain Cable Company, LP (DIP) WGZ-335

CAR-20050523AO-08 Mountain Cable Company, LP (DIP) WGZ-413

CAR-20050523AP-08 Pullman TV Cable Company, Inc. (DIP) WAE-605

CAR-20050523AQ-08 Pullman TV Cable Company, Inc. (DIP) WAE-606

CAR-20050523AR-08 Southwest Colorado Cable, Inc. (DIP) WHZ-293

CAR-20050523AS-08 Southwest Colorado Cable, Inc. (DIP) WHZ-301

CAR-20050523AT-08 Yuma Cablevision, Inc. (DIP) KB-60101

CAR-20050523AU-08 Yuma Cablevision, Inc. (DIP) WAJ-458

CAR-20050523AV-08 Yuma Cablevision, Inc. (DIP) WLY-809

CAR-20050524AP-08 Century Cablevision Holdings, LLC (DIP) WLY-627

Licenses to be assigned to **CAC Exchange I LLC**

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

CAR-20050524AC-08 Century-TCI California, LP (DIP) WHZ-879

CAR-20050524AD-08 Century-TCI California, LP (DIP) WHZ-880

CAR-20050524AE-08 Century-TCI California, LP (DIP) WHZ-886

License to be assigned to **CAP Exchange I LLC**

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

CAR-20050524AF-08 Parnassoss, LP (DIP) WGH-439

Licenses to be assigned to **C-Native Exchange I, LLC (Pro forma)**

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

CAR-20050524AG-08 Comcast of Los Angeles, Inc. WLY-348

CAR-20050524AH-08 Comcast of Los Angeles, Inc. WLY-501

Licenses to be assigned to **C-Native Exchange III, LP (Pro forma)**

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

CAR-20050524AI-08 Comcast of CA/CO/IL/IN/TX, Inc. WHZ-677

CAR-20050524AJ-08 Comcast of CA/CO/IL/IN/TX, Inc. WGV-990

CAR-20050524AK-08 Comcast of CA/CO/IL/IN/TX, Inc. WLY-812

CAR-20050524AL-08 Comcast of CA/CO/IL/IN/TX, Inc. WLY-816

CAR-20050524AM-08 Comcast of CA/CO/IL/IN/TX, Inc. WLY-817

CAR-20050524AN-08 Comcast of CA/CO/IL/IN/TX, Inc. WLY-815

CAR-20050524AO-08 Comcast of Dallas, LP KA-80623

**[Two-Part Transactions]{.underline}**

**STEP 1**

Licenses to be assigned to **Cable Holdco Exchange II LLC**

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

CAR-20050519AA-08 Owensboro-Brunswick, Inc. (DIP) WLY-810

CAR-20050519AB-08 Owensboro-Brunswick, Inc. (DIP) WLY-436

CAR-20050519AC-08 Olympus Communications, LP (DIP) WLY-347

Licenses to be assigned to **Cable Holdco Exchange I LLC**

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

CAR-20050519AD-08 Century Colorado Springs Partnership (DIP) WJN-35

CAR-20050519AE-08 Century Colorado Springs Partnership (DIP) WLY-440

CAR-20050519AF-08 Century Colorado Springs Partnership (DIP) WLY-790

CAR-20050519AG-08 Century Trinidad Cable Television Corp., (DIP) WGI-777

CAR-20050519AH-08 Adelphia Central Pennsylvania, LLC (DIP) WLY-512

License to be assigned to **Cable Holdco Exchange IV-2, LLC**

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

CAR-20050520-AA-08 Century Virginia Corp. (DIP) WHZ-485

Licenses to be assigned to **Cable Holdco Exchange V, LLC**

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

CAR-20050520AC-08 Century Mendocino Cable Television, Inc. (DIP) WAD-902

CAR-20050520AD-08 Century Mendocino Cable Television, Inc. (DIP) WLY-818

CAR-20050520AE-08 Century Mendocino Cable Television, Inc. (DIP) WSF-24

License to be assigned to **Cable Holdco II Inc. (Pro forma)**

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

CAR-20050523AW-08 Time Warner Inc. WHZ-238

CAR-20050523AX-08 Time Warner Inc. WHZ-244

**STEP 2**

Control of licensee to be transferred to **Comcast Corporation**

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

CAR-20050523AY-09 Cable Holdco Exchange I LLC WLY-512

CAR-20050523AZ-09 Cable Holdco Exchange I LLC WJN-35

CAR-20050523BA-09 Cable Holdco Exchange I LLC WLY-440

CAR-20050523BB-09 Cable Holdco Exchange I LLC WLY-790

CAR-20050523BC-09 Cable Holdco Exchange I LLC WGI-777

CAR-20050523BD-09 Cable Holdco Exchange II LLC WLY-347

CAR-20050523BE-09 Cable Holdco Exchange II LLC WHZ-810

CAR-20050523BF-09 Cable Holdco Exchange II LLC WLY-436

CAR-20050523BG-09 Cable Holdco Exchange IV-2, LLC WHZ-485

CAR-20050523BH-09 Cable Holdco Exchange V, LLC WAD-902

CAR-20050523BI-09 Cable Holdco Exchange V, LLC WLY-818

CAR-20050523BJ-09 Cable Holdco Exchange V, LLC WSF-24

CAR-20050524AA-09 Cable Holdco II Inc. WHZ-238

CAR-20050524AB-09 Cable Holdco II Inc. WHZ-244

Control of licensee to be transferred to **Time Warner Inc.**

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

CAR-20050602AA-09 C-Native Exchange I, LLC WLY-501

CAR-20050602AB-09 C-Native Exchange I, LLC WLY-348

CAR-20050602AC-09 C-Native Exchange III, LP WHZ-677

CAR-20050602AD-09 C-Native Exchange III, LP WGV-990

CAR-20050602AE-09 C-Native Exchange III, LP WLY-812

CAR-20050602AF-09 C-Native Exchange III, LP WLY-816

CAR-20050602AG-09 C-Native Exchange III, LP WLY-817

CAR-20050602AH-09 C-Native Exchange III, LP WLY-815

CAR-20050602AI-09 C-Native Exchange III, LP KA-80623

CAR-20050602AJ-09 CAC Exchange I LLC WHZ-879

CAR-20050602AK-09 CAC Exchange I LLC WHZ-880

CAR-20050602AL-09 CAC Exchange I LLC WHZ-886

CAR-20050602AM-09 CAP Exchange I LLC WGH-439

**Part 25 -- Satellite Communications**[^951]

**[Receive-Only Satellite Earth Stations (TVRO)]{.underline}**

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

  ----------------------------------------------------------- -----------
  Adelphia Cable Partners, L.P., (DIP)                        E930116

  Adelphia Cable Partners, L.P., (DIP)                        E950095

  Adelphia Cablevision Associates, L.P., (DIP)                WJ42

  Adelphia Cablevision Corp., (DIP)                           E870268

  Adelphia Cablevision Corp., (DIP)                           E870269

  Adelphia Cablevision Corp., (DIP)                           E9003

  Adelphia Cablevision Corp., (DIP)                           E9004

  Adelphia Cablevision Corp., (DIP)                           E9005

  Adelphia Cablevision of Boca Raton, LLC, (DIP)              E2072

  Adelphia Cablevision of Inland Empire LLC, (DIP)            E2321

  Adelphia Cablevision of New York, Inc., (DIP)               E2573

  Adelphia Cablevision of New York, Inc., (DIP)               E870127

  Adelphia Cablevision of Newport Beach, LLC, (DIP)           KV51

  Adelphia Cablevision of Orange County II, LLC, (DIP)        E4930

  Adelphia Cablevision of San Bernardino, LLC, (DIP)          E3198

  Adelphia Cablevision of Seal Beach, LLC, (DIP)              E7993

  Adelphia Cablevision of Simi Valley, LLC, (DIP)             KH60

  Adelphia Cablevision of West Palm Beach IV, LLC, (DIP)      WB57

  Adelphia Cablevision of West Palm Beach, LLC                E4157

  Adelphia California Cablevision, LLC, (DIP)                 E940138

  Adelphia California Cablevision, LLC, (DIP)                 E950223

  Adelphia California Cablevision, LLC, (DIP)                 E950315

  Adelphia California Cablevision, LLC, (DIP)                 E960066

  Adelphia California Cablevision, LLC, (DIP)                 E960140

  Adelphia California Cablevision, LLC, (DIP)                 E960141

  Adelphia California Cablevision, LLC, (DIP)                 E960153

  Adelphia California Cablevision, LLC, (DIP)                 E970171

  Adelphia California Cablevision, LLC, (DIP)                 E970172

  Adelphia California Cablevision, LLC, (DIP)                 E970173

  Adelphia Central Pennsylvania, LLC, (DIP)                   E010259

  Adelphia Central Pennsylvania, LLC, (DIP)                   E2404

  Adelphia Central Pennsylvania, LLC, (DIP)                   E2489

  Adelphia Central Pennsylvania, LLC, (DIP)                   E2629

  Adelphia Central Pennsylvania, LLC, (DIP)                   E2723

  Adelphia Central Pennsylvania, LLC, (DIP)                   E2779

  Adelphia Central Pennsylvania, LLC, (DIP)                   E3491

  Adelphia Central Pennsylvania, LLC, (DIP)                   E5083

  Adelphia Central Pennsylvania, LLC, (DIP)                   E5295

  Adelphia Central Pennsylvania, LLC, (DIP)                   E6210

  Adelphia Central Pennsylvania, LLC, (DIP)                   E6449

  Adelphia Central Pennsylvania, LLC, (DIP)                   E859861

  Adelphia Central Pennsylvania, LLC, (DIP)                   E860973

  Adelphia Central Pennsylvania, LLC, (DIP)                   E870893

  Adelphia Central Pennsylvania, LLC, (DIP)                   E870897

  Adelphia Central Pennsylvania, LLC, (DIP)                   E873416

  Adelphia Central Pennsylvania, LLC, (DIP)                   E873418

  Adelphia Central Pennsylvania, LLC, (DIP)                   E873419

  Adelphia Central Pennsylvania, LLC, (DIP)                   E873420

  Adelphia Central Pennsylvania, LLC, (DIP)                   E873614

  Adelphia Central Pennsylvania, LLC, (DIP)                   E873621

  Adelphia Central Pennsylvania, LLC, (DIP)                   E873624

  Adelphia Central Pennsylvania, LLC, (DIP)                   E873625

  Adelphia Central Pennsylvania, LLC, (DIP)                   E873634

  Adelphia Central Pennsylvania, LLC, (DIP)                   E881253

  Adelphia Central Pennsylvania, LLC, (DIP)                   E890358

  Adelphia Central Pennsylvania, LLC, (DIP)                   E960299

  Adelphia Central Pennsylvania, LLC, (DIP)                   WF93

  Adelphia Central Pennsylvania, LLC, (DIP)                   WN32

  Adelphia Central Pennsylvania, LLC, (DIP)                   WQ77

  Adelphia Central Pennsylvania, LLC, (DIP)                   WR73

  Adelphia Central Pennsylvania, LLC, (DIP)                   WS55

  Adelphia Central Pennsylvania, LLC, (DIP)                   WS91

  Adelphia Central Pennsylvania, LLC, (DIP)                   WU94

  Adelphia Cleveland LLC, (DIP)                               WG76

  Adelphia Communications of California II, LLC, (DIP)        KW80

  Adelphia Communications of California, LLC, (DIP)           E6474

  Adelphia Communications of California, LLC, (DIP)           E9439

  Adelphia Communications of California, LLC, (DIP)           KK81

  Adelphia Company of Western Connecticut, (DIP)              E6301

  Adelphia Company of Western Connecticut, (DIP)              E910437

  Adelphia GS Cable, LLC, (DIP)                               E860282

  Adelphia of the Midwest, Inc., (DIP)                        E5927

  Adelphia of the Midwest, Inc., (DIP)                        E8221

  Adelphia of the Midwest, Inc., (DIP)                        E860681

  Adelphia of the Midwest, Inc., (DIP)                        E860682

  Adelphia of the Midwest, Inc., (DIP)                        E865184

  Better TV, Inc. of Bennington, (DIP)                        E860184

  Blacksburg/Salem Cablevision, Inc., (DIP)                   WH56

  Blacksburg/Salem Cablevision, Inc., (DIP)                   WS39

  CDA Cable, Inc., (DIP)                                      E890126

  CDA Cable, Inc., (DIP)                                      KJ94

  Century Alabama Corp., (DIP)                                WP46

  Century Cable Holdings LLC, (DIP)                           E3952

  Century Carolina Corporation, (DIP)                         E3618

  Century Carolina Corporation, (DIP)                         E3876

  Century Carolina Corporation, (DIP)                         E5060

  Century Colorado Springs Partnership, (DIP)                 E890028

  Century Cullman Corp., (DIP)                                E880474

  Century Enterprise Cable Corp., (DIP)                       E6900

  Century Huntington Company, (DIP)                           E4010

  Century Island Associates, Inc., (DIP)                      E881189

  Century Kansas Cable Television Corp. (DIP)                 KF77

  Century Lykens Cable Corp., (DIP)                           WV35

  Century Mendocino Cable Television Inc., (DIP)              E3634

  Century Mendocino Cable Television Inc., (DIP)              E910122

  Century Norwich Corp., (DIP)                                WT81

  Century Ohio Cable Television Corp., (DIP)                  E2369

  Century Ohio Cable Television Corp., (DIP)                  WS44

  Century Trinidad Cable Television Corp., (DIP)              KJ41

  Century Virginia Corp., (DIP)                               WP43

  Century-TCI California, L.P., (DIP)                         E2558

  Century-TCI California, L.P., (DIP)                         E3075

  Century-TCI California, L.P., (DIP)                         E3118

  Century-TCI California, L.P., (DIP)                         E5954

  Century-TCI California, L.P., (DIP)                         E5975

  Century-TCI California, L.P., (DIP)                         E6438

  Century-TCI California, L.P., (DIP)                         E7924

  Century-TCI California, L.P., (DIP)                         E860955

  Century-TCI California, L.P., (DIP)                         E881085

  Century-TCI California, L.P., (DIP)                         E890795

  Century-TCI California, L.P., (DIP)                         E940504

  Century-TCI California, L.P., (DIP)                         E960176

  Century-TCI California, L.P., (DIP)                         KG94

  Century-TCI California, L.P., (DIP)                         KM99

  Chelsea Communications, LLC, (DIP)                          E2022

  Chelsea Communications, LLC, (DIP)                          E2471

  Chelsea Communications, LLC, (DIP)                          E2746

  Chelsea Communications, LLC, (DIP)                          E3049

  Chelsea Communications, LLC, (DIP)                          E3073

  Chelsea Communications, LLC, (DIP)                          E3284

  Chelsea Communications, LLC, (DIP)                          E4086

  Chelsea Communications, LLC, (DIP)                          E4315

  Chelsea Communications, LLC, (DIP)                          E4472

  Chelsea Communications, LLC, (DIP)                          E6002

  Chelsea Communications, LLC, (DIP)                          E865079

  Chelsea Communications, LLC, (DIP)                          E9117

  Chelsea Communications, LLC, (DIP)                          E950352

  Chelsea Communications, LLC, (DIP)                          E960172

  Chelsea Communications, LLC, (DIP)                          WM92

  Chelsea Communications, LLC, (DIP)                          WM93

  Chelsea Communications, LLC, (DIP)                          WY73

  Chelsea Communications, LLC, (DIP)                          WY83

  Comcast of California I, LLC                                E874302

  Comcast of California I, LLC                                E874303

  Comcast of California I, LLC                                E874304

  Comcast of California VII, Inc.                             KL47

  Comcast of California/Colorado/Illinois/Indiana/Texas, Inc. E2124

  Comcast of California/Colorado/Illinois/Indiana/Texas, Inc. E2527

  Comcast of California/Colorado/Illinois/Indiana/Texas, Inc. E3672

  Comcast of California/Colorado/Illinois/Indiana/Texas, Inc. KZ97

  Comcast of Costa Mesa, Inc.                                 E860337

  Comcast of Cypress, Inc.                                    E860336

  Comcast of Dallas, LP                                       E3107

  Comcast of Dallas, LP                                       E891027

  Comcast of Dallas, LP                                       E900497

  Comcast of Illinois/Texas, Inc.                             KJ44

  Comcast of Illinois/Texas, Inc.                             KL41

  Comcast of Indiana/Michigan/Texas, LP                       E4090

  Comcast of Indiana/Michigan/Texas, LP                       E940277

  Comcast of Los Angeles, Inc.                                E2480

  Comcast of Los Angeles, Inc.                                E3882

  Comcast of Los Angeles, Inc.                                E4239

  Comcast of Los Angeles, Inc.                                E5048

  Comcast of Los Angeles, Inc.                                E5057

  Comcast of Los Angeles, Inc.                                E873365

  Comcast of Los Angeles, Inc.                                E874223

  Comcast of Los Angeles, Inc.                                E880022

  Comcast of Los Angeles, Inc.                                E880023

  Comcast of Los Angeles, Inc.                                E880024

  Comcast of Massachusetts/New Hampshire/Ohio, Inc.           E900577

  Comcast of Massachusetts/New Hampshire/Ohio, Inc.           E920188

  Comcast of Newhall, Inc.                                    KP72

  Comcast of Plano, LP                                        E6596

  Comcast of Richardson, LP                                   E6150

  Comcast of Texas I, LP                                      KE90

  Comcast of Texas II, LP                                     E5358

  Comcast of Texas II, LP                                     E5587

  Comcast of Texas II, LP                                     E5602

  Comcast of Texas II, LP                                     E870041

  Comcast of Texas II, LP                                     E900498

  Comcast of Texas II, LP                                     KR52

  Desert Hot Springs Cablevision, Inc.                        E3238

  Eastern Virginia Cablevision, L.P., (DIP)                   WF57

  FOP Indiana, L.P., (DIP)                                    E4341

  FrontierVision Operating Partners, L.P., (DIP)              E010103

  FrontierVision Operating Partners, L.P., (DIP)              E2018

  FrontierVision Operating Partners, L.P., (DIP)              E2364

  FrontierVision Operating Partners, L.P., (DIP)              E2379

  FrontierVision Operating Partners, L.P., (DIP)              E2422

  FrontierVision Operating Partners, L.P., (DIP)              E2425

  FrontierVision Operating Partners, L.P., (DIP)              E2426

  FrontierVision Operating Partners, L.P., (DIP)              E2427

  FrontierVision Operating Partners, L.P., (DIP)              E2477

  FrontierVision Operating Partners, L.P., (DIP)              E2818

  FrontierVision Operating Partners, L.P., (DIP)              E3190

  FrontierVision Operating Partners, L.P., (DIP)              E3505

  FrontierVision Operating Partners, L.P., (DIP)              E3506

  FrontierVision Operating Partners, L.P., (DIP)              E3542

  FrontierVision Operating Partners, L.P., (DIP)              E3550

  FrontierVision Operating Partners, L.P., (DIP)              E3551

  FrontierVision Operating Partners, L.P., (DIP)              E3571

  FrontierVision Operating Partners, L.P., (DIP)              E3838

  FrontierVision Operating Partners, L.P., (DIP)              E3839

  FrontierVision Operating Partners, L.P., (DIP)              E3840

  FrontierVision Operating Partners, L.P., (DIP)              E3887

  FrontierVision Operating Partners, L.P., (DIP)              E4338

  FrontierVision Operating Partners, L.P., (DIP)              E4448

  FrontierVision Operating Partners, L.P., (DIP)              E5020

  FrontierVision Operating Partners, L.P., (DIP)              E5498

  FrontierVision Operating Partners, L.P., (DIP)              E6130

  FrontierVision Operating Partners, L.P., (DIP)              E6191

  FrontierVision Operating Partners, L.P., (DIP)              E6333

  FrontierVision Operating Partners, L.P., (DIP)              E6338

  FrontierVision Operating Partners, L.P., (DIP)              E7300

  FrontierVision Operating Partners, L.P., (DIP)              E8325

  FrontierVision Operating Partners, L.P., (DIP)              E859862

  FrontierVision Operating Partners, L.P., (DIP)              E870266

  FrontierVision Operating Partners, L.P., (DIP)              E870271

  FrontierVision Operating Partners, L.P., (DIP)              E870272

  FrontierVision Operating Partners, L.P., (DIP)              E890880

  FrontierVision Operating Partners, L.P., (DIP)              E890881

  FrontierVision Operating Partners, L.P., (DIP)              E890882

  FrontierVision Operating Partners, L.P., (DIP)              E890886

  FrontierVision Operating Partners, L.P., (DIP)              E890887

  FrontierVision Operating Partners, L.P., (DIP)              E890888

  FrontierVision Operating Partners, L.P., (DIP)              E890889

  FrontierVision Operating Partners, L.P., (DIP)              E890890

  FrontierVision Operating Partners, L.P., (DIP)              E890891

  FrontierVision Operating Partners, L.P., (DIP)              E890947

  FrontierVision Operating Partners, L.P., (DIP)              E900326

  FrontierVision Operating Partners, L.P., (DIP)              E900327

  FrontierVision Operating Partners, L.P., (DIP)              E900328

  FrontierVision Operating Partners, L.P., (DIP)              E900386

  FrontierVision Operating Partners, L.P., (DIP)              E900387

  FrontierVision Operating Partners, L.P., (DIP)              E900388

  FrontierVision Operating Partners, L.P., (DIP)              E900679

  FrontierVision Operating Partners, L.P., (DIP)              E900963

  FrontierVision Operating Partners, L.P., (DIP)              E910224

  FrontierVision Operating Partners, L.P., (DIP)              E9194

  FrontierVision Operating Partners, L.P., (DIP)              E920508

  FrontierVision Operating Partners, L.P., (DIP)              E920509

  FrontierVision Operating Partners, L.P., (DIP)              E930144

  FrontierVision Operating Partners, L.P., (DIP)              E980264

  FrontierVision Operating Partners, L.P., (DIP)              WE47

  FrontierVision Operating Partners, L.P., (DIP)              WF85

  FrontierVision Operating Partners, L.P., (DIP)              WL29

  FrontierVision Operating Partners, L.P., (DIP)              WQ28

  FrontierVision Operating Partners, L.P., (DIP)              WS36

  FrontierVision Operating Partners, L.P., (DIP)              WT23

  FrontierVision Operating Partners, L.P., (DIP)              WT30

  FrontierVision Operating Partners, L.P., (DIP)              WT31

  FrontierVision Operating Partners, L.P., (DIP)              WV36

  FrontierVision Operating Partners, L.P., (DIP)              WX39

  FrontierVision Operating Partners, L.P., (DIP)              WY82

  Global Acquisition Partners, L.P., (DIP)                    WL25

  Highland Carlsbad Operating Subsidiary, Inc.                E3199

  Highland Carlsbad Operating Subsidiary, Inc.                E3201

  Highland Video Associates, L.P.                             E920253

  Hilton Head Communications, L.P.                            WG36

  Imperial Valley Cablevision, Inc., (DIP)                    KB97

  KBL Cablesystems of Minneapolis, LP                         E6737

  Key Biscayne Cablevision, (DIP)                             E7027

  Kootenai Cable, Inc., (DIP)                                 E880393

  Kootenai Cable, Inc., (DIP)                                 E880850

  Kootenai Cable, Inc., (DIP)                                 E880852

  Martha\'s Vineyard Cablevision, L.P., (DIP)                 E9032

  Mickelson Media, Inc., (DIP)                                E2983

  Mountain Cable Company, L.P., (DIP)                         E3490

  Mountain Cable Company, L.P., (DIP)                         E3533

  Mountain Cable Company, L.P., (DIP)                         E3534

  Mountain Cable Company, L.P., (DIP)                         E4438

  Mountain Cable Company, L.P., (DIP)                         E4439

  Mountain Cable Company, L.P., (DIP)                         E4853

  Mountain Cable Company, L.P., (DIP)                         E900789

  Mountain Cable Company, L.P., (DIP)                         E910277

  National Cable Acquisition Associates, L.P., (DIP)          E900329

  National Cable Acquisition Associates, L.P., (DIP)          E940171

  Owensboro-Brunswick, Inc., (DIP)                            WB50

  Owensboro-Brunswick, Inc., (DIP)                            WE75

  Parnassos, L.P., (DIP)                                      E2562

  Parnassos, L.P., (DIP)                                      E3436

  Parnassos, L.P., (DIP)                                      E4478

  Parnassos, L.P., (DIP)                                      E850287

  Parnassos, L.P., (DIP)                                      E859968

  Parnassos, L.P., (DIP)                                      E865088

  Parnassos, L.P., (DIP)                                      E880888

  Parnassos, L.P., (DIP)                                      E890830

  Parnassos, L.P., (DIP)                                      E930438

  Parnassos, L.P., (DIP)                                      WB58

  Parnassos, L.P., (DIP)                                      WG77

  Parnassos, L.P., (DIP)                                      WY93

  Pullman TV Cable Co., Inc., (DIP)                           KK46

  Rentavision of Brunswick, Inc., (DIP)                       WX31

  Scranton Cablevision, Inc., (DIP)                           E3259

  Southeast Florida Cable, Inc., (DIP)                        E2391

  Southeast Florida Cable, Inc., (DIP)                        E5611

  Southeast Florida Cable, Inc., (DIP)                        E930117

  Southeast Florida Cable, Inc., (DIP)                        E930155

  Southeast Florida Cable, Inc., (DIP)                        E930156

  Southeast Florida Cable, Inc., (DIP)                        WJ23

  Southeast Florida Cable, Inc., (DIP)                        WM59

  Southwest Colorado Cable, Inc., (DIP)                       E6756

  Southwest Colorado Cable, Inc., (DIP)                       E880841

  SVHH Cable Acquisition, L.P., (DIP)                         E3192

  SVHH Cable Acquisition, L.P., (DIP)                         E3193

  SVHH Cable Acquisition, L.P., (DIP)                         WH21

  SVHH Cable Acquisition, L.P., (DIP)                         WR89

  SVHH Cable Acquisition, L.P., (DIP)                         WR90

  Three Rivers Cable Associates, L.P., (DIP)                  E865158

  Three Rivers Cable Associates, L.P., (DIP)                  E970379

  Time Warner Cable Inc.                                      E5279

  Time Warner Cable Inc.                                      E5965

  Time Warner Cable Inc.                                      E6144

  Time Warner Cable Inc.                                      E860479

  Time Warner Cable Inc.                                      E880383

  Time Warner Cable Inc.                                      WR53

  Time Warner Entertainment Co., L.P.                         E2481

  Time Warner Entertainment Co., L.P.                         E3256

  Time Warner Entertainment Co., L.P.                         E3561

  Time Warner Entertainment Co., L.P.                         E4281

  Time Warner Entertainment Co., L.P.                         E4433

  Time Warner Entertainment Co., L.P.                         E4513

  Time Warner Entertainment Co., L.P.                         E5382

  Time Warner Entertainment Co., L.P.                         E871302

  Time Warner Entertainment Co., L.P.                         E910123

  Time Warner Entertainment Co., L.P.                         E920573

  Time Warner Entertainment Co., L.P.                         E920598

  Time Warner Entertainment Co., L.P.                         KD51

  Time Warner Entertainment Co., L.P.                         KD80

  Time Warner Entertainment Co., L.P.                         KR31

  Time Warner Entertainment Co., L.P.                         WB46

  Time Warner Entertainment Co., L.P.                         WL84

  Time Warner Entertainment Co., L.P.                         WZ34

  Time Warner Entertainment-Advance/Newhouse Partnership      KY26

  UCA, LLC, (DIP)                                             E2442

  UCA, LLC, (DIP)                                             E5674

  UCA, LLC, (DIP)                                             E6617

  UCA, LLC, (DIP)                                             E872136

  UCA, LLC, (DIP)                                             E880113

  UCA, LLC, (DIP)                                             E890798

  UCA, LLC, (DIP)                                             E890832

  UCA, LLC, (DIP)                                             E910144

  UCA, LLC, (DIP)                                             E920186

  UCA, LLC, (DIP)                                             E920351

  UCA, LLC, (DIP)                                             E940507

  UCA, LLC, (DIP)                                             E980528

  UCA, LLC, (DIP)                                             WF73

  UCA, LLC, (DIP)                                             WF74

  UCA, LLC, (DIP)                                             WL90

  UCA, LLC, (DIP)                                             WM60

  UCA, LLC, (DIP)                                             WP39

  UCA, LLC, (DIP)                                             WU55

  Valley Video, Inc., (DIP)                                   WQ39

  Western NY Cablevision, L.P., (DIP)                         WB77

  Yuma Cablevision, Inc., (DIP)                               E3293

  Yuma Cablevision, Inc., (DIP)                               KB62
  ----------------------------------------------------------- -----------

**Section 214 Authorizations**

**Part 63 -- Domestic Section 214 Authority**

The Applicants have filed four applications for consent to the transfer
of control of domestic section 214 authority in connection with the
transactions described above.[^952]

**Parts 90 and 101 -- Wireless Radio Services Applications**

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

0002159061 Adelphia Cablevision of New York Inc, (DIP) KEY243

0002159194 Adelphia Cablevision of the Kennebunks, LLC, (DIP) KNJD338

0002159198 Adelphia Cleveland LLC, (DIP) WNKS662

0002159211 Adelphia California Cablevision, LLC, (DIP) WNTM202

0002159215 Adelphia Communications of California II, LLC, (DIP) KTM739

0002159217 Adelphia of the Midwest Inc, LLC, (DIP) KNFK941

0002159219 CDA Cable, Inc., (DIP) KNIK432

0002159222 Century Alabama Corp., (DIP) WXV338

0002159225 Century Berkshire Cable Corp., (DIP) KNDV713

0002159227 Century Cable Holdings LLC, (DIP) KXO480

0002159229 Century Carolina Corporation, (DIP) KYA708

0002159232 Century Cullman Corp., (DIP) KNCS964

0002159234 Century Island Associates, Inc., (DIP) WNMX369

0002159236 Century Kansas Cable Television Corp. (DIP) WNRC522

0002159240 Century Mississippi Corp., (DIP) WRK611

0002159242 Century Ohio Cable Television Corp., (DIP) WNMD682

0002159244 Century Wyoming Cable Corp., (DIP) KNFN972

0002159248 FrontierVision Operating Partners, L.P., (DIP) KAI939

0002159251 Hilton Head Communications, L.P. WCW237

0002159253 Kootenai Cable, Inc., (DIP) KNDK239

0002159255 Mountain Cable Company, L.P., (DIP) KST750

0002159258 Owensboro-Brunswick, Inc., (DIP) KNEP792

0002159261 Parnassos, L.P., (DIP) WPCI360

0002159263 Southwest Colorado Cable, Inc., (DIP) KNHM865

0002159265 SVHH Cable Acquisition, L.P., (DIP) KNHB711

0002159267 UCA, LLC, (DIP) KNEP681

0002159270 Valley Video Inc., (DIP) WPHV911

0002159276 Wellsville Cablevision, L.L.C., (DIP) KNEW327

0002159279 Yuma Cablevision, Inc., (DIP) KBL655

0002159737 Adelphia Central Pennsylvania, LLC, (DIP) KAV983

0002159755 Adelphia GS Cable, LLC, (DIP) WNKH753

0002159758 Century Colorado Springs Partnership, (DIP) WNNY662

0002159788 Century Huntington Company, (DIP) WNQR362

0002159764 Century Lykens Cable TV Communications Corp. KNIM644

0002159767 Century Trinidad Cable Television Corp., (DIP) KJE667

0002159792 Chelsea Communications, L.L.C., (DIP) KNJM834

0002159800 Scranton Cablevision, Inc., (DIP) KVN239

0002159864 Mickelson Media of Florida, Inc., (DIP) WNNQ866

0002159875 Owensboro-Brunswick, Inc., (DIP) WPZT290

0002159879 Ionian Communications, L.P. KGE914

0002159883 West Boca Acquisition, L.P., (DIP) WSQ484

0002159885 SVHH Cable Acquisition, L.P., (DIP) WSF832

0002159897 Adelphia Company of Western Connecticut, (DIP) KUP796

0002159902 Better TV, Inc. of Bennington, (DIP) WNJN274

0002159909 FrontierVision Operating Partners, L.P., (DIP) KNIN723

0002159912 Lake Champlain Cable Television Corporation, (DIP) WNGM596

0002159916 Mountain Cable Company, L.P., (DIP) KNEV877

0002159919 Multi-Channel T.V. Cable Company, (DIP) KNAV853

0002159923 Three Rivers Cable Associates, L.P., (DIP) WNQL889

0002159926 UCA, LLC, (DIP) KUJ362

0002159931 Century-TCI California, L.P., (DIP) WNMF308

0002448868[^953] Adelphia California Cablevision, LLC, (DIP) WNTS945

0002159960 Adelphia of the Midwest, Inc., (DIP) KNJH360

0002159976 Parnassos, L.P., (DIP) WNAU571

0002159981 Western NY Cablevision, L.P., (DIP) KVG330

0002160103 Adelphia Cable Partners L.P., (DIP) KNBQ811

0002160109 Cowlitz Cablevision, Inc., (DIP) KGQ685

0002163779 Century Huntington Company, (DIP) KIN464

0002164332 Adelphia GS Cable, LLC, (DIP) WNFQ557

0002164346 Adelphia Prestige Cablevision, LLC, (DIP) KNCR396

0002164356 Century Mendocino Cable Television, Inc., (DIP) WNMD760

0002164364 Chelsea Communications, LLC, (DIP) KUW324

0002164373 GS Cable, LLC, (DIP) KUP756

0002164379 Wilderness Cable Company, (DIP) KME372

Listed below are Pro Forma Assignment applications:

0002164979 Time Warner Entertainment Co., L.P. WQG372

0002165002 Time Warner Entertainment/ KUC787

Advance-Newhouse Partnership

0002165020 Time Warner Cable Inc. KNHA621

0002165560 Comcast of Los Angeles, Inc WNTD907

0002165601 Comcast of Massachusette/New Hampshire/Ohio, Inc. WQW327

0002165658 Comcast of Illinois/Texas, Inc. WNYE223

0002165666 Comcast of Richardson, LP KNHC697

0002165682 Comcast of Texas, LLC KNAW439

**"Step-Two" Transactions**[^954]

**File Number Licensee Lead Call Sign**

50006GBTC05 CAP Exchange I, LLC KNJH360

50007IGTC05 CAC Exchange I, LLC WNXG511

50008IGTC05 Cable Holdco Exchange IV-3, LLC KIN464

50009IGTC05 Cable Holdco Exchange II LLC WNNQ866

50010IGTC05 C-Native Exchange II, LP KNCT914

50011IGTC05 Cable Holdco Exchange III, LLC KUP796

50012IGTC05 C-Native Exchange I, LLC WQW327

50013IGTC05 Cable Holdco Exchange IV LLC KNBQ811

50014IGTC05 C-Native Exchange III, LP WNYE223

50015IGTC05 Cable Holdco Exchange I LLC KAV983

50016IGTC05 Cable Holdco III, LLC KUC787

50017IGTC05 Cable Holdco II, Inc. WSW583

50018IGTC05 Cable Holdco Exchange V, LLC WPPW503

50019MGTC05 CAC Exchange I, LLC WNTS945

50020MGTC05 C-Native Exchange I, LLC WNTD907

**Attachment**

The table below cross-references the \"step-one\" assignment
applications with the associated \"step-two\" transfer of control
applications for the wireless radio licenses.

**Assignment File Number Transfer of Control File Number**

0002159960 50006GBTC05

0002159976 50006GBTC05

0002159981 50006GBTC05

0002159931 50007IGTC05

0002163779 50008IGTC05

0002159864 50009IGTC05

0002159875 50009IGTC05

0002159883 50009IGTC05

0002165682 50010IGTC05

0002159897 50011IGTC05

0002159902 50011IGTC05

0002159909 50011IGTC05

0002159912 50011IGTC05

0002159916 50011IGTC05

0002159919 50011IGTC05

0002159923 50011IGTC05

0002159926 50011IGTC05

0002165601 50012IGTC05

0002160103 50013IGTC05

0002160109 50013IGTC05

0002165658 50014IGTC05

0002165666 50014IGTC05

0002159737 50015IGTC05

0002159755 50015IGTC05

0002159758 50015IGTC05

0002159764 50015IGTC05

0002159767 50015IGTC05

0002159788 50015IGTC05

0002159792 50015IGTC05

0002159800 50015IGTC05

0002165002 50016IGTC05

0002164979 50017IGTC05

0002165020 50017IGTC05

0002164332 50018IGTC05

0002164346 50018IGTC05

0002164356 50018IGTC05

0002164364 50018IGTC05

0002164373 50018IGTC05

0002164379 50018IGTC05

0002448868[^955] 50019MGTC05

0002165560 50020MGTC05

**STATEMENT OF**

**CHAIRMAN KEVIN J. MARTIN**

Re: *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; Comcast
Corporation, Transferor, to Time Warner Inc., Transferee; Time Warner
Inc., Transferor to Comcast Corporation, Transferee*, Memorandum Opinion
and Order (MB Docket No. 05-192).

I am pleased that the Commission has voted to approve these transactions
on a bipartisan basis. I believe that, on balance, the transactions as
conditioned will further the public interest.

The acquisition of the Adelphia systems, currently in bankruptcy, should
bring significant benefits to the customers of those systems. Comcast
and Time Warner have committed to make long-needed upgrades to those
systems to enable the rapid and widespread deployment of advanced
services to Adelphia subscribers.

I was concerned that the transactions raised the potential for harm to
competition in markets where Comcast or Time Warner has an affiliated
regional sports network ("RSN"). As the Commission noted in its approval
of News Corp.'s acquisition of DirecTV, viewers consider the programming
that RSNs carry as "must have" TV. While a new entrant or competing
multi-channel video programming distributor ("MVPD") could create a
substitute if denied access to a local news channel, for instance, it
could not create a substitute for the games of a popular local sports
team. In North Carolina, there is no substitute for Tarheel basketball.
As a result, we conditioned approval of the News Corp./DirecTV
transaction on a requirement that News Corp. make its affiliated RSNs
available to other MVPDs and, if the parties were not able to reach an
agreement on the terms and conditions, the MVPD could request binding
arbitration. We adopt the same condition here: Time Warner and Comcast
must make their affiliated RSNs available to other MVPDs and, if the
parties are not able to reach an agreement, the MVPD can request
arbitration. I believe this condition addresses the potential for
anti-competitive behavior and facilitates the ability of parties to
compete with the incumbent cable operator, to the benefit of consumers.

The other Commissioners in the majority also tried to address a number
of other potential harms. Commissioner Tate raised concerns about access
to children's programming. Commissioner McDowell and Commissioner
Adelstein raised concerns about MASN and other independent RSNs being
carried, and Commissioner Adelstein also raised concerns about how other
independent programmers could use our leased access rules. All four of
us in the majority worked hard to address these concerns, and I
appreciate all of their efforts. I am pleased that, in the end, we could
find a way to address these concerns in a limited way and enhance
consumers' access to a variety of programming and service options.

In the end there was still some disagreement on net neutrality. This
should not be a surprise, as there is not consensus on net neutrality
within the industry or among policy experts. I continue to support the
principles we adopted last summer. However, I do not think requirements
are necessary at this time without evidence of actual harm to consumers
or internet users. The Commission has, and will continue to, monitor the
situation and will not hesitate to take action to protect consumers when
necessary.

**DISSENTING STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS**

Re: *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; Comcast
Corporation, Transferor, to Time Warner Inc., Transferee; Time Warner
Inc., Transferor to Comcast Corporation, Transferee*, Memorandum Opinion
and Order (MB Docket No. 05-192).

In transactions coming before this Commission, my obligation is to weigh
their promised benefits against their potential harms. This particular
transaction is not without positive attributes, but to me the potential
harms clearly and substantially outweigh the benefits. That is why I
will dissent from today's order. The potential for harm here is in the
sheer economic power of distribution and content that can, and likely
will, ensue. While rescuing Adelphia from the perils of bankruptcy is
laudable, the anti-competitive division of assets proposed by the
Applicants is not. The swapping of media properties contemplated by
these two giants has the clear potential, even the probability, of
limiting competition in numerous media markets across the country.
Nothing in this Order can rebut the simple truth that less competition
equals higher prices. Indeed, when you step back and look at the
totality of these proposed transactions, the direction here is
unmistakable: this decision is about Big Media getting bigger, with
consumers left holding the bag. There are those in industry trying to
lull America into complacency by claiming that media industry
consolidation has run its course and we needn't worry about it any
longer. This transaction proves them wrong. More than 3300 FCC approvals
of media property assignment and transfer grants over the past three
years prove them wrong. Believe me, this party is far from over.

Let me state upfront that the Applicants come to us with what I believe
is a commitment to update and upgrade the failing Adelphia cable
systems. I commend their intention to modernize these networks. But it
comes with too heavy a price tag---swaps between Comcast and Time Warner
that will result in even more cable concentration in numerous markets.
If you live in Pennsylvania, Minnesota, Southern Florida, Washington,
D.C., Maryland, Virginia, New England, Western New York, Ohio, Texas,
Southern California, North Carolina or South Carolina, you will face
increased concentration and all that it entails as a result of these
swaps. In some markets, the percentage of homes covered will hover as
high as 95 percent. The application and the Order may talk about
"geographic rationalization" and "market clustering" in an effort to
veil these swaps in something posing as economic logic. Don't buy it.
Clever economic terms cannot mask what is a strategy to concentrate
ownership and dismantle competition.

As the Order itself acknowledges, it is totally unclear how any of these
purported efficiencies and market rationalizations will flow through to
benefit consumers. To the contrary, I fear consumers will end up finding
their cable bills climbing still higher. Already cable bills rise at two
to three times the rate of inflation. Since 1996, cable rates have risen
by 68 percent. Do we really believe that more concentration will lead to
a new era of lower rates? That would be a triumph of hope over history.
My advice to consumers when they hear about the wonders of clustering
and consolidation is to hold onto your pocketbooks. This is not a
consumer-friendly transaction.

***[Competition]{.underline}***

I believe that forfeiting competition is bad for consumers and bad for
the future of our media. I believe that ceding gatekeeper control over
the content we receive in our homes to fewer and fewer media
distributors is something that should alarm us. Combining content and
conduit is, after all, the classic strategy for monopoly or control by a
privileged few. It is not the recipe for innovation and lower consumer
bills. When more than 30,000 individuals and organizations representing
millions of others called upon the FCC to protect their rights in this
proceeding, we should have paid heed. At the end of the day, I think the
American people are owed both a more rigorous analysis of these issues
and a better outcome from the transaction than they will find in this
decision.

As one commenter in this proceeding put it, enhancing concentration by
clustering markets creates a "fortress" that deters competitive entry.
In fact, the Commission's own precedent bolsters this point. The
Commission has found that cable systems owned by multiple system
operators that are part of a regional cluster---as the Applicants'
systems are here---tend to result in higher prices.[^956] So we have our
own precedent telling us that as a result of the swaps and clustering in
this deal, we will have less competition and higher prices. But the
majority's decision glides right by this and blithely grants Comcast and
Time Warner license to cluster, consolidate and non-compete. Though the
item's language is dense and its reasoning is long, one thing is clear:
it is consumers who are stuck with the consequences.

***[Programming Diversity]{.underline}***

Today's decision describes two types of programming---programming from
networks affiliated with the Applicants and programming from independent
programmers who are not affiliated with the Applicants.

Affiliated programming presents special competitive concerns. Both
Comcast and Time Warner have ownership stakes in popular cable channels.
The Order finds that if an incumbent cable provider owns "must have"
content, it has the ability---and perhaps the incentive---to deny that
content to satellite companies, other cable providers, even the new IPTV
networks from the telephone companies. That makes it difficult for these
entities to compete. This finding is correct. The record shows that if
you don't have access to regional sports games, it is hard to compete
against the dominant cable provider. The Order limits, however, the
definition of "must have" content to regional sports networks. But is
sports programming the only "must have" programming? What if you only
speak Spanish? Wouldn't a Spanish language channel be "must have"? How
about local news? Children's programming? We ought to be careful before
starting down the slippery slope of determining what is and isn't
"must-have" cable content. Setting that aside, the Order imposes a
commercial arbitration remedy to prevent the price hikes and competitive
foreclosure that result from denying competitors access to affiliated
regional sports networks. That's good, as far as it goes. But it
inexplicably leaves out Philadelphia, where the vertically integrated
sports network is locked up in exclusive deals with the incumbent cable
provider. I have heard from a lot of people residing in the City of
Brotherly Love and I feel confident in saying they are not happy about
this situation. The majority has now made some tweaks on the margins to
guard against further inroads beyond the city, but the residents of
Philadelphia are still stuck without competitive choices. You don't have
to take my word for it---read yesterday's *Philadelphia Inquirer*:
"Philadelphia is Exhibit No. 1 for what happens when a cable company
uses 'must-have content' to limit consumers' choice." The story goes on
to call the majority's Philadelphia exclusion a "lousy argument" and
makes the point that "Philadelphians deserve equal protection from the
FCC." I agree.

The availability of truly independent programming is another test of
whether competition exists. Concentrating so much clout in the
Applicants gives them the ability to make or break cable programming
across the country. If an aspiring cable channel cannot win carriage on
these big concentrated networks, its fate is sealed. It's doomed. And
the record is full of examples of channels that will never get to your
television and of communities---especially minority communities---who
struggle for basic access to programming they want and need. We need a
system that works better for them and for all of us---better program
carriage rules, a better complaint process, a better and reinvigorated
leased access system so other voices can be heard. I note that a
commitment to review leased access and a related arbitration condition
have now been added to the item by the majority and this is encouraging.
I commend particularly Commissioner Adelstein for his leadership on
this. The proof of how well the Commission lives up to this commitment
is down the road, of course, so I urge my leased access friends in
localities throughout the country to push us hard to really deliver on
this. We need to support independent programmers and independent content
production. I'll say it again: we just cannot afford to cede so much
content control to so few media companies. It's bad because of the
homogenized entertainment and information we are fed and it's bad for
our democracy. And what happens if these two companies refuse to take
political advertisements for issues they oppose? It's like giving them
the keys to control what we watch, see and hear.

There is one aspect of independent programming where we make headway
today. The Mid-Atlantic Sports Network, an independent regional sports
network, has been struggling to get on the air in the Washington market.
In our own backyard, subscribers to the dominant cable provider can't
watch our hometown team's baseball games. This decision makes real
progress, in that it requires Comcast to enter into commercial
arbitration with the Mid-Atlantic Sports Network to hammer out a deal
that can bring the Washington Nationals to Washington's homes. I believe
this is the right thing to do. Many Members of Congress agree. Let me
note especially the efforts of my new colleague, Commissioner McDowell.
It is a good result. Going forward, this is only the tip of the iceberg,
however, for independent programmers. While we solve this glaring issue
for the Mid-Atlantic Sports Network, there are too many other
independent programmers stuck without similar recourse.

***[Broadband and Net Neutrality]{.underline}***

We all know the future of communications is broadband. I am worried that
this decision tightens the grip that cable companies share with
telephone companies over our nation's broadband access. FCC data show
that these two industries control some 98 percent of the broadband
market. Despite this, the majority's Order goes on at length about the
supposedly competitive broadband market. Indeed, the competitive picture
the majority spins is at odds with too many other reports. A few weeks
ago, the Congressional Research Service characterized the broadband
market as a "cable and telephone duopoly." Just last week, the
International Telecommunications Union (ITU) released its Digital
Opportunity Index. It's a more nuanced metric than the broadband
penetration statistics the ITU employed to peg the United States at
16^th^ in the world in broadband penetration this past year. On this new
assessment of digital opportunity, your country and mine is ranked
21^st^. Right after . . . Estonia. If we want to continue to lay claim
to the United States as the Land of Opportunity, we'd better find a way
to make this country the Land of Digital Opportunity. Placing more
control in a handful of entrenched broadband providers may not be the
best way to go about it.

I also am disappointed that this Order gives such short shrift to
network neutrality. It has been our practice to condition recent mergers
of this scale on enforcement of the four principles of the Internet
Policy Statement that the Commission adopted last year. But here we
backtrack and are too timid to even apply them in an enforceable fashion
to the transaction at hand. More than that, I believe the Commission
needs to consider the addition of a fifth principle to its Internet
Policy Statement. We are entering a world where big and concentrated
broadband providers are searching for new business models and sometimes
even suggesting that web sites may have to pay additional charges and
new tolls for the traffic they generate. This could change the character
of the Internet as we know it. To keep our policies current, we need to
go beyond the original four principles and commit industry and the FCC
to a specific principle of enforceable non-discrimination, one that
allows for reasonable network management but makes clear that broadband
network providers will not be allowed to shackle the promise of the
Internet in its adolescence.

There are other concerns I have with the majority's analysis. It
dismisses concerns in the record about economic redlining, job losses,
PEG channel commitments and key arguments about loss of viewpoint
diversity without fully evaluating their merits. Each of these is
important in its own right and each merits more careful handling than it
receives here.

In the end, the Applicants contend that the proposed transaction has
four public interest benefits: a pledge to roll out new video services,
efficiencies from "geographic rationalization," resolution of the
bankruptcy and unwinding Comcast's interests in a limited partnership
acquired in an earlier transaction. But even the Commission finds two of
those four claimed benefits non-compelling. That leaves two assertions
on which the majority rests its case. One is the promise to deploy new
video services, but this is tempered by the majority's doubt that triple
play broadband will be much enhanced by the transaction. Second is
resolution of the bankruptcy, but no mention is made that other and less
anti-competitive options could have accomplished a similar end. That
doesn't leave much of a case to justify this kind of potential market
disruption and additional industry consolidation.

Just a few weeks ago, the Commission voted to revisit its broadcast
ownership rules. I argued then for an open and transparent process and
for doing independent and granular studies so as to understand what is
happening in various media markets before we vote again to change the
limits. I hope we will do just that. It's what we should be doing here,
too. But today's action doesn't encourage me. We have cable ownership
limits that were returned to the Commission years ago for study and
reworking and they continue to languish with no action. Instead we
plunge ahead to approve a huge transaction without the factual
foundation we should have before changing the media environment so
profoundly.

As I have said before, mergers and acquisitions are not inherently bad.
In the past I have supported mergers when the benefits truly outweigh
the harms. As I mentioned upfront, there are some positives to be found
in the revival and improvement of Adelphia's systems. But they cannot
and do not overcome the broader negatives and consumer costs inherent in
this mega-transaction. Because of the potential for harm and what I
believe are inevitable higher costs for consumers, I do not join my
colleagues in supporting this decision and will dissent from it.

**STATEMENT OF**

**COMMISSIONER JONATHAN S. ADELSTEIN,**

**APPROVING IN PART & DISSENTING IN PART**

Re: *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; Comcast
Corporation, Transferor, to Time Warner Inc., Transferee; Time Warner
Inc., Transferor to Comcast Corporation, Transferee*, Memorandum Opinion
and Order (MB Docket No. 05-192).

After more than a year, this Commission has finally completed its public
interest review of the acquisition by Comcast Corporation ("Comcast")
and Time Warner Cable Inc. ("TWC") of the cable systems and assets of
Adelphia Communications Corporation ("Adelphia"), and related
transactions in which Comcast and TWC will exchange various cable
systems and assets, and expedite the redemption of Comcast's interests
in TWC and Time Warner Entertainment Company ("TWE").

At the outset, I must say that I share many of the concerns raised by
opponents of this merger, and I might have preferred that Adelphia
remain an independent entity, or that it be purchased by companies
without the enormous market power that the Applicants have in some of
Adelphia's service areas. Ultimately, though, the question is whether it
is better for consumers for Adelphia to remain in bankruptcy, or for
this transaction to proceed, with appropriate conditions.

We do not choose the mergers that come before us. Faced with this
merger, we must analyze the record evidence and determine whether the
public will be served better by the transaction being approved or being
denied, and what conditions may be necessary to mitigate harms to
consumers. While I continue to have some concerns, I believe this
acquisition, with the conditions we adopt in this Order, generates
several ancillary benefits that, on balance, satisfy the Commission's
statutory obligations to protect consumers. Because of the willingness
of my colleagues to consider critical consumer protections that
significantly mitigate some of the potential harms, I believe consumers
will be better served by this transaction proceeding rather than
allowing Adelphia to remain in bankruptcy while its customers watch
their service continue to deteriorate.

Notably, in seeking approval for this transaction, Comcast and TWC have
pledged to invest over \$1.6 billion to upgrade Adelphia's network,
which should bring improved broadband service, access to voice over
Internet protocol telephone service, video on demand and other
innovations that are currently enjoyed by many customers of other cable
and telephone companies. Most importantly, my support for this item is
based on critical conditions that were included in our negotiations to
protect sports fans' ability to get video access to their home teams, to
promote the diversity of independent programming available to cable
customers, and to ensure the video marketplace remains competitive.

The underlying fact of this acquisition is that Comcast and TWC are
buying a bankrupt cable company, Adelphia, whose five million
subscribers and cable systems in 31 states are suffering from a severe
lack of investment and a resulting deterioration of service in the
course of a protracted bankruptcy and regulatory process. Adelphia, the
nation's fifth largest cable operator, is essentially rotting on the
vine awaiting the completion of this transaction, and as a result, its
consumers are being further victimized by the fraud perpetrated by
Adelphia's former executives.

This transaction has the benefit of facilitating the successful
resolution of the Adelphia bankruptcy proceeding. It also has the added
benefit of unwinding Comcast's interests in TWC and TWE. Although
Comcast and TWC have a preexisting obligation to unwind Comcast's
interests, their continued financial entanglement has long been a
significant concern to this Commission and many of us who are worried
about the implications of those ties for media consolidation.

In the final analysis, both Comcast and TWC will remain below the
Commission's *defacto* thirty-percent cable ownership limits[^957]
post-transaction. Nevertheless, while there are meritorious reasons to
support the instant acquisition, there are potential public interest
harms that compelled the adoption of essential program access and
program carriage conditions to preserve and enhance a competitive video
market.

Based on my review of the record, there is a reasonable likelihood that
this transaction could increase the incentive for Comcast or TWC to
foreclose or engage in other anticompetitive practices against
independent, unaffiliated programmers. Congress specifically authorized
commercial leased access for unaffiliated programmers to gain reasonable
access to cable systems, and empowered the Commission to create a
pricing regime and complaint process. Unfortunately, while it was widely
recognized that cable operators had the incentive and ability to prefer
their own programming, or the programming of another operator, rather
than an independent programmer, the Commission's pricing regime and
complaint process have not facilitated the use of leased access.

I am pleased that my colleagues are sensitive to this problem and to the
potentially increased harm this transaction would have on small,
independent, unaffiliated programmers. Accordingly, this Order provides
aggrieved independent programmers with the option to seek arbitration in
the event there is a dispute with the cable operator over the terms and
conditions.

Also, because the Commission's price formula currently allows cable
operators to gain full compensation for all potential costs or risks
that leased access might impose on cable subscribers, cable operators
may not be offering independent programmers a reasonable, justifiable
rate to provide access. I am especially pleased that the Chairman and my
colleagues agreed to launch an NPRM within three months on the broader
issue of leased access that will address these concerns about pricing
and other issues. This, combined with the condition on the merger,
presents a real opportunity to revitalize a moribund program, so that it
can reach the potential Congress envisioned in promoting diversity of
programming available to cable consumers. I especially want to thank
Chairman Martin for agreeing with me to move that NPRM to a final order
in a reasonable period of time. I would also thank Harold Feld and the
Media Access Project for their leadership in bringing this to the
attention of the Commission, and for making a real difference in the
final product.

In addressing another concern, Commission analysis determined that
increased geographic clustering resulting from this acquisition would
indeed make it more likely for Comcast or TWC to engage in certain
anticompetitive practices. This could effectively foreclose
overbuilders, satellite and telephone distribution competitors from
gaining access to "must have" regional sports programming owned or
controlled, in whole or in part, by Comcast and TWC.[^958] While the
parties argued that geographic clustering generates certain economies of
scale and efficiency, there is a real opportunity for abuse here, as
well. The Order acknowledges that consumers will gain little measurable
benefit from clustering. I share Commissioner Copps' concern about the
potential abuse of market power such concentration may permit in local
markets where clustering is occurring.

In analyzing the likely impact of this transaction on the relevant video
distribution and programming markets, the Commission found that Comcast
and TWC would have the increased incentive and ability to adopt certain
stealth discriminatory practices, such as "uniform overcharge pricing."
As a result, in this Order, the Commission prohibits Comcast and TWC
from either *offering* their affiliated RSNs to a video distributor on
an exclusive basis or *entering* into any exclusive distribution
arrangement with their affiliated RSNs, notwithstanding the terrestrial
exemption to the program access rules. Additionally, we also provide
aggrieved video distributors with the option to seek binding commercial
arbitration to settle disputes concerning terms and conditions.

I am pleased that my colleagues agreed to "grandfather" cable operators
that currently have access to Philadelphia Sports Net, in order to
refrain from disenfranchising hundreds of thousands of Philadelphia
sports fans. As a result, customers of competitive cable operators in
the Philadelphia market will not have to worry about being cut off from
watching their favorite sports teams. Now these Philadelphia-area cable
operators, similar to other operators seeking access to affiliated RSN
programming across the country, will have the opportunity to request
arbitration to determine the terms and conditions of future contracts.

At my urging, the Commission also agreed to impose the program access
and arbitration conditions to all "affiliated" RSNs in which Comcast or
TWC have management control or an option to purchase an attributable
interest. This extension should capture RSNs in which Comcast or TWC do
not have an ownership interests, but have a relationship that
effectively operates like one.

I am concerned, though, that we do not address in the item those
financial relationships that significantly lower the net effective rate
that applicants pay for the RSN programming. Using arrangement like
marketing or sales agreements, competitors have alleged that the
applicants can artificially raise the rate that competitors must pay for
RSN programming, while insulating themselves from the full impact of the
rates by cross-subsidizing it with other "backroom" deals. The
Commission should remain vigilant about such arrangements and explore it
through the rulemaking process. In that regard, I thank the Chairman for
his commitment to launch an NPRM regarding our cable ownership
attribution rules that will include questions about this practice.

I dissent in part from this Order because I am particularly concerned
that the Commission fails to adopt explicit, enforceable provisions to
preserve and promote the open and interconnected nature of the Internet.
The Internet has been a source of remarkable innovation and has opened a
new world of social and economic opportunities. One reason that it is
such a transformative tool is its openness and diversity. To help
preserve this character, the FCC last fall adopted an Internet Policy
Statement that sets out a basic set of consumer expectations for
broadband providers and the Internet. With these four principles, we
sought to ensure that consumers are entitled to access the lawful
Internet content of their choice, to run applications and use services
of their choice, subject to the needs of law enforcement, and to connect
their choice of legal devices that do not harm the network. I am deeply
concerned that the majority does not require the applicants to meet
these basic provisions adopted unanimously by the Commission and applied
as enforceable conditions to the mergers of our nation's largest
telephone companies, less than a year ago.

It is a major step back to let these large media conglomerates,
including two of the nation's largest broadband providers, grow even
bigger without requiring that they comply with basic network neutrality
principles. The majority's decision to backtrack from earlier Commission
precedent is particularly troubling given that we should be thinking
about how to enhance our consumer protections in the broadband world,
not to erode them. We continue to see a broadband market in which,
according to FCC statistics, telephone and cable operators control
nearly 98 percent of the market, with many consumers lacking any
meaningful choice of providers. Given the increase in concentration and
the significant combinations of content and services presented in this
transaction, this Commission should even be looking to add a principle
to address incentives for anti-competitive discrimination, in addition
to imposing those principles the Commission already has unanimously
approved. Without even the bare minimum of enforceable provisions to
address these issues in the context of this merger, I must dissent in
part.

I am also pleased that my colleagues made efforts to address concerns
about sports and children's programming that deserved attention. I
commend Commissioner McDowell for his leadership in ensuring fair
treatment for the Mid-Atlantic Sports Network in its carriage dispute
with Comcast, and Commissioner Tate for her efforts to help resolve
concerns about the provisioning of PBS Sprout to a competing cable
provider.

I want to thank my colleagues for their willingness to consider so many
of my concerns and adopt meaningful conditions to address potential
anti-competitive harms to consumers. Their cooperation enabled me to
support in part this item.

**STATEMENT OF**

**COMMISSIONER DEBORAH TAYLOR TATE**

Re: *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; Comcast
Corporation, Transferor, to Time Warner Inc., Transferee; Time Warner
Inc., Transferor to Comcast Corporation, Transferee*, Memorandum Opinion
and Order (MB Docket No. 05-192).

The Communications Act requires the parties in these applications to
demonstrate that allowing this transaction to go forward will serve the
public interest, convenience, and necessity. I have carefully reviewed
the thoughtful comments provided by numerous parties -- from the America
Channel to the Urban League of Greater Hartford and everyone in between.
Based on this review, I have concluded that the applicants have met the
standards dictated by the statute, and I therefore support this Order.

In proceedings such as this, the burden is on the Applicants to show by
a preponderance of the evidence that the proposed transactions would
benefit the public interest more than it would harm it. The Commission's
review is limited to the transaction presented, and it should not
attempt to use this Order to conduct an industry-wide rulemaking.
Accordingly, the conditions that we impose today are limited to
merger-specific issues that remedy identified harms that might otherwise
occur. That said, many of the concerns raised in the comments implicate
serious questions about the underlying cable ownership rules that I hope
we can address on an industry-wide basis in other proceedings pending at
the Commission in the near future.

With regard to this item, I have met with the Applicants and received
numerous assurances about how they will behave following the completion
of the proposed transaction. Let me respond to those assurances with one
of my own: I intend to see that promises made are promises kept.

The FCC -- following the lead of the President of the United States --
has made deployment of broadband to all Americans a top priority. This
deployment is critical to our nation's competitiveness in the global
economy and to our national security. It implicates every aspect of our
lives -- from health to education to public safety. All consumers should
expect to benefit from this technology. I have been repeatedly assured
that broadband and other services will be deployed on a fair, equitable,
and expedited basis to the areas served by these companies. Given the
importance of this deployment, let me make it absolutely clear that
so-called redlining -- the distribution of services based solely on the
ethnicity or income level of an area -- will not be tolerated. Period.

I am also troubled by the continued reports of the difficulty that
smaller, independent channels have in getting carriage on cable systems.
The names Comcast and Time Warner frequently are invoked by these
smaller programmers as -- and I'll put it diplomatically here -- being
difficult to work with on this issue. It is in the public interest to
have a diversity of voices on the air. When the America Channel is seen
by more people outside the United States than in it, when
Hispanic-focused channels have trouble getting carriage in Los Angeles
and other large Hispanic markets -- when I hear these and other similar
reports I am far from convinced that cable providers are doing an
adequate job in promoting a diversity of voices on television.

Nonetheless, I am not willing to combat allegations of unfairness with
an unfair act of our own. Addressing industry-wide problems on a
case-by-case basis only undermines the development of a truly
competitive marketplace, and such onerous conditions have no place in an
Order by a Commission committed to helping American businesses stay
ahead in an increasingly competitive world. The Commission once again
takes steps in line with my own philosophy of regulatory humility and
resists the temptation to burden the market with rules and regulations
that would stifle innovation and growth.

I do, however, think the time has come to reenergize the cable ownership
discussion at the FCC. The Act requires us to develop meaningful
protections through our rulemaking process to ensure that the incentives
created by vertical integration of cable systems with affiliated
programming do not unreasonably restrict the flow of independent
programming to consumers. The comments that have come to my attention --
comments including statements like "unlawful refusal," "intimidation,"
and "coercion" -- are serious allegations. I call on the parties that
have raised these allegations to refresh the record with updated filings
and to join us in a renewed dialog about how the FCC can promote the
public interest in a diversity of voices while still allowing cable
operators the freedom to make sound business decisions.

I know that there are many people from across this country who are
concerned about this transaction. Many have filed comments and been
extremely helpful in shaping the discussions related to these
transactions. I hope that they will continue to be helpful by assisting
the FCC in monitoring the implementation of this Order. The Order notes
many of the ways that parties can seek redress for the specific concerns
that have been raised in this process:

-   Victims of alleged anticompetitive pricing schemes can file
    complaints with the Commission or in court.

-   Disputes between Local Franchising Authorities and cable operators
    can be resolved in court or in other forums as designated by state
    and local law.

-   Sections 613 and 616 of the Telecommunications Act allow complaints
    to be raised in the event that cable operators attempt to use their
    market power to limit the amount of programming available to the
    public or to coerce networks into exclusive arrangements as a
    condition of carriage.

-   Parties can (and should) file comments in relevant open proceedings
    addressing industry-wide solutions to particular issues.

-   Parties and interested consumers should contact other officials to
    register concerns -- whether they be Members of Congress or other
    agencies such as the FTC and the Department of Justice.

I encourage consumers and programmers and anyone else to avail
themselves of those mechanisms if they feel they have been treated
unfairly by these or any other service providers out there.

I am pleased to note that this proceeding has also led to some
resolution of the issue concerning access to PBSKids Sprout. PBS creates
publicly-funded, noncommercial programming, which makes it unique among
programming providers in America. Its unique nature and inherent public
interest value should not and can not be allowed to be used by *any*
company as leverage in negotiations with another company that wants to
provide this programming to its subscribers. By making PBS Sprout
available to other Video-on-Demand platforms, Comcast has committed to
making this important children's programming as widely available as
possible. The FCC should not be in the business of writing contracts
between private companies, and the resolution of this issue through
private rather than regulatory means recognizes the unique nature of PBS
programming, but does not impose onerous burdens on Comcast's ability to
make business decisions.

Finally, I want to take a moment to recognize that while there are
concerns and criticisms of the cable industry that have taken a center
stage in this proceeding, the parties to this proceeding -- and many
others in the industry -- have been good corporate citizens. These
companies dedicate considerable amounts of time, money, and energy to
the communities they serve. Their charitable endeavors have made a
difference to thousands of lives. Moreover, they have, in some cases,
worked to use the power of the media to make a positive difference in
people's lives. From educating the public on how to control the content
that enters their homes to the enormously successful Cable in the
Classroom program to support for public affairs programming like C-SPAN,
these companies have worked to inform, educate, and inspire the American
people through the power of media. Yes, I would like to see them do
more, and I have and will continue to say so. But by expressing that
desire, I do not in any way mean to suggest that they do not deserve
credit for all that they have already accomplished.

I thank the Chairman, my fellow Commissioners, and the dedicated FCC
staff for their hard work on this item. I particularly want to thank all
those who filed thoughtful comments and excellent legal analysis which
contributed to this important debate. I look forward to a continuing
dialog with all parties in the coming months.

**STATEMENT OF**

**COMMISSIONER ROBERT M. MCDOWELL**

Re: *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; Comcast
Corporation, Transferor, to Time Warner Inc., Transferee; Time Warner
Inc., Transferor to Comcast Corporation, Transferee*, Memorandum Opinion
and Order (MB Docket No. 05-192).

I support the Commission's decision to approve this transaction.
Clearly, the merger will benefit consumers, particularly those who
continue to be served by Adelphia during its lengthy bankruptcy
proceeding, by creating synergies that will spur investment, create
efficiencies and speed the roll-out of competitive new technologies.

However, it has become clear to me through this merger review process
that the Commission's regulations governing program carriage agreements
and program access by MVPDs for years have not been enforced in the
expeditious manner contemplated by Congress and our own rules. Although
the substance of these regulations provides MVPDs and programmers with
standards and processes for redress of their program access and program
carriage disputes with cable providers, very few parties have filed
complaints to adjudicate their disputes. Those that are filed often wait
too long for resolution. In fact, it seems that many disputes are never
resolved. Why? Because the FCC has not been doing its job. The parties
to these complaints deserve better treatment from this Commission. More
importantly, so do consumers. Competition, in this quickly evolving
market, should not be held back by an indolent bureaucracy's failure to
obey simple Congressional mandates. Speedy resolution of disputes is
critical, especially where regional sports networks are concerned. When
a programmer or an MVPD is unable to air games at the start of a season,
the competitive damage to its business has already been done. The FCC's
inaction should not be responsible for such a delay. Accordingly, I
strongly support the commitment by the Commission to review and reform
the procedures for enforcement of its program access and program
carriage rules. And I applaud the commitment to do so in short order.

In the meantime, part of what the Commission is doing today is to pave a
path toward a private sector solution to resolve program access
disputes. Of course, our preference is that conflicts be resolved and
deals be made without parties having to resort to litigation or
arbitration. This Order provides incentives for such resolutions.
However, should parties refuse to negotiate or fail to agree, we are
paving a path toward private sector binding arbitration, with the
ultimate destination being final resolution. With a two-step analysis
commencing with a determination of whether carriage should be required
at all, followed by baseball-style arbitration to determine rates, terms
and conditions, no particular outcome is guaranteed. Furthermore, no new
legal standards are being created. However, to ensure speedy resolution,
we are imposing a "shot clock" on all proceedings, including any
relevant Commission review of arbitration decisions. Again, arbitration
can be avoided if parties make deals. But, should arbitration be
necessary, it will be concluded swiftly and at minimal cost. This
dispute resolution framework is used successfully thousands of times per
day throughout the country in the private sector, and we are confident
that it will be just as successful in this context as well. We believe
all parties will benefit, especially the American consumer.

For similar reasons, I also wholeheartedly support binding arbitration
of the dispute between the Mid-Atlantic Sports Network and Comcast over
carriage of the Washington Nationals games. Protracted negotiations and
legal wrangling between the parties somehow have failed to produce
televised coverage of 75 percent of this season's games for the 1.3
million Comcast subscribers in the Washington D.C. market. And,
apparently, the MASN complaint has been left to rot in some lost crypt
inside this building. Accordingly, the narrow arbitration remedy in the
Order creates a private-sector solution to the dispute. This remedy also
does not dictate a particular outcome, nor does it create a new legal
standard for reviewing program carriage issues. It does, however,
provide for a timely and long-overdue decision that will break the
long-standing impasse between MASN and Comcast. One way or the other, a
decision will be made. Of course, the parties are free to resolve the
dispute beforehand, at any time.

I would like to thank my fellow Commissioners for their hard work on
this important matter. The lights have been burning late here at the FCC
recently. Many thanks to Commissioner Tate for her insight -- especially
regarding children's programming. Thank you, Commissioner Adelstein, for
your efforts regarding program access and carriage. Commissioner Copps,
many thanks for initiating the conversation on net neutrality. I
appreciate your thoughtfulness and look forward to additional dialogue.
And lastly, Mr. Chairman, thank you for your leadership, especially
working so hard into the wee hours.

I thank Donna Gregg and the Media Bureau staff for their dedication and
hard work on this item. I look forward to our review and reform of our
rules.

[^1]: Applications for Consent to the Assignment and/or Transfer of
    Control of Licenses, Adelphia Communications Corporation, Assignors,
    to Time Warner Cable Inc., Assignees; Adelphia Communications
    Corporation, Assignors and Transferors, to Comcast Corporation,
    Assignees and Transferees; Comcast Corporation, Transferor, to Time
    Warner Inc., Transferee; Time Warner Inc., Transferor, to Comcast
    Corporation, Transferee, Applications and Public Interest Statement
    (May 18, 2005) ("Public Interest Statement"). The term
    "Applications" refers to the Public Interest Statement, associated
    exhibits, and the letter from Arthur H. Harding, Fleischman and
    Walsh, L.L.P., Counsel for Time Warner Inc., to Marlene H. Dortch,
    Secretary, FCC (June 3, 2005) (additional agreements relating to the
    underlying transactions). In addition, the Applicants filed amended
    asset purchase agreements pursuant to Adelphia's Second Modified
    Fourth Amended Plan of Reorganization. *See* Letter from Angie
    Kronenberg, Willkie, Farr & Gallagher LLP, Counsel for Adelphia
    Communications Corp., to Marlene H. Dortch, Secretary, FCC (June 8,
    2006). The Media Bureau placed the Applications on public notice on
    June 2, 2005, DA 05-1591, MB Docket No. 05-192, establishing a
    comment cycle for this proceeding. See Appendix A for a list of
    commenters and petitioners filing in this proceeding and the
    abbreviations by which they are identified in this Order. As
    discussed more fully at para. 16, *infra*, the Applications involve
    assignment of licenses, transfers of control, and *pro forma*
    assignment of licenses. For convenience, we will refer to the
    overall filings as transfers.

[^2]: As used throughout this Order, the term "Time Warner" will refer
    generally to both Time Warner Inc. and its subsidiary, Time Warner
    Cable.

[^3]: Public Interest Statement at 2. The so-called "Rigas Family"
    systems in the following communities are not subject to the
    transactions Township of Roulette, Township of Liberty, Township of
    Annin, Township of Portgage, Township of Shippen and Township of
    Lumber, all in Pennsylvania; Borough of Coudersport, Borough of Port
    Allegany and Borough of Emporium, all in Pennsylvania; and the
    County of Louisa, Virginia. *See* Adelphia Dec. 12, 2005 Response to
    Information Requests II.A.1, 3, 7, 8 and 9. In addition, Adelphia
    stated that its systems in St. Mary's, Pennsylvania and Puerto Rico
    are not part of the transactions. Adelphia Dec. 12, 2005 Response to
    Information Request II.A.2; *see also* Public Interest Statement at
    6 n.12. In a filing with the federal bankruptcy court, Adelphia
    represented that its 50% interest in a joint venture in Puerto Rico
    was sold on October 31, 2005. *See* Debtors' Fourth Amended
    Disclosure Statement Pursuant to Section 1125 of the Bankruptcy
    Code, U.S. Bankruptcy Court Southern District of New York, Case No.
    02-41729, filed Nov. 21, 2005, at 60, 436. ("Fourth Amended
    Disclosure Statement"). *See* Adelphia Dec. 12, 2005 Response to
    Information Request for a listing of the Adelphia cable systems
    involved in the Applications.

[^4]: 47 U.S.C. §§ 214, 310(d).

[^5]: The Applicants state that each of the Adelphia Transactions, as
    described more fully below, is "conditioned on contemporaneous
    consummation of the other." *See* Public Interest Statement at 3.
    The Applicants add that the Adelphia Transactions are not dependent
    on the occurrence of the system swaps and redemption transactions
    between Time Warner and Comcast. *Id.* The transactions are
    described fully at paras. 11-16, *infra.*

[^6]: Pursuant to the terms of the Commission's decision regarding the
    *Comcast-AT&T* transaction, Comcast must divest its 17.9% equity
    interest in Time Warner Cable and its 4.7% limited partnership
    interest in TWE. Both interests are currently held in a
    Commission-mandated trust. *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, 23274-75 ¶¶ 74-77 (2002) ("*Comcast-AT&T Order*"). *See
    infra* paras. 13-14 for a discussion of the proposed divestiture of
    the TWC and TWE Interests.

[^7]: Public Interest Statement at 5-6 and Ex. R (Map and Chart of
    Comcast Post-Transactions Service Areas).

[^8]: *Id*. at 5-6 and Ex. Q (Map of Time Warner Post-Transactions
    Service Areas).

[^9]: *See* *infra* paras. 11-16 for a full discussion of various phases
    of the transactions.

[^10]: Public Interest Statement at i-iv.

[^11]: *See Comcast-AT&T Order,* 17 FCC Rcd at 23274-75 ¶¶ 74-77.

[^12]: Public Interest Statement at 21-40, 45-60.

[^13]: *Id*. at 68.

[^14]: *Id*. at ii-iii; *see infra* Section VIII (discussing claimed
    benefits).

[^15]: *See* 47 U.S.C. §§ 214, 310(d); *see also 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, 9817 ¶ 1 (2000) ("*AT&T-MediaOne
    Order*"); *Applications for Consent to the Transfer of Control of
    Licenses and Section 214 Authorizations from Tele-Communications,
    Inc., Transferor, to AT&T Corp., Transferee*, 14 FCC Rcd 3160, 3168
    ¶ 13 (1999) ("*AT&T-TCI Order*").

[^16]: *See General Motors Corporation and Hughes Electronics
    Corporation, Transferors, and The News Corporation Limited,
    Transferee*, 19 FCC Rcd 473, 484 ¶ 16 (2004) ("*News Corp.-Hughes
    Order*").

[^17]: *See infra* paras. 23-24 for a complete discussion of the
    Commission's standard of review analysis.

[^18]: *News Corp.-Hughes Order*, 19 FCC Rcd at 477 ¶ 5.

[^19]: Adelphia's subscriber count includes subscribers served by
    several joint ventures with Comcast, specifically, the Century-TCI
    Joint Venture and the Parnassos Joint Ventures. Comcast will acquire
    all of Adelphia's interests in the Century-TCI and Parnassos
    partnerships, including approximately one million subscribers and
    thereafter will transfer these assets and subscribers to Time
    Warner. In addition, Adelphia holds a 50% interest (with the
    remaining 50% held by Ibis Communication Company) in the Palm Beach
    Group Cable Joint Venture, which serves 825 subscribers. Adelphia's
    50% interest in the Palm Beach Group Cable Joint Venture will be
    assigned to Comcast, with Comcast managing the day-to-day operations
    upon consummation of the transactions. *See* Public Interest
    Statement at 6-7, 73-75; *see also* Adelphia Dec. 12, 2005 Response
    to Information Request II.A.6. At the time the Applications were
    filed, Adelphia also served subscribers through three joint ventures
    with Tele-Media Corporation of Delaware, in which it was the
    majority partner (the "Tele-Media Joint Ventures"). Separately from
    the instant transactions, Adelphia entered into an agreement to
    purchase the minority equity interests in each of the Tele-Media
    Joint Ventures. Public Interest Statement at 6-7. On May 26, 2005,
    Adelphia acquired 100% ownership of the Tele-Media Ventures. *See*
    Fourth Amended Disclosure Statement at 435.

[^20]: Adelphia owns the Empire Sports Network, an inactive regional
    sports network, but it is excluded from the transactions. Adelphia's
    residential and commercial security monitoring operations in Maine
    and its long distance telephone resale business are also excluded
    from the transactions. Public Interest Statement at 7.

[^21]: Adelphia began offering VoIP telephone service on a trial basis
    in January 2005. Trial participants were limited to Adelphia
    employees in the Colorado Springs, Colorado area. Adelphia suspended
    its VoIP trial on October 11, 2005, and no longer provides VoIP
    service to any customers, including Adelphia employees. *See*
    Adelphia Dec. 22, 2005 Response to Information Request IV.E.

[^22]: 11 U.S.C. §§ 1101 *et* *seq.*

[^23]: Public Interest Statement at 8 (citing *In re Adelphia
    Communications Corp., et al.,* Motion for Supplemental Order,
    Pursuant to Sections 105, 363, 364, 503, 507 and 1123 of the
    Bankruptcy Code, Approving Supplemental Bid Protections in
    Connection With the Sale of Substantially All of the Assets of
    Adelphia Communications Corporation and Certain of its Affiliates,
    Case No. 02-41729 (Bankr. S.D.N.Y., filed Apr. 8, 2005) at 5-6). The
    bankruptcy court granted the Applicants' motion. *In re Adelphia
    Communications Corp. et al.,* Supplemental Order, Case No. 02-41729
    (Bankr. S.D.N.Y. Apr. 21, 2005) (Gerber, J.).

[^24]: Public Interest Statement at 73. The Applicants estimate in their
    Public Interest Statement that there are 92.6 million MVPD
    subscribers nationwide. *Id.* at 73 n.185 (citing Kagan Media Money,
    Apr. 26, 2005, at 7).

[^25]: These include systems owned jointly with Time Warner Cable, which
    together served approximately 1.5 million subscribers when the
    Applications were filed, as well as systems owned jointly with
    Adelphia, which served approximately one million subscribers as of
    that date. Applicants' Reply at Ex. F.

[^26]: Public Interest Statement at 73-75.

[^27]: *Id.* at 74 n.187.

[^28]: *Id.* at 75.

[^29]: *Id*. at 15.

[^30]: Letter from Martha Heller, Wiley, Rein & Fielding, LLP, Counsel
    for Comcast Corp., to Marlene H. Dortch, Secretary, FCC (Mar. 29,
    2006) ("Comcast Mar. 29, 2006 Ex Parte") at 2. By the end of 2005,
    the service was available to 16 million homes. *Id*. In the Public
    Interest Statement, Comcast stated that by the end of 2005 the
    service would be available to over 15 million homes, with full
    deployment to over 40 million homes passed targeted for 2006. Public
    Interest Statement at 15. Comcast Business Communications ("CBC"), a
    wholly owned subsidiary, offers integrated broadband communications
    services to business and governmental customers, as well as to
    schools and libraries. CBC also provides local exchange service to
    small and medium-sized business customers. Comcast's cable telephony
    and CBC's business offerings include long distance service, provided
    mostly on a resale basis. Public Interest Statement at 15.

[^31]: These networks include (1) E! Entertainment (60.5% interest); (2)
    The Golf Channel (99.9% interest); (3) The Outdoor Life Network
    (100% interest); (4) The Style Network (60.5% interest); (5) G4
    Network (83.5% interest); (6) TV One (32.8% interest); (7) AZN
    Television (100% interest); (8) iN DEMAND (54.1% interest); and (9)
    iN DEMAND2 (54.1% interest). Public Interest Statement at 15-16;
    *see also Annual Assessment of the Status of Competition in the
    Market for the Delivery of Video Programming,* 21 FCC Rcd 2503,
    2622-25 App. C, Table C-1 (2006) ("*Twelfth Annual Video Competition
    Report*").

[^32]: Comcast's RSNs include (1) Comcast SportsNet Philadelphia (84.1%
    interest), offered in Pennsylvania, Delaware, and southern New
    Jersey, which carries, among other programming, the games of the
    Philadelphia Flyers and 76ers; (2) Comcast SportsNet Mid-Atlantic
    (100% interest) offered in Maryland, Virginia, Delaware, the
    District of Columbia, and parts of Pennsylvania and West Virginia,
    which carries the games of the Baltimore Orioles, the Washington
    Wizards, and the Washington Capitals, as well as a variety of
    college sports; (3) Comcast/Charter Sports Southeast (70% interest),
    carried in Alabama, Arkansas (Little Rock area only), Florida,
    Georgia, Kentucky (Louisville, Lexington, south-central, Paducah and
    western), Louisiana, Mississippi, North Carolina (Asheville-Hickory
    area only), South Carolina (Greenville-Spartanburg area, Camden, and
    coastal South Carolina between Charleston and Port Royal),
    Tennessee, Virginia, and West Virginia, which provides a mix of live
    sports programming and sports news and analysis with a focus on
    intercollegiate sports; (4) Comcast SportsNet Chicago (30%
    interest), offered in Iowa, most of Illinois and Indiana, and parts
    of southern Wisconsin, which carries game coverage of the Chicago
    Bulls, Blackhawks, Cubs, and White Sox; (5) Comcast SportsNet West
    (100% interest), offered in parts of California, Oregon, and Nevada,
    which carries games of the Sacramento Kings and the WNBA Sacramento
    Monarchs, as well as Fresno State football, Sacramento State
    football, UC Davis football and basketball, and other local and
    regional sports programming; and (6) Comcast Local Detroit (100%
    interest), offered in Michigan, Illinois and Indiana, which carries
    local content including coverage of high school games, the
    Mid-American Conference, Michigan and Michigan State men's
    basketball games, and some Detroit Shock (WNBA) games. Public
    Interest Statement at 17-18, Ex. AA; *see also*
    www.comcastlocal.com/channels.asp/ (visited June 16, 2006). Comcast
    also holds a 50% ownership interest in Fox Sports Channel New
    England, which carries Boston Celtics games and reaches households
    in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island,
    and Vermont. In addition, Comcast has an 8.16% ownership interest in
    SportsNet New York, which launched in March 2006, and features
    regular season Mets games. *See* Comcast Mar. 29, 2006 Response to
    Information Request III.F.1.; Comcast Dec. 22, 2005 Response to
    Information Request III.A.1.; *see also* Public Interest Statement
    at 17 n.37; Mark Newman, *SportsNet New York Begins New Era,* Major
    League Baseball, Mar. 16, 2006, *at*
    http://mlb.mlb.com/NASApp/mlb/news/article.jsp?ymd=20060315&content_id=1351407&vkey=news_mlb&text=.jsp&c_id=mlb
    (last visited June 19, 2006).

[^33]: Comcast's team-specific networks are Falcons Vision, Braves
    Vision, and the Dallas Cowboys Channel. Public Interest Statement at
    18.

[^34]: Comcast owns the following non-sports local and regional networks
    (1) cn8, The Comcast Network, which provides original local and
    regional news, public affairs, sports, and family programming in
    Pennsylvania, New Jersey, Delaware, Maryland, Massachusetts, New
    Hampshire, Connecticut and Maine (100% interest); (2) Comcast
    Entertainment TV, which is carried in Denver, Colorado (100%
    interest); (3) Comcast Local, which is carried in Detroit, Michigan
    (100% interest); (4) Pittsburgh Cable News Channel, carried in
    Pittsburgh, Pennsylvania (30% interest); and (5) New England Cable
    News (50% interest). *See* Comcast Mar. 29, 2006 Ex Parte at Att.
    ("Video Programming Networks in which Comcast has an Attributable
    Interest"); *see also* Public Interest Statement at 17.

[^35]: Public Interest Statement at 16-17. Comcast holds a 40% interest
    in PBS Kids Sprout. *See* Comcast Mar. 29, 2006 Response to
    Information Request III.F.1.

[^36]: Public Interest Statement at 9-11, 73. This subscriber figure
    includes 6.6 million subscribers served by systems that Time Warner
    Cable owns jointly with other cable operators, including systems
    co-owned with Comcast that serve 1.5 million subscribers, and
    systems owned jointly with the Time Warner
    Entertainment-Advance/Newhouse Partnership ("TWE-A/N"), which owns
    systems serving 5.1 million subscribers, of which systems serving
    2.9 million subscribers are managed by Time Warner Cable. The
    remaining 2.2 million TWE-A/N subscribers are served by systems
    managed by Bright House Networks, an affiliate of Advance/Newhouse.
    All of the foregoing systems are attributable to Time Warner Cable.

[^37]: *Id*. at 73.

[^38]: *Id.* at 5-6.

[^39]: *Id*. at 11-13. Time Warner holds a 30.3% equity interest in iN
    DEMAND. *Id.* at 16 n.35.

[^40]: *Id.* at 9. In 2005, Time Warner Cable conducted an IPTV (i.e.,
    Internet Protocol Television) trial in San Diego, California. The
    service, called "TWC Broadband TV," permits existing video customers
    to view 75 of the most popular channels on a broadband connected
    Windows personal computer within the subscriber's home. TWC
    Broadband TV is essentially a video simulcast service, as opposed to
    a new tier, because subscribers are receiving programming via their
    computers that they have previously paid for and can receive by
    traditional video delivery. *See* Letter from Arthur H. Harding,
    Fleischman and Walsh, L.L.P., Counsel for Time Warner Inc., to
    Marlene H. Dortch, Secretary, FCC (Nov. 10, 2005) ("Time Warner Nov.
    10, 2005 Ex Parte") at Decl. of Peter Stern at 2-3. Time Warner has
    also announced plans to develop a family tier.

[^41]: Public Interest Statement at 29, 30. Time Warner states that its
    VoIP service is available to over two-thirds of its cable homes
    passed. *Id.* at 29.

[^42]: *Id.* at 11.

[^43]: *Id.* at 12-13. In January 2006, CBS and Warner Brothers
    Entertainment announced the merger of their separately owned
    networks, The WB and UPN, to form a new broadcast television
    network, The CW. CBS and Warner Brothers Entertainment will each
    have a 50% interest in the new entity. *See* CBS Corp., *CBS
    Corporation and Warner Bros. Entertainment Form New 5th Broadcast
    Network*, Jan. 24, 2006, *at*
    http://www.cbscorporation.com/news/prdetails.php?id=173 (last
    visited June 28, 2006). Through its Turner Broadcasting System
    Group, Time Warner Inc. holds a 100% interest in a number of
    programming services, including Boomerang, Cartoon Network, CNN, CNN
    *En Espanol*, CNN Headline News, CNN International, Turner
    Broadcasting System, Turner Classic Movies, Turner Network
    Television, and Turner Network Television HD. At the time of the
    filing of the instant Applications, Liberty Media and Time Warner
    each held a 50% interest in Court TV. In May 2006, Time Warner
    acquired Liberty Media's remaining 50% interest. *See* *Twelfth
    Annual Video Competition Report*, 21 FCC Rcd at 2622-25 App. C,
    Table C-1; *see also* Public Interest Statement at Ex. W;
    [Communications Daily,]{.smallcaps} May 15, 2006, at 11-12.

[^44]: Public Interest Statement at 12. In addition, Time Warner Inc.
    holds a 100% interest in the following programming services under
    the HBO Group, HBO, HBO2, HBO Comedy, HBO Family, HBO Latino, HBO
    Signature, HBO Zone, HBO HD, Cinemax, Cinemax HD, Action Max, \@Max,
    5StarMax, MoreMax, Outer Max, Thriller Max, and WMAX. *Twelfth
    Annual Video Competition Report*, 21 FCC Rcd at 2622-25 App. C,
    Table C-1.

[^45]: Time Warner Cable's local news channels include, Capital News
    9-Albany, Albany, New York; News 8 Austin, Austin, Texas; News 10
    Now-Syracuse, Syracuse, New York; News 14, Carolina-Charlotte,
    Charlotte, North Carolina; News 14, Carolina-Raleigh, Raleigh, North
    Carolina; NY1 News, New York, New York; NY 1 *Noticias*, New York,
    New York; and R News, Rochester, New York. *See* Time Warner Dec.
    20, 2005 Response to Information Request III.A.

[^46]: When the Applications were filed, Time Warner Inc. held, through
    its wholly-owned subsidiary, Turner Broadcasting System, Inc., a
    100% interest in the regional network Turner South (distributed in
    Alabama, Georgia, Mississippi, Tennessee, South Carolina, and
    portions of North Carolina), which holds the distribution rights for
    several professional sports teams, including the Atlanta Thrashers
    National Hockey League team, the Atlanta Hawks National Basketball
    Association team, and the Atlanta Braves Major League Baseball team.
    Time Warner Inc. has since sold Turner South to Fox Networks Group,
    a subsidiary of the News Corp., for \$375 million. Turner South has
    approximately 8.3 million subscribers. *See* Letter from Arthur H.
    Harding, Fleischman and Walsh, L.L.P., Counsel for Time Warner Inc.,
    to Marlene H. Dortch, Secretary, FCC (Mar. 3, 2006) ("Time Warner
    Mar. 3, 2006 Ex Parte"); Joe Flint, *News Corp. Buys Turner South
    For \$375 Million,* [Wall St. J.,]{.smallcaps} Feb. 24, 2006, at B4.
    Additionally, through Time Warner Cable, Time Warner Inc. holds a
    100% interest in MetroSports, Kansas City, Missouri. *See* *Twelfth
    Annual Video Competition Report*, 21 FCC Rcd at 2644-49 App. C,
    Table C-3; *see also* Time Warner Cable,
    http://www.timewarner.com/corp/businesses/detail/time_warner_cable/
    (last visited June 19, 2006). Time Warner Inc. also has an ownership
    interest (26.8%) in SportsNet New York, a New York City based sports
    channel that launched in March 2006. *See* Comcast Dec. 22, 2005
    Response to Information Request III.A.1.; *see also* Arthur H.
    Harding, Fleischman and Walsh, L.L.P., Counsel for Time Warner Inc.,
    to Marlene H. Dortch, Secretary, FCC, (Mar. 2, 2006) ("Time Warner
    Mar. 2, 2006 Ex Parte") at 5-6.

[^47]: We will use the term "Adelphia Transactions" to refer to the
    initial phase of the overall transactions wherein Time Warner and
    Comcast separately would acquire various cable systems that, in the
    aggregate, comprise substantially all of the domestic cable systems
    owned or managed by Adelphia.

[^48]: Time Warner NY Cable, LLC is a wholly-owned subsidiary of Time
    Warner Cable. Public Interest Statement at 2.

[^49]: *See* *id*. at Ex. A, Asset Purchase Agreement, dated as of April
    20, 2005, between Adelphia Communications Corp. and Time Warner NY
    Cable, LLC, and Ex. B, Asset Purchase Agreement, dated as of April
    20, 2005, between Adelphia Communications Corp. and Comcast Corp.,
    each as amended pursuant to amendments dated June 24, 2005, June
    21**,** 2006, and June 26, 2006.

[^50]: Public Interest Statement at 2-3; *see also* Letter from Arthur
    H. Harding, Fleischman and Walsh, L.L.P., Counsel for Time Warner
    Inc., to Marlene H. Dortch, Secretary, FCC (Mar. 23, 2006) ("Time
    Warner Mar. 23, 2006 Ex Parte") at Att. 1; Adelphia Dec. 12, 2005
    Response to Information Requests II.A.1, 3, 7, 8 and 9.

[^51]: Public Interest Statement at 3, 74. Of these, approximately one
    million subscribers are already attributable to Comcast via existing
    partnerships. *Id.*; *see also* Adelphia Dec. 12, 2005 Response to
    Information Request II.A.6. According to Adelphia's Form 10-K Annual
    Report for the year ending Dec. 31, 2004, if Adelphia's purchase
    agreement with Comcast is terminated due to failure to receive
    Commission or other applicable antitrust regulatory approvals, TWNY
    has agreed to acquire the assets of Adelphia that Comcast would have
    acquired and to apply for Commission and other regulatory approvals.
    This agreement, referred to as the "Expanded Transaction,"
    stipulates that TYNY will pay the \$3.5 billion purchase price to
    have been paid by Comcast, and that the Comcast subsidiaries that
    hold direct interests in the Century-TCI/Parnassos Partnerships will
    contribute the Comcast Discharge Amount, valued at between \$549
    million and \$600 million, to the Century-TCI/Parnassos
    Partnerships. Thereafter, the Century-TCI/Parnassos Partnerships
    would distribute their respective portions of the Comcast Discharge
    Amount to the Company's subsidiaries that hold a direct interest in
    such Century-TCI/Partnerships. *See* Adelphia Report on Form 10-K
    for the Year Ending Dec. 31, 2004 at 36-37; *see also* Public
    Interest Statement at Exs. H and M.

[^52]: *See* Public Interest Statement at Ex. C, Exchange Agreement by
    and among Comcast Corp., Time Warner Cable Inc., and affiliates of
    Comcast Corp. and Time Warner Cable Inc.

[^53]: Public Interest Statement at 3.

[^54]: *See* Letter from Arthur H. Harding, Fleischman and Walsh, L.L.P,
    Counsel for Time Warner Inc., to Marlene H. Dortch, Secretary, FCC
    (Mar. 31, 2006) ("Time Warner Mar. 31, 2006 Ex Parte"). Time Warner
    explains that the difference in subscriber counting methodology,
    along with the different subscriber reporting periods and rounding,
    are factors accounting for a smaller net subscriber gain for Time
    Warner when compared to subscriber data included in the Applicants'
    Public Interest Statement. *Id.* In addition, Comcast provides
    figures that differ slightly from those submitted by Time Warner
    because the companies utilize different subscriber counting methods.
    *See* Letter from Martha E. Heller, Wiley Rein & Fielding, LLP,
    Counsel for Comcast Corp., to Marlene H. Dortch, Secretary, FCC
    (Mar. 30, 2006) ("Comcast Mar. 30, 2006 Ex Parte"); *see also infra*
    notes 187 and 197.

[^55]: *See* Public Interest Statement at Ex. D, Time Warner Cable
    Redemption Agreement among Time Warner Inc., Comcast Corp., and
    certain related entities of Time Warner and Comcast Corporation.

[^56]: *Comcast-AT&T Order,* 17 FCC Rcd at 23274-75 ¶¶ 74-77.

[^57]: Public Interest Statement at 3; *id.* at Ex. A, Asset Purchase
    Agreement between Adelphia Communications Corp. and Time Warner NY
    Cable LLC, Section 2.8, at 53; *see also* Time Warner Dec. 12, 2005
    Response to Information Request. Time Warner Cable updated
    information regarding subscriber totals involved in each transaction
    and indicated that 585,220 subscribers would be transferred to
    Comcast as part of the TWC redemption transaction. *See* Time Warner
    Mar. 23, 2006 Ex Parte, Att. 1 at 2.

[^58]: Public Interest Statement at 3.

[^59]: *Id.* at 2, Ex. E; *see also* Time Warner Dec. 12, 2005 Response
    to Information Request. In addition, Comcast will retain in the
    trust mandated in the *Comcast-AT&T* *Order* shares of Time Warner
    common stock representing approximately 1.3% of the voting stock of
    Time Warner. This interest is not related to the instant
    transactions. Comcast acquired these shares as a result of a
    restructuring of TWE in March 2003 subsequent to which Comcast
    received one share of Series A Mandatorily Convertible Preferred
    Stock of Time Warner that converted automatically into shares of
    Time Warner common stock on March 31, 2005. Public Interest
    Statement at 4 n.8.

[^60]: *Id*. at 4. Updated subscriber information from Time Warner
    indicates that 164,561 subscribers would be transferred to Comcast
    as a result of the TWE Redemption Agreement. *See* Time Warner Mar.
    23, 2006 Ex Parte at Att. 2.

[^61]: Public Interest Statement at 4. Time Warner also will directly
    own approximately nine to 12% of the capital stock (non-voting
    common stock) of a subsidiary of Time Warner Cable. Time Warner
    Cable will own the remaining interest in the subsidiary. *Id.* at 4
    n.7. Applicants do not otherwise identify the referenced subsidiary.

[^62]: *Id*. at 4.

[^63]: *See* *Adelphia Communications Corporation, Debtor-in-Possession,
    Time Warner Inc. and Comcast Corporation Seek Approval to Transfer
    Control and/or Assign FCC Authorizations and Licenses*, Public
    Notice, 20 FCC Rcd 10051 (MB 2005) ("*Comment Public Notice*"). The
    *Comment Public Notice* established July 5, 2005, as the deadline
    for filing comments and/or petitions to deny, and July 20, 2005, as
    the deadline for filing responses to comments and/or oppositions to
    the petitions. On June 15, 2005, the Acting Chief of the Media
    Bureau adopted a Protective Order under which third parties were
    allowed to review confidential or proprietary documents submitted by
    the Applicants. *See Adelphia Communications Corp., et al*., 20 FCC
    Rcd 10751 (MB 2005) ("*Initial Protective Order*").

[^64]: *See* Petition to Condition Approval of Application to Transfer
    Control of CARS Stations, City of Buenaventura, California ("City of
    San Buenaventura"); Petition to Deny of Communications Workers of
    America, International Brotherhood of Electrical Workers
    ("CWA/IBEW"); Petition to Deny of Free Press, Center for Creative
    Voices in Media, Office of Communication of the United Church of
    Christ, Inc., U.S. Public Interest Research Group, Center for
    Digital Democracy, CCTV, Center for Media & Democracy, Media
    Alliance, National Hispanic Media Coalition, The Benton Foundation
    and Reclaim the Media ("Free Press"); Petition to Deny of National
    Hispanic Media Coalition ("NHMC"); Petition of TCR Sports
    Broadcasting Holding, L.L.P. to Impose Conditions or, in the
    Alternative, to Deny Parts of the Proposed Transaction ("TCR"); and
    The America Channel LLC's Petition to Deny ("TAC"). On September 12,
    2005, Black Television News Channel ("BTNC") filed a Motion for
    Extension of Time, seeking an extension until September 9, 2005, to
    file reply comments in this proceeding. In support of its motion,
    BTNC states that as a minority-owned, independent network, it is a
    "unique and important voice." BTNC argues that the Commission should
    consider BTNC's experiences in trying to obtain carriage by Comcast
    and Time Warner in its review of the Applications. BTNC further
    states that it contacted counsel for the Applicants and gave notice
    of the motion. Pursuant to section 1.46 of the Commission's rules,
    47 C.F.R. § 1.46, motions for extension of time shall be filed at
    least seven days before the filing deadline. By Public Notice, the
    Acting Chief of the Media Bureau extended the period for filing
    responses to comments and oppositions to petitions to deny until
    August 5, 2005. *See infra* note 67. Although dated September 8,
    2005, BTNC's motion was officially received by the Commission on
    September 12, 2005, more than 30 days after the filing deadline. As
    such, BTNC failed to comply with the requirements for filing a
    motion for extension of time. Moreover, BTNC did not explain why it
    could not participate in a timely manner. Therefore, we deny BTNC's
    motion for extension of time. However, we accept its reply comments
    and will treat them as an ex parte filing. We will address BTNC's
    concerns in the applicable sections of this order. *See generally*
    47 C.F.R. §§ 1.1200-1.1216.

[^65]: *See* Letter from Donna C. Gregg, Chief, Media Bureau, FCC, to
    Brad Sonnenberg and James N. Zerefos, Adelphia Communications Corp.,
    and Philip L. Verveer, Michael H. Hammer and Francis M. Buono,
    Willkie Farr & Gallagher LLP (Dec. 5, 2005) ("Adelphia Information
    Request"); Letter from Donna C. Gregg, Chief, Media Bureau, FCC, to
    Steven N. Teplitz and Susan A. Mort, Time Warner Inc., and Aaron I.
    Fleischman, Arthur H. Harding, Seth A. Davidson, and Craig A.
    Gilley, Fleischman and Walsh, L.L.P. (Dec. 5, 2005) ("Time Warner
    Information Request"); Letter from Donna C. Gregg, Chief, Media
    Bureau, FCC, to Joseph W. Waz, Jr. and James R. Coltharp, Comcast
    Corporation (Dec. 5, 2005) ("Comcast Information Request"). On
    December 14, 2005, the Applicants submitted a request for enhanced
    confidential treatment for certain materials to be submitted
    pursuant to the referenced information requests. *See* Letter from
    Michael H. Hammer, Willkie, Farr & Gallagher, LLP, Counsel for
    Adelphia Communications Corp., to Donna C. Gregg, Chief, Media
    Bureau, FCC (Dec. 14, 2005) ("Applicants Dec. 14, 2005 Ex Parte").
    The request for enhanced confidential treatment was granted and,
    thus, responses to certain of the December 5, 2005, information
    requests were made subject to a second protective order, with access
    limited to outside counsel of record, their employees, and outside
    consultants and experts retained by those counsel to assist in the
    instant proceeding. *See Adelphia Communications Corp., et al.,* 20
    FCC Rcd 20073 (MB 2005) ("*Second Protective Order*"). *See*
    Adelphia Responses to Information Request (Dec. 12, 2005, Dec. 22,
    2005, Jan. 13, 2006, Jan. 23, 2006); Comcast Responses to
    Information Request (Dec. 22, 2005, Jan. 13, 2006, Mar. 10, 2005,
    Mar. 23, 2005, Mar. 24, 2005, Mar. 29, 2006, Apr. 7, 2006); Time
    Warner Responses to Information Request (Dec. 12, 2005, Dec. 19,
    2005, Dec. 22, 2005, Jan. 6, 2006, Jan. 10, 2006, Jan. 13, 2006,
    Jan. 26, 2006, Mar. 2, 2006, Mar. 14, 2006, Mar. 22, 2006, Mar. 23,
    2006 (two separate letters), Mar. 24, 2006).

[^66]: In this Order, \["**REDACTED**"\] indicates confidential or
    proprietary information, or analysis based on such information,
    submitted pursuant to the *Initial Protective Order* and/or the
    *Second Protective Order. See supra* notes 63 and 65. The unredacted
    version of this Order will be available upon request to those
    qualified representatives who execute and file with the Commission
    the signed acknowledgements required by the protective orders in
    this proceedings. *See Initial Protective Order*, App. B --
    Acknowledgement of Confidentiality; *see also Second Protective
    Order*, App. B -- Acknowledgment of Confidentiality.

[^67]: The period for filing comments and/or petitions to deny was
    extended to July 21, 2005, and the period for filing responses to
    comments and oppositions to petitions to deny was extended to August
    5, 2005. *Adelphia Communications Corp., et al.,* 20 FCC Rcd 11145
    (MB 2005) ("*Extension of Time Order*").

[^68]: 47 U.S.C. § 309(d)(1).

[^69]: 47 C.F.R. § 78.22.

[^70]: *See Multicultural Radio,* 15 FCC Rcd 20630 (2000) (holding that
    petitioner's failure to provide a supporting affidavit rendered his
    pleading procedurally defective as a petition to deny; pleading was
    thus treated as an informal objection); *CHET-5 Broadcasting, L.P*.,
    14 FCC Rcd 13041 (1999).

[^71]: Applicants' Reply at 2 n.2.

[^72]: 47 C.F.R. § 1.41; *see supra* note 70.

[^73]: 47 U.S.C. § 309(d)(1). Free Press filed with its petition the
    sworn declaration of Ben Scott, the Policy Director of Free Press.
    Scott avers in his declaration that (1) Free Press is a national
    nonpartisan organization working to generate policies that will
    produce a more competitive and public interest-oriented media
    system; and (2) members of Free Press reside in communities
    presently served by Comcast, Time Warner, and Adelphia cable
    systems. Scott states under penalty of perjury that the factual
    assertions set forth in the sworn declaration are true and correct.
    NHMC included with its petition the declaration of Alex Nogales,
    President and CEO of NHMC. Nogales avers in his declaration that (1)
    NHMC is a coalition of Hispanic-American organizations joined
    together to address media-related issues that affect the
    Hispanic-American community; (2) NHMC's goals are to improve the
    image of Hispanic-Americans portrayed by the media and increase the
    number of Hispanic-Americans employed in the media; and (3) members
    of NHMC reside in communities presently served by Comcast, Time
    Warner, and Adelphia, and many are subscribers to their services.
    Nogales states under penalty of perjury that he is familiar with the
    contents of the petition to deny, that the factual assertions are
    true to the best of his knowledge and belief, and that the
    declaration is true and correct.

[^74]: Several local franchising authorities ("LFAs") have also reviewed
    aspects of these transactions. We review and discuss issues
    pertaining to LFA approval below in the procedural section.

[^75]: 15 U.S.C. § 18.

[^76]: *See* FTC, *FTC's Competition Bureau Closes Investigation into
    Comcast, Time Warner Cable and Adelphia Communications
    Transactions*, *at* http://www.ftc.gov/opa/2006/01/fyi0609.htm (last
    visited June 19, 2006).

[^77]: *See* Statement of Chairman Majoras, Commissioner Kavacic, and
    Commissioner Rosch Concerning the Closing of the Investigation Into
    Transactions Involving Comcast, Time Warner, and Adelphia
    Communications, File No. 051-0151 (Jan. 31. 2006) ("Majoras
    Statement").

[^78]: *Id.* at 2. In a statement concurring in part and dissenting in
    part, FTC Commissioners Leibowitz and Harbour stated that "serious
    concerns" remain within certain geographic markets that the
    transactions may raise the cost of sports programming to rival
    content distributors, thereby lessening competition and harming
    consumers. *See* Statement of Commissioners Jon Leibowitz and Pamela
    Jones Harbour (Concurring in Part, Dissenting in Part), Time
    Warner/Comcast/Adelphia, File No. 051-0151 (Jan. 31, 2006).

[^79]: 47 U.S.C. §§ 214, 310(d).

[^80]: 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; *Comcast-AT&T Order,* 17 FCC Rcd at 23255 ¶ 26.

[^81]: *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*").

[^82]: *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.

[^83]: *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.

[^84]: *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.

[^85]: 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.

[^86]: *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; *AT&T-MediaOne
    Order*, 15 FCC Rcd at 9821 ¶ 11; *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*").

[^87]: 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")*.

[^88]: *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).

[^89]: 47 U.S.C. § 521(4); *see also* 47 U.S.C. § 532(a).

[^90]: *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.

[^91]: *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.

[^92]: *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.

[^93]: *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.

[^94]: *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.

[^95]: *Cingular-AT&T Wireless Order*, 19 FCC Rcd at 21545 ¶ 42;
    *AOL-Time Warner Order*, 16 FCC Rcd at 6550, 6553 ¶¶ 5, 15.

[^96]: *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) ("*Deutsche Telekom-VoiceStream Wireless
    Order*") (conditioning approval on compliance with agreements with
    Department of Justice and Federal Bureau of Investigation addressing
    national security, law enforcement, and public safety concerns).

[^97]: 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 Commission
    to order 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)).

[^98]: *Cingular-AT&T Wireless Order*, 19 FCC Rcd at 21545 ¶ 43; *Bell
    Atlantic-GTE Order*, 15 FCC Rcd at 14047 ¶ 24; *AT&T Corp.-British
    Telecom. Order*, 14 FCC Rcd at 19148 ¶ 15.

[^99]: *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.

[^100]: *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.

[^101]: *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.

[^102]: Public Interest Statement at 18-21 n.56; Applicants' Reply at 44
    n.156. The *Bell Atlantic-NYNEX* public interest standard to which
    Applicants refer is found in *Applications of NYNEX Corporation,
    Transferor, and Bell Atlantic Corporation, Transferee, for Consent
    to Transfer Control of NYNEX Corporation and Its Subsidiaries,* 12
    FCC Rcd 19985, 20001-08 ¶¶ 30-36 (1997) ("*Bell Atlantic-NYNEX
    Order*").

[^103]: Public Interest Statement at 21 n.56; *see also* Applicants'
    Reply at 44 n.156.

[^104]: Applicants' Reply at 44 n.156; *see also* Public Interest
    Statement at 21 n.56.

[^105]: Public Interest Statement at 18-19.

[^106]: 47 U.S.C. § 214(a).

[^107]: 47 U.S.C. § 310(d).

[^108]: CARS stations are authorized and licensed as radio services
    under Title III of the Communications Act to relay TV broadcast and
    related audio signals, AM and FM broadcast, and cablecasting from
    the point of reception to a terminal point where the signals are
    distributed to the public by cable. 47 C.F.R. § 78.1; 47 C.F.R. §
    78.11(a). By allowing the cable system to distribute cable
    programming to its entire service area regardless of certain
    physical obstacles to transmission, CARS licenses can be an integral
    part of a cable system's plant.

[^109]: *See Applications for Consent to Voluntary Transfer of Control
    of 11 Stations in the Cable Television Relay Service from Athena
    Communications Corp. to Tele-Communications, Inc*., 47 FCC 2d 535
    (1974) (holding that transfer of only 11 CARS licenses was
    sufficient to bestow jurisdiction to review impact of cable merger
    on industry as a whole, stating that the application before it
    reflected in essence a merger of the third and 18^th^ largest MSOs
    in the country and would affect over 500,000 subscribers).

[^110]: *See United States v. FCC,* 652 F.2d 72, 81-88 (D.C. Cir. 1980)
    (*en banc*) (affirming Commission authorization of satellite joint
    venture upon its finding that the public interest benefits
    outweighed competitive concerns). The court relied in part on its
    earlier opinion in *Greater Boston Television Corp. v. FCC,* 444
    F.2d 841, 851 (D.C. Cir. 1970), where it stated "\[a\]ssuming
    consistency with law and the legislative mandate, the agency has
    latitude . . . to select the policies deemed in the public
    interest." 444 F.2d at 851. *See also FCC v. RCA Communications
    Inc.,* 346 U.S. 86, 96-97 (1953) (reversing the Commission's
    authorization because the Commission had relied on perceived
    congressional intent without conducting its own analysis as to
    whether competitive entry was in the public interest). Contrary to
    the Applicants' suggestion, the Commission's articulation of its
    public interest standard is not immutable. As the D.C. Circuit has
    recognized, "an agency's view of what is in the public interest may
    change," as long as the agency reasonably explains the changes.
    *Greater Boston Television Corp. v. FCC*, 444 F.2d at 852 (affirming
    the Commission's application of new criteria to the license renewal
    process because the Commission explained the circumstances that
    justified its action).

[^111]: Free Press Petition at 4-9. Section 314 provides "\[N\]o person
    engaged directly, or indirectly . . . in the business of
    transmitting and/or receiving for hire energy, communications, or
    signals by radio in accordance with the terms of the license issued
    under this Act, shall . . . directly or indirectly, operate any
    cable or wire telegraph or telephone line or system between any
    place in any State . . . and any place in any foreign country . . .
    if . . . the purpose is and/or the effect thereof may be to
    substantially lessen competition or to restrain commerce between any
    place in any State . . . and any place in any foreign country, or
    unlawfully to create monopoly in any line of commerce." 47 U.S.C. §
    314.

[^112]: For a discussion of the calculation and application of the HHI,
    see *infra* Section VI.C.1.

[^113]: Free Press Petition at 7.

[^114]: *Id*. at 4, 9; *see also* 47 U.S.C. § 314.

[^115]: *Radiofone, Inc. v. Bellsouth Mobility, Inc*., 14 FCC Rcd 6088
    (WTB 1999) ("*Radiofone*"); *see also* *Mackay Radio & Telegraph
    Co., Inc. v. FCC*, 97 F.2d 641 (D.C. Cir. 1938).

[^116]: *Radiofone*, 14 FCC Rcd at 6102; *see also Applications of
    General Telephone Co. of the Northwest, Inc.*, 17 FCC 2d 654 (Rev.
    Bd. 1969).

[^117]: *Radiofone*, 14 FCC Rcd at 6102.

[^118]: *Stockholders of RCA Corp. and General Electric Co.,* 60 Rad.
    Reg. 2d (P&F) 563, 568 ¶ 13 (1986) (holding that complainant
    presented no evidence to demonstrate how merger would adversely
    affect international competition in violation of section 314, or how
    changes in "competitive mixture of international facilities" would
    occur).

[^119]: In particular, we note that the U.S. Bankruptcy Court for the
    Southern District of New York ordered trifurcated confirmation
    hearings on Adelphia's reorganization plan. On May 26, 2006,
    Adelphia filed a motion seeking the bankruptcy court's approval to
    consummate the transfer of cable assets to Time Warner and certain
    other cable assets to Comcast in advance of the subsequent plan of
    reorganization under which the proceeds of the sale would be
    distributed. Adelphia also sought confirmation of a separate plan to
    sell its equity interest in the Parnassos and Century-TCI Joint
    Ventures to Comcast pursuant to a plan of reorganization. Adelphia
    sought authority to close the sale of cable assets, with the
    exception of the Parnassos and Century-TCI Joint Ventures, pursuant
    to section 363 of the Bankruptcy Code in view of ongoing creditor
    settlement issues and the impending "outside date" of July 31, 2006,
    whereby the Applicants can terminate the cable purchase agreements.
    *In re Adelphia Communications Corp. et al.,* Debtors' Motion
    Pursuant to Sections 105, 363, 365 and 1146 (C) of the Bankruptcy
    Code and Rules 2002, 6004, 6006 and 9014 of the Federal Rules of
    Bankruptcy Procedure Seeking Approval of: (I) A Form of Notice
    Regarding Certain Hearing Dates and Objection Deadlines; (II) New
    Provisions for Termination and for the Payment or Crediting of the
    Breakup Fee; (III) The Sale of Substantially All Assets of Adelphia
    Communications Corporation and its Affiliated Debtors to Time Warner
    NY Cable LLC and Certain Other Assets to Comcast Corporation Free
    and Clear of Liens, Claims, Encumbrances, and Interests and Exempt
    from Applicable Transfer Taxes; (IV) The Retention, Assumption
    and/or Assignment of Certain Agreements, Contracts and Leases; and
    (V) The Granting of Related Relief, No. 02-41729 (REG) (Bankr.
    S.D.N.Y., filed May 26, 2006). On June 28, 2006, the bankruptcy
    court granted the motion. It stated that the debtor parties are
    authorized to execute the purchase agreements or other related
    documents and to take any other actions necessary or appropriate to
    effectuate the purchase agreements. *In re Adelphia Communications
    Corp. et al,* Order Authorizing (I) Sale of Substantially All Assets
    of Adelphia Communications Corporation and its Affiliated Debtors to
    Time Warner NY Cable LLC and to Comcast Corporation, Free and Clear
    of Liens, Claims, Encumbrances, and Interests and Exempt from
    Applicable Transfer Taxes; (II) Assumption and/or Assignment of
    Certain Agreements, Contracts and Leases; and (III) the Granting of
    Related Relief, No. 02-41729 (REG) (Bankr. S.D.N.Y., June 28, 2006
    (Gerber, J.)). Thereafter, on June 29, 2006, the bankruptcy court
    approved the sale of Adelphia's interests in the Parnassos and
    Century-TCI Joint Ventures to Comcast. *See* Order Confirming Third
    Modified Fourth Amended Joint Plan of Reorganization Under Chapter
    11 of the Bankruptcy Code for the Century-TCI Debtors and Parnassos
    Debtors, No. 02-41729 (REG) (Bankr. S.D.N.Y., June 29, 2006 (Gerber,
    J.)).

[^120]: These transactions are reflected in several agreements by and
    among the Applicants, specifically (1) Asset Purchase Agreement,
    dated as of April 20, 2005, between Adelphia Communications Corp.
    and Time Warner NY Cable LLC; (2) Asset Purchase Agreement, dated as
    of April 20, 2005, between Adelphia Communications Corp. and Comcast
    Corp.; (3) Exchange Agreement, dated as of April 20, 2005, by and
    among Comcast Corp.; Time Warner Inc; and certain other related
    entities; (4) Redemption Agreement, dated as of April 20, 2005, by
    and among Comcast Cable Communications Holdings, Inc.; Time Warner
    Inc.; and certain other related entities; and (5) Redemption
    Agreement, dated as of April 20, 2005, by and among Comcast Cable
    Communications Holdings, Inc.; Time Warner Entertainment Company,
    L.P.; and certain other related entities. Public Interest Statement
    at Exs. A-E.

[^121]: As with all assignments and transfers of CARS licenses, the
    license transfers approved herein must be consummated and
    notification provided to the Commission within 60 days of the date
    of public notice of approval, pursuant to our rules. 47 C.F.R. §
    78.35(e). If the Applicants are unable to consummate any of the
    license transfers contained in the Applications consistent with the
    provisions of section 78.35(e) because LFA approvals are still
    pending, or for any other reason, the Applicants must submit written
    notice to the Commission prior to expiration of the 60-day deadline.
    If the Applicants are unable to consummate the transfers consistent
    with the provisions of section 78.35(e), the Applicants must seek an
    extension of time within which to consummate or withdraw the
    affected license transfer applications. Specifically, the Applicants
    must provide notice of the reason for their inability to consummate
    any of the transfers; identification of the affected cable systems,
    including the community and the number of subscribers attributable
    to each cable system; and identification of the relevant CARS,
    wireless or other authorization. In addition, if the Applicants'
    failure to consummate would result in violation of any Commission
    rule, the Applicants must file within 30 days of the action that
    results in violation of the rule(s) the necessary applications to
    remedy the violation.

[^122]: *See* *infra* Section X.A.

[^123]: Cable Television Consumer Protection and Competition Act of
    1992, P.L. No. 102-385, 106 Stat. 1460 ("1992 Act"), Communications
    Act § 613(f), 47 U.S.C. § 533(f).

[^124]: *See* [S. Rep. No]{.smallcaps}. 102-92, 1, 18 (1991) ("Senate
    Report"); [H.R. Rep. No]{.smallcaps}. 102-628, 1, 27 (1992) ("House
    Report"); *see also* 1992 Act § 2(a)(4), (b)(1)-(5).

[^125]: *See* 1992 Act §§ 2(b)(1)-(5); *see generally* Senate Report,
    House Report.

[^126]: *See* 1992 Act §§ 2(a)(2)-(4), (6); Senate Report at 12-18, 20,
    32-34; House Report at 26-27, 42-47.

[^127]: Senate Report at 24.

[^128]: *See id*. at 24 (stating that "\[w\]hen cable systems are not
    subject to effective competition . . . \[p\]rogrammers either deal
    with operators of such systems on their terms or face the threat of
    not being carried in that market. The Committee believes this
    disrupts the crucial relationship between the content provider and
    the consumer . . . . Moreover, these concerns are exacerbated by the
    increased vertical integration in the cable industry."); *see also*
    1992 Act §§ 2(a)(5)-(6); House Report at 41.

[^129]: *See* Senate Report at 18, 33; House Report at 26-27, 30, 40-44.

[^130]: 47 U.S.C. § 533(f)(2)(A).

[^131]: House Report at 43; *see also* Senate Report at 33.

[^132]: *Implementation of Sections 11 and 13 of the Cable Television
    Consumer Protection and Competition Act of 1992, Horizontal and
    Vertical Ownership Limits*, 8 FCC Rcd 8565, 8567 ¶¶ 3-4 (1993)
    ("*1993 Cable Ownership Second Report and Order*").

[^133]: *Id*. at 8567 ¶ 3.

[^134]: *Id*. at 8567 ¶ 4. For a system with 75 or fewer channels, the
    limit is 40% of actual activated channel capacity; 60% of activated
    channel capacity must be reserved for unaffiliated programming,
    i.e., 45 channels for a 75 channel system. For systems with 75 or
    more channels, the limit is applied only to 75 channels, meaning, in
    effect, that 45 channels on such systems must be reserved for
    unaffiliated programming (60% of 75). As a result, the limit for
    larger systems is effectively higher, when expressed as a percentage
    of system capacity, than the limit for systems with 75 channels or
    fewer.

[^135]: *Id*. at 8577 ¶ 25.

[^136]: *Implementation of § 11(c) of the Cable Television Consumer
    Protection and Competition Act of 1992, Horizontal Ownership
    Limits*, 14 FCC Rcd 19098, 19101 ¶ 5 (1999) ("*1999 Cable Ownership
    Order*"). MVPD subscribers include subscribers of cable services and
    direct broadcast satellite ("DBS") services, as well as, *inter
    alia*, subscribers to direct-to-home satellite services,
    multichannel multipoint distribution services, local multipoint
    distribution services, satellite master antenna television services,
    and open video system services. 47 C.F.R. § 76.503(e). In addition,
    a cable operator's national reach for purposes of determining
    compliance with the limit excludes cable subscribers that a cable
    operator does not serve through cable franchises existing as of
    October 20, 1999, and all successors in interest to those
    franchises. 47 C.F.R. § 76.503(b)-(c).

[^137]: *1993 Cable Ownership Second Report and Order*, 8 FCC Rcd at
    8594 ¶ 68.

[^138]: The application of the limit to only 75 channels was based on
    the technological capacity of the average cable system in 1993,
    which generally could offer approximately 75 channels of video
    programming. *Id*. at 8601-02 ¶ 84 & n.106.

[^139]: *Id*. at 8594 n.86 (measurement of the channel occupancy rule to
    be done on a per channel basis using the traditional 6 MHz channel
    definition; periodic review necessary in light of fact that it may
    soon be common for cable operators to provide several channels using
    a single 6 MHz bandwidth segment).

[^140]: 240 F.3d 1126, 1136, 1139 (D.C. Cir. 2001). The D.C. Circuit
    upheld the underlying statute in *Time Warner Entertainment Co. v.
    United States*, 211 F.3d 1313, 1316-21 (D.C. Cir. 2000) ("*Time
    Warner I*").

[^141]: *Time Warner II*, 240 F.3d at 1135-39.

[^142]: *Id*.

[^143]: *Id*. at 1134-36, 1139.

[^144]: In addition, as the court noted, the Commission's voluntary stay
    of enforcement of the cable ownership limit "ended automatically"
    upon the reversal of the District Court's decision in *Daniels
    Cablevision, Inc. v. United States,* 835 F. Supp. 1 (D.D.C. 1993)
    ("*Daniels*"). *Time Warner II*, 240 F.3d at 1128. The Commission
    issued the stay pending the court's determination of the limit's
    constitutionality in *Daniels*. *See 1993 Cable Ownership Second
    Report and Order*, 8 FCC Rcd at 8609 ¶ 109.

[^145]: *Implementation of Section 11 of the Cable Television Consumer
    Protection and Competition Act of 1992, The Commission's Horizontal
    and Vertical Ownership Limits*, 16 FCC Rcd 17312 (2001) ("*Cable
    Ownership Further Notice*").

[^146]: *The Commission's Cable Horizontal and Vertical Ownership
    Limits*, 20 FCC Rcd 9374 (2005) ("*Cable Ownership Second Further
    Notice*").

[^147]: [H.R. Conf. Rep. No]{.smallcaps}. 102-862, at 93 (1992).

[^148]: 1992 Act § 2(a)(5).

[^149]: House Report at 165-66 (additional views of Messrs. Tauzin,
    Harris, Cooper, Synar, Eckart, Bruce, Slattery, Boucher, Hall,
    Holloway, Upton and Hastert).

[^150]: "Satellite cable programming" is video programming that is
    transmitted via satellite to cable operators for retransmission to
    cable subscribers. 47 C.F.R. § 76.1000(h). A "satellite cable
    programming vendor" is an entity engaged in the production, creation
    or wholesale distribution for sale of satellite cable programming.
    47 C.F.R. § 76.1000(i). Over-the-air broadcast programming is not
    subject to the program access rules.

[^151]: A "satellite broadcast programming vendor" is a fixed service
    satellite carrier that provides service pursuant to 17 U.S.C. § 119
    with respect to satellite broadcast programming. 47 C.F.R. §
    76.1000(g).

[^152]: Communications Act § 628(b); 47 U.S.C. § 548(b).

[^153]: 47 C.F.R § 76.1001.

[^154]: 47 C.F.R. § 76.1002(b).

[^155]: 47 C.F.R. § 76.1002(c)(2) and (4). The exclusivity prohibition
    sunsets on October 5, 2007, unless extended by the Commission. 47
    C.F.R. § 76.1002(c)(6); *see infra* para. 41.

[^156]: 47 C.F.R. § 76.1003.

[^157]: 47 C.F.R. § 76.1003(h).

[^158]: *Implementation of the Cable Television Consumer Protection and
    Competition Act of 1992*, 17 FCC Rcd 12124 (2002) ("*Program Access
    Order*").

[^159]: *Program Access Order*, 17 FCC Rcd at 12130 ¶ 16.

[^160]: *Id*. at 17 FCC Rcd at 12138 ¶ 32.

[^161]: *Id.* at 17 FCC Rcd at 12143-44 ¶ 45.

[^162]: *Id.* at 17 FCC Rcd at 12125 ¶ 4.

[^163]: *Id*.

[^164]: *Id*. at 17 FCC Rcd at 12161 ¶ 80.

[^165]: *Id.* at 17 FCC Rcd at 12139 ¶ 33.

[^166]: "Must have" programming, an industry term, describes the high
    value consumers place on the programming and on the lack of
    available substitutes. Referring to programming as "must have" is
    not meant to imply that an MVPD cannot survive without the
    programming.

[^167]: *Program Access Order*, 17 FCC Rcd at 12156 ¶ 69. The Commission
    also listed regional news and regional sports programming as
    examples of "must have" programming.

[^168]: *Id*.

[^169]: *Id.*

[^170]: 47 U.S.C. § 536(a).

[^171]: *Implementation of Sections 12 and 19 of the Cable Television
    Consumer Protection and Competition Act of 1992*, 9 FCC Rcd 2642,
    2643 ¶ 2 (1993) ("*Second* *Program Carriage Order*"); *see also* 47
    U.S.C. § 536(a)(1)-(3).

[^172]: *See* 47 C.F.R. § 76.1301; *see also Second Program Carriage
    Order,* 9 FCC Rcd at 2649 ¶ 16.

[^173]: Section 76.1302 authorizes video programming vendors and MVPDs
    to file program carriage complaints with the Commission. 47 C.F.R. §
    76.1302; *see also Second Program Carriage Order,* 9 FCC Rcd at
    2652-57 ¶¶ 23-36.

[^174]: In the following sections, we examine whether the transactions
    are likely to contravene the policy goals underlying section 613(f).

[^175]: We examine compliance with these rules because the transfer of
    cable systems from one entity to another is more likely to affect
    compliance with these rules than with the Commission's other rules.
    In addition, the Applicants and/or other parties asserted claims
    regarding compliance with these particular rules.

[^176]: Public Interest Statement at 72-75. *See also* FFBC Comments at
    5-6 (supporting the Applicants' claim).

[^177]: Public Interest Statement at 73-74.

[^178]: *Id.* This total does not include Comcast's ownership interests
    in TWE and Time Warner. Those interests are not attributable to
    Comcast because they are insulated through placements in trusts.
    *See Comcast-AT&T Order*, 17 FCC Rcd at 23248-49 ¶ 4 (2002).
    Moreover, those interests will be substantially divested upon the
    closing of the transactions. Public Interest Statement at 74 n.187.
    *See also infra* Section VIII.B.4.

[^179]: Public Interest Statement at 73-74.

[^180]: Comcast relies on Kagan Media Money for the 92.6 million MVPD
    subscriber total, citing the Commission's policy of accepting any
    published, current, and widely cited industry estimate of MVPD
    subscribership when reviewing compliance with the cable ownership
    limit. *Id.* at 73 n.186 (citing Kagan Media Money, April 26, 2005,
    at 7). *See 1999 Cable Ownership Order*, 14 FCC Rcd at 19112 ¶ 35
    (1999). In their Reply, the Applicants note that, since the filing
    of their Applications, the Kagan estimate of the number of national
    MVPD subscribers had increased to approximately 92.9 million.
    Applicants' Reply at 27 n.96 (citing Kagan Media Money, May 24,
    2005, at 7).

[^181]: Public Interest Statement at 74.

[^182]: *Id.*

[^183]: *Id*.

[^184]: *Id.* The cable systems that Time Warner will transfer to
    Comcast include certain systems that Time Warner will acquire from
    Adelphia.

[^185]: *Id.* at 74-75. The change in the number of subscribers will be
    138,000 plus 2,740,000 minus 2,198,000. Comcast subsequently
    provided updated figures in which it said it would receive from
    Adelphia systems serving 1,222,423 subscribers, of which 1,085,543
    subscribers are already attributable to Comcast. Comcast would
    receive from Time Warner systems serving 1,990,640 subscribers,
    including systems Time Warner would receive from Adelphia serving
    1,950,715 subscribers. In addition, pursuant to the TWC and TWE
    redemption agreements, Comcast would receive from Time Warner
    systems serving 545,981 subscribers and 150,528 subscribers,
    respectively. Comcast would transfer to Time Warner systems serving
    2,190,429 subscribers, including systems Comcast would receive from
    Adelphia serving 1,085,543 subscribers. Using these figures, Comcast
    would gain a total of 633,600 subscribers not previously
    attributable to Comcast, which is slightly less than the estimate of
    680,000 subscribers in the Public Interest Statement. Comcast Mar.
    30, 2006 Ex Parte at Att. The numbers Comcast provides differ from
    the numbers Time Warner provides because they use different counting
    methods and the data are from different time periods. *See infra*
    notes 187 and 197.

[^186]: Public Interest Statement at 73.

[^187]: *Id.* Time Warner subsequently provided updated figures in which
    it said it would receive from Adelphia systems serving 3,715,603
    subscribers. Time Warner would receive from Comcast systems serving
    2,192,667 subscribers, including systems Comcast would receive from
    Adelphia serving 1,085,543 subscribers. Time Warner would transfer
    systems serving 2,002,680 subscribers to Comcast, including systems
    Time Warner would receive from Adelphia serving 1,953,293
    subscribers. In addition, pursuant to the TWC and TWE redemption
    agreements, Time Warner would transfer to Comcast systems serving
    585,220 subscribers and 164,561 subscribers, respectively. Using
    these figures, the Time Warner's net gain would be 3,155,809
    subscribers. Time Warner explains that the lower total is the result
    of the different counting methods the Applicants use and different
    subscriber reporting periods from the figures used in the Public
    Interest Statement. Time Warner Mar. 23, 2006 Ex Parte at Att. 1;
    Time Warner Mar. 31, 2006 Ex Parte at Att.; *see also infra* note
    197.

[^188]: Public Interest Statement at 10-11, 73.

[^189]: *Id.* at 73.

[^190]: EchoStar Comments at 11-12 (citing *Annual Assessment of the
    Status of Competition in the Market for the Delivery of Video
    Programming, Eleventh Annual Report*, 20 FCC Rcd 2755, 2869 at Table
    B-1 (2005) ("*Eleventh Annual Video Competition Report*")). *See
    also* Florida Communities Comments at 4 (providing no evidence for
    their assertion that Comcast will be in violation of the cable
    ownership limit).

[^191]: 47 C.F.R. § 76.503(a).

[^192]: Free Press Petition at 33-35.

[^193]: *Id*.

[^194]: 47 C.F.R. § 76.503 Note 2(b).

[^195]: *Review of the Commission\'s Cable Attribution Rules*, 14 FCC
    Rcd 19014, 19016 ¶ 2 (1999) ("*Cable Attribution Order*").

[^196]: Free Press Petition at 35, Rose Decl. at 15-16. Free Press is
    referring to the Applicants' filing on June 21, 2005, which provides
    pre- and post-transaction subscriber information by DMA for Time
    Warner and Comcast. *See* Letter from Arthur H. Harding, Fleischman
    and Walsh, L.L.P, Counsel for Time Warner Inc., to Marlene H.
    Dortch, Secretary, FCC (June 21, 2005) ("Applicants June 21, 2005 Ex
    Parte") at Att. (Comcast Subscribers -- Current and Post
    Adelphia/Time Warner Transactions). In that document, Comcast's
    totals for the numbers of subscribers gained in each market are
    rounded to the nearest thousand, and the post-transaction subscriber
    counts for a few DMAs do not match the pre-transaction counts for
    those DMAs.

[^197]: For example, Free Press notes that Time Warner says it is losing
    202,472 subscribers in the Minneapolis-St. Paul DMA, but Comcast
    states that it is gaining only 193,000 subscribers there. Free Press
    Petition at 35. We examined this and other similar discrepancies in
    the June 21 filing. We discovered that the discrepancies in pre- and
    post-transaction numbers are explained by the fact that Time Warner
    and Comcast use different methods of counting subscribers in bulk
    accounts for multiple dwelling units ("MDUs"). Comcast uses the
    equivalent billing unit ("EBU") approach. Under this approach, the
    number of subscribers is determined by dividing the total revenue
    from an MDU by the service rate for the tier of service provided to
    the MDU. Thus, if Comcast provides an MDU expanded basic cable
    service for a monthly fee of \$1,000.00, and the standard
    residential rate for expanded basic cable service is \$40.00, the
    MDU would be deemed by Comcast to comprise 25 basic subscribers.
    *See* Comcast Dec. 22, 2005 Response to Information Request
    II.B.2.a. Under the occupiable dwelling unit ("ODU" or "kitchen")
    methodology used by Time Warner, subscribers in the MDU generally
    are determined based on the total number of separate dwelling units
    in the MDU. For example, if the MDU has 30 separate apartment units,
    the MDU generally is considered to have 30 basic subscribers under
    the ODU method. *See* Comcast Dec. 22, 2005 Response to Information
    Request II.B.2.a.; *see also* Letter from Arthur H. Harding,
    Fleischman and Walsh, L.L.P., Counsel for Time Warner Inc., to
    Marlene H. Dortch, Secretary, FCC (Dec. 12, 2005) at 2; Letter from
    Arthur H. Harding, Fleischman and Walsh, L.L.P., Counsel for Time
    Warner Inc., to Marlene H. Dortch, Secretary, FCC (Feb. 2, 2006)
    at 1. Because the EBU calculation uses the bulk rate charged to an
    MDU owner, the EBU method may derive a lower subscriber figure than
    the ODU method.

[^198]: Comcast's calculation of 26,780,352 subscribers was based on
    subscriber data that was current as of March 2005 for its
    wholly-owned systems and for one of its attributable systems, and on
    subscriber data that was current as of January 2005 for the
    remainder of its attributable systems. *See* Public Interest
    Statement at 73-74 n.186 and Ex. Z. Our calculations, which were
    based on June 2005 data, resulted in a total that was slightly less
    than Comcast's total, but for purposes of calculating Comcast's
    national reach, we will use the figure Comcast provided in the
    Public Interest Statement. Our calculations include the 226,117
    subscribers that subscribe to the cable systems formerly owned by
    Susquehanna Cable Company. Comcast previously owned an approximately
    30% equity interest in Susquehanna Cable Company and its
    subsidiaries but recently acquired 100% ownership of the Susquehanna
    systems. *See* Public Notice, Rep. No. 4035 (Apr. 26, 2006)
    (assignment of authorization of CAR-20051221AN-08 granted on April
    13, 2006); *see also infra* Section X.B.

[^199]: The Applicants used Kagan data available as of April 26, 2005,
    which estimated 92.6 million MVPD subscribers. As stated above, we
    based our calculations on system-level subscriber information that
    was current as of June 2005. Kagan estimates that as of June 2005
    there were 93.3 million MVPD subscribers nationwide. Kagan Media
    Money, July 26, 2005, at 6. The Commission's most recent annual
    report on the status of video competition found that, as of June
    2005, there were approximately 94.2 million MVPD subscribers
    nationwide. Using the Commission's figure for June 2005 would result
    in a post-transaction national subscribership of 28.4%. *Twelfth
    Annual Video Competition Report*, 21 FCC Rcd at 2617-18 App. B,
    Table B-1. On December 20, 2005, pursuant to the certification
    requirements of Commission rule 76.503(g), Comcast notified the
    Commission that it was attributed with approximately 26,252,586
    subscribers, including the Susquehanna Cable Company subscribers.
    Letter from Peter H. Feinberg, Associate General Counsel, Comcast,
    to Marlene H. Dortch, Secretary, FCC (Dec. 20, 2005). When the
    approximately 680,000 subscribers Comcast intends to acquire as a
    result of the transactions are added to this more recent Comcast
    figure, Comcast's post-transaction total would be 26,932,586
    attributable subscribers. Using this post-transaction total of
    26,932,586 attributable subscribers and Kagan's estimate that there
    were 94.2 million MVPD subscribers as of December 2005, Comcast's
    national reach post-transaction would be 28.6%. [Kagan Cable TV
    Investor]{.smallcaps}: Deals & Finance, Jan. 31, 2006, at 3.

[^200]: *See Cable Ownership Second Further Notice*, 20 FCC Rcd at 9385.

[^201]: Public Interest Statement at 73 n.184. As noted above, the
    license transfers approved herein must be consummated and
    notification provided to the Commission within 60 days of public
    notice of approval pursuant to Commission rule 78.35(e). *See supra*
    note 121. If the Applicants are unable to consummate any of the
    license transfers contained in the Applications consistent with this
    requirement, they must so notify the Commission. If failure to
    consummate would cause Comcast or Time Warner to violate any
    Commission rule, they must remedy the violation.

[^202]: 47 C.F.R. § 76.504.

[^203]: Public Interest Statement at 75.

[^204]: *Id*. Time Warner will acquire certain *de minimis* and
    non-attributable programming interests from Adelphia.

[^205]: *See* Comcast Dec. 22, 2005 Response to Information Request
    V.B.; Time Warner Dec. 19, 2005 Response to Information Request V.B.

[^206]: *Time Warner II*, 240 F.3d at 1137-39.

[^207]: 47 C.F.R. § 76.501(d)-(f). The rule does not apply if the cable
    operator is subject to effective competition or if the SMATV system
    was owned, operated, controlled by, or under common control with the
    cable operator as of October 5, 1992. 47 C.F.R. § 76.501(e)(1), (f).

[^208]: Public Interest Statement at 76.

[^209]: *Id*.

[^210]: *Cf. Comcast-AT&T Order*, 17 FCC Rcd at 23310, 23331 (requiring
    compliance with the cable/SMATV cross-ownership rule as of closing).

[^211]: 47 C.F.R. § 73.3555.

[^212]: 47 C.F.R. § 27.1202.

[^213]: Public Interest Statement at 76. *See* 47 C.F.R. §§ 27.1202,
    73.3555. Instead of BRS, the Applicants refer to multichannel
    multipoint distribution service ("MMDS"). MMDS, also known as MDS,
    has been renamed the broadband radio service ("BRS"), and the
    Commission has made a number of changes to the rules governing the
    band. *See* *Amendment of Parts 1, 21, 73, 74 and 101 of the
    Commission\'s Rules to Facilitate the Provision of Fixed and Mobile
    Broadband Access, Educational and Other Advanced Services in the
    2150-2162 and 2500-2690 MHz Bands*, 19 FCC Rcd 14165 (2004).

[^214]: 47 C.F.R. § 76.505(a).

[^215]: 47 C.F.R. § 76.505(e). If the telephone exchange service
    facilities were transferred after January 1, 1993, the area served
    by those facilities is considered part of the telephone service area
    of the acquiring common carrier, not the selling common carrier.

[^216]: Public Interest Statement at 76-77.

[^217]: 47 C.F.R. § 76.505(b).

[^218]: Public Interest Statement at 77.

[^219]: *See*, *e.g*., *News Corp.-Hughes Order*, 19 FCC Rcd at 500 ¶
    51.

[^220]: As noted *supra* in Section IV, these goals are embodied in
    various statutory provisions, including §§ 613(f), 616, and 628 of
    the 1992 Act.

[^221]: The term "overbuilders" refers to MVPDs, other than DBS
    providers, that compete against cable incumbents in their local
    franchise areas and includes wireless cable operators, SMATV
    providers and "second cable operators" such as broadband service
    providers, electric utilities or telephone companies that offer
    wireline video distribution service.

[^222]: *Comcast-AT&T Order*, 17 FCC Rcd at 23257-58 ¶ 33; *see also*
    *Cable Ownership Second Further Notice*, 20 FCC Rcd at 9412-13 ¶¶
    67-70 (discussing and requesting comment on the Commission's
    definition of the programming market).

[^223]: CWA/IBEW Petition at 6-7.

[^224]: *Id*. at 6-7 (citing Andrew S. Wise and Kiran Duwadi,
    *Competition Between Cable and Direct Broadcast Satellite \-- It's
    More Complicated Than You Think*, FCC MB Staff Research Paper and IB
    Working Paper at 5 (Jan. 20, 2005) ("*Wise and Duwadi*")); Douglas
    Shapiro, *What Changed in the Cable-DBS Dynamic in 2Q?*, Bank of
    America Securities, Aug. 27, 2004).

[^225]: CWA/IBEW Petition at 6 (citing *Report on Cable Industry
    Prices*, 20 FCC Rcd 2718 (2005) ("*2004 Cable Price Report*"); and
    General Accounting Office ("GAO"), *The Effect of Competition from
    Satellite Providers*, GAO/RCED-00-164, July 2000).

[^226]: *Id*. at 6-7 (citing *Wise and Duwadi* at 20); A. Goolsbee and
    A. Petrin, *The Consumer Gains from Direct Broadcast Satellites and
    Competition with Cable TV*, [Econometrica,]{.smallcaps} 72:351-381;
    S.J. Savage and M. Wirth, *Price, Programming, and Potential
    Competition in U.S. Cable Television Markets*, [Journal of
    Regulatory Economics]{.smallcaps}, 27(1):25-46; Jerry Hausman, App.
    A to Petition of SBC Communications to Deny the Applications for
    Consent to Transfer of Control of MediaOne Group, Inc., Transferor
    to AT&T Corp., Transferee; Mark Cooper, *Cable Mergers and Media
    Monopolies: Market Power in Digital Media and Communications
    Networks*, Economic Policy Institute, Washington, D.C. (2002) at
    22-24.

[^227]: CWA/IBEW Petition at 7.

[^228]: *Id*. at 8.

[^229]: *See*, *e.g*., *Comcast-AT&T Order*, 17 FCC Rcd at 23281-82 ¶
    89.

[^230]: *See Annual Assessment of the Status of Competition in the
    Market for the Delivery of Video Programming*, *First Report*, 9 FCC
    Rcd 7442, 7467 ¶¶ 49-50 (1994) ("*First Annual Video Competition
    Report*").

[^231]: *See AOL-Time Warner Order*, 16 FCC Rcd at 6647 ¶¶ 244-45;
    *AT&T-TCI Order*, 14 FCC Rcd at 3172 ¶ 21.

[^232]: *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.

[^233]: *See News Corp.-Hughes Order*, 19 FCC Rcd at 505 ¶ 62.

[^234]: *Id.* at 502 ¶ 54; *Comcast-AT&T Order*, 17 FCC Rcd at 23258 ¶
    34; *see also Cable Ownership Second Further Notice*, 20 FCC Rcd at
    9411-2 ¶¶ 65-66.

[^235]: *News Corp.-Hughes Order*, 19 FCC Rcd at 502 ¶ 54; *Comcast-AT&T
    Order*, 17 FCC Rcd at 23258 ¶ 34; *EchoStar-DIRECTV HDO*, 17 FCC Rcd
    at 20653 ¶ 248.

[^236]: Such rate cards are not publicly available.

[^237]: *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.

[^238]: *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.

[^239]: Differentiated products are products whose characteristics
    differ and which are viewed as imperfect substitutes by consumers.
    *See* Dennis W. Carlton and Jeffrey M. Perloff, [Modern Industrial
    Organization]{.smallcaps} 281 (2d ed. 1991) ("*Carlton and
    Perloff*").

[^240]: *News Corp.-Hughes Order*, 19 FCC Rcd at 504 ¶ 59.

[^241]: *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20654 ¶ 250 (citing *Cable
    Ownership Further Notice*, 16 FCC Rcd at 17322-23). Examples of the
    first type of programming include TNT and USA; examples of the
    second type include ESPN for sports and CNN for news; and examples
    of this third type of programming include Discovery Health, the Golf
    Network, and Home and Garden TV. *Id*.; *see also* *News
    Corp.-Hughes Order*, 19 FCC Rcd at 503 ¶ 57.

[^242]: Some cable programming networks likely can survive with
    distribution to a few million subscribers within a certain region,
    while others may need nationwide distribution in order to remain
    viable. *News Corp.-Hughes Order*, 19 FCC Rcd at 503 ¶ 57;
    *Comcast-AT&T Order*, 17 FCC Rcd at 23258 ¶ 35; *EchoStar-DIRECTV
    HDO*, 17 FCC Rcd at 20654 ¶ 250 (citing *Cable Ownership Further
    Notice*, 16 FCC Rcd at 17323).

[^243]: *See News Corp.-Hughes Order*, 19 FCC Rcd at 633, App. D.

[^244]: *Id.* at 506 ¶ 64.

[^245]: *Comcast-AT&T Order*, 17 FCC Rcd at 23267 ¶¶ 59-60; *News
    Corp.-Hughes Order*, 19 FCC Rcd at 506 ¶ 66.

[^246]: *See,* *e.g*., DIRECTV, *Blackout Information*, *at*
    http://www.directvsports.com/Blackout_Info (last visited June 19,
    2006).

[^247]: In Section VI.D.1.a., *infra*, we further refine the geographic
    market for RSNs to account for the particular characteristics of
    these products.

[^248]: *See* 1 ABA Section of Antitrust Law, *Antitrust Law
    Developments* 327 (5^th^ ed. 2002); [Kip Viscusi, John M. Vernon and
    Joseph E. Harrington, Jr., Economics of Regulation and Antitrust
    192]{.smallcaps} (3d ed. 2000) ("[Viscusi]{.smallcaps}*, et al*.").

[^249]: *See* [Viscusi]{.smallcaps}*, et al*. at 233.

[^250]: In the simple case where there are two levels of production, an
    upstream market is a market for inputs, while a downstream market is
    a market for end-user outputs. We will sometimes refer to the
    upstream and downstream markets as the input and output markets.

[^251]: [Viscusi]{.smallcaps}*, et al*. at 219-221; Michael H. Riordan
    and Steven Salop, *Evaluating Vertical Mergers: A Post-Chicago
    Approach*, 63 [Antitrust L. J]{.smallcaps}. 513, 523-27 (1995)
    ("*Riordan and Salop*"); [Jean Tirole, The Theory of Industrial
    Organization]{.smallcaps} 174-75 (MIT Press 1988).

[^252]: TAC Petition at 18-22, 28-35; CWA/IBEW Petition at 8-20; Free
    Press Petition at 6-11; TCR Petition at 11-17; CFA/CU Reply Comments
    at 7-11, 32-41.

[^253]: TAC Petition at 18-22, 28-35; CWA/IBEW Petition at 8-20; Free
    Press Petition at 6-11; TCR Petition at 11-17; CFA/CU Reply Comments
    at 7-11, 32-41.

[^254]: TAC Petition at 18-22, 28-35; CWA/IBEW Petition at 8-20; Free
    Press Petition at 6-11; TCR Petition at 11-17; CFA/CU Reply Comments
    at 7-11, 32-41.

[^255]: According to DIRECTV, the study concludes that "an increase in
    the size of the cluster value for a given area significantly
    decreases the likelihood that an overbuilder enters that area."
    DIRECTV Comments at 29 (citing Hal J. Singer, *Does Clustering by
    Incumbent Cable MSOs Deter Entry by Overbuilders?*, Social Science
    Research Network, May 2003, at 4, *at*
    http://ssrn.com/abstract=403720 (last visited June 19, 2006)).

[^256]: Free Press Petition at 24; CFA/CU Reply Comments at 14-16;
    Florida Communities Comments at 5.

[^257]: RCN Comments at 8-9; *id*. at 3 (*citing Annual Assessment of
    the Status of Competition in Markets for the Delivery of Video
    Programming, Eighth Annual Report*, 17 FCC Rcd 1244, 1323 ¶ 197
    (2002) ("*Eighth Annual Video Competition Report*")). RCN and others
    note that GAO has found that the presence of an overbuilder in a
    market leads to significantly lower cable rates. RCN Comments at
    3-5; DIRECTV Comments at 29; CFA/CU Reply Comments at 14-15; Free
    Press Petition at 23; TAC Petition at 49-50. *See, e.g.,* *GAO
    Report: Issues Related to Competition and Subscriber Rates in the
    Cable Television Industry*, GAO-04-8 at 3, App. IV (Oct. 2003)
    (cable rates are 15% lower in markets where there is competition
    from a wireline provider) ("*GAO Report: Competition and Subscriber
    Rates*").

[^258]: RCN Comments at 9.

[^259]: Free Press's consultant, Dr. Gregory Rose, calculates that the
    transactions will result in an absence of head-to-head competition
    between Time Warner and Comcast in 22 of the top 40 DMAs, and in 119
    of the 210 Nielsen DMAs. Free Press Petition at 9, Rose Decl. at
    11-13.

[^260]: Free Press Petition at 24-25; DIRECTV Comments at 30-33;
    CWA/IBEW Petition at 6-8; RCN Comments at 8-9. Free Press states
    that DBS competition would not constrain the Applicants from
    exercising their dominant positions nationally or in the top 25 DMAs
    and asserts that the paucity of overbuilders eliminates them as a
    serious source of competition. Free Press Petition at 21-24; *see
    also* CFA/CU Reply Comments at 17-19; 23-25 (asserting that DBS is
    "not a full competitor to cable").

[^261]: DIRECTV Comments at 30; Free Press Petition at 25 (stating that
    ILEC buildout of video offering "will take years to achieve and may
    never come to fruition at all"); RCN Comments at 8.

[^262]: DIRECTV Comments at 30 (citing press reports stating that it
    took one ILEC a full year to negotiate six of the 10,000 franchise
    agreements that it would require in order to offer MVPD service to
    its entire service area).

[^263]: *Id*. (citing articles describing certain technological
    difficulties faced by ILECs attempting to roll out a video
    offering).

[^264]: *Id*. at 33-34 (contending that the obstacles to ILEC entry will
    prevent them from entering the marketplace "in a manner sufficient
    and timely enough" to counteract concentration resulting from the
    proposed transactions); *see also* Free Press Petition at 25
    (contending that potential telephone competitors will face the same
    market power and barriers to entry as traditional cable
    overbuilders).

[^265]: DIRECTV Comments at 32 (citing maps provided by the Applicants).

[^266]: Free Press Petition at 4-5, Rose Decl. at 2-4; CWA/IBEW Petition
    at 8-9, App. A; DIRECTV Comments at 9, Bamberger & Neuman Decl. at
    2; CFA/CU Reply Comments at 13; *see also* Letter from Francis
    Ackerman, Assistant Attorney General, Office of the Attorney
    General, State of Maine, to Chairman Kevin Martin and Commissioners
    Kathleen Q. Abernathy, Michael Copps, Jonathan Adelstein, and
    Deborah Taylor Tate, FCC (Mar. 1, 2006) ("Maine Attorney General Ex
    Parte") at 3-4. The HHI is a measure of concentration that takes
    account of the distribution of the size of firms in a market. A
    market's HHI is calculated by summing the squares of the individual
    market shares of all the participants. The HHI varies with the
    number of firms in a market and the degree of inequality among firm
    size. Generally, the HHI increases when there are fewer and unequal
    sized firms in a market. *See Twelfth Annual Video Competition
    Report*, 20 FCC Rcd at 2573-74 ¶ 153.

[^267]: Free Press Petition at 4-7, Rose Decl. at 2-6; CWA/IBEW Petition
    at 8-9; DIRECTV Comments at 9-10; CFA/CU Reply Comments at 13-14,
    Ex. 1. Horizontal mergers of competing firms may raise antitrust
    concerns because of their direct and well-understood impact on
    prices, quantities sold, and consumer welfare.

[^268]: Free Press asserts that the national HHI would increase by 13.5%
    to 1911 for the MVPD market and by 15.8% to 2108 for the cable
    market. Free Press reasons that since the guidelines state that an
    HHI of 1800 or greater denotes a concentrated market, the
    transactions likely would lessen competition. *See Horizontal Merger
    Guidelines*, 57 Fed. Reg. 41552 (Sept. 10, 1992), revised, 4 Trade
    Reg. Rep. (CCH) ¶ 13104 (Apr. 8, 1997) ("*Horizontal Merger
    Guidelines*" or "*Guidelines*"). Free Press claims that the proposed
    transactions would produce enormous regional concentration, creating
    a mean HHI increase in the top 10 DMAs of 10.5% in the MVPD market
    and 14.3% in the cable market, and in the top 25 DMAs of 10.38% in
    the MVPD market and 13.1% in the cable market. Free Press Petition
    at 4-7, Rose Decl. at 6, Figs. 1, 2. CWA/IBEW contend that in the
    cable market nationwide, the proposed transactions would increase
    the HHI by 212 points, from 1,790 to 2,002, amounting to a highly
    concentrated market. CWA/IBEW assert that the HHI for the MVPD
    market would increase by 134 points, from 1,495 to 1,629, which
    would raise significant competitive concerns according to the
    *Horizontal Merger Guidelines*. CWA/IBEW Petition at 8-9, App. A.
    DIRECTV claims that 16 RSN markets meet the *Horizontal Merger
    Guidelines*' criteria for a presumption that a transaction is likely
    to create or enhance market power or facilitate its exercise in
    highly concentrated markets, with a post-transaction HHI exceeding
    1800 and an increase in HHI of more than 100 points. DIRECTV avers
    that ten of these RSN markets (C-SET, Comcast SportsNet Philly, FSN
    Florida, Sun Sports, FSN Ohio, FSN West/West 2, Mid-Atlantic Sports
    Network, Comcast/Charter Sports Southeast, Comcast SportsNet
    Mid-Atlantic, and FSN Pittsburgh) would have post-transaction HHIs
    of at least 2000 and a change of at least 325, which far surpasses
    the thresholds for an adverse presumption. DIRECTV asserts that four
    additional RSN markets meet the *Horizontal Merger Guidelines*\'
    criteria for raising significant competitive concerns. DIRECTV
    Comments at 9-11, Bamberger & Neuman Decl. at Table 3. *See also*
    CFA/CU Reply Comments at 13-14, Ex. 1.

[^269]: Free Press Petition at 8.

[^270]: *Id*.

[^271]: *Id*. (citing *Applications of Ameritech Corp., Transferor, and
    SBC Communications Inc., Transferee, For Consent to Transfer Control
    of Corporations Holding Commission Licenses and Lines Pursuant to
    Sections 214 and 310(d) of the Communications Act and Parts 5, 22,
    24, 25, 63, 90, 95 and 101 of the Commission\'s Rules*, 14 FCC Rcd
    14712, 14741-42 (1999) ("*SBC-Ameritech Order*")).

[^272]: *Id*. at 6-8, Rose Decl. at 2-6, Fig. 1.

[^273]: Free Press Petition at 8-9.

[^274]: Applicants' Reply, Ex. G, Ordover and Higgins Decl. at 11-12.

[^275]: Applicants' Reply at 84.

[^276]: *Id*. at Ex. G, Ordover and Higgins Decl. at 11.

[^277]: *Id*.

[^278]: We describe elsewhere the potential indirect impact that the
    transactions and the Applicants' relationships with upstream sellers
    of valuable programming could have on their incentive to withhold
    that programming from rival MVPDs, which could increase the
    Applicants' downstream market power. *See* *infra* Section VI.D.1.

[^279]: *Horizontal Merger Guidelines*, 57 Fed. Reg. at 41554 § 1.0
    (stating that "\[i\]f the process of market definition and market
    measurement identifies one or more relevant markets in which the
    merging firms are both participants, then the merger is considered
    to be horizontal").

[^280]: Time Warner Jan. 13, 2006 Response to Information Request
    II.A.10.; Comcast Jan. 13, 2006 Response to Information Request
    II.A.10.; Adelphia Jan. 13, 2006 Response to Information Request
    II.A.10. Since the Applicants' cable systems generally do not
    overlap, there are very few markets in which the Applicants are
    directly competing with each other to sell MVPD service to a
    particular residence. One example of potential direct competition is
    in Collier and Lee Counties in Florida, as discussed below. *See
    infra* Section VI.C.1.c.

[^281]: The Applicants' increased share of regional and national markets
    from the proposed transactions reported by commenters reflects only
    the number of customers served in each geographic area. The addition
    of customers in adjacent areas may appear to increase the firms'
    market share in each region, but it actually represents the
    replacement of one supplier by another for those customers whose
    cable service provider changes.

[^282]: *Comcast-AT&T Order,* 17 FCC Rcd at 23282 ¶ 90; DIRECTV
    Surreply, Ex. A at 2-3. As explained above, because it would be
    administratively impractical and inefficient to analyze a separate
    relevant geographic market for each individual customer, we will
    aggregate relevant geographic markets in which customers face
    similar competitive choices. *See supra* Section VI.A.1.b.;
    *Comcast-AT&T Order,* 17 FCC Rcd at 23282 ¶ 90.

[^283]: *See* Applicants' Reply, Ex. G, Ordover and Higgins Decl. at
    11-12; DIRECTV Surreply, Ex. A at 2.

[^284]: As stated above, we assume that customers are not likely to move
    to another neighborhood of a city just to obtain cheaper cable
    television service. *See supra* Section VI.A.1.b.; *see also
    Comcast-AT&T Order*, 17 FCC Rcd at 23282 ¶ 90.

[^285]: We note that no commenter has articulated a theory purporting to
    explain how or why changes in HHI indicate that Applicants are more
    likely as a result of the transactions to engage successfully in
    anticompetitive strategies.

[^286]: Free Press Petition at 9, Rose Decl. at 11-13.

[^287]: In the few areas where Time Warner and Comcast have overlapping
    service areas, the number of affected subscribers is very low. *See*
    Time Warner Jan. 13, 2006 Response to Information Request II.A.10.;
    Comcast Jan. 13, 2006 Response to Information Request II.A.10. As
    noted above and discussed below, Time Warner and Comcast both
    operate in Collier and Lee Counties in Florida. *See infra* Section
    VI.C.1.c.

[^288]: CWA/IBEW Petition at 10-11.

[^289]: *SBC-Ameritech Order*, 14 FCC Rcd at 14741-42 ¶¶ 57-60.

[^290]: *See* Maine Attorney General Ex Parte at 2 (stating that
    "municipalities, relying on the benefits of competition, compare the
    track records of rival prospective franchisees on matters such as
    price, universal service and contract compliance"); Free Press
    Petition at 8-9 (noting that programmers and local advertisers may
    also benefit from the presence of a benchmark competitor).

[^291]: *See infra* Section VI.D.

[^292]: CWA provides a report finding that Time Warner likely would
    raise its cable rates in order to pay down the debt incurred by the
    transactions, to report increased annual revenues to shareholders,
    and to shorten the time frame needed to return its investment in the
    newly-acquired systems. Letter from Kim Racine, Racine Financial
    Consulting, to Robert Sepe, Action Audits, LLC (Sept. 28, 2005),
    Att. at 1-3, transmitted by letter from Kenneth R. Peres, PhD.,
    Research and Development Department, CWA, to Marlene H. Dortch,
    Secretary, FCC (Dec. 16, 2005) ("CWA Dec. 16, 2005 Ex Parte"). In
    response, Time Warner Inc. provides a signed declaration by the
    company's Senior Vice President of Investments stating that (1) Time
    Warner has a solid investment grade rating from the nation's three
    leading credit rating agencies and is expected to maintain an
    investment grade rating after the transactions; (2) the report
    mischaracterizes the company's debt, cash flow, and liquidity; (3)
    the report misrepresents the cost of the transactions; and (4) the
    report fails to consider that Adelphia is more highly leveraged than
    Time Warner. Letter from Seth A. Davidson, Fleischman and Walsh,
    L.L.P., Counsel for Time Warner Inc., to Marlene H. Dortch,
    Secretary, FCC (Jan. 25, 2006) ("Time Warner Jan. 25, 2006 Ex
    Parte"), Adige Decl. at 1-4. *See also* Letter from Robert F. Sepe,
    Action Audits, LLC, to Marlene H. Dortch, Secretary, FCC (June 26,
    2006) (claiming that Time Warner failed to address CWA's allegation
    that the transactions will lead to increased cable rates and asking
    the Commission to require Time Warner to upgrade within two years
    all systems acquired from Adelphia that serve rural communities). In
    addition, some commenters expect that Comcast's and Time Warner's
    quality of service would decline or would not improve. *See, e.g.*,
    NATOA Reply Comments at 9-10; Maine Attorney General Ex Parte at 5;
    *see also* DIRECTV Comments at 27-28.

[^293]: CFA/CU Reply Comments at 19 (citing *GAO Report: Competition and
    Subscriber Rates*, GAO-04-8, App. IV); *see also* TAC Petition at
    49.

[^294]: CFA/CU Reply Comments at 19 (citing *Implementation of Section 3
    of the Cable Television Consumer Protection and Competition Act of
    1992*, 16 FCC Rcd 4346, 4376 Att. D-1 (2001) ("*2000 Cable Price
    Survey*") and citing *Implementation of Section 3 of the Cable
    Television Consumer Protection and Competition Act of 1992*, 15 FCC
    Rcd 10927, 10959 Att. D-1 (2000)); DIRECTV Comments at 26-27 (also
    citing the *2000 Cable Price Survey*); *see also* TAC Petition at
    49.

[^295]: CFA/CU Reply Comments at 19; DIRECTV Comments at 26-27; *see
    also* CFA/CU Reply Comments at 10 (stating that the increases in
    firm size and regional clustering will lead to price increases of
    five to ten percent); DIRECTV Surreply at 20-22 (stating that
    clustering does not lead to lower cable rates or improved services).
    CFA/CU contend that the enormous increases in cable operators' cash
    flows demonstrate that higher programming and operating expenses
    cannot account for all of the increases in consumer prices. CFA/CU
    Reply Comments at 20-21.

[^296]: TAC Petition at 47-50.

[^297]: CFA/CU calculate that the national HHI in the MVPD market would
    increase almost 200 points, over twice the threshold for concern
    about anticompetitive impacts in moderately concentrated markets.
    CFA/CU assert that the average increase in HHI would be over 900
    points in 48 of the 99 markets currently served by the Applicants,
    which is more than 18 times the threshold for concern in highly
    concentrated markets. CFA/CU Reply Comments at 13-14. According to
    CWA/IBEW, the HHI in the cable market would increase by 212 points
    to 2002, and the HHI in the MVPD market would increase by 134 points
    to 1629. CWA/IBEW Petition at 8-10.

[^298]: Applicants' Reply at 84.

[^299]: *Id*. Thierer and English argue that competition from DBS
    providers and telephone companies holds down cable prices. They
    argue that given the decreasing costs of switching providers, cable
    operators would risk losing a substantial market share by raising
    prices. Thierer and English Comments at 22-24.

[^300]: CFA/CU Reply Comments at 19-20.

[^301]: *GAO Report: Competition and Subscriber Rates*, GAO-04-8, App.
    IV at 56, 59.

[^302]: CFA/CU Reply Comments at 13-14; CWA/IBEW Petition at 8-10.

[^303]: *See supra* paras. 80-81.

[^304]: MIC Comments at 1; *see also* Letter from William Gaston,
    President, Marco Island Cable, to Marlene H. Dortch, Secretary, FCC
    (Feb. 13, 2006) ("MIC Feb. 13, 2006 Ex Parte").

[^305]: MIC Comments at 1. MIC claims that Comcast charges an average of
    \$30.00 per month for cable service in the county area not served by
    MIC and as low as \$11.50 per month in the county area where it
    faces competition from MIC. *Id*. at Att. at 3. According to MIC,
    Comcast's predatory pricing practices are aimed only at MIC and not
    at Time Warner. *Id*. at 1.

[^306]: *Id*. at 1-2. As discussed above, Time Warner and Comcast
    generally do not compete directly with each other in the same
    franchise area. *See supra* note 280.

[^307]: MIC Comments at 2.

[^308]: *Id*. at 1; *see* Amended Complaint of Marco Island Cable, Inc.
    v. Comcast Cablevision of the South, Inc., *et al*., Case No.
    03-5267-CA (Cir. Ct. of 20^th^ Jud. Cir. of Florida) (filed Jan. 12,
    2004) (later removed to the U.S. District Court for the Middle Dist.
    of Florida, where it remains pending as Case No.
    2:04-CV-26-Ft.M-29-DNF). In its complaint, MIC avers that Comcast
    (1) engages in predatory pricing practices; (2) enters into
    long-term, exclusive contracts with homeowners' associations and
    condominium owners that prevent the individual residents from
    choosing an alternative cable provider; (3) intimidates customers
    wishing to switch to MIC by threatening removal of their cable
    wiring and/or threatening litigation; and (4) offers developers cash
    payments to induce them to do business with Comcast. MIC Comments,
    Att. at 1-6. The court, however, recently granted Comcast's motions
    for summary judgment with respect to MIC's claims of predatory
    pricing and with respect to two of MIC's complaints regarding
    exclusivity. *Marco Island Cable, Inc. v. Comcast Cablevision of the
    South, Inc.*, No. 2:04-CV-26-FTM-29DNF, 2006 WL 1814333, at \*3-8,
    \*9 (M.D. Fla. July 3, 2006).

[^309]: RCN Comments at 16-17.

[^310]: *Id*.

[^311]: *Id*.

[^312]: *Id*. at 17-18.

[^313]: *Id*. at 19.

[^314]: Applicants' Reply at 98-99.

[^315]: *Id*.

[^316]: *Id*. at 98-99 n.333 (citing *Implementation of the Cable
    Television Consumer Protection and Competition Act of 1992; Cable
    Home Wiring*, 18 FCC Rcd 1342, 1364-65 ¶ 60 (2003) ("*Cable Home
    Wiring Second Report and Order*")).

[^317]: *Id*. at 86.

[^318]: *Id*.

[^319]: *Id*. at 86-87.

[^320]: *Id*. at 84-85.

[^321]: *Id*. at 85-86.

[^322]: *Id*. at 85 n.290 (citing *Brooke Group Ltd. v. Brown &
    Williamson Tobacco Corp*., 509 U.S. 209, 226-27 (1993)) and at 86
    n.292.

[^323]: *Cable Home Wiring Second Report and Order*, 18 FCC Rcd at
    1364-72 ¶¶ 59-77.

[^324]: *See* 47 C.F.R. § 76.984.

[^325]: *Comcast-AT&T Order*, 17 FCC Rcd at 23293 ¶ 120.

[^326]: Complaints regarding any removal of inside wiring in violation
    of our cable inside wiring rules also may be filed with the
    Commission or in court.

[^327]: MIC Comments at 2.

[^328]: Letter from Martha E. Heller, Wiley Rein & Fielding, LLP,
    Counsel for Comcast Corp., to Marlene H. Dortch, Secretary, FCC
    (Jan. 13, 2006) ("Comcast Jan. 13, 2006 Ex Parte") at 1-2.

[^329]: *Id*. at 1.

[^330]: MIC Feb. 13, 2006 Ex Parte at 1-2.

[^331]: NATOA Reply Comments at 2, 4-5 (stating that Congress recognized
    that LFAs are in the best position to protect local consumers from
    the market power of cable operators).

[^332]: *Id*. at 5.

[^333]: *Id*. at 5-8; Florida Communities Comments at 4-6; *see also*
    Maine Attorney General Ex Parte at 5 (claiming that the loss of
    competition that would result from the transactions would diminish
    the LFAs' bargaining power, and LFAs increasingly would be dealing
    with a cable operator's distant headquarters where local conditions
    and geography are not well known).

[^334]: NATOA Reply Comments at 5-8; Florida Communities Comments at
    4-6.

[^335]: NATOA Reply Comments at 8 (contending that increased regional
    concentration hinders LFAs' ability to attract overbuilders or other
    competitors because alternative providers are not likely to seek a
    franchise in an area that is isolated in the middle of a cable
    cluster where there is no opportunity to expand their coverage
    area).

[^336]: *Id*. at 9.

[^337]: *Id*. at 6-8.

[^338]: *Id*. at 14-16; *see also* Letter from Parul Desai, Assistant
    Director, Media Access Project, to Marlene H. Dortch, Secretary, FCC
    (Jan. 12, 2006) at 1-2 (proposing that "an expedited complaint
    process be put in place through which local governments or those
    using public access channels can submit complaints to the Commission
    regarding the cable operator's refusal to carry out its obligations
    under agreements already in place"); *see* Communications Act § 611,
    47 U.S.C. § 531.

[^339]: NATOA Reply Comments at 16. The City of San Buenaventura
    requests that the Commission condition approval of the license
    transfers at issue here upon grant of all required LFA approvals for
    the transfer of franchise rights. We address these concerns below.
    *See infra* Section X.A.

[^340]: NATOA Reply Comments at 16-17.

[^341]: *Id*. at 12.

[^342]: *Id*. at 17.

[^343]: *Id*. at 10-11; *see* 47 U.S.C. § 537; 47 C.F.R. § 76.502 *et
    seq*. NATOA asks that the Commission "not take any action within
    this proceeding that in any way jeopardizes, or infringes upon the
    right of an LFA to require the filing of the FCC Form 394, the right
    to require submission of additional information, or the tolling of
    the 120 day period until such time as the company has provided the
    appropriate response, or in any way impedes the statutory rights of
    local government." NATOA Reply Comments at 11. NATOA also encourages
    the Commission to make leased access a more viable option for
    independent programmers and to ensure a meaningful mechanism for
    addressing individual complaints of market power abuse. *Id*. at
    17-18.

[^344]: *See* *Letter to Jill Abeshouse Stern,* 4 FCC Rcd 5061, 5062
    (1989) ("*Stern*").

[^345]: The merger of two or more competing buyers increases buyer
    concentration and reduces the number of firms competing to buy
    inputs from suppliers. This reduction in competition can increase
    buyers' market power, giving them the ability to force down prices
    paid to suppliers. Economic theory finds this harmful when the lower
    prices are the result of buyers purchasing lower quantities of a
    good. *Carlton and Perloff* at 105-07.

[^346]: A large buyer can force down the price of an input by purchasing
    less of it. That is, if a buyer offers a lower price, suppliers will
    find it profitable to sell it fewer units of the input. *Carlton and
    Perloff* at 105-07. According to standard economic theory, a firm's
    actions cause harm if they lead to the inefficient production and/or
    distribution of goods. If a firm's exercise of market power does not
    change the quantity of output purchased, then the production and
    distribution of goods has not changed, and the firm's action has
    caused no decrease in efficiency.

[^347]: In this Section, consistent with section 613(f)(2)(A) of the
    Act, we address whether decisions by Comcast or Time Warner would
    impede the flow of programming by preventing programming networks
    from launching or surviving without carriage by either firm. In
    Section VI.D.3, we examine whether the transactions would increase
    the likelihood that unaffiliated networks would be foreclosed from
    the market on the basis of discrimination in favor of networks owned
    by Comcast or Time Warner. *See* 47 U.S.C. § 613(f)(2)(B).

[^348]: 47 U.S.C. § 613(f)(2)(D). We note that the policy goals set
    forth in section 613(f) specifically pertain to limits imposed in
    the rulemaking context.

[^349]: *See* TAC Petition at 7; CWA/IBEW Petition at 5, 18; Free Press
    Petition at 10; CFA/CU Reply Comments at 7. Examples of nationally
    distributed programming include ESPN, CNN, C-SPAN and The Weather
    Channel.

[^350]: TAC Petition at 7; CWA/IBEW Petition at 5, 18; Free Press
    Petition at 10; CFA/CU Reply Comments at 7.

[^351]: TAC Petition at 7; CWA/IBEW Petition at 5, 18; CFA/CU Reply
    Comments at 10; BTNC Sept. 7, 2005 Ex Parte at 4-6.

[^352]: Free Press Petition at 7; TAC Petition at 28.

[^353]: CWA/IBEW Petition at 1; TAC Petition at 27; EchoStar Comments at
    11. EchoStar asserts that this would give Comcast "unfettered power"
    to decide whether a programmer would gain access to Comcast's
    platform. EchoStar Comments at 12.

[^354]: CWA/IBEW Petition at 18-19 (citing comments filed by various
    programmers in the Commission's a la carte proceeding in MB Docket
    No. 04-207 and; Keith S. Brown, *A Survival Analysis of Cable
    Networks*, Media Bureau Staff Research Paper No. 2004-1 (rel. Dec.
    7, 2004) ("*Cable Network Survival Study*")). CFA states that a
    national programmer must gain carriage on systems that pass at least
    50 million, and perhaps as many as 75 million, households to achieve
    long term viability. CFA/CU Reply Comments at 30.

[^355]: TAC describes itself as an independent programming network
    offering "family-friendly cable programming that celebrates America,
    its communities, unsung heroes and ordinary people who accomplish
    the extraordinary." TAC Petition at 4. In seeking nationwide
    distribution, TAC states that it has sought carriage from Comcast
    and Time Warner for years but has been rebuffed. *Id*. at 9.

[^356]: *Id*. at 20.

[^357]: *Id*. at 45, Ex. 1.

[^358]: *Id*. at 26, 28. TAC asserts that only five "independent"
    networks (in addition to the two C-SPAN networks) have reached the
    50 million subscriber threshold -- The Weather Channel, Home
    Shopping Network, Hallmark Channel, Oxygen, and EWTN. *Id*. at 14.
    We note that both Time Warner Inc. and Charter Communications have
    equity interests in Oxygen Media, and the Home Shopping Network and
    the Hallmark Channel (formerly the Odyssey Network) were affiliated
    with cable operators from at least 1994 until 2003 and from 1997
    until 2003, respectively.  *See Twelfth Annual Video Competition
    Report*, 21 FCC Rcd at 2633, 2639; *First Annual Video Competition
    Report*, 9 FCC Rcd at 7589, Table 3; *Annual Assessment of The
    Status of Competition in Markets for the Delivery of Video
    Programming, Fourth Annual Report*, 13 FCC Rcd 1034, 1215, Table F-1
    (1998) ("*Fourth Annual Video Competition Report*"); *Annual
    Assessment of the Status of Competition in Markets for the Delivery
    of Video Programming, Tenth Annual Report*, 19 FCC Rcd 1606, App. C,
    Table C-5 (2004).

[^359]: New York City is the number one ranked Nielsen television
    market. Nielsen Media Research provides television audience
    estimates for broadcast and cable networks, television stations,
    national syndicators, regional cable television systems, satellite
    providers, advertisers, and advertising agencies. Television
    audience research information is used to buy and sell television
    time and to make programming decisions.

[^360]: Los Angeles, California is the number two ranked Nielsen
    television market.

[^361]: Washington, D.C. is the number eight ranked Nielsen television
    market.

[^362]: TAC Petition at 28-29; Free Press Petition at 7. TAC posits that
    even if an independent network is able to reach the minimum number
    of MVPD subscribers needed for survival, it would be unable to
    compete effectively if Comcast and Time Warner choose not to carry
    it, because carriage in top television markets is critical to
    securing advertising dollars. TAC Petition at 19.

[^363]: *Id*. at 29-33.

[^364]: *Id*. at 28-29.

[^365]: Free Press Petition at 8.

[^366]: TAC Petition at 45.

[^367]: BTNC Sept. 7, 2005 Ex Parte at 5-6.

[^368]: TAC Petition at 8, 21, Ex. 1.

[^369]: *Id*. at 22.

[^370]: IBC Reply Comments at 2.

[^371]: *Id*.

[^372]: *Id.*

[^373]: TAC Petition at 5-6; Free Press Petition at 41-42; CFA/CU Reply
    Comments at 43. In its Reply Comments, CWA/IBEW urges the Commission
    to "\[p\]romote the ability of independent programmers to gain
    access to Comcast and Time Warner's cable systems." CWA/IBEW Reply
    Comments at 3.

[^374]: Letter from Kathleen Wallman, Counsel for TAC, to Marlene H.
    Dortch, Secretary, FCC (Nov. 8, 2005) ("TAC Nov. 8, 2005 Ex Parte")
    at 11-12. Regarding its second proposed condition, TAC requests a
    procedure for consulting a neutral arbitrator to perform an "initial
    review" at the expense of the programmer alleging discrimination.
    *Id*. at 12. If the arbitrator determines "that the matter should go
    forward," TAC proposes that the programmer post a bond, and that the
    arbitration process be similar to the one instituted in the *News
    Corp.-Hughes Order*. *Id*. Regarding its third (alternative)
    proposed condition, TAC requests that a "fast-track" complaint
    resolution process be instituted under the FCC's existing program
    access rules. *Id*. It appears, however, that TAC is referring to
    the Commission's program carriage rules, 47 C.F.R. § 76.1300-02.

[^375]: BTNC Sept. 7, 2005 Ex Parte at 9.

[^376]: CWA/IBEW Petition at 2.

[^377]: *Id*.

[^378]: Applicants' Reply at 27.

[^379]: Public Interest Statement at 79-80 (stating that the Commission
    previously indicated that cable operators serving fewer than 30% of
    MVPDs are not able to restrict unreasonably the flow of programming
    to consumers or hinder the development of new and diverse
    programming).

[^380]: *Id*. at 80-82.

[^381]: Applicants' Reply at 37.

[^382]: *Id*. at 35-37; Letter from Michael H. Hammer, Willkie Farr &
    Gallagher, LLP, Counsel for Adelphia Communications Corp., to
    Marlene H. Dortch, Secretary, FCC (Dec. 9, 2005) ("Adelphia Dec. 9,
    2005 Ex Parte") at 8 (citing examples of networks that have launched
    successfully without carriage by both Comcast and Time Warner or
    with carriage by only one firm).

[^383]: Applicants' Reply at 35, 37.

[^384]: Time Warner Mar. 23, 2006 Ex Parte at 5-6 (stating that the data
    cited by TAC indicates that the transactions will result in only a
    minor change in top 50 DMA subscribership distribution).

[^385]: Applicants' Reply at 38.

[^386]: Public Interest Statement at 73-74.

[^387]: As a result of the Comcast-AT&T merger, Comcast served 28.9% of
    the total U.S. MVPD subscribers, the same percentage it would serve
    as a result of the transactions now before us. *See Comcast-AT&T
    Order*, 17 FCC Rcd at 23248 ¶ 3; Applicants' Reply at 30. Although
    Comcast will acquire approximately 680,000 subscribers as a result
    of the transactions, total MVPD subscriber reach has increased
    steadily over time. Moreover, although TAC asserts that carriage in
    the top DMAs is critical for a national programmer's success, there
    is no evidence in the record regarding the level of distribution
    within any market that is necessary for TAC or any other network to
    become viable.

[^388]: TAC has submitted in the cable ownership rulemaking proceeding
    the same evidence that it submitted here, and we will evaluate in
    that proceeding the full range of empirical and theoretical evidence
    available to determine an appropriate limit.

[^389]: 47 C.F.R. §§ 76.970-71, 76.975.

[^390]: 47 C.F.R. § 76.970.

[^391]: As stated in Section V *supra*, there are approximately 94
    million total U.S. MVPD subscribers. *See supra* note 199.

[^392]: *See* Public Interest Statement at 73 n.184.

[^393]: CWA/IBEW Petition at 14, 16.

[^394]: *Id*. at 15-16.

[^395]: BTNC Sept. 7, 2005 Ex Parte at 7-8.

[^396]: Letter from David C. Frederick, Kellogg, Huber, Hansen, Todd,
    Evans & Figel, Counsel for TCR, to Marlene H. Dortch, Secretary, FCC
    (Feb. 21, 2006) ("TCR Feb. 21, 2006 Ex Parte") Att. at 8.

[^397]: TCR Petition at 15.

[^398]: TCR Reply Comments at 6.

[^399]: *Id*. at 6-7. CWA/IBEW state that they support conditions
    proposed by other commenters that would promote the ability of
    independent programmers to secure distribution over the Comcast and
    Time Warner systems. CWA/IBEW Reply Comments at 3.

[^400]: Specifically, Comcast asserts that there would be no significant
    change in concentration within the footprints of CSN West and CSN
    Chicago (remaining at 23% and 20% of TV households, respectively), a
    three percentage point increase in Philadelphia (53% to 56% of TV
    households), a four percentage point increase in the Southeast (16%
    to 20% of TV households), and an eight percentage point increase in
    the Mid-Atlantic (30% to 38% of TV households). Applicants' Reply at
    58, Table 1, Ex. F, Ordover and Higgins Decl. at ¶ 27.

[^401]: Applicants' Reply at 39.

[^402]: *Id*. at 77-78 (citing *TCR Sports Broadcast Holding, L.L.P. v.
    Comcast Corp*., CSR-6911-N (filed June 14, 2005)). Applicants did
    not reply to TCR's proposed condition that the Commission require
    divestiture of CSN Mid-Atlantic.

[^403]: The condition we impose below in Section VI.D.1.a. regarding
    access to regional sports programming is designed to address the
    Applicants' incentive to pursue, and ability to accomplish, such a
    strategy.

[^404]: *1993 Cable Ownership Second Report and Order*, 8 FCC Rcd at
    8572-73 ¶¶ 16-17 (confirming the Commission's authority to adopt
    regional subscriber limits and concluding that there was no basis in
    the record for imposing regional limits that could reduce investment
    in the development of regional programming, upgraded cable
    infrastructure, and improved customer service).

[^405]: *See* *Cable Ownership Second Further Notice*, 20 FCC Rcd at
    9374.

[^406]: *Cable Ownership Further Notice*, 16 FCC Rcd at 17322 ¶¶ 10-11.
    In that regard, we note that section 613(f)(2)(B) requires the
    Commission to ensure, among other public interest objectives, that
    cable operators affiliated with video programmers do not favor such
    programming in determining carriage on their cable systems. *See* 47
    U.S.C. § 613(f)(2)(B).

[^407]: *See supra* para. 110.

[^408]: The term "foreclosure," when used with respect to program
    access, refers to a vertically integrated MVPD's withholding of its
    affiliated programming, to the detriment of competing MVPDs. When
    used with respect to program carriage, the term refers to a
    vertically integrated MVPD's refusal to carry the programming of an
    unaffiliated network such that the programmer would exit the market
    or would be deterred from entering the market.

[^409]: *See*, *e.g*., *Riordan & Salop* at 527-38; *see also* Thomas G.
    Krattenmaker & Steven C. Salop, *Anticompetitive Exclusion: Raising
    Rivals' Costs to Achieve Power over Price*, [96 Yale L.
    J.]{.smallcaps} 209, 234-38 (1986).

[^410]: 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).

[^411]: *News Corp.-Hughes Order,* 19 FCC Rcd at 513, 523 ¶¶ 84, 107.

[^412]: *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.

[^413]: 47 C.F.R. §§ 76.1001-76.1002. The program access rules prohibit
    satellite cable programming vendors in which a cable operator has an
    attributable interest from entering into exclusive contracts with
    cable operators unless the Commission finds the exclusivity to be in
    the public interest. 47 C.F.R. § 76.1002(c)(2), (4). A terrestrial
    network delivers programming to cable headends by fiber or microwave
    links rather than by satellite. A programming network that is
    delivered terrestrially is not "satellite cable programming." 47
    C.F.R. § 76.1000(h).

[^414]: 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.

[^415]: EchoStar Comments at 4-7; CFA/CU Reply Comments at 39; DIRECTV
    Comments at 8-25. According to DIRECTV, its HHI calculations
    indicate that Comcast and Time Warner would be able to exercise
    market power in 20 of the 29 RSN markets by denying rivals access to
    RSN programming. DIRECTV Comments at 10-11. We note that HHIs
    calculated for markets in which the merging parties are not direct
    competitors for retail customers, i.e., HHI calculations based on a
    DMA unit of analysis, do not represent accurate measures of market
    concentration and market power. *See supra* Section VI.C.1.a.
    Commenters who present HHI data have not explained how their
    calculations relate to a vertical acquisition or a particular theory
    of harm. *See* CWA/IBEW Petition at 8-10, App. A; DIRECTV Comments
    at 9-11, Bamberger Decl. at 4-5, Tables 3-4; CFA/CU Reply Comments
    at 13-14, Ex. 1; Free Press Petition at 4-8, Rose Decl. at 2-10,
    Figs 1, 2.

[^416]: Letter from Richard Ramlall, Senior Vice President, RCN, to
    Kevin J. Martin, Chairman, FCC, at 3, transmitted by letter from
    Jean L. Kiddoo, Bingham McCutchen, to Marlene H. Dortch, Secretary,
    FCC (Apr. 14, 2006) ("RCN Apr. 14, 2006 Ex Parte"); Letter from
    Richard Ramlall, Senior Vice President, RCN, to Chairman Martin and
    Commissioners Adelstein, Copps, and Tate, FCC, at 6, transmitted by
    letter from Jean L. Kiddoo, to Marlene H. Dortch, FCC (Mar. 3, 2006)
    ("RCN Mar. 3, 2006 Ex Parte").

[^417]: *See*, *e.g*., DIRECTV Comments at 30*.*

[^418]: *Id*. at iii; *see also News Corp.-Hughes Order,* 19 FCC Rcd at
    496-97 ¶ 44; *supra* Section IV.B. (discussing "must-have"
    programming).

[^419]: *News Corp.-Hughes Order,* 19 FCC Rcd at 535 ¶ 133.

[^420]: Applicants' Response to DIRECTV Surreply at 28-29; Time Warner
    Jan. 13, 2006 Response to Information Request II.E at TW 00024596
    **\[REDACTED\]** ; Comcast Jan. 13, 2006 Response to Information
    Request III.J. at COM III.J. 000967 **\[REDACTED\]** Letter from
    James R. Coltharp, Comcast Corp., to Marlene H. Dortch, Secretary,
    FCC (Mar. 27, 2006) ("Comcast Mar. 27, 2006 Ex Parte") at 1 n.2. We
    also note that the Applicants allege that lack of access to RSNs
    does not depress DBS penetration in markets where such programming
    is unavailable to DBS providers. Letter from Michael H. Hammer,
    Willkie, Farr & Gallagher, LLP, to Marlene H. Dortch, Secretary, FCC
    (Mar. 16, 2006) ("Applicants Mar. 16, 2006 Ex Parte") at 1-2. We
    address this allegation below. *See* *infra* paras. 145-151*.*

[^421]: *Comcast-AT&T Order*, 17 FCC Rcd at 23267 ¶ 59; *see also News
    Corp.-Hughes Order*, 19 FCC Rcd at 506 ¶ 66; *supra* Section VI.A.2.
    (explaining relevant market for video programming).

[^422]: Teams or leagues typically establish these zones.

[^423]: For example, FSN North carries the games of Minneapolis' and
    Milwaukee's professional baseball and basketball teams. *See* Fox
    Sports, FSN-MN, *at* http://msn.foxsports.com/regional/minnesota
    (last visited June 20, 2006); *see also* Fox Sports, FSN-WI, *at*
    http://msn.foxsports.com/regional/wisconsin (last visited June 20,
    2006). However each team's games are not available in the other's
    home territory. *See* Time Warner Cable, *Sports Blackouts*, *at*
    http://timewarnercable.com/piedmonttriad/products/cable/sportsblackouts.html
    (last visited June 20, 2006). Contracts between sports teams and
    RSNs limit the distribution of games to a specific viewing zone that
    does not overlap with the exclusive viewing zones of neighboring
    teams in the same league. *See* DIRECTV, *Blackout Information*,
    *at* http://www.directvsports.com/Blackout_Info/ (last visited June
    20, 2006). In addition, RSN boundaries often change, depending on
    what teams' sports rights they gain, and with which local cable
    companies the RSNs are able to negotiate carriage.

[^424]: Our use of DMAs in this context does not conflict with our
    rejection of DMAs as a relevant geographic market for purposes of
    analyzing potential harms to MVPD competition, because in each case
    we are examining the market within which consumers face similar
    choices. *See* *supra* para. 81. In the context of MVPD competition,
    we select the franchise area, rather than the DMA, as the relevant
    market, because consumers may not face similar choices in larger
    geographic areas such as DMAs. *Id.*

[^425]: DIRECTV Comments at 8 (citing *News* *Corp.-Hughes Order*, 19
    FCC Rcd at 506; *Comcast-AT&T Order*, 17 FCC Rcd at 23267).

[^426]: *Id*. at 25.

[^427]: *See News Corp.-Hughes Order*, 19 FCC Rcd at 506 ¶ 66.

[^428]: For example, CSN West uses a zone pricing system, in which the
    price per subscriber is highest in the inner zone, less in the outer
    zone, and least in the outermost zone. *See infra* para. 134.

[^429]: Thus, we do not address DIRECTV's argument that the Applicants
    have understated the effects of the transactions even if the
    analysis focuses only on the markets in which Comcast and Time
    Warner currently own RSNs. DIRECTV Surreply at 11-12, Lexecon Report
    at 8-11. The Applicants' RSNs include Comcast SportsNet Chicago
    ("CSN Chicago"); Comcast SportsNet West ("CSN West"); Comcast
    SportsNet Mid-Atlantic ("CSN Mid-Atlantic"); Comcast/Charter Sports
    Southeast; and Comcast Local Detroit. Applicants' Reply at 58-59;
    Public Interest Statement at 17 n.37; Bill Griffin, *FSN Shake-up
    Opens Door for Comcast?*, [The Boston Globe]{.smallcaps}, Feb. 25,
    2005, *at*
    http://www.boston.com/sports/other_sports/articles/2005/02/25/fsn_shake_up_opens_door_for_comcast?mode=PF
    (last visited June 20, 2006). The Applicants do not include the
    markets served by SportsNet New York, Comcast Local Detroit, or Fox
    Sports New England in their analysis of the transaction-related
    effects. *Cf.* Applicants' Reply at 58-59 (displaying calculations
    for five RSNs, not including the RSNs in New York, Detroit or New
    England).

[^430]: DIRECTV states that the Commission must consider the
    transactions' impact in any market in which Comcast or Time Warner
    could own an RSN in the future, claiming that the significant
    clustering resulting from the sale would place Comcast and Time
    Warner in a better position to lure sports teams away from News
    Corp.'s RSNs by enticing them with a share of their monopoly rents.
    DIRECTV Comments at 10-11 n.36, 20-21; DIRECTV Surreply at 7-8;
    Letter from William M. Wiltshire, Michael D. Nilsson, S. Roberts
    Carter III, Harris, Wiltshire & Grannis LLP, Counsel for DIRECTV,
    Inc., to Marlene H. Dortch, Secretary, FCC (Apr. 3, 2006) ("DIRECTV
    Apr. 3, 2006 Ex Parte") at 2. In support of this argument, DIRECTV
    cites Comcast's creation of CSN Chicago and CSN West following its
    acquisition of the AT&T Broadband cable systems. DIRECTV Surreply at
    7-8. Comcast explains that the owner of the cable systems in those
    regions had "*exactly the same* incentive and ability to engage (or
    not engage) in foreclosure before and after the AT&T
    Broadband/Comcast transaction." Letter from James R. Coltharp,
    Comcast Corp., to Marlene H. Dortch, Secretary, FCC (Apr. 28, 2006)
    ("Comcast Apr. 28, 2006 Ex Parte") (emphasis in original) at 5.
    DIRECTV states that Comcast dramatically increased prices charged to
    competing MVPDs for carriage of these RSNs after acquiring the
    networks. DIRECTV Surreply at 7-8.

[^431]: Applicants assert that our analysis should be limited to those
    markets where they currently own RSNs, because long-term contracts
    between sports teams and incumbent RSNs preclude them from luring
    teams away to launch their own RSNs in new markets. Applicants'
    Response to DIRECTV Surreply at 19-21. Applicants explain that in
    Los Angeles and Miami, for example, most sports teams have contracts
    with News Corp.'s RSNs until 2010 (with the exceptions in Los
    Angeles noted above). *Id.* at 20; *see also* Letter from Martha E.
    Heller, Wiley, Rein & Fielding LLP, Counsel for Comcast Corp., to
    Marlene H. Dortch, Secretary, FCC (Mar. 24, 2006) ("Comcast Mar. 24,
    2006 Ex Parte") at 8-9. However, it does not appear that such
    contracts are necessarily a bar to the creation of new RSNs.
    **\[REDACTED\]** Comcast Apr. 7, 2006 Response to Information
    Request III.J., Att. at unnumbered 1. Yet in 2004, Comcast signed
    agreements to carry the games of those same teams on its own RSN,
    CSN Chicago. Don Steinberg, *Comcast SportsNet's Growth Spurt,*
    [Philadelphia Inquirer,]{.smallcaps} Oct. 1, 2004, at D02.

[^432]: Applicants' Response to DIRECTV Surreply at 21.

[^433]: For example, in 2004, the New York Mets paid \$54 million to end
    a contract with Madison Square Garden Networks, which enabled the
    creation of SportsNet New York. Richard Sandomir, *Cablevision Takes
    Mets to Court,* [N.Y. Times,]{.smallcaps} Oct. 28, 2004, *at*
    http://www.nytimes.com/2004/10/28/sports/baseball/28cablevision.html?ei=5088&en=9cfa5178c260283e&ex=1256702400&adxnnl=1&partner=rssnyt&adxnnlx=1114171725-Wd0IQXYBoPpsUIuzdiiGQg
    (last visited June 20, 2006). Moreover, Time Warner documents show
    that it is aware that the marketplace to obtain ownership rights to
    distribute regional sports programming is dynamic. Time Warner Mar.
    14, 2006 Response to Information Request III.J. at TW FCC2 00000559
    **\[REDACTED\]** ; Time Warner Mar. 14, 2006 Response to Information
    Request III.J. at eTW FCC2 00003991-3993 **\[REDACTED\]** .

[^434]: For example, Fox Cable Networks recently purchased the Turner
    South programming network from Time Warner's Turner Broadcasting
    System, Inc. Turner South has long-term broadcast rights to the
    MLB's Atlanta Braves, the NHL's Atlanta Thrashers, and the NBA's
    Atlanta Hawks. Time Warner Mar. 3, 2006 Ex Parte at 1, Att. at 1.
    Further, **\[REDACTED\]** . Time Warner Mar. 2, 2006 Response to
    Information Request III.J. at TW FCCM 0028 **\[REDACTED\]** ; *see
    also* Letter from Arthur H. Harding, Fleischman & Walsh, L.L.P.,
    Counsel for Time Warner, to Marlene H. Dortch, Secretary, FCC (Apr.
    8, 2006) ("Time Warner Apr. 8, 2006 Ex Parte") 5; Anthony
    Castrovince, *Fans to Have More Access to Games: Fastball Sports to
    Produce Largest TV Package in Tribe History,* Major League Baseball,
    Dec. 26, 2005, *at*
    http://mlb.mlb.com/NASApp/mlb/news/article.jsp?ymd=20051208&content_id=1279170&vkey=news\_
    mlb&fext=.jsp&c_id=mlb. (last visited June 20, 2006).

[^435]: Applicants assert that vertical integration is not necessary to
    enable an MVPD to lure sports teams away from incumbent RSNs, citing
    News Corp.'s acquisition of sports distribution rights held by a
    Detroit RSN to create Fox Sports Net Detroit. Applicants' Response
    to DIRECTV Surreply at 26-27; *see also id.* at 28-29 (describing
    News Corp.'s creation of FSN West 2, a "spin-off" of FSN West, in
    order to draw additional license fees); Comcast Mar. 24, 2006 Ex
    Parte at 8-9. The Applicants state that News Corp.'s conduct, which
    occurred before News Corp.'s affiliation with DIRECTV, demonstrates
    that News Corp. was a potent competitor for sports rights even
    before it was vertically integrated. Applicants' Response to DIRECTV
    Surreply at 28-29. Furthermore, the Applicants explain that the
    Bureau of Competition at the Federal Trade Commission investigated
    whether the transactions would impact the availability of RSNs and
    that the majority concluded that evidence "did not indicate that the
    proposed transactions . . . are likely to reduce competition in any
    relevant geographic market," and that the "proposed transactions are
    unlikely to make the hypothesized foreclosure or cost-sharing
    strategies profitable for either Comcast or \[Time Warner\]." Letter
    from James R. Coltharp, Comcast Corp., Steven N. Teplitz, Time
    Warner Inc., Michael Hammer, Willkie Farr & Gallagher, LLP, to
    Marlene H. Dortch, Secretary, FCC (Feb. 9, 2006) at 1.

[^436]: DIRECTV Surreply at 12.

[^437]: *Id.* at 12-13. DIRECTV explains that once the DBS provider
    accedes to the price increase, other cable operators in that RSN
    footprint can no longer refuse carriage without penalty, because
    their subscribers would have an alternative source for obtaining the
    RSN programming. *Id.* at 13 (citing DIRECTV Surreply, Lexecon
    Report at 15); *see also* Letter from William M. Wiltshire, Harris,
    Wiltshire & Grannis, LLP, Counsel for DIRECTV, Inc., to Marlene H.
    Dortch, Secretary, FCC (Mar. 17, 2006) at 1, 3 (updating DBS
    penetration regression analysis with current data).

[^438]: DIRECTV Comments at 20.

[^439]: DIRECTV Surreply at 9; DIRECTV Apr. 3, 2006 Ex Parte at 8.
    Nonetheless, DIRECTV carries SportsNet New York. *See* DIRECTV, *at*
    http://www.directv.com/DTVAPP/see/SportsNetwork_chanDescriptions.jsp
    (last visited June 20, 2006). Moreover, we note that RCN also has
    agreed to purchase SportsNet New York programming for its customers.
    RCN, *RCN Set to Launch SportsNet New York on April 1, RCN to Carry
    Network's Professional Team Coverage of the Mets & Jets, SportsNet
    New York Offers Comprehensive Local New York Sports News
    Programming* (press release), Mar. 31, 2006.

[^440]: Letter from William M. Wiltshire, Harris, Wiltshire & Grannis,
    LLP, Counsel for DIRECTV, Inc., to Marlene H. Dortch, Secretary, FCC
    (Apr. 13, 2006) ("DIRECTV Apr. 13, 2006 Ex Parte") at 5.

[^441]: Applicants' Reply at 61.

[^442]: *Id*.; Letter from Arthur H. Harding, Fleischman & Walsh,
    L.L.P., Counsel for Time Warner Inc., to Marlene H. Dortch,
    Secretary, FCC (Apr. 8, 2006) ("Time Warner Apr. 8, 2006 Ex Parte")
    at 2-4.

[^443]: Letter from Michael H. Hammer, Willkie Farr & Gallagher, LLP,
    Counsel for Adelphia Communications Corp., to Marlene H. Dortch,
    Secretary, FCC (Mar. 7, 2006) at 2-3. Comcast notes that in each of
    the DMAs with comparable penetration, DBS operators carry the RSN.
    Comcast Mar. 27, 2006 Ex Parte at 3. Furthermore, Comcast explains
    that DIRECTV's analysis of how access to an RSN relates to DBS
    penetration was flawed because it did not consider cable system
    quality and average cable prices, and that the small number of
    cable-only exclusives made economic modeling difficult. Comcast Mar.
    27, 2006 Ex Parte at 2.

[^444]: Comcast Apr. 28, 2006 Ex Parte at 5.

[^445]: Applicants' Response to DIRECTV Surreply at 23; Comcast Mar. 24,
    2006 Ex Parte at 6-7.

[^446]: Comcast Mar. 24, 2006 Ex Parte at 7.

[^447]: Time Warner Apr. 8, 2006 Ex Parte at 4.

[^448]: DIRECTV Comments at 23-25.

[^449]: *Id*. at 25 n.66.

[^450]: *Id*. at 23, 25.

[^451]: DIRECTV observes that CSN West was created after Comcast
    acquired cable systems serving CSN West's footprint from AT&T
    Broadband. Letter from William M. Wiltshire, Michael D. Nilsson, S.
    Roberts Carter III, Harris, Wiltshire & Grannis, LLP, Counsel for
    DIRECTV, Inc., to Marlene H. Dortch, Secretary, FCC (Feb. 14, 2006)
    ("DIRECTV Feb. 14, 2006 Ex Parte") at 4.

[^452]: DIRECTV Comments at 24.

[^453]: *Id*. at 23.

[^454]: *Id*. at 24.

[^455]: *Id*. at 25; DIRECTV Surreply, Lexecon Report at 16-17.

[^456]: DIRECTV Comments at 25.

[^457]: Applicants' Response to DIRECTV Surreply at 24-25; Comcast Mar.
    24, 2006 Ex Parte at 7.

[^458]: Applicants' Response to DIRECTV Surreply at 24.

[^459]: DIRECTV Comments at 16-17; EchoStar Comments at 4-5 (stating
    that because the transactions would expand the Philadelphia cluster
    and give Comcast other Pennsylvania cable systems, Comcast will have
    a greater incentive to withhold its affiliated RSN programming); RCN
    Comments at 11-12 (stating that although RCN now carries CSN
    Philadelphia, Comcast was unwilling to negotiate carriage for
    several years following launch of the network, and it charges higher
    prices to RCN than to other MVPDs for affiliated programming in
    general).

[^460]: DIRECTV Comments at 17; DIRECTV Surreply at 4-5 (citing *Program
    Access Order*, 17 FCC Rcd at 12140 ¶ 38). DIRECTV also notes that
    the transactions would decrease the number of subscribers that would
    need to switch in order to make the strategy more profitable.
    DIRECTV Apr. 3, 2006 Ex Parte at 7. EchoStar asserts that because
    the transactions also would expand Time Warner's clusters in various
    regions, Time Warner could acquire RSN assets in the future and
    would have equally strong incentives to withhold RSN programming.
    EchoStar Comments at 5-6.

[^461]: Letter from William M. Wiltshire, Michael D. Nilsson, & S.
    Roberts Carter III, Harris, Wiltshire & Grannis, LLP, Counsel for
    DIRECTV, Inc., to Marlene H. Dortch, Secretary, FCC (Mar. 1, 2006)
    ("DIRECTV Mar. 1, 2006 Ex Parte") at 5, Further Statement of
    Bamberger & Neumann at 16 ¶ 34; DIRECTV Feb. 14, 2006 Ex Parte at
    3-6; Letter from William M. Wiltshire, Michael D. Nilsson, and S.
    Roberts Carter III, Harris, Wiltshire & Grannis, LLP, Counsel for
    DIRECTV, Inc., to Marlene H. Dortch, Secretary, FCC (Apr. 6, 2006)
    ("DIRECTV Apr. 6, 2006 Ex Parte") at 7 (citing COM IIIJ 000206
    **\[REDACTED\]** ; Letter from Harold Feld, Senior Vice President,
    Media Access Project, to Marlene H. Dortch, Secretary, FCC (Feb. 23,
    2006) ("MAP Feb. 23, 2006 Ex Parte") at Att. B at 2-3.
    **\[REDACTED\]** MAP Feb. 23, 2006 Ex Parte at Att. B at 3.
    **\[REDACTED\]** Comcast Apr. 28, 2006 Ex Parte at 9-10 n.39.

[^462]: DIRECTV Mar. 1, 2006 Ex Parte, Further Statement of Bamberger &
    Neumann at 16 ¶¶ 33-34.

[^463]: *Id*. at 15 ¶ 32.

[^464]: Letter from James R. Coltharp, Comcast Corp., to Marlene H.
    Dortch, Secretary, FCC (Mar. 15, 2006) ("Comcast Mar. 15, 2006 Ex
    Parte") at 2. According to Comcast, DIRECTV acknowledges that there
    can be no transaction-specific effects relating to CSN Philadelphia
    or Comcast/Charter Sports Southeast, because DBS operators do not
    currently carry either network. According to Comcast, DIRECTV does
    not even attempt to do a post-transaction analysis of foreclosure in
    the CSN West footprint, because the transactions would not
    substantially alter Comcast's market share in that market. Further,
    Comcast states that while DIRECTV complained it had insufficient
    data to conduct foreclosure analyses for other Comcast-affiliated
    RSNs, including CSN Chicago, Fox Sports New England, and SportsNet
    New York, such analyses should not bear on the FCC's consideration
    of the transactions because (1) Comcast is not acquiring any systems
    in CSN Chicago's footprint; (2) Fox Sports New England is managed by
    a subsidiary of Cablevision, not by Comcast; and (3) SportsNet New
    York had not yet launched, so there would be insufficient data for
    analysis. *Id.* at 3-4. We note that SportsNet New York launched on
    March 16, 2006. *See supra* note 32.

[^465]: Comcast Mar. 15, 2006 Ex Parte at 8; Comcast Mar. 24, 2006 Ex
    Parte at 3. According to Comcast, based on ratings data for the
    first three quarters of 2005 for the Baltimore and Washington DMAs
    and assuming that DBS subscribers watch CSN Mid-Atlantic in
    approximately the same proportions as other viewers,
    **\[REDACTED\]** of CSN Mid-Atlantic's DBS viewers would need to
    switch for a permanent foreclosure strategy to be profitable.
    Comcast Mar. 15, 2006 Ex Parte at 8. Comcast adds that, according to
    DIRECTV's analysis, far fewer DBS subscribers **\[REDACTED\]** would
    need to switch to make temporary foreclosure profitable. The fact
    that it is not using a temporary foreclosure strategy, Comcast
    claims, indicates that it will not have the incentive to withhold
    CSN Mid-Atlantic when far more viewers would need to switch to make
    it profitable. Comcast Mar. 15, 2006 Ex Parte at 8. Comcast also
    asserts that DIRECTV has failed to present concrete evidence of the
    pre-transaction critical value (or "tipping point" at which
    foreclosure switches from being unprofitable to profitable), the
    post-transaction critical value, and the likely level of switching
    to result from temporarily withholding the particular RSN at issue.
    Comcast Mar. 15, 2006 Ex Parte at 4-5. Comcast further asserts that
    the analysis shows that the point at which temporary foreclosure
    allegedly would become profitable for Comcast is essentially
    identical pre- and post-transaction. Comcast Mar. 15, 2006 Ex Parte
    at 4-5; Comcast Mar. 24, 2006 Ex Parte at 3.

[^466]: Comcast Mar. 15, 2006 Ex Parte at 9-10 (citing DIRECTV Mar. 1,
    2006 Ex Parte at 7, Further Statement of Bamberger & Neumann at
    12-13.)

[^467]: Comcast Dec. 22, 2005 Response to Information Request III.K.1.
    at 28. The Commission's questions in the Comcast Information Request
    regarding terrestrial delivery were directed at Comcast. Time Warner
    therefore did not file any information with the Commission regarding
    terrestrial delivery of programming.

[^468]: Comcast Dec. 22, 2005 Response to Information Request III.K.2.
    at 28, 30-32.

[^469]: *Id.* at 31. Time Warner asserts that switching from terrestrial
    to satellite delivery imposes additional costs to the cable
    operator, such as satellite dishes, down-converters, modulators,
    etc. Time Warner Apr. 8, 2006 Ex Parte at 7.

[^470]: Comcast cites a 2000 program access order for the proposition
    that, in certain circumstances, a network's conversion to
    terrestrial delivery could trigger Commission scrutiny. Comcast Mar.
    15, 2006 Ex Parte at 8 & n.24 (citing *DIRECTV v. Comcast Corp.,* 15
    FCC Rcd 22802, 22807 ¶ 13 (2000)). **\[REDACTED\]** *See* Comcast
    Jan. 13, 2006 Response to Information Request III.J. at COM IIIJ
    000874 **\[REDACTED\]** .

[^471]: DIRECTV Surreply at 16-17.

[^472]: *Id*. at 17-18.

[^473]: *News Corp.-Hughes Order*, 19 FCC Rcd at 543 ¶¶ 147-48.

[^474]: Applicants' Reply at 44; Comcast Mar. 24, 2006 Ex Parte at 2-3.

[^475]: *News Corp.-Hughes Order*, 19 FCC Rcd at 546-47 ¶¶ 159-60.

[^476]: *Id.* at 552-555 ¶¶ 172-79.

[^477]: DIRECTV Mar. 1, 2006 Ex Parte at 1. DIRECTV contends that
    temporary foreclosure is more profitable after the transactions in
    the CSN Mid-Atlantic and CSN West footprints. *Id.* at 3-4.

[^478]: *See News Corp.-Hughes Order,* 19 FCC Rcd at App. D, 644-46 ¶¶
    33-38.

[^479]: DIRECTV does not analyze the situation with respect to other
    Comcast RSNs because either data is not available or DIRECTV does
    not carry the RSN. DIRECTV Mar. 1, 2006 Ex Parte at 3.

[^480]: The networks are Altitude Sports and Entertainment, Fox Sports
    Florida, Fox Sports Ohio, Fox Sports Pittsburgh, Fox Sports West,
    and Sun Sports.

[^481]: DIRECTV Mar. 1, 2006 Ex Parte at 4, Further Statement of
    Bamberger & Neumann at 12-14, ¶¶ 25-26. DIRECTV did not analyze
    whether temporary foreclosure, in these additional markets, would be
    profitable before the transactions. *Id.*

[^482]: Comcast Mar. 15, 2006 Ex Parte, Further Ordover & Higgins Decl.
    at 6-7.

[^483]: *Id*. at 4.

[^484]: DIRECTV Feb. 14, 2006 Ex Parte at 12. The Commission is
    generally concerned with financial relationships between the
    Applicants and RSNs that have the effect of lowering significantly
    the net effective rate that the Applicants pay for RSN programming.

[^485]: DIRECTV Comments at 30; *see also* Letter from William M.
    Wiltshire, Harris, Wiltshire & Grannis, LLP, Counsel for DIRECTV,
    Inc., to Marlene H. Dortch, Secretary, FCC (Feb. 16, 2006) ("DIRECTV
    Feb. 16, 2006 Ex Parte"), Att. 1, at 2 (explaining that DBS
    penetration is lower in those areas in which DBS is denied access to
    an RSN, that this reduces the ability of DBS to constrain cable
    pricing, and that DBS passes programming rate increases on to its
    subscribers); Letter from Stacy R. Fuller, Vice President,
    Regulatory Affairs, DIRECTV, Inc., to Commissioner Tate, FCC (Mar.
    8, 2006) ("DIRECTV Mar. 8, 2006 Ex Parte") at 1 (explaining that
    "Comcast prices for the expanded basic tier in Philadelphia were, on
    average, between \$3.75 per month and \$7.47 per month higher than
    expected") and at 2 (explaining that subscribers will be "saddled"
    with programming costs).

[^486]: *See* Letter from William M. Wiltshire, Michael D. Nilsson, S.
    Roberts Carter III, Harris, Wiltshire & Grannis, LLP, Counsel for
    DIRECTV, Inc., to Marlene H. Dortch, Secretary, FCC (Mar. 15, 2006)
    ("DIRECTV Mar. 15, 2006 Ex Parte") at 13, 14; DIRECTV Surreply at
    14-17 (contending that Applicants' economic exhibits do not refute
    DIRECTV's arguments concerning uniform price increases). DIRECTV
    states that the Ordover & Higgins declaration shows only that there
    are no significant differences in the fees charged to MVPDs that
    compete with Comcast as compared to those that do not compete with
    Comcast. DIRECTV states that this finding does not undercut
    DIRECTV's contention that Comcast engages in a strategy of uniform
    price increases by allegedly increasing the prices for CSN Chicago
    uniformly to all MVPDs and by raising DBS operators' costs of
    carrying CSN West through facially neutral pricing that achieves
    discriminatory effects. DIRECTV also notes that the declaration does
    not describe its analysis or methodology. DIRECTV Surreply, Lexecon
    Report at 18-20.

[^487]: *See* Economic Appendix, App. D, Section III, Table A-2.

[^488]: *See* DIRECTV Comments at 19-21; DIRECTV Surreply, Lexecon
    Report at 12-16.

[^489]: *See* Economic Appendix, App. D, Section I.

[^490]: *Id*. at Section II.

[^491]: *Id.* at App. D, Section I, equations (2) & (3).

[^492]: *Id.* at App. D, Section I, equation (5).

[^493]: *Horizontal Merger Guidelines* at § 1.1 ("In attempting to
    determine objectively the effect of a 'small but significant and
    nontransitory' increase in price, the Agency, in most contexts, will
    use a price increase of five percent lasting for the foreseeable
    future.").

[^494]: As discussed in the Economic Appendix, at App. D, Section III,
    the model yields similar results when reasonable alternative
    assumptions are employed. This increases our confidence that our
    conclusions are not dependent on the particular set of assumptions
    employed.

[^495]: We recognize that Jacksonville currently has only one major
    professional sports team, whose games are not carried on an RSN.

[^496]: *See* Economic Appendix, App. D, Section III, Table A-2.

[^497]: *Id*.

[^498]: *Id*.

[^499]: Applicants' Response to DIRECTV Surreply at 29-32; *see also*
    Letter from Michael H. Hammer, Willkie Farr & Gallagher LLP, Counsel
    for Adelphia Communications Corp., to Marlene H. Dortch, Secretary,
    FCC (Mar. 9, 2006) at 2-3.

[^500]: Internal Comcast documents also indicate that Comcast
    understands the nexus between access to RSNs and DBS penetration
    levels. *See* Comcast Jan. 13, 2006 Response to Information Request
    III.J. at COM-IIIJ-000831 **\[REDACTED\]** This document calculates
    the **\[REDACTED\]** *Id.* CSN West carries the Sacramento Kings,
    and Comcast ultimately decided **\[REDACTED\]** Comcast Jan. 13,
    2006 Response to Information Request III.J. at COM-IIIJ-000874. The
    document reveals, however, that Comcast calculated that
    **\[REDACTED\]** Comcast Jan. 13, 2006 Response to Information
    Request III.J. at COM-IIIJ-000831.

[^501]: Nielsen data indicate that approximately 22.3% of households
    subscribing to MVPD service received service from DBS providers in
    2005. This figure differs from that provided in the Commission's
    *Twelfth Annual Video Competition Report* (27.72%). *See Twelfth
    Annual Video Competition Report*, 21 FCC Rcd at 2617-18 App. B,
    Table B-1. A significant reason for the difference is that the
    Nielsen data measure households rather than subscribers and
    therefore do not measure seasonal customers and commercial accounts.
    *See* Letter from Arthur H. Harding, Fleischman and Walsh, L.L.P.,
    Counsel for Time Warner Inc., to Marlene H. Dortch, Secretary, FCC
    (Feb. 23, 2006) ("Time Warner Feb. 23, 2006 Ex Parte[")]{.smallcaps}
    at 1.

[^502]: The RSN in New Orleans is not carried by either DBS operator,
    though it is offered for sale to DBS operators. DIRECTV alleges that
    it has not reached an agreement with Cox Sports New Orleans because
    it would be required to distribute the network to all subscribers
    within 350 miles of New Orleans, even though the professional
    basketball games that comprise the most valuable content on the RSN
    cannot be shown outside a 75-mile radius of New Orleans. DIRECTV
    Feb. 14, 2006 Ex Parte at 10.

[^503]: Our analysis finds that the DBS market share in Charlotte is
    25.4%, which is 9% above the national average, but the circumstances
    in Charlotte appear to be unique, such that one would not expect
    Time Warner's withholding of that sports programming to have a
    significant impact on DBS market shares. First, in a full third of
    the DMA, no MVPD distributed the network that was carrying the
    games. Second, the Charlotte Bobcats team, the sports team whose
    games are carried on the network at issue, has not been in existence
    long enough to develop a fan base that would be willing to switch
    MVPDs in order to see the games, having played its first games in
    2004. National Basketball Association, *The Wait is Finally Over,*
    Nov. 4, 2004, *at*
    http://www.nba.com/bobcats/preview_washington_041104.html (last
    visited June 20, 2006). The RSN, C-SET, was owned by the Charlotte
    Bobcats and has ceased operations. The Bobcats' games continue to be
    provided to cable operators on an exclusive basis, though the games
    are also carried over the air. Currently only Time Warner and
    Comporium Cable carry Bobcats games on cable. *See* Charlotte
    Bobcats, *at*
    http://www.nba.com/bobcats/Bobcats_Broadcasting-128276-443.html
    (last visited June 20, 2006); *see also* Charlotte Bobcats,
    *Comporium Cable to Air Games in South Carolina*, Nov. 4, 2005, *at*
    http://www.nba.com/bobcats/release_comporium_051104.html (last
    visited June 20, 2006)*.* These cable operators pass approximately
    66% of the homes in the Charlotte DMA. Warren Communications Cable
    and Television Factbook Online. In contrast, Comcast passes
    approximately 79% of the homes in Philadelphia, **\[REDACTED\]**
    *See* Economic Appendix, App. D, Section III, Table A-2; *see also*
    Comcast Dec. 22, 2005 Response to Information Request III.C. at
    III.C1-4.xls.

[^504]: DIRECTV Surreply at App. A, 6.

[^505]: *Id.* at 7.

[^506]: Letter from Pantelis Mialopoulus, Counsel for EchoStar Satellite
    Corporation, to Marlene H. Dortch, Secretary, FCC, at 4, transmitted
    by letter from David Goodfriend, Director of Business Development,
    EchoStar Satellite L.L.C. to Marlene H. Dortch (Jan. 25, 2006).

[^507]: *See* Economic Appendix, App. D, Section II.

[^508]: This result is statistically significant at the 95% level of
    confidence, in contrast to the result calculated by DIRECTV for San
    Diego.

[^509]: Comcast Jan. 13, 2006 Response to Information Request III.J. at
    COM-IIIJ-000965 **\[REDACTED\]** .

[^510]: *Id.* **\[REDACTED\]**

[^511]: Comcast Mar. 27, 2006 Ex Parte at 1 n.2.

[^512]: Comcast Dec. 22, 2005 Response to Information Request III.A.1.
    at 16; *see also* CSS Southeast, *at*
    http://www.csssports.com/about_us.cfm (last visited June 20, 2006).

[^513]: Comcast Dec. 22, 2005 Response to Information Request III.A.1.
    at 16; Comcast Jan. 13, 2006 Response to Information Request III.J.
    at COM IIIJ-000943, -000970 (Regional Sports Research); Time Warner
    Mar. 2, 2006 Response to Information Request III.J. at TWFCCM 0061
    (Second Amended and Restated Limited Liability Company Agreement of
    Sterling Entertainment Enterprises, LLC).

[^514]: For example, if an RSN has 1 million subscribers and a cable
    operator has 25% (= 250,000 subscribers) of those subscribers and a
    25% equity stake in the RSN, then a \$1 increase in the RSN's
    affiliate fee means that the cable operator will pay \$250,000 more
    for its 250,000 subscribers. The RSN's profits will increase by \$1
    million, however, and thus the cable operator will receive \$250,000
    back as its share of the profits. Therefore the price increase has
    not affected the cable operator's effective cost for RSN service.
    The cable operator's equity stake then perfectly insulates it from
    price increases in the RSN affiliate fee. MVPDs with no equity stake
    in the RSN, on the other hand, will find their effective cost rising
    by \$1 per subscriber.

[^515]: **\[REDACTED\]** Comcast Jan. 13, 2006 Response to Information
    Request III.J at COM IIIJ-000867 **\[REDACTED\]** .

[^516]: **\[REDACTED\]** Comcast Dec. 22, 2005 Response to Information
    Request III.A.I. at 16 n.3. One Comcast document states that
    **\[REDACTED\]** Comcast Jan 13, 2006 Response to Information
    Request at III.J. at COM-III.J-000967. **\[REDACTED\]**

[^517]: *See* DIRECTV Feb. 14, 2006 Ex Parte at 12-13.

[^518]: Time Warner Mar. 2, 2006 Response to Information Request III.J.
    at TW FCCM 0086-89 (Second Amended and Restated Limited Liability
    Company Agreement of Sterling Entertainment Enterprises).

[^519]: **\[REDACTED\]** Time Warner Mar. 2, 2006 Response to
    Information Request III.J. at TW FCCM 0086-89 **\[REDACTED\]** ;
    *see* *also* DIRECTV Feb. 14, 2006 Ex Parte at 12-13.

[^520]: Letter from William M. Wiltshire, Michael D. Nilsson, S. Roberts
    Carter III, Harris, Wiltshire & Grannis, LLP, Counsel for DIRECTV,
    Inc., to Marlene H. Dortch, Secretary, FCC (Mar. 27, 2007) ("DIRECTV
    Mar. 27, 2006 Ex Parte") at 6, 7 (citing TW FCC2 00000005
    **\[REDACTED\]** . The Time Warner document to which DIRECTV cites
    states that **\[REDACTED\]** Time Warner Mar. 14, 2006 Response to
    Information Request III.J. at TW FCC2 00000005.

[^521]: DIRECTV Mar. 15, 2006 Ex Parte at 3.

[^522]: Time Warner contends that the provision does not make Comcast or
    Time Warner effectively immune from a uniform price increase. Time
    Warner states that it would be economically irrational for it to
    impose a uniform price increase for SportsNet New York since it owns
    only 22% of the joint venture, alleging that such a strategy would
    increase its programming costs by \$1.00 in return for 22¢ of
    profit. Time Warner March 2, 2006 Ex Parte at 5-6. According to Time
    Warner, the net effective rate provision in the SportsNet New York
    agreement merely provides an exit mechanism from the joint venture.
    *Id*. Although Time Warner states that it owns 22% of SportsNet New
    York, Comcast's December submission shows that Time Warner owns
    26.833% of the joint venture. Comcast Dec. 22, 2005 Response to
    Information Request III.A.1. at 16; *see also* Time Warner Mar. 2,
    2006 Ex Parte at 6.

[^523]: *See* DIRECTV Mar. 15, 2006 Ex Parte at 4*.* DIRECTV explains
    that a uniform \$1.00 price increase raises rivals' costs by \$1.00
    per subscriber, but Time Warner's costs increase by only about
    **\[REDACTED\]** per subscriber because **\[REDACTED\]** per
    subscriber is effectively an internal transfer from Time Warner to
    Time Warner. DIRECTV contends that as a result, Time Warner gains a
    cost advantage over its rivals of **\[REDACTED\]** per subscriber.
    *Id.; see also supra* para. 152-53*.* One of Time Warner's documents
    **\[REDACTED\]** Time Warner Jan. 6, 2006 Response to Information
    Request III.J. at eTW 00001897 **\[REDACTED\]** .

[^524]: As discussed above, our licensing authority under Section 310(d)
    of the Communications Act enables us to impose conditions to our
    approval to ensure that the public interest is served by a
    transaction. *See supra* para. 26; 47 U.S.C. § 310(d); *WorldCom-MCI
    Order*, 13 FCC Rcd at 18025, 18031-32 ¶¶ 1, 10 (conditioning
    approval on the divestiture of MCI's Internet assets); *Deutsche
    Telekom-VoiceStream Wireless Order*, 16 FCC Rcd at 9821 ¶ 1
    (conditioning approval on compliance with agreements with Department
    of Justice and Federal Bureau of Investigation addressing national
    security, law enforcement, and public safety concerns). Section
    303(r) of the Communications Act authorizes the Commission to
    "prescribe such restrictions or conditions, not inconsistent with
    law," that may be necessary to carry out the provisions of the Act.
    47 U.S.C. § 303(r). *See WorldCom-MCI Order,* 13 FCC Rcd at 18032 ¶
    10 n.36 (*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) (section 303(r) powers permit
    Commission to order 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) (syndicated exclusivity rules
    adopted pursuant to section 303(r) authority)).

[^525]: *See News Corp.-Hughes Order*, 19 FCC Rcd at 532 ¶ 127 & App. F;
    47 C.F.R. § 76.1002*.* These rules already apply to Comcast's and
    Time Warner's affiliated satellite-delivered programming. Our
    condition extends the prohibitions set forth in the rules, as well
    as the complaint procedures, to any terrestrially delivered RSNs in
    which Comcast or Time Warner have or may acquire an attributable
    interest. The condition is not intended to affect the application of
    the program access rules to Comcast's and Time Warner's
    satellite-delivered networks, which will continue to be subject to
    the program access rules even after these conditions expire. The
    arbitration and program access conditions apply to any RSN,
    regardless of the means of delivery, that is currently managed or
    controlled by Comcast or Time Warner and prohibit Comcast or Time
    Warner, on a going forward basis, from acquiring a managing,
    controlling, or otherwise attributable interest in any RSN,
    regardless of the means of delivery, that is not contractually
    obligated to abide by these conditions. For the reasons explained
    below, however, the conditions we adopt here apply partially to
    Comcast SportsNet Philadelphia. A "Covered RSN" is an RSN (i) that
    Comcast or Time Warner currently manages or controls, or (ii) in
    which Comcast or Time Warner, on or after the date of adoption of
    this Order and during the period of the conditions, acquires either
    an attributable interest, an option to purchase an attributable
    interest, or one that would permit management or control of the RSN.

[^526]: This condition is intended to prohibit all exclusive
    arrangements, including those that may not be effectuated by a
    formal agreement.

[^527]: 47 C.F.R. § 76.1003.

[^528]: *See News Corp.-Hughes Order*, 19 FCC Rcd at 532-33 ¶ 128 & App.
    F. Although most of the program access rules have no sunset date,
    Section 76.1002(c), the prohibition on exclusive contracts, sunsets
    on October 5, 2007, unless the Commission finds that the prohibition
    continues to be necessary to protect competition in the distribution
    of video programming. *See* 47 C.F.R. § 76.1002(c)(2); *supra* para.
    41. In the year prior to the sunset, the Commission will conduct a
    proceeding to evaluate the circumstances in the video programming
    marketplace.

[^529]: This definition of RSN does not include TBS, TNT, or OLN
    programming networks, because those networks are distributed
    nationally, as opposed to within a limited geographic region. This
    definition of RSN is not meant to exclude local origination
    channels.

[^530]: For example, DIRECTV claims that it wanted to carry CSN West, a
    Comcast RSN that carried Sacramento Kings NBA games. *See supra*
    paras. 132-33. **\[REDACTED\]** Comcast Dec. 22, 2005 Response to
    Information Request III.A. at III.A.5.xls. **\[REDACTED\]**

[^531]: This threshold is sufficiently low to address commenters'
    concerns that Comcast or Time Warner would spread their regional
    sports programming over multiple video programming services to avoid
    triggering the conditions. *See* Letter from Stanton Dodge, Senior
    Vice President, EchoStar Satellite, Andrew Schwartzman, President,
    Media Access Project, Richard Ramlall, Senior Vice President, RCN
    Corporation, Jonathan Rintels, President, Center for Creative Voices
    in Media, Doron Gorshein, CEO, The America Channel, to Marlene H.
    Dortch, Secretary, FCC (July 6, 2006) at 2.

[^532]: The application of the program access conditions to terrestrial
    networks will ensure that those networks are available to competing
    MVPDs. The arbitration condition will ensure that disputes that may
    arise because of alleged discrimination or temporary foreclosure can
    be resolved expeditiously via arbitration. The condition will
    further ensure that programming an MVPD carries prior to arbitration
    is not temporarily disrupted during arbitration.

[^533]: Thus, on a going forward basis, these conditions are triggered
    by the acquisition of an attributable interest even if the interest
    is not controlling and does not include management rights. *See
    infra* App. B.

[^534]: *See* Comcast Dec. 22, 2005 Response to Information Request
    III.K. at 28-30. Comcast's regional terrestrial networks are located
    in **\[REDACTED\]** . *Id.* These terrestrial networks are not
    programming networks, but fiber infrastructure. According to
    Comcast, its terrestrial networks currently carry a variety of
    digital and advanced services, including VOD programming, high
    definition programming (including, in certain cases, the high
    definition feeds of Comcast\'s regional sports networks), all
    digital simulcast programming, local broadcast programming,
    advertising (transported to local systems' ad servers), Comcast
    Digital Voice services, and high-speed data. *Id.* at 30.

[^535]: *Id*. at 31.

[^536]: *Id.* at 28.

[^537]: *See News Corp.-Hughes Order*, 19 FCC Rcd at 555 ¶ 179.

[^538]: *Id*.

[^539]: 47 C.F.R. §§ 76.1003, 76.1302.

[^540]: EchoStar Comments at 8, 13; RCN Comments at 12-13 (describing
    failed efforts to arrange carriage of PBS Kids VOD programming after
    Comcast entered into a joint venture with PBS to produce the Sprout
    network and claiming that Sprout is "must-have" programming for
    viewers with young children). Letter from Jean L. Kiddoo, Bingham
    McCutchen LLP, to Marlene H. Dortch, Secretary, FCC (July 6, 2006)
    (describing film libraries as "must have" programming for VOD); RCN
    Mar. 3, 2006 Ex Parte at 4 (contending that Comcast and Time Warner
    plan to acquire rights to the film libraries of the largest movie
    studios). EchoStar further notes that Time Warner controls a library
    of very popular national and regional non-sports programming, such
    as CNN and HBO. EchoStar contends that Time Warner's acquisition of
    the Adelphia systems, and the prospect of luring subscribers away
    from DBS, could "tip the scales in favor of a foreclosure strategy."
    EchoStar Comments at 8.

[^541]: EchoStar Comments at 9-10. EchoStar asserts that Comcast and
    Time Warner already have engaged in anticompetitive tactics that
    have prevented it from offering certain programming to subscribers
    by imposing contract terms that disadvantage DBS operators. For
    example, EchoStar contends that Comcast's Outdoor Life Network,
    which carries the games of the National Hockey League, requires
    MVPDs to include the programming on a tier that is purchased by at
    least 40% of the MVPD's subscribers. *See* Letter from David K.
    Moskowitz, EchoStar, to Marlene H. Dortch, Secretary, FCC ("EchoStar
    Dec. 23, 2005 Ex Parte") at 5-6*.* The tier on which EchoStar
    carries the network does not meet this requirement. *Id.* As a
    result, EchoStar explains that it could either drop OLN or switch
    the network to a less expensive tier, which would effectively make
    the terms available to EchoStar much less economically attractive.
    *Id.* As another example, EchoStar states that iN DEMAND conditions
    access to its high definition programming on the payment of a fee
    assessed on a per digital subscriber basis. EchoStar Dec. 23, 2005
    Ex Parte at 3. Because all satellite subscribers are digital, while
    only a minority of cable customers subscribe to digital services,
    EchoStar asserts that iN DEMAND's pricing scheme has the
    discriminatory effect of multiplying the costs of such programming
    to DBS as compared to cable. *Id.*

[^542]: Letter from Richard Ramlall, Sr. Vice President, External and
    Regulatory Affairs, RCN Corp., to Commissioners Martin, Adelstein,
    Copps and Tate, at 4-5, transmitted by letter from Jean L. Kiddoo,
    Bingham McCutchen to Marlene H. Dortch, Secretary, FCC (May 19,
    2006) ("RCN May 19, 2006 Ex Parte"). RCN contends that once Comcast
    obtained control over the joint venture that develops PBS
    programming, Comcast terminated RCN's ability to provide that
    programming until a technical agreement and an affiliation agreement
    for a new linear network called "Sprout" were negotiated. RCN
    explains that its drop in VOD usage occurred during the negotiation
    period for the new agreements for PBS Sprout programming. *Id.* at
    4. In May 2006, Comcast's distributor became the exclusive
    distributor for PBS Sprout VOD programming. *Id.* RCN claims that
    Comcast's distributor is seeking to impose onerous contract
    conditions, including a term which would enable its distributor to
    raise rates annually without limitation. *Id.* MAP also contends
    that the Commission should find Sprout and other children's VOD
    programming to be "must have" programming. Letter from Harold Feld,
    Senior Vice President, Media Access Project, to Marlene Dortch,
    Secretary, FCC (July 3, 2006) at 2.

[^543]: RCN May 19, 2006 Ex Parte at 4; *see also supra* note 166.

[^544]: EchoStar Comments at 9; RCN Comments at 19.

[^545]: RCN Mar. 3, 2006 Ex Parte at 6, 7; RCN May 19, 2006 Ex Parte at
    5. RCN recommends that Applicants disclose all programming contracts
    to create transparency, which RCN contends will develop a fully
    competitive and nondiscriminatory programming market. At a minimum,
    RCN also recommends that parties to a programming dispute be granted
    access to other buyers' programming contract terms. RCN Mar. 3, 2006
    Ex Parte at 6. RCN also recommends implementing arbitration
    conditions. RCN Mar. 3, 2006 Ex Parte at 7.

[^546]: EchoStar proposes the following condition: "Upon request,
    Comcast and Time Warner must provide to any distributor all
    programming in which either company has an ownership interest
    (including regional sports networks and video-on-demand content) on
    an *a la carte* basis, with no penetration or any other
    requirements, including any terms or conditions that would make the
    rate effectively discriminatory. The rate for such *a la carte*
    programming shall be a nondiscriminatory, market-based rate, which
    is no higher than the price currently being paid for such
    programming under existing contracts, and shall be subject to
    baseball-type arbitration. In order to receive programming pursuant
    to this provision, the distributor must offer the programming *a la
    carte* to consumers, but may also offer the programming as part of
    any programming package." Letter from David K. Moskowitz, General
    Counsel and Executive Vice President, EchoStar Satellite, L.L.C., to
    Marlene H. Dortch, Secretary, FCC (Jan. 23, 2006) ("EchoStar Jan.
    23, 2006 Ex Parte") at 2. EchoStar states that if it were to receive
    programming *a la carte* from programmers pursuant to the above
    condition, it would commit to providing such programming to
    consumers on an *a la* *carte* basis. *Id.* at 1-2.

[^547]: EchoStar proposes the following condition "In addition to video
    programming, Comcast and Time Warner shall provide, under
    nondiscriminatory terms and conditions, any and all ancillary video
    services in which they have an ownership interest, including all
    related internet streaming, interactive applications, broadband
    applications, additional camera angles, streaming data such as
    sports statistics, and any other related programming features and
    functionality." *Id*.

[^548]: Applicants' Reply at 66-67.

[^549]: Letter from Sandy Wax, President, PBS KIDS Sprout, to Marlene H.
    Dortch, Secretary, FCC (June 5, 2006) ("PBS KIDS Sprout June 5, 2006
    Ex Parte") at 1-2. Further, Comcast has indicated that it has
    reached an agreement to distribute PBS Sprout programming with
    another VOD distributor, TVN. Letter from Michael H. Hammer, Willkie
    Farr & Gallagher, LLP, Counsel for Adelphia Communications Corp., to
    Marlene H. Dortch, Secretary, FCC (July 12, 2006) at 1.

[^550]: PBS KIDS Sprout June 5, 2006 Ex Parte at 2.

[^551]: Those rules allow parties to file program access complaints with
    the Commission. *See* 47 C.F.R. § 76.1006. Indeed, EchoStar has
    filed a program access complaint with respect to iN DEMAND's alleged
    discrimination. *EchoStar v. iN DEMAND*, CSR 6913-P (filed July 5,
    2005). That matter is pending. *See* EchoStar v. iN DEMAND, Joint
    Motion to Hold in Abeyance, CSR-6913P (filed June 12, 2006).

[^552]: Nickelodeon and Discovery KIDS, among other national programming
    networks, also offer children's programming. Moreover, we note that
    Comcast has indicated that Sprout is available for distribution by
    all multichannel video program distributors. Letter from Michael H.
    Hammer, Willkie Farr & Gallagher LLP Counsel for Adelphia
    Communications Corp., to Marlene H. Dortch, Secretary, FCC (July 6,
    2006) at 2; *see also* PBS KIDS Sprout June 5, 2006 Ex Parte at 1-2;
    Letter from Paul Greco, Vice President & Deputy General Counsel,
    PBS, to Commissioners Adelstein and Tate, FCC (July 5, 2006) at 2;
    *supra* note 549 (citing Applicants' July 12, 2006 Ex Parte).

[^553]: **\[REDACTED\]** Comcast Mar. 29, 2006 Response to Information
    Request III.F.1. at Att. at 1. Even with respect to the New England
    Cable News, which commenters cite as an example of desirable
    non-sports regional programming, there is no evidence establishing
    that an MVPD's inability to carry that network would materially
    diminish competition or otherwise harm consumers. Moreover, as RCN
    concedes, it has access to this programming, even though the network
    is delivered terrestrially and therefore is not subject to the
    program access rules. RCN Comments at 14.

[^554]: The Viacom networks, such as MTV and Nickelodeon, fall into the
    second category.

[^555]: *See* 47 C.F.R § 76.1002(c)(2), (4). For example, the networks
    owned by Cablevision's Rainbow Media, such as American Movie
    Classics, fall into this category.

[^556]: EchoStar Comments at 10, 12 (citing David Waterman, *Vertical
    Integration and Program Access in the Cable Television Industry*, 47
    [Fed. Comm. L.J]{.smallcaps}. 511 (1995)); *see also* CWA/IBEW
    Petition at 17-18 (stating that dominant MSOs can negotiate
    substantial discounts with national programmers, which harms
    competing MVPDs that cannot negotiate comparable terms).

[^557]: EchoStar Comments at 12-13. EchoStar also asks that we require
    Applicants to provide all programming and ancillary services on a
    non-discriminatory and a la carte basis, subject to arbitration
    conditions. EchoStar Jan. 23, 2006 Ex Parte at 1-2. RCN proposes a
    similar condition. RCN Comments at ii, 19 (stating that the
    Commission should impose "a prohibition on exclusive or
    discriminatory arrangements between Comcast or Time Warner and
    third-party suppliers of programming").

[^558]: DIRECTV Comments at 13, 17-18; *see also* DIRECTV Surreply at
    9-11; CWA/IBEW Petition at 16. CWA/IBEW also asserts that exclusive
    contracts will harm diversity in local programming. CWA/IBEW
    Petition at 16.

[^559]: DIRECTV Comments at v-vi, 44. DIRECTV proposes that the
    condition apply in regional markets where an HHI analysis shows that
    the transactions would result in an increase of 100 points or more
    for a moderately concentrated market and 50 points or more for a
    highly concentrated market. *Id.* at 44 & n.124. DIRECTV contends
    that the proper geographic market definition is the entire RSN
    footprint. Based on that geographic market definition, DIRECTV
    asserts that that the markets served by the following networks would
    experience increases in HHI levels of at least 325 points in a
    highly-concentrated market (1) C-SET, (2) Comcast SportsNet
    Philadelphia, (3) FSN Florida, (4) Sun Sports, (5) FSN Ohio, (6) FSN
    West/West 2, (7) Mid-Atlantic Sports Network, (8) Comcast/Charter
    Sports Southeast, (9) Comcast SportsNet Mid-Atlantic, (10) FSN
    Pittsburgh. *Id.* at 9-10.

[^560]: Letter from Kenneth R. Peres, PhD, CWA, to Marlene H. Dortch,
    Secretary, FCC, Att. at 8, transmitted by letter from Kenneth R.
    Peres to Marlene H. Dortch (Mar. 9, 2006) ("CWA Mar. 9, 2006 Ex
    Parte"); TCR Feb. 21, 2006 Ex Parte, Att. at 9. CWA/IBEW assert that
    exclusive contracts will harm diversity in local programming.
    CWA/IBEW Petition at 16. CWA asks that the Commission make
    programming available to all competitors on non-discriminatory
    prices/terms, and impose arbitration on programming. CWA Mar. 9,
    2006 Ex Parte, Att. at 8.

[^561]: CFA/CU Reply Comments at 11.

[^562]: Applicants' Reply at 63 (citing *Program Access Implementation
    Order*, 8 FCC Rcd at 3359 ¶ 63; *United Video, Inc. v. FCC*, 890
    F.2d at 1179-80). Comcast also points to the *News Corp.-Hughes
    Order*, in which the Commission explained that Congress had
    specifically chosen to exclude unaffiliated programming from the
    program access rules. Comcast Apr. 28, 2006 Ex Parte at n.10 (citing
    *News Corp.-Hughes Order,* 19 FCC Rcd at 600 ¶¶ 291-93). We note,
    however, that the discussion in *News Corp.-Hughes* related to
    whether Section 628(c) of the Communications Act, which applies
    exclusively to vertically-integrated entities, gave the Commission
    authority to extend its ban on exclusive programming contracts to
    non-vertically integrated programmers. In response to the
    Commission's Information Request, Time Warner and Comcast identified
    the following unaffiliated video programming networks for which they
    have exclusive distribution rights in areas they serve. Time Warner
    identified **\[REDACTED\]** . Time Warner April 18, 2006 Response to
    Information Request III.F.1. at Att. at 1, supplementing Time Warner
    Dec. 22, 2005 Response to Information Request III.F.1. at Ex.
    III.F(1).

    Comcast identified **\[REDACTED\]** Comcast Dec. 22, 2005 Response
    to Information Request II.F.1 at Ex. COM-IIIF.xls; Comcast Mar. 29,
    2006 Response to Information Request III.F.1. at Att. 1.
    **\[REDACTED\]** Comcast Mar. 29, 2006 Response to Information
    Request at Att. 1. Applicants state that the conditions from the
    *News Corp.-Hughes Order* preclude them from entering into exclusive
    agreements with any RSNs controlled by News Corp. Applicants'
    Response to DIRECTV Surreply at 19; Comcast Mar. 24, 2006 Ex Parte
    at 9.

[^563]: Applicants' Reply at 64 (citing *Program Access Implementation
    Order*, 8 FCC Rcd at 3359 ¶ 63).

[^564]: *Program Access Order,* 17 FCC Rcd at 12160 ¶ 78.

[^565]: *See* 47 U.S.C. § 548(c)(4)*.* The 1992 Cable Act required the
    Commission to determine, in 2002, whether the exclusivity provisions
    should sunset or should be renewed. *See* 47 U.S.C. § 548(c)(5). The
    Commission renewed the exclusivity provisions for a period of five
    years, until October 5, 2007. *See Program Access Order*, 17 FCC Rcd
    at 12161 ¶ 80; 47 C.F.R. § 76.1002(c)(6). The Commission indicated
    in the *Program Access Order* that, during the year before the
    October 5, 2007 expiration of the exclusivity provisions of the
    program access rules, it would commence a rulemaking seeking comment
    on whether the current prohibition on exclusive contracts should be
    extended beyond 2007.

[^566]: Both the costs and revenues will vary depending on consumer
    interest in the programming. As explained above, a popular
    programming service with an exclusive arrangement with one cable
    operator in a franchise area will likely see a decrease in revenues
    due to the lack of sales to other MVPDs serving the same area.

[^567]: *See* Applicants' Response to DIRECTV Surreply at 16.

[^568]: This economic principle alleviates concerns, such as those
    raised by DIRECTV, about the Sales Agreement between Time Warner and
    SportsTime Ohio. *See* DIRECTV Mar. 27, 2006 Ex Parte at 6; DIRECTV
    Mar. 15, 2006 Ex Parte at 7.

[^569]: See Applicants' Reply at 62; *see also* Time Warner Apr. 8, 2006
    Ex Parte at 6-7. C-SET was affiliated with the Charlotte Bobcat
    Organization, which includes a sports arena and Charlotte's NBA
    (Bobcats) and WNBA (Sting) teams. C-SET ceased operations on June
    30, 2005. *See* Charlotte Bobcats, *C-SET to Cease Operations*
    (press release), June 28, 2005. Time Warner documents indicate that
    one of the reasons C-SET ceased operations was because its owner did
    not think that the RSN would be profitable if it were offered only
    on a digital tier. Time Warner Mar. 14, 2006 Response to Information
    Request III.J. at FCC2 00000132 (Andy Bernstein, Bobcats Looking for
    Wide Exposure After C-SET's Shutdown, Street & Smith's
    Sportsbusiness Journal (July 11-17, 2005)); Time Warner Mar. 14,
    2006 Response to Information Request III.J. at FCC2 00003068 (Email
    exchange between David Auger and John Bickham of Time Warner Cable
    (June 29, 2005)). DIRECTV states that because Time Warner's share of
    homes passed in Charlotte is **\[REDACTED\]** it was able to secure
    an exclusive contract and other favorable treatment. *See* DIRECTV
    Feb. 14, 2006 Ex Parte at 7-8; *see also* DIRECTV Mar. 15, 2006 Ex
    Parte at 8-9; DIRECTV Mar. 27, 2006 Ex Parte at 4; Economic
    Appendix, App. D at A-2.

[^570]: *See* News 14 Carolina, *Charlotte Bobcats Announce 2005-06
    Television Schedule*, Oct. 18, 2005, *at*
    http://rdu.news14.com/content/sports/charlotte_bobcats/?ArID=75838&SecID=453
    (last visited June 29, 2006); *see also* News 14 Carolina, About
    News 14, *at* http://www.news14charlotte.com/content/about_us/ (last
    visited June 20, 2006). Time Warner owns 100% of News 14 Carolina.
    *Twelfth Annual Video Competition Report*, 21 FCC Rcd at 2644-49
    App. C, Table C-3.

[^571]: *See* DIRECTV Feb. 14, 2006 Ex Parte at 8-9; *see also* DIRECTV
    Mar. 15, 2006 Ex Parte at 7-8; DIRECTV Mar. 27, 2006 Ex Parte at
    5-6; DIRECTV Apr. 3, 2006 Ex Parte at 8-9. DIRECTV also claims that
    STO is charging much higher rates for its programming than the
    previous RSN did for the same programming. **\[REDACTED\]** DIRECTV
    Apr. 3, 2006 Ex Parte at 8-9, n.27.

[^572]: *See* DIRECTV Feb. 14, 2006 Ex Parte at 7-9; *see also* DIRECTV
    Mar. 15, 2006 Ex Parte at 8.

[^573]: *See* Time Warner Mar. 2, 2006 Ex Parte at 2-5. Time Warner
    explains that its ability to gain exclusive rights to exhibit the
    Charlotte Bobcats' games, formerly carried by C-SET, does not
    prevent competitors from obtaining exclusive agreements in other
    geographic areas. Time Warner states that it believes DIRECTV never
    attempted to acquire rights to the Charlotte Bobcats after C-SET
    dissolved. Second, Time Warner states that it evaluated the
    feasibility of securing an exclusive agreement with the Cleveland
    Indians only because the Indians had offered that option in initial
    discussions. *Id.* at 3-4. DIRECTV states that it is irrelevant
    whether Time Warner or the Indians initiated the discussions and
    that Time Warner's claim, if true, indicates that team ownership of
    an RSN is not a check on Comcast's and Time Warner's ability to
    prevent MVPD competitors from gaining access to valuable
    programming. DIRECTV Mar. 15, 2006 Ex Parte at 8-9.

[^574]: **\[REDACTED\]** *See* Time Warner Mar. 2, 2006 Response to
    Information Request III.J. at TW FCCM 0001 **\[REDACTED\]** DIRECTV
    also contends that STO programming is significantly more expensive
    than that of its predecessor RSN, FSN Ohio. Assuming that the
    programming is more expensive, DIRECTV fails to show how these
    transactions caused STO, a programmer unaffiliated with either
    Applicant, to increase its programming prices. DIRECTV Apr. 13, 2006
    Ex Parte at 2.

[^575]: *See* 47 U.S.C. §§ 533, 536.

[^576]: *See* 47 U.S.C. § 536(a)(2); 47 C.F.R. § 76.1301(b); *see also
    Second Program Carriage Order,* 9 FCC Rcd at 2649 ¶ 16.

[^577]: TAC Petition at 7; CWA/IBEW Petition at 19; Free Press Petition
    at 10; CFA/CU Reply Comments at 7. TAC disagrees with the
    Applicants' characterization of the national programming market as
    competitive and diverse, finding fault with the Applicants' reliance
    on the Commission's *Eleventh Annual Video Competition Report*,
    which TAC contends overstates the number of independent networks.
    TAC Petition at 12-16.

[^578]: TAC Petition at 37-38. Citing Time Warner's 2004 Annual Report,
    TAC notes that Time Warner's networks (including broadcast network
    WB) contributed 40% of operating income, while its cable division
    contributed only 28.6% of operating income. TAC states that
    Comcast's recent attempt to acquire Disney and its recent channel
    launches demonstrate "a clear strategy of augmenting its cable
    channel assets." *Id*. at 38.

[^579]: *Id*. at Ex. 1. TAC treats networks that are affiliated with
    large media firms other than Comcast and Time Warner as "affiliated"
    in its comparisons of carriage statistics for so-called "affiliated"
    and "unaffiliated" networks. *Id.*

[^580]: TAC's definition of "independent networks" excludes networks
    with financial ties to Comcast, Time Warner, Viacom, News Corp.,
    NBC-Universal, Disney, or their subsidiaries. TAC Petition at 39
    n.42. TAC claims that networks for which an MVPD is the marketing
    and distributing agent should also be excluded. *Id*. at 12-16. TAC
    argues that networks unaffiliated with MSOs but owned by large media
    companies also get preferential treatment by using their leverage to
    secure carriage through retransmission consent and "other means."
    *Id*. at 16.

[^581]: *Id*. at 40-41. TAC also cites a GAO Study finding similar
    favoritism among cable operators generally. *Id*. at 43-44 (citing
    Michael E. Clements and Amy D. Abramowitz, *Ownership Affiliation
    and the Programming Decisions of Cable Operators*, U.S. Government
    Accountability Office, at 16).

[^582]: *Id*. at 45.

[^583]: CWA/IBEW Petition at 5.

[^584]: *See supra* para. 105.

[^585]: Applicants' Reply at 81.

[^586]: Applicants assert that the number of programming networks has
    more than tripled from 106 in 1994, to 278 in 1999, and to 388 in
    2004, an increase of 268%. Applicants' Reply at 35-36. Comcast
    further points out that it owns no attributable interest in any of
    the top 20 rated cable networks. Comcast Mar. 29, 2006 Ex Parte,
    Att. at 2.

[^587]: Applicants' Reply at 36 (citing *Time Warner II*, 240 F.3d at
    1134).

[^588]: TCR Petition at 7, 10 & 13-14.

[^589]: *Id*. at 13 (citing *Comcast-AT&T Order*, 17 FCC Rcd at 23266).

[^590]: *Id*. at 6. Among other programming it provides, CSN
    Mid-Atlantic has a license to produce and exhibit certain Orioles
    baseball games on pay television through the 2006 Major League
    Baseball season, Washington Wizards basketball games through the
    2011 National Basketball Association season, and the Washington
    Capitals matches through the 2016 National Hockey League season.

[^591]: *Id*. at 7.

[^592]: *Id*. at 10. TCR alleges that Comcast has attempted to
    intimidate other MVPDs in the Washington metropolitan area by
    directing CSN Mid-Atlantic to write a letter to them "falsely
    alleging that TCR had improperly represented that it controls the
    rights to exhibit Orioles games beginning in 2007." TCR contends
    that "\[b\]ecause TCR had approached distributors with a package of
    games -- Nationals games beginning immediately and Orioles games
    beginning in the 2007 season -- the intent of CSN's letter was to
    thwart TCR's efforts to televise Nationals games." *Id*.

[^593]: *Id*. However, DIRECTV, Cox, Charter, and RCN carry MASN
    programming in the Baltimore-Washington region. TCR also contends
    that Comcast would have the same incentive and ability to refuse to
    carry MASN after CSN's licensing rights to carry certain Orioles
    games expire in 2006. *Id*. at 15.

[^594]: *See* Letter from David C. Frederick, Kellogg, Huber, Hansen,
    Todd, Evans & Figel, Counsel for TCR, to Marlene H. Dortch,
    Secretary, FCC (Nov. 14, 2005) ("TCR Nov. 14, 2005 Ex Parte") at
    5-6.

[^595]: *See* Letter from David C. Frederick, Kellogg, Huber, Hansen,
    Todd, Evans & Figel, Counsel for TCR, to Marlene H. Dortch,
    Secretary, FCC (Nov. 22, 2005) ("TCR Nov. 22, 2005 Ex Parte") at
    Att. (Economic Analysis of Comcast's and Time Warner's Proposed
    Acquisition of Adelphia) at 3.

[^596]: *Id*.

[^597]: TCR Feb. 21, 2005 Ex Parte, Att. at 7-8. The DMAs listed are
    Orlando, Tampa, Atlanta, Washington, Sacramento, Miami,
    Philadelphia, Baltimore, Detroit, and Chicago. In an earlier filing,
    using seven DMAs in which Comcast owns an RSN, TCR argues that the
    tipping point is between 61% and 69% of homes passed in a DMA,
    alleging that Comcast is already discriminating against its
    competitors where its market share is at these levels. TCR Nov. 22,
    2005 Ex Parte, Att. at 6-7. TCR hypothesizes that the profitability
    of withholding RSNs in such markets would induce Comcast to
    foreclose competing RSNs operating in those markets in order to
    acquire and then withhold their programming. TCR Nov. 22, 2005 Ex
    Parte, Att. at 6-7.

[^598]: Applicants' Reply at 71-83.

[^599]: *Id*. at 72.

[^600]: *Id*. at 72-73.

[^601]: Applicants note that there are now 96 regional programming
    networks, an increase of 12 networks over the total in 2003, and
    that the number of regional sports networks has increased from 29 in
    1998 to 38 in 2004. *Id*. at 35-36.

[^602]: Letter from James R. Coltharp, Comcast Corp., to Marlene H.
    Dortch, Secretary, FCC (Jan. 10, 2006) ("Comcast Jan. 10, 2006 Ex
    Parte") at 3-4. TCR contends in response that its inability to reach
    Comcast's subscribers in Baltimore and Washington will severely
    imperil its viability and that its ability to reach subscribers
    outside of the core market for the Washington Nationals will not be
    sufficient to sustain the network. Letter from David C. Frederick,
    Kellogg, Huber, Hansen, Todd, Evans & Figel, PLLC, Counsel for TCR,
    to Marlene H. Dortch, Secretary, FCC (Feb. 17, 2006) at 6.

[^603]: Applicants' Reply at 74.

[^604]: *See supra* Section VI.C.2.a*.*

[^605]: *See supra* para. 124.

[^606]: Free Press Petition at 37-38; *see also* NAB Reply Comments at
    5-6 (asserting that cable operators that own programming have a
    particularly strong incentive to disfavor unaffiliated content
    providers seeking distribution).

[^607]: Free Press Petition at 37-38.

[^608]: NAB Reply Comments at 1-2. NAB notes that "the cable industry
    *as a whole* is concentrated and clustered regionally" and is
    dominated by an increasingly smaller number of larger entities.
    *Id.* at 5 (emphasis in original); *id.* at 7 (citing *Turner
    Broadcasting System, Inc. v. FCC*, 512 U.S. 622, 648 (1994)
    ("*Turner I*")).

[^609]: *Id*. at 7-8; *see also* Free Press Petition at 38 (noting the
    critical role performed by local broadcasters in "maintaining a
    diverse media environment, fostering localism, and maintaining an
    informed and engaged citizenry") (citing *Turner I*, 512 U.S. at
    622).

[^610]: KVMD's city of license is located within the Los Angeles DMA,
    and its signal is currently carried on Adelphia systems in that
    market. According to KVMD, carriage of its signal on the Adelphia
    cable systems in Los Angeles allows it to reach more viewers than it
    could by over-the-air transmission, and the increased advertising
    revenues it receives based on its greater audience reach allows it
    to develop more unique programming. KVMD Comments at 2-3.

[^611]: *Id*. at 3. *See Net Goes Local in L.A.*, [Multichannel
    News]{.smallcaps}*,* Sept. 5, 2005, at 13.

[^612]: KVMD states that both Comcast and Time Warner have previously
    brought market modification proceedings against Station KVMD in an
    effort to remove the station from their cable communities in the Los
    Angeles market. *See Time Warner Petition for Special Relief*, 18
    FCC Rcd 21384 (MB 2003) (granting Time Warner's petition to remove
    its cable communities in the Los Angeles DMA from the station's
    market); *Comcast Corporation Petition for Modification of the Los
    Angeles, California DMA*, 19 FCC Rcd 5245 (MB 2004) (granting in
    part and denying in part Comcast's petition to remove its cable
    communities in the Los Angeles DMA from the station's market). KVMD
    has filed petitions for reconsideration in both proceedings. KVMD
    Comments at 3-4.

[^613]: KVMD Comments at 5.

[^614]: Applicants' Reply at 25.

[^615]: Applicants state that both Comcast and Time Warner have
    "exemplary" track records in their carriage of digital broadcast
    signals. Comcast is carrying multicast channels both pursuant to the
    agreement between the National Cable Television Association ("NCTA")
    and the Association of Public Television Stations ("APTS") and as a
    result of ongoing commercial negotiations. Likewise, Time Warner
    represents that it has entered into agreements for the digital
    carriage of CBS, Fox, NBC, and ABC stations. Time Warner has agreed
    to carry the digital signals of Public Broadcasting Service ("PBS")
    stations prior to adoption of the NCTA/APTS agreement. Applicants'
    Reply at 92, 94.

[^616]: *Id*. at 92. Applicants state that other cable operators also
    have pursued market modification rulings involving KVMD. *See, e.g.,
    Lone Pine Television, Inc.,* 18 FCC Rcd 23955 (MB 2003) (granting
    market modification petition involving three stations, including
    KVMD). Applicants add that any suggestion that they have pursued
    such market modifications involving KVMD for improper reasons is
    "baseless." Applicants' Reply at 92 n.314.

[^617]: *See* CWA/IBEW Petition at 1; Free Press Petition at 11-12,
    15-22, 27-30; TAC Petition at 7-8, 17, 20; NATOA Reply Comments at
    9, 14-18; BTNC Sept. 7, 2005 Ex Parte at 1-2, 6 (stating that
    "\[t\]he censorship of minority viewpoints, ideas and voices in the
    cable marketplace is simply a by-product of the industry's
    consolidation").

[^618]: Free Press Petition at 30. In support of its argument, Free
    Press states that Comcast and Time Warner rejected political
    advertisements from SBC in support of legislation before the Texas
    legislature, while running advertisements from the Texas Cable and
    Telecommunications Association against the bills; that Comcast
    refused to sell advertising time in New Hampshire prior to the state
    primary because the buyer supported marijuana use and a change in
    legislation concerning that use; and that Comcast refused to sell
    advertising time during President Bush's State of the Union address
    to an organization that opposed the use of military force in Iraq.
    *Id.* at 28-29.

[^619]: *Id*. at 28; CWA/IBEW Petition at 1; *see also* TAC Petition at
    50-52. *See also* Letter from Andrew Jay Schwartzman, Media Access
    Project, Counsel for Free Press, et al. to Marlene H. Dortch,
    Secretary, FCC (May 1, 2006) at 1 (stating that in view of the
    "substantial concerns" raised by commenters about the
    anticompetitive effects of the proposed transactions, the Commission
    should, at least, impose conditions to safeguard competition and
    protect the public's First Amendment rights to speak and to be
    heard).

[^620]: Free Press Petition at 26 (citing *Red Lion Broadcasting v.
    FCC,* 395 U.S. 367 (1969)).

[^621]: Letter from Harold Feld, Senior Vice President, Media Access
    Project, Counsel for National Hispanic Media Coalition, to Marlene
    H. Dortch, Secretary, FCC (May 1, 2006) ("NHMC May 1, 2006 Ex
    Parte") at 1.

[^622]: Free Press Petition at 12, 27. Free Press enumerates several
    examples of Comcast's and Time Warner's past actions that give Free
    Press concern about their post-transaction behavior. *See* *supra*
    note 606*.* In addition, MAP requests that the Commission protect
    access to local advertising markets by establishing an expedited
    complaint process that protects political speech and rival product
    advertisements. *See* MAP Feb. 23, 2006 Ex Parte, Att. A at 4.

[^623]: *See infra* paras. 212-23 for a discussion of issues relating to
    broadband competition and network management.

[^624]: Free Press Petition at 27.

[^625]: NATOA Reply Comments at 9; *see also* TAC Petition at 7-8, 17,
    20 (stating that the proposed transfer, if approved without
    conditions, would lock in the regional dominance of Comcast and Time
    Warner, undermining diversity in MVPD programming, which is
    "fundamental to political and civic discourse").

[^626]: NATOA Reply Comments at 9.

[^627]: *Id*. at 14-15. NATOA argues that subscribers value the
    availability of public access channels and programming, suggesting,
    for example, that cable subscribers are more likely to watch city
    council meetings on television than to attend such meetings in
    person. *Id.*

[^628]: FFBC states that Comcast and Time Warner would provide the level
    of investment needed to ensure that religious, minority, and ethnic
    communities are able to deliver their respective messages. FFBC
    Comments at 2-3. A number of Hispanic organizations, as well as
    other groups, have submitted letters in support of the transactions,
    averring that they will result in greater programming diversity.
    *See, e.g.,* Letter from Alex Lopez Negrete, Chairman, Association
    of Hispanic Advertising Agencies, to Chairman Kevin Martin, FCC
    (Aug. 2, 2005); Letter from Alex Ferro, Executive Director of the
    Florida Hispanic Legislative Caucus, to Chairman Martin and
    Commissioners Abernathy, Copps and Adelstein, FCC (Aug. 2, 2005);
    Letter from Jose "Pepe" Lopez, President of the Latin Chamber of
    Commerce of Broward County, Inc., to Chairman Martin and
    Commissioners Abernathy, Copps and Adelstein, FCC (Aug. 2, 2005);
    Letter from Rev. Dr. Walter B. Johnson, Jr., Executive Director of
    Alliance for Community Peace, to Chairman Kevin Martin, FCC (Aug. 4,
    2005). In addition, Thierer and English warn that any ownership
    restrictions on media that interfere with business structures and
    plans could affect the quality and quantity of the media by
    "artificially limiting" market structures or outputs and by
    diminishing the editorial discretion of media operators. They add
    that ownership restrictions amount to "architectural censorship" in
    violation of the First Amendment. Thierer and English Comments at
    39-40.

[^629]: Applicants' Reply at 41. Moreover, Applicants assert that any
    legitimate diversity issues should be addressed through a rulemaking
    proceeding and not in the context of a transaction that does not
    violate any ownership rules. *Id.* at 40.

[^630]: *Id*. at 41. Applicants cite several Commission decisions for
    the proposition that MSOs serving different franchise areas are not
    competitors, including *Implementation of Sections of the Cable
    Television Consumer Protection and Competition Act of 1992; Rate
    Regulation*, 9 FCC Rcd 4119, 4134 ¶ 29 (1994); *EchoStar-DIRECTV
    HDO,* 17 FCC Rcd at 20613 ¶ 130 (2002); *Comcast-AT&T Order,* 17 FCC
    Rcd at 23282 ¶ 90, n.241. Applicants' Reply at 41 n.151.

[^631]: Applicants' Reply at 40-41.

[^632]: *Id.* at 41 n.147*.*

[^633]: *Id.* at 40.

[^634]: *Id.* at 42.

[^635]: *Id.* We note that Comcast and Time Warner have recently
    reaffirmed their policy regarding advertisements from companies that
    offer competing video, broadband and telephony products, or ads that
    are considered "misleading." According to trade reports, Comcast and
    Time Warner rejected ads from Verizon regarding franchise reform
    legislation in New Jersey, stating that Verizon could air its ads on
    broadcast stations. [Communications daily,]{.smallcaps} Mar. 16,
    2006, at 9-10.

[^636]: Viewpoint diversity refers to the availability of media content
    reflecting a variety of perspectives. *See 2002 Biennial Regulatory
    Review--Review of the Commission's Broadcast Ownership and Other
    Rules Adopted Pursuant to Section 202 of the Telecommunications Act
    of 1996*, 18 FCC Rcd 13620, 13627 ¶ 19 (2003) ("*2002 Biennial
    Review Order"*), *aff'd in part and remanded in part,* *Prometheus
    Radio Project v. F.C.C*., 373 F.3d 372 (2004), *cert. denied*, 125
    S.Ct 2902-04 (2005). Viewpoint diversity is most easily measured
    through the amount of news and public affairs programming, which
    relates most directly to the Commission's core policy objectives of
    facilitating robust democratic discourse in the media. *2002
    Biennial Review Order,* 18 FCC Rcd at 13631 ¶ 32. If, however,
    advertisements fall within the scope of our political programming
    rules, and parties experience difficulty in placing such political
    announcements on cable systems, our rules may provide redress. All
    cable operators are required to abide by the Commission's political
    programming rules applicable to cable television. *See, e.g.,* 47
    C.F.R. §§ 76.205, 76.206, 76.1611, 76.1615, 76.1701, 76.1715. The
    no-censorship provision of the Communications Act of 1934, as
    amended, which embodies First Amendment free speech principles,
    prohibits the Commission from involving itself in the content of
    specific programs or otherwise engaging in activities that might be
    regarded as program censorship. *See* 47 U.S.C. § 326. The
    Commission can neither prevent licensees from airing a particular
    program, nor require that particular speech contained within
    specific programming be balanced.

[^637]: MAP states that the Commission should establish a complaint
    process in the event that the Applicants renege on their promises
    regarding PEG and local franchising conditions. *See* MAP Feb. 23,
    2006 Ex Parte at 4. Based on the current statutory framework for
    local cable franchise issues, including PEG channels, we decline to
    adopt this recommendation and encourage commenters to raise their
    compliance concerns with the appropriate local officials.

[^638]: *Cable Ownership Second Further Notice,* 20 FCC Rcd at 9394 ¶
    31; *see also* 47 U.S.C. § 533(f)(2)(A) (requiring the Commission to
    ensure that no cable operator or group of cable operators can
    unfairly impede, either because of the size of any individual
    operator or because of joint actions by a group of operators of
    sufficient size, the flow of video programming from the video
    programmer to the consumer); 47 U.S.C. § 521(4) (requiring the
    government to assure that cable communications provide and are
    encouraged to provide the widest possible diversity of information
    sources and services to the public).

[^639]: *Cable Ownership Second Further Notice*, 20 FCC Rcd at 9396-97
    ¶¶ 35-36. The Commission's inquiry focuses on the rulings in *Time
    Warner I* and *Time Warner II* interpreting section 613(f)(2)(G) of
    the Act. 47 U.S.C. § 533(f)(2)(G). *See Time Warner I,* 211 F.3d
    1313 (D.C. Cir. 2000); *Time Warner II,* 240 F.3d 1126 (D.C. Cir.
    2001). The statute requires the Commission to ensure that any cable
    ownership limits imposed do not impair the development of diverse
    and high quality video programming. *Time Warner I* upheld the
    constitutionality of section 613(f) and found that Congress
    reasonably concluded that dramatic concentration in the cable
    industry "threatened the diversity of information available to the
    public and could form a barrier to the entry of new cable
    programmers." *Time Warner I,* 211 F.3d at 1320. However, *Time
    Warner II* concluded that Congress had not given the Commission
    authority to impose, solely on the basis of the diversity precept, a
    limit that does more than guarantee a programmer two possible
    outlets sufficient to achieve viability. *Time Warner II*, 240 F.3d
    at 1135.

[^640]: NHMC Petition at 6-7.

[^641]: *Id.* at 6.

[^642]: *Id*. at 4. NHMC does not allege that Comcast and Time Warner
    have engaged in electronic redlining. However, NHMC asserts that the
    significant history of redlining in minority communities, coupled
    with "Comcast's particular record of insensitivity to the Hispanic
    community," warrants conditions on the transactions to ensure that
    the public interest benefits claimed by the Applicants will be
    shared with the entire community. *Id*. at 5.

[^643]: *Id*. at 3. In particular, according to NHMC, minority
    communities in urban areas often receive inferior service and
    experience severe outages of electronic services. NHMC also cites
    the Commission's 2000 report pursuant to section 706 of the
    Telecommunications Act, which concluded that many low income and
    minority consumers are barred from obtaining advanced services due
    to the poor quality and lack of services provided to these
    communities. *See Deployment of Advanced Telecommunications
    Capability to All Americans in a Reasonable and Timely Fashion, and
    Possible Steps to Accelerate Such Deployment Pursuant to Section 706
    of the Telecommunications Act of 1996,* 15 FCC Rcd 20918 (2000).

[^644]: NHMC Petition at 2.

[^645]: NHMC May 1, 2006 Ex Parte at 1.

[^646]: NATOA Reply Comments at 12.

[^647]: *Id.*

[^648]: Applicants' Reply at 108. The Applicants assert that NHMC has
    presented no evidence to support its allegations of economic
    redlining.

[^649]: *Id.* at 109 (agreeing that economic redlining is contrary to
    the public interest). In support of their assertions that Comcast
    and Time Warner have taken affirmative steps to prevent economic
    redlining, the Applicants cite to Comcast's efforts to provide more
    channels and advanced services in Flint, Michigan, which the
    Applicants claim is one of the most economically depressed cities in
    the region. The Applicants also note Comcast's efforts in
    Albuquerque, New Mexico, including low income neighborhoods in the
    Uptown Area, South Valley, and Southern Heights. These areas,
    according to the Applicants, were among the first to be upgraded to
    allow for digital and high- speed Internet service. Time Warner also
    highlights its deployment of advanced services to minority
    communities, stating that among the first Time Warner systems to be
    upgraded in 1998 as part of the \$5 billion company-wide upgrade
    effort was El Paso, Texas, which it describes as one of the most
    "demographically challenged" systems owned by Time Warner. In
    addition, Time Warner states that in Minneapolis it completed
    upgrades first in North Minneapolis, one of the lowest
    socio-economic areas in the city. *Id.* at 109-111.

[^650]: *See AT&T-MediaOne Order*, 15 FCC Rcd at 9879 ¶ 145.

[^651]: Section 1 of the Communications Act charges the Commission with
    ensuring that communications services are made available, "so far as
    possible, to all the people of the United States, without
    discrimination on the basis of race, color, religion, national
    origin, or sex." 47 U.S.C. § 151.

[^652]: *See* Joint Manager's Statement, S. Conf. Rep. No. 104-230 at
    113; *see also* 47 U.S.C. § 254(b)(3) (stating that the 1996 Act
    envisions that "consumers and those in rural, insular, and high cost
    areas, should have access to telecommunications and information
    services").

[^653]: Free Press Petition at 15-17, 30-32, 44-45; IBC Comments at 3.

[^654]: *National Cable & Telecomm. Ass'n v. Brand X Internet Services*,
    125 S. Ct. 2688 (2005).

[^655]: Free Press Petition at 15-17, 30.

[^656]: *Id.* at 15-17, 31.

[^657]: *Id.* at 15-16, 44-55; *see also* Letter from Parul Desai and
    Andrew J. Schwartzman, Media Access Project, on behalf of Free
    Press, to Marlene H. Dortch, Secretary, FCC (Mar. 28, 2006) at 2;
    Letter from Andrew J. Schwartzman, President, Media Access Project,
    to Marlene H. Dortch, Secretary, FCC (Apr. 20, 2006) at 1. The
    conditions imposed by the Commission and the FTC are discussed
    *infra* at para. 221.

[^658]: Free Press Petition at 45; *see also* Letter from Harold Feld,
    Senior Vice President, Media Access Project, to Marlene H. Dortch,
    Secretary, FCC (July 6, 2006) at 2; Letter from Henry Goldberg,
    Goldberg, Godles, Wienter & Wright, Attorney for Skype, Inc., to
    Marlene H. Dortch, Secretary, FCC (June 14, 2006) ("Skype June 14,
    2006 Ex Parte") at 1. In addition, Skype discussed the possibility
    of conditioning approval of the transactions on adherence to the
    Commission's *Policy Statement,* discussed below. Skype June 14,
    2006 Ex Parte at 1; *see also infra* para. 223.

[^659]: CWA/IBEW Reply Comments at 3. We presume that by "network
    devices," CWA/IBEW refer to personal video recorders and other
    electronic devices, such as wireless routers, that can be used in
    connection with residential broadband Internet access. *See* Free
    Press Petition at 15.

[^660]: IBC Comments at 3-4.

[^661]: Applicants' Reply at 89; *see also* Applicants Apr. 19, 2006 Ex
    Parte at 9.

[^662]: Applicants' Reply at 90; *see also* Thierer and English Comments
    at 34-38; Letter from Seth A. Davidson, Fleischman and Walsh,
    L.L.P., Counsel for Time Warner Inc., to Marlene H. Dortch,
    Secretary, FCC (Apr. 7, 2006) at 2 (reiterating that open access
    conditions proffered by MAP and others are unrelated to this
    proceeding, and in any event, are neither necessary nor
    appropriate); Letter from Michael H. Hammer, Willkie, Farr &
    Gallagher, LLP, to Marlene H. Dortch, Secretary, FCC (May 23, 2006)
    ("Applicants May 23, 2006 Ex Parte") at 1-2.

[^663]: Applicants May 23, 2006 Ex Parte at 2.

[^664]: *Id.*

[^665]: At the end of 2000, 84.6% of U.S. households with Internet
    access were dial-up customers. Now, high-speed Internet access
    rivals that of dial-up: of the 70.3 million Internet access
    households in June 2005, 33.7 million had high-speed access. *See
    Eighth Annual Video Competition Report,* 17 FCC Rcd at 1265 ¶ 43;
    *Twelfth Annual Video Competition Report,* 21 FCC Rcd at 2567 ¶ 137.
    *See also* AB Bernstein Research, *Broadband Update: "Value Share"
    and "Subscriber Share" Have Diverged*, Apr. 7, 2006 ("*Bernstein
    Broadband Update*") at 1-2 (stating that "\[d\]uring 4Q05, Internet
    penetration (including both dial-up and broadband connections) as a
    percentage of U.S. households increased 70bps \[basis points\] to
    64%, or around two-thirds of all households" and has been gradually
    accelerating).

[^666]: *See Bernstein Broadband Update* at 1; *see also* The Buckingham
    Research Group, *The Last Mile---Monitoring Quarterly Trends in
    Telecommunications, Video and Data,* Nov. 30, 2005, at 56 (reporting
    that "\[w\]hile cable continues to dominate the HSD market, its
    share has been falling in recent quarters, as DSL has become a more
    competitive and widely available alternative . . . . Not only has
    DSL now beaten cable in net adds for three straight quarters, the 3Q
    \[of 2005\] figure also stood out as the highest incremental share
    ever for this product."); Bernstein Research Call, *Broadband
    Competition Intensifies as Penetration Advances; Price and Speed
    Define Main Battle Lines*, June 15, 2005 ("*Bernstein Research
    Call*") at 1 (projecting "that DSL will gain 800 bps \[basis
    points\] incremental share over the next five years, to 44% of the
    residential broadband market in 2010").

[^667]: FCC, *High-Speed Services for Internet Access: Status as of June
    30, 2005*, Apr. 2006, at Table 1 ("*High-Speed Services for Internet
    Access: 2005 Status Report*"). This report and previous releases of
    the *High-Speed Services for Internet Access* report are available
    at http://www.fcc.gov/wcb/iatd/comp.html (last visited June 20,
    2006).

[^668]: *Id.* at Table 5.

[^669]: Wireless-Fidelity ("Wi-Fi") is an interoperability certification
    for wireless local area network (LAN) products. This term has been
    applied to devices developed in accordance with the Institute of
    Electrical and Electronics Engineers (IEEE) 802.11 standard.
    *Twelfth Annual Video Competition Report*, 21 FCC Rcd at 2604 ¶ 225
    & n.785. WiMAX is a wireless standard, embodied in IEEE Standard
    802.16, that can provide wireless high-speed Internet access with
    speeds up to 75 Mbps and ranges up to 30 miles. *Id*. at 2604 ¶ 226.
    BPL is a new type of carrier current technology that provides access
    to high speed broadband services using electric utility companies'
    power lines. *In the Matter of Amendment of Part 15 Regarding New
    Requirements and Measurement Guidelines for Access Broadband Over
    Power Line Systems, Carrier Current Systems, Including Broadband
    Over Power Line Systems,* 19 FCC Rcd 21265, 21266 (2004); *see also*
    47 C.F.R. § 15.3(ff) (defining the term "Access BPL").

[^670]: *High-Speed Services for Internet Access: 2005 Status Report* at
    Table 1. A separate FCC report indicates that cellular-based
    high-speed Internet access service "has been launched in at least
    some portion of counties containing 278 million people, or roughly
    97 percent of the U.S. population . . . ." *Implementation of
    Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993
    (Annual Report and Analysis of Competitive Market Conditions With
    Respect to Commercial Mobile Services)*, 20 FCC Rcd 15908, 15953-4 ¶
    119 (2005).

[^671]: *Bernstein Research Call* at 1 (projecting that "\[c\]able
    modem's share of the broadband market is projected to decline from
    64% currently to 51% by 2010, with both DSL and alternative
    technologies such as WiMax driving the share loss").

[^672]: *See, e.g.,* Karen Brown*, WildBlue Inks EchoStar, DirecTV*,
    [Multichannel News]{.smallcaps}, June 9, 2006, *available at*
    http://www.multichannel.com/article/CA6342695.html (last visited
    June 20, 2006); SkyREPORT, *WildBlue Nails DISH and DirecTV Deals,
    NRTC Reacts*, June 12, 2006, *at*
    http://www.skyreport.com/view.cfm?ReleaseID=1939#Story2 (last
    visited June 20, 2006).

[^673]: Free Press cites to an article published on the ADS website,
    which explained that ADS e-mails were not getting through to its
    members who subscribed to Comcast's cable modem service. Free Press
    Petition at 31; David Swanson, *How Comcast Censors Political
    Content,* Common Dreams News Center, July 16, 2005, *at*
    http://www.commondreams.org/views05/0716-20.htm (last visited June
    20, 2006)*.*

[^674]: Free Press Petition at 31.

[^675]: Comcast Dec. 22, 2005 Response to Information Request IV.B.

[^676]: *See, e.g.*, *White Buffalo Ventures, LLC v. Univ. of Texas at
    Austin,* 420 F.3d 366 (5^th^ Cir. 2005); *Sotelo v. Directrevenue,
    LLC*, 384 F. Supp. 2d 1219 (N.D. Ill. 2005) (citing *Compuserve,
    Inc. v. Cyber Promotions, Inc.*, 962 F. Supp. 1015 (S.D. Ohio
    1997)).

[^677]: *See Madison River Communications and Affiliated Companies,* 20
    FCC Rcd 4295 (2005).

[^678]: *See America Online, Inc. and Time Warner Inc.,* FTC Docket No.
    C-3989, Agreement Containing Consent Orders: Decision and Order,
    2000 WL 1843019 at Section III (FTC Dec. 14, 2000). The FTC decision
    and order containing its open access condition terminated on April
    17, 2006. *See also* FTC Decision and Order (Final), 2001 WL 410712
    at Section X (April 17, 2001).

[^679]: *AOL-Time Warner Order*, 16 FCC Rcd at 6600-03 ¶¶ 126-27.

[^680]: *Id.* at 6570-71 ¶ 61.

[^681]: *Id.*

[^682]: We note that the Commission's *AOL-Time Warner*
    non-discrimination condition continues to apply to Time Warner's
    systems, including systems it will acquire from Adelphia or Comcast.
    *Id.* at 6600-03 ¶¶ 126-27.

[^683]: *Appropriate Framework for Broadband Access to the Internet over
    Wireline Facilities*, *Policy Statement*, CC Docket No. 02-33, FCC
    05-151 (rel. Sept. 23, 2005).

[^684]: *Id.* at ¶ 4. The Commission found that the principles adopted
    in the *Policy Statement* are subject to reasonable network
    management. *Id.* at ¶ 5 n.15.

[^685]: *Id.* at ¶ 5.

[^686]: Free Press Petition at 15.

[^687]: *Id.*

[^688]: *Id.*

[^689]: EPGs are on-screen directories of programming delivered through
    various means, including cable, satellite, and over-the-air
    broadcast signals. EPGs are available in two formats,
    original-generation or interactive. Original-generation EPGs
    continually scroll programming listings and are generally delivered
    as discrete programming channels. Interactive EPGs ("IPGs") allow
    users to sort and search programming, give program descriptions,
    provide reminders of upcoming programming, and take users to
    programming they select. EPGs are available to cable and DBS
    subscribers. *See Report on the Packaging and Sale of Video
    Programming Services to the Public*, FCC Media Bureau, Nov. 18,
    2004,
    http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-254432A1.pdf
    (last visited June 20, 2006). Generally, ITV is defined as a service
    that supports subscriber-initiated choices or actions that are
    related to one or more video programming streams. *Nondiscrimination
    in the Distribution of Interactive Television Services Over Cable,*
    16 FCC Rcd 1321, 1323 ¶ 6 (2001).

[^690]: Public Interest Statement at 7 n.14.

[^691]: Free Press Petition at 17-19. Free Press states that Comcast has
    positioned itself in the ITV market through its control and/or
    interests in companies such as Double C Technologies, TV Works, Meta
    TV, Extent Technologies, and Visible World. These companies are
    involved in various aspects of VOD, targeted interactive
    advertising, and games software. *Id.*

[^692]: *Id.* at 19.

[^693]: *Id.* at 43.

[^694]: *See* Letter from Michael H. Hammer, Willkie Farr & Gallagher,
    LLP, Counsel for Adelphia Communications Corp., James R. Coltharp,
    Comcast Corp., and Steven N. Teplitz, Time Warner Inc., to Marlene
    H. Dortch, Secretary, FCC (Jan. 17, 2006) ("Applicants Jan. 17, 2006
    Ex Parte") at 4.

[^695]: Applicants refer to "traditional standards bodies" such as the
    American National Standards Institute. *See id.* at 4.

[^696]: *Id.*

[^697]: *Id.* at 2.

[^698]: *Id.* at 3.

[^699]: *Id.* at 6-7. MAP responds that the Applicants' January 17, 2006
    Ex Parte does not "address the core issues raised by Free Press."
    MAP asserts that, post-transaction, Comcast and Time Warner will
    have the power and the incentive to set *de facto* standards in the
    market for consumer electronic devices. It states that by dictating
    standards and practices to the electronics industry, Comcast and
    Time Warner will be able to create incompatibilities in PVRs and
    other consumer video devices, which will increase "customer lock
    in." *See* MAP Feb. 23, 2006 Ex Parte at 1-2.

[^700]: Applicants Jan. 17, 2006 Ex Parte at 8.

[^701]: The Applicants have made similar representations regarding
    ICTV's dominance in the ITV market. Time Warner ex parte meeting
    with FCC staff, Benefits Presentation, Nov. 9, 2005; *see also*
    Applicants Jan. 17, 2006 Ex Parte at 7-8.

[^702]: NHMC Petition at 5.

[^703]: *Id.*

[^704]: *Id.* at 2.

[^705]: Applicants' Reply at 112. The Applicants report that by the end
    of 2004, approximately 40% of all Comcast employees were minorities,
    and 37% were women; of Comcast's senior managers (employed as
    directors and in higher job positions) 14% were minorities and 30%
    were women. The Applicants note that more than 40% of Comcast Cable
    employees promoted within the last two years were minorities, and
    approximately 30% were women. *Id.*

[^706]: The Applicants list four such initiatives. First, according to
    the Applicants, Comcast has established a Diversity Management
    Council, comprised of senior executives representing Comcast's
    business units, which is charged with setting tangible goals to
    achieve the company's diversity objectives within each of its
    operating divisions. Second, the Applicants state that Comcast
    actively participates in hundreds of career events annually and is
    continually focused on community events to recruit minorities for
    employment. Third, Comcast has established its "Comcast University"
    program to develop future leaders and assist new entrants in the
    cable industry. Fourth, Comcast states that it is "partnering" with
    organizations that specialize in connecting Hispanic professionals
    with corporate employment opportunities. *Id*. at 112-14.

[^707]: *Id*. at 114 (employment of Hispanics increased by 250% since
    Comcast's purchase in 2002 of AT&T Broadband). According to the
    Commission's most recent statistics compiled in its 1999 Cable
    Employment Trend Report, 10.5% of cable employees were Hispanic.
    *See* *FCC Cable Employment Trend Report* (1999),
    http://www.fcc.gov/Bureaus/Cable/Public_Notices/2001/pncb0101.pdf
    (last visited June 20, 2006).

[^708]: Applicants' Reply at 114.

[^709]: *See Amendment of the Commission\'s Rules to Require Operators
    of Community Antenna Television Systems and Community Antenna Relay
    Station Licensees to Show Nondiscrimination in their Employment
    Practices*, 34 F.C.C.2d 186 (1972).

[^710]: 47 C.F.R. § 76.73(a).

[^711]: *See* 47 C.F.R. §§ 76.71, 76.73, 76.75, 76.77, and 76.79.

[^712]: Generally, it is left to the discretion of MVPDs to determine
    how this requirement is best fulfilled so long as the procedures
    utilized are sufficient to ensure wide dissemination of information
    about all job openings to the entire community. *See Review of the
    Commission's Broadcast and Cable Equal Employment Opportunity Rules
    and Policies*, 17 FCC Rcd 24018 (2002) ("*Broadcast and Cable Equal
    Employment Opportunity Rules*"). In issuing new recruitment outreach
    rules, the Commission deferred action on issues raised concerning
    the broadcast and cable annual employment report forms (FCC Forms
    395-B, 395-A), which had been used to collect data concerning the
    workforces of broadcast and cable employment units, including data
    concerning the race/ethnicity and gender of those workforces. In
    *Review of the Commission's Broadcast and Cable Equal Employment
    Opportunity Rules and Policies,* 19 FCC Rcd 9973 (2004), the
    Commission reinstated the regulatory requirements to file the forms
    but issued a notice of proposed rulemaking regarding whether the
    forms should be treated as confidential by the Commission after they
    are filed.

[^713]: *Broadcast and Cable Equal Employment Opportunity Rules*, 17 FCC
    Rcd at 24023-24 ¶¶ 14, 15.

[^714]: NHMC is not foreclosed from filing future complaints regarding
    Comcast's EEO compliance. Our ruling herein is limited to the
    current record before us.

[^715]: *See* 47 U.S.C. § 310(d).

[^716]: CWA/IBEW Petition at 20. CWA/IBEW cite instances in which
    Comcast has apparently been cited by the National Labor Relations
    Board ("NLRB") for violations of labor law. *Id*. at 20-22. CWA/IBEW
    also allege that Comcast has reneged on promises, made when it
    purchased AT&T's cable systems, to respect the collective bargaining
    agreements negotiated between AT&T Broadband and union members.
    CWA/IBEW therefore argue that their union members will be harmed by
    the transactions because they currently have long-standing
    collective bargaining relationships with Adelphia in several
    communities in which Time Warner or Comcast propose to purchase the
    franchise. *Id*. at 22-23.

[^717]: CWA/IBEW state that the only protection employees have had
    through the "lengthy ordeal" of the Rigas' family indictments and
    bankruptcy is their union contract. CWA/IBEW Petition at 23.

[^718]: *Id*.

[^719]: *Id*. at 24. *See* CWA Dec. 16, 2005 Ex Parte; *see also* Letter
    from Kenneth R. Peres, Ph.D., CWA, to Marlene H. Dortch, Secretary,
    FCC (Feb. 23, 2006); Letter from Kenneth R. Peres, Ph.D., CWA, to
    Marlene H. Dortch, Secretary, FCC (Feb. 27, 2006); Letter from
    Kenneth R. Peres, Ph.D., CWA, to Marlene H. Dortch, Secretary, FCC
    (Mar. 22, 2006) (seeking the requirement that Time Warner and
    Comcast commit in writing that they will (1) continue a bargaining
    relationship with those units that are represented by a union, and
    (2) permit transferred workers eligibility for company benefit
    plans, and not reduce compensation as a result of the transaction);
    CWA Presentation to FCC (Mar. 31, 2006) at 12 (alleging that Time
    Warner informed all Adelphia employees by letter of February 17,
    2006, that their employment with TWC would be "at-will," and not
    governed by any individual contract or collective bargaining
    agreement).

[^720]: TCR Petition at 17. *See also* Letter from David C. Frederick,
    Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., Counsel for
    TCR, to Marlene H. Dortch, Secretary, FCC (May 16, 2006).

[^721]: *TCR Sports Broadcasting Holding, L.L.P. v. Comcast Corp.,*
    CSR-6911-N (filed June 14, 2005) ("*TCR Complaint*"). The complaint,
    which alleges violations of Commission rules 47 C.F.R. §§
    76.1300-76.1302, is currently pending with the Media Bureau.

[^722]: Applicants' Reply at 117.

[^723]: *Id.*

[^724]: *Id.* at 118.

[^725]: *Id.* at 117.

[^726]: *Id.* at 117-118 n.375.

[^727]: The Applicants further contend that several of CWA's assertions,
    made in ex parte presentations to Commission staff, are unfounded.
    Specifically, the Applicants deny CWA's charge that Comcast and Time
    Warner will "discriminate" against union employees, or that the
    Asset Purchase Agreement between the parties requires employees to
    reapply for their jobs. The Applicants assert that "all applicable
    employees of the acquired systems will be offered employment" and
    that there is no requirement that employees reapply for their jobs.
    *See* Letter from Seth A. Davidson, Fleischman and Walsh, L.L.P.,
    Counsel for Time Warner Inc., to Marlene H. Dortch, Secretary, FCC
    (Feb. 28, 2006). Additionally, in response to subsequent notices of
    ex parte meetings between CWA and Commission staff, the Applicants
    state that with respect to labor relations, the NLRB is the
    appropriate federal agency to review those issues. They add that
    there is no precedent for CWA's demand that the Commission delve
    into matters of federal labor law by requiring Time Warner and
    Comcast to "continue a bargaining relationship with those units that
    are represented by a union." *See* Letter from Seth A. Davidson,
    Fleischman and Walsh, L.L.P., Counsel for Time Warner Inc., to
    Marlene H. Dortch, Secretary, FCC (Mar. 28, 2006).

[^728]: *See* Letter from James R. Coltharp, Comcast Corp., to Marlene
    H. Dortch, Secretary, FCC (Jan. 10, 2006) ("Comcast Jan. 10, 2006 Ex
    Parte") at 1; *see also TCR Complaint*.

[^729]: Comcast Jan. 10, 2006 Ex Parte at 2.

[^730]: *Id*. at 3. On May 23, 2006, Mayor Anthony Williams of
    Washington, D.C., signed into law a bill which requires Comcast to
    begin broadcasting Washington Nationals games or potentially lose
    its franchise license. Comcast is the main cable provider in
    Washington, D.C. *See Williams Signs Bill Requiring Comcast to Show
    Nats Games*, [Washington Post,]{.smallcaps} May 24, 2006, at E-2.

[^731]: 47 U.S.C. §§ 308(b), 310(d). *See Policy Regarding Character
    Qualifications in Broadcast Licensing,* 102 F.C.C.2d 1179 ¶ 2
    (1986), *modified,* 5 FCC Rcd 3252 (1990), *recon. granted in part*,
    6 FCC Rcd 3448 (1991), *modified in part*, 7 FCC Rcd 6564 (1992)
    ("*Character Policy Statement*"). This character policy statement is
    utilized primarily in broadcast licensing and application
    proceedings to assess "fitness," but also in reviewing initial,
    assignment, transfer, and license renewal applications for a variety
    of services. *See EchoStar-DIRECTV HDO,* 17 FCC Rcd at 20576 ¶ 28;
    *Applications for the Consent to Transfer of Control of Licenses and
    Section 214 Authorizations from Southern New England
    Telecommunications Corporation, Transferor, to SBC Communications,
    Inc., Transferee,* 13 FCC Rcd 21292, 21305 ¶ 26 (1998); *Western
    Telecommunications, Inc*., 3 FCC Rcd 6405 (1988).

[^732]: In examining FCC misconduct, the Commission has determined that
    the "relevant character traits with which it is concerned are those
    of truthfulness and reliability as a means to discern "whether the
    licensee will in the future be likely to be forthright in its
    dealings with the Commission and to operate its station consistent
    with the requirements of the Communications Act and the Commission's
    rules and policies." *Character Policy Statement*, 102 F.C.C.2d at
    1209 ¶ 55.

[^733]: When the misconduct involves non-FCC behavior, the Commission
    has previously focused on behavior that "allows us to predict
    whether an applicant has or lacks the character traits of
    'truthfulness' and 'reliability' that we have found relevant to the
    qualifications to operate a broadcast station in accordance with the
    requirements of the Communications Act and of our rules and
    policies." *Character Policy Statement*, 102 F.C.C.2d at 1195 ¶ 34.

[^734]: *See Bell Atlantic-NYNEX Order*, 12 FCC Rcd at 20092 ¶ 236
    (1998).

[^735]: CWA, in ex parte presentations to Commission staff, has
    indicated that the Commission's decision in the *SBC-Ameritech
    Order* is precedential. We disagree that the *SBC-Ameritech Order*
    provides precedent supporting a requirement that Comcast and Time
    Warner be required to maintain adequate levels of trained and
    experienced employees, which CWA asserts would impact customer
    service. In that transaction, the Commission rejected claims that
    the transfers should be prohibited based on speculation that service
    quality in the Ameritech region would deteriorate as a result of the
    merger. As the assignee in that case, SBC *voluntarily* increased
    its commitment to improving service quality by, among other things,
    hiring more employees and investing in infrastructure. In addition,
    regulations pertaining to the Title II licenses at issue in that
    transaction provided for annual reporting via the Automated
    Reporting Management Information System ("ARMIS"). Commitments
    proffered by SBC and Ameritech prompted the reporting and
    enforcement measures designed to prevent potential service quality
    degradation post-merger. *See SBC-Ameritech Order,* 14 FCC Rcd at
    14946-47 ¶¶ 566-67. CWA further seeks a condition that the
    Commission monitor the buildout of advanced services in rural areas
    to assess whether potential financial strains created by the
    transactions would lead to negative impacts on consumers and
    communities. CWA relies on the Commission's decision in
    *Sprint*-*Nextel* as support for its request for conditions.
    *Sprint-Nextel Order,* 20 FCC Rcd at 14034-35 ¶ 183. *See* CWA Dec.
    16, 2005 Ex Parte at 2, Att. As we discuss, *infra,* the record in
    the instant transactions does not warrant imposition of measures to
    ensure service quality to consumers in the Adelphia markets, beyond
    what the Applicants have asserted they intend to provide in
    upgrading the Adelphia markets. Specifically, we find no evidence
    that LFAs have raised, on this record, substantial concerns about
    the capability of Comcast and Time Warner to serve Adelphia
    customers in the same manner as they currently serve their
    respective customers. Hence, we do not find that customer service in
    those markets is likely to suffer as a result of the transactions.

[^736]: Applicants' Reply at 117.

[^737]: *Id.*

[^738]: *See* Time Warner Jan. 25, 2006 Ex Parte at 2. *See also* Letter
    from Megan Anne Stull, Willkie Farr & Gallagher, LLP, Counsel for
    Adelphia Communications Corp., to Marlene H. Dortch, Secretary, FCC
    (Apr. 19, 2006) (summary of CWA's labor allegations and the
    Applicants' rebuttals thereto).

[^739]: We believe that NLRB is the more appropriate forum for
    resolution of commenters' labor-oriented concerns. *See supra* note
    716 for a brief discussion of cases cited by CWA involving adverse
    NLRB decisions against Comcast. Comcast states that it was found to
    not be at fault in the firing of a Beaver Falls worker who was
    organizing a union; that the NLRB dismissed a claim that Comcast
    influenced a union decertification election in Illinois; and that
    Comcast was found not to be at fault in the firing of two
    technicians who were union supporters in Pittsburgh. Applicants'
    Reply at 117-18 n.375.

[^740]: 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).

[^741]: *AT&T-MediaOne Order*, 15 FCC Rcd at 9883 ¶ 154; *SBC-Ameritech
    Order*, 14 FCC Rcd at 14736 ¶ 46.

[^742]: *News Corp.-Hughes Order,* 19 FCC Rcd at 610 ¶ 316 (citing
    *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20630 ¶ 188); *Bell
    Atlantic-NYNEX Order*, 12 FCC Rcd at 20063 ¶ 158; *Sprint-Nextel
    Order*, 20 FCC Rcd at 14013 ¶ 129; *see also* *Horizontal Merger
    Guidelines* § 4.

[^743]: *News Corp.-Hughes Order,* 19 FCC Rcd at 610 ¶ 316;
    *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20630 ¶ 188; *Bell
    Atlantic-NYNEX Order*, 12 FCC Rcd at 20063 ¶ 157; *SBC-Ameritech
    Order,* 14 FCC Rcd at 14825 ¶ 256; *see also* TAC Petition at 6.

[^744]: *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.

[^745]: *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 Horizontal Merger
    Guidelines* § 4.

[^746]: *News Corp.-Hughes Order,* 19 FCC Rcd at 611 ¶ 317;
    *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20630 ¶ 190.

[^747]: *News Corp.-Hughes Order*, 19 FCC Rcd at 610-11 ¶ 317;
    *EchoStar-DIRECTV HDO,* 17 FCC Rcd at 20630-31 ¶ 190.

[^748]: *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*").

[^749]: *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).

[^750]: Public Interest Statement at 46, 48.

[^751]: *Id*. at 21; Applicants' Reply at 8-9.

[^752]: Public Interest Statement at 32-33; Applicants' Reply at App. B.

[^753]: Applicants' Reply at 8-9. Comcast states that it completed 93%
    of the upgrades by year-end 2003. Letter from Martha E. Heller,
    Wiley Rein & Fielding, LLP, Counsel for Comcast Corp., to Marlene H.
    Dortch, Secretary, FCC (Nov. 18, 2005) ("Comcast Nov. 18, 2005 Ex
    Parte") at Att. ("Advanced Services Benefits") at 4.

[^754]: Public Interest Statement at 23-24; Applicants' Reply at 9
    (citing *Social Contract for Time Warner*, 11 FCC Rcd 2788 (1996)).
    In a subsequent filing, Time Warner claims to have spent over \$17
    billion since 1996 upgrading, enhancing, and growing its plant. Time
    Warner Nov. 10, 2005 Ex Parte at Decl. of Peter Stern at 1.

[^755]: Public Interest Statement at 45. In Adelphia's 2004 year-end SEC
    filing, it states that as of December 31, 2004, 86% of homes passed
    were served by systems with 750 MHz, two-way capacity. On its 750
    MHz systems, Adelphia offers HDTV, VOD, and DVR services. Adelphia's
    basic service tier penetration rate fell to 47.1% from 50.5% in
    2003. Of its basic service subscribers, 38.3% also subscribe to
    Adelphia's digital service, a 2.9% increase from 2003. Adelphia
    Communications Corp., SEC Form 10-K for the Year Ended December 31,
    2004, at 6-7. In comparison, over 40% of Comcast's and over 45% of
    Time Warner's basic tier subscribers also subscribe to digital
    service. Public Interest Statement at 24, 34.

[^756]: Time Warner Nov. 10, 2005 Ex Parte, Ex. 1 ("Benefits
    Presentation") at 12; Public Interest Statement at 33.

[^757]: Public Interest Statement at 45.

[^758]: *Id*. at 47. Comcast also states that its HDTV service is
    available to over 90% of its customers and boasts nearly 1.5 million
    subscribers. Comcast offers up to 15 HDTV channels of national
    programming and provides HDTV programming on each of its regional
    SportsNet services. *Id*. at 34-35. Time Warner states that it
    offers, on average, 15 HDTV channels and has nearly 574,000 HDTV
    subscribers. *Id*. at 25. The Applicants do not provide comparable
    HDTV statistics for Adelphia's cable systems.

[^759]: These statistics indicate that 2.5% of Adelphia's subscribers
    purchase DVR service, while 2.6% of Comcast's and 7.6% of Time
    Warner's subscribers respectively, purchase DVR service.

[^760]: Comcast states that its digital subscribers have access to an
    average of 2,500-3,000 hours of VOD programming per month, of which
    up to 95% is free. Comcast Nov. 22, 2005 Ex Parte at 7. By year end
    2005, Comcast projected it would be offering subscribers a choice of
    up to 10,000 programs. Public Interest Statement at 36; Comcast Nov.
    18, 2005 Ex Parte, Att. at 11. Time Warner states that it offers VOD
    to customers with advanced digital set-top boxes in all of its
    divisions. In 2005, the company had 1.6 million SVOD subscribers.
    Time Warner states that it introduced an integrated DVR in 2002 and
    a multi-room DVR in 2004. In November 2005, Time Warner introduced
    its "Start Over" service on its South Carolina system, which allows
    subscribers to view broadcast programs any time after the show
    begins. Public Interest Statement at 26-27; Time Warner Nov 10, 2005
    Ex Parte at 2-3 & Ex. 1 ("Benefits Presentation") at 5, 8.

[^761]: Letter from Martha E. Heller, Wiley, Rein & Fielding, LLP,
    Counsel for Comcast Corp., to Marlene H. Dortch, Secretary, FCC
    (Nov. 15, 2005) at Att. ("Local Benefits") at 12-16; Letter from
    Seth A. Davidson, Fleischman and Walsh, L.L.P., Counsel for Time
    Warner Inc., to Marlene H. Dortch, Secretary, FCC (Nov. 17, 2005) at
    Ex. 1 ("Local on Demand-Southeast Wisconsin") at 2-8. Comcast
    projected it would be offering three-quarters of its customers
    digital simulcasting by the end of 2005. It also intends to invest
    **\[REDACTED\]** to launch digital simulcasting on Adelphia's
    systems. Comcast Nov. 18, 2005 Ex Parte, Att. ("Advanced Services
    Benefits") at 13.

[^762]: Time Warner Nov. 10, 2005 Ex Parte, Ex. 1 ("Benefits
    Presentation") at 18 & Decl. of Peter Stern at 2. Comcast did not
    provide information regarding how many of its systems offer local
    VOD programming or the average numbers of hours of local VOD
    provided where it is offered, but the company did provide examples
    of local VOD programming. On its Arlington, Virginia cable system,
    for example, Comcast offers NBC, ABC, and NewsChannel 8 local news
    on demand, as well as educational programming specials such as *In
    their Own Words* (a documentary about the events of D-Day as told by
    World War II veterans from Maryland) and *Students and Leaders*
    (2003) (a month-long program, in partnership with C-SPAN, which
    brought 40 national leaders into local high school classrooms);
    Letter from James R. Coltharp, Comcast Corp., to Marlene H. Dortch,
    Secretary, FCC (Nov. 22, 2005) ("Comcast Nov. 22, 2005 Ex Parte") at
    Att. 1 at 1-5.

[^763]: Comcast Nov. 18, 2005 Ex Parte, Att. ("Advanced Services
    Benefits") at 11; Time Warner Nov. 10, 2005 Ex Parte, Ex. 1
    ("Benefits Presentation") at 18-21.

[^764]: Comcast Mar. 29, 2006 Ex Parte at 2. In addition to its VoIP
    service customers, Comcast also provides circuit-switched telephony
    in 18 markets to approximately 1.1 million subscribers. Comcast Nov.
    22, 2005 Ex Parte at 6 n.10.

[^765]: Public Interest Statement at 29; Time Warner Nov. 10, 2005 Ex
    Parte, Decl. of Gerald D. Campbell at 1.

[^766]: Public Interest Statement at 30; Time Warner Nov. 10, 2005 Ex
    Parte, Ex. 1 ("Benefits Presentation") at 15.

[^767]: Comcast Nov. 18, 2005 Ex Parte, Att. at 9. In 2004, Adelphia
    began preparations to offer VoIP service, including product
    development, initiation of a technical trial, and interoperability
    testing, but the company subsequently terminated its VoIP service
    plans. Adelphia Communications Corp., SEC Form 10-K for the Year
    Ended December 31, 2004 at 10; Comcast Nov. 22, 2005 Ex Parte at 4.

[^768]: Public Interest Statement at 46 (stating that "HSD penetration
    will surely grow in areas currently served by Adelphia as a result
    of the Transactions."); Comcast Nov. 18, 2005 Ex Parte, Att.
    ("Advanced Services Benefits") at 2-3; Comcast Nov. 22, 2005 Ex
    Parte at 2.

[^769]: Public Interest Statement at 28, 46.

[^770]: *Id*. at 38; Comcast Nov. 22, 2005 Ex Parte at 11.

[^771]: Public Interest Statement at 48 & n.111. Applicants explain that
    this amount is in addition to other sums set aside for capital
    improvements to Adelphia's systems. Comcast also intends to invest
    **\[REDACTED\]** for its digital Simulcast roll-out. Most of the
    capital expenditure, however, would be for Comcast's purchase of
    digital set-top boxes, which will cost the company **\[REDACTED\]**
    . Comcast expects the installation of digital converters to take
    several years. Comcast Nov. 22, 2005 Ex Parte at 11.

[^772]: Time Warner Nov. 10, 2005 Ex Parte, Ex. 1 ("Benefits
    Presentation") at 14.

[^773]: Comcast Nov. 22, 2005 Ex Parte at 4.

[^774]: *Id*.

[^775]: *Id*. at 3.

[^776]: Time Warner Nov. 10, 2005 Ex Parte, Ex. 1 ("Benefits
    Presentation") at 14.

[^777]: Time Warner Nov. 10, 2005 Ex Parte at 4. While Time Warner has
    not established a firm rollout schedule for Digital Phone on systems
    to be acquired, its goal is to use commercially reasonable efforts
    to begin the rollout of Digital Phone service on Adelphia systems to
    be acquired in one or more of these areas as soon as 90 to 180 days
    after closing. *Id.*, Decl. of Gerald Campbell at 2.

[^778]: Comcast Nov. 18, 2005 Ex Parte, Att. ("Advanced Services
    Benefits") at 8-9.

[^779]: *Id*. at 3, 12.

[^780]: *See*, *e.g.*, Americans for Prosperity Letter at 1; Americans
    for Tax Reform Letter 1; FreedomWorks Letter at 1.

[^781]: DIRECTV Comments at 37-39; DIRECTV Feb. 16, 2006 Ex Parte at 5;
    *see also* Letter from Center for Creative Voices in Media ("CCVM"),
    CWA, DIRECTV, MASN, MAP, RCN, and TAC to Marlene H. Dortch,
    Secretary, FCC (Jan. 23, 2006) ("CCVM Jan. 23, 2006 Ex Parte") at
    2-3.

[^782]: DIRECTV Comments at 37-39.

[^783]: Applicants' Reply at 6-7; Applicants' Response to DIRECTV's
    Surreply at 10.

[^784]: *Comcast-AT&T Order*, 17 FCC Rcd at 23316-17 ¶¶ 182-85;
    *AT&T*-*MediaOne Order*, 15 FCC Rcd at 9886 ¶ 160; *News
    Corp.-Hughes Order*, 19 FCC Rcd at 614-15 ¶ 327.

[^785]: *See, e.g.,* *Comcast-AT&T Order*, 17 FCC Rcd at 23323 ¶ 199.

[^786]: Public Interest Statement at 39.

[^787]: Time Warner Nov. 10, 2005 Ex Parte, Decl. of Gerald Campbell at
    1.

[^788]: Public Interest Statement at 46; Comcast Nov. 18, 2005 Ex Parte
    at 9.

[^789]: For instance, Adelphia recently expanded its Vermont cable
    system by 200 miles, is preparing to convert all of the channels on
    that system to digital in early 2006, and continues to add
    high-definition and on-demand programming to the system's channel
    line-up. *Most Adelphia Customers Will See Rate Boost*, [Rutland
    Herald]{.smallcaps}, Nov. 24, 2005.

[^790]: For instance, Adelphia recently rebuilt its customer care
    operations from the ground up, "creating a highly centralized,
    highly standardized infrastructure." *Adelphia Takes a Uniform
    Approach*, Focus on Customer Care Newsletter, [Broadcasting &
    Cable/Mulitchannel News]{.smallcaps}, Nov. 23, 2005.

[^791]: Adelphia Communications Corp., SEC Form 10-K for the year Ended
    December 31, 2004 at 6. We expect this percentage rate has increased
    within the last year.

[^792]: Adelphia's standard high-speed Internet service offers speeds of
    4 Mbps download and 384 kbps upload, and its premier service offers
    6 Mbps download and 768 kbps upload speeds. Adelphia, Premier High
    Speed Internet, *at* http://www.adelphia.com/high_speed
    \_internet/pl_premier.cfm (last visited June 20, 2006). While
    Adelphia's standard service offers somewhat slower speeds, the
    average customer would not perceive a difference while using the
    service. None of the companies guarantee transmission speeds, as
    speeds of Internet service depend on factors such as the location of
    the customer, the customer's equipment, and Internet traffic.

[^793]: As of September 30, 2005, Adelphia has 1,646,000 high-speed
    Internet customers. Adelphia Communications Corp., SEC Form 10-Q for
    the Quarter Ended September 30, 2005 at 53.

[^794]: *AT&T*-*MediaOne Order*, 15 FCC Rcd at 9886 ¶ 160.

[^795]: *See Horizontal Merger Guidelines* § 4 n.35; *EchoStar-DIRECTV
    HDO*, 17 FCC Rcd at 20646 ¶ 230; *AT&T- MediaOne Order*, 15 FCC Rcd
    at 9886 ¶ 160.

[^796]: *Horizontal Merger Guidelines* § 4.

[^797]: *See* 47 U.S.C. § 310(d); *Sprint-Nextel Order*, 20 FCC Rcd at
    14013-14 ¶¶ 129-30; *AT&T-MediaOne Order*, 15 FCC Rcd at 9883 ¶ 154;
    *see also* Applicants' Response to DIRECTV's Surreply at 10.

[^798]: DIRECTV Comments at 38-39; *see also* CCVM Jan. 23, 2006 Ex
    Parte at 3 n.6.

[^799]: *See supra* Section VIII.A. for the analytical framework for
    considering potential public interest benefits.

[^800]: *News* *Corp.-Hughes Order*, 19 FCC Rcd at 621 ¶ 350.

[^801]: Public Interest Statement at 48; Comcast Nov. 18, 2005 Ex Parte,
    Att. ("Advanced Services Benefits") at 3.

[^802]: CWA Dec. 16, 2005 Ex Parte at 2; NHMC Petition at 6; NHMC May 1,
    2006 Ex Parte at 1.

[^803]: *Annual Assessment of the Status of Competition in the Market
    for the Delivery of Video Programming, Third Annual Report*, 12 FCC
    Rcd 4358, 4427 ¶ 137 (1997) ("*Third Annual Video Competition
    Report*") (citing *Annual Assessment of the Status of Competition in
    the Market for the Delivery of Video Programming, Second Annual
    Report*; 11 FCC Rcd 2060, 2128 ¶ 142 (1995)); *Eleventh Annual Video
    Competition Report*, 20 FCC Rcd at 2830 ¶ 141.

[^804]: Public Interest Statement at 54.

[^805]: *Id*. at 51-56.

[^806]: Applicants' Reply at Ex. C, D.

[^807]: Public Interest Statement at 51.

[^808]: Applicants' Reply at 18-19.

[^809]: Public Interest Statement at 57; Applicants' Reply at 10-12,
    18-19.

[^810]: Public Interest Statement at 56; Applicants' Reply at 10.

[^811]: Public Interest Statement at 59; Time Warner Nov. 10, 2005 Ex
    Parte at 5-6. Comcast does not claim specific cost savings as a
    result of the additional clustering.

[^812]: Public Interest Statement at 57.

[^813]: *Id*. at 58.

[^814]: *Id*. at 50.

[^815]: Time Warner Nov. 10, 2005 Ex Parte at 5 & Ex. 1 ("Benefits
    Presentation") at 26.

[^816]: Time Warner Nov. 10, 2005 Ex Parte. at 6.

[^817]: DIRECTV Comments at 36-37; *see also* CCVM Jan. 23, 2006 Ex
    Parte at 5.

[^818]: DIRECTV Comments at 37.

[^819]: *Id*. at 40-41; DIRECTV Surreply at 21-24 (citing the
    *ALLTEL-WWC* *Order* and the *Sprint-Nextel Order* for the level of
    support for claimed benefits the Commission requires from the
    Applicants). DIRECTV also states that while Comcast and Time Warner
    have been clustering for years, they have not provided data to
    suggest that clustering has resulted in lower prices. DIRECTV Feb.
    16, 2006 Ex Parte at 6.

[^820]: Letter from William M. Wiltshire, Harris, Wiltshire & Grannis,
    LLP, Counsel for DIRECTV, Inc., to Marlene H. Dortch, Secretary, FCC
    (Mar. 30, 2006) ("DIRECTV Mar. 30, 2006 Ex Parte") at Att. (Gustavo
    Bamberger and Lynette Neumann: Analysis of the Effect of
    'Clustering' on the Availability and Penetration of Digital Cable,
    High-Speed Data and Telephony Services) ("Bamberger & Neumann
    Advanced Services Analysis"); Letter from William M. Wiltshire,
    Harris, Wiltshire & Grannis, LLP, Counsel for DIRECTV, Inc., to
    Marlene H. Dortch, Secretary, FCC (May 2, 2006) ("DIRECTV May 2,
    2006 Ex Parte") at 1-3; *see also* Letter from Andrew Jay
    Schwartzman, on behalf of Free Press, et al., to Marlene H. Dortch,
    Secretary, FCC (May 1, 2006) at 2-4.

[^821]: DIRECTV Mar. 30, 2006 Ex Parte, Bamberger & Neumann Advanced
    Services Analysis at 4.

[^822]: DIRECTV Mar. 30, 2006 Ex Parte at 2, Bamberger & Newmann
    Advanced Services Analysis at 6-8.

[^823]: DIRECTV Mar. 30, 2006 Ex Parte at 2, Bamberger & Newmann
    Advanced Services Analysis at 6-8.

[^824]: *Id*. at 9-11. Although DIRECTV's analysis suggests a positive
    relationship between cluster size and penetration rates for Time
    Warner's systems, that effect is limited to changes in cluster size
    below 250,000 basic homes passed. *Id*. at 11.

[^825]: Public Interest Statement at 69; Applicants' Reply at 13-14.

[^826]: Applicants' Reply at 13-14.

[^827]: Letter from James R. Coltharp, Comcast Corp., Steven N. Teplitz,
    Time Warner Inc., and Michael H. Hammer, Willkie Farr & Gallagher,
    LLP, Counsel for Adelphia Communications Corp., to Marlene H.
    Dortch, Secretary, FCC (Apr. 18, 2006) at 1-2.

[^828]: Letter from James R. Coltharp, Comcast Corp., Steven Teplitz,
    Time Warner Inc., and Michael H. Hammer, Willkie Farr & Gallagher,
    LLP, Counsel for Adelphia Communications Corp., to Marlene H.
    Dortch, Secretary, FCC (Apr. 14, 2006) at 5.

[^829]: *Id*.

[^830]: *Id*. at 2. DIRECTV asserts that the Applicants' criticisms of
    its study are unsupported. Moreover, DIRECTV states that it does not
    have access to the data necessary to evaluate the factors that the
    Applicants enumerate, because the Applicants alone possess the data
    necessary to perform such an analysis, though they have yet to do
    so. DIRECTV May 2, 2006 Ex Parte at 1-2.

[^831]: *See 1993 Second Report & Order*, 8 FCC Rcd at 8573 ¶ 17; *Third
    Annual Video Competition Report*, 12 FCC Rcd at 4428 ¶ 138; *Fourth
    Annual Video Competition Report*, 13 FCC Rcd at 1115 ¶ 140; *Annual
    Assessment of the Status of Competition in Markets for the Delivery
    of Video Programming, Fifth Annual Report*, 13 FCC Rcd 24284, 24371
    ¶ 144 (1998) ("*Fifth Annual Video Competition Report*").

[^832]: *1993 Second Report & Order*, 8 FCC Rcd at 8573 ¶ 17; *1999
    Cable Ownership Order*, 14 FCC Rcd at 19124 ¶ 63.

[^833]: *Annual Assessment of the Status of Competition in Markets for
    the Delivery of Video Programming, Sixth Annual Report*, 15 FCC Rcd
    978, 1051 ¶ 162 (2000).

[^834]: *Fifth Annual Video Competition Report*, 13 FCC Rcd at 24371 ¶
    144.

[^835]: *Id*.

[^836]: DIRECTV Comments at 26 (citing *Annual Assessment of the Status
    of Competition in Markets for the Delivery of Video Programming,
    Seventh Annual Report*, 16 FCC Rcd 6005, 6072-73 ¶ 155 (2001)).

[^837]: We do not make any determinations based on the Bamberger &
    Neumann Advanced Services Analysis. We note that the Analysis fails
    to account for other relevant variables that could explain the
    results of the Analysis and does not employ statistical techniques
    to resolve causality issues. We also note that the Analysis does not
    find a reduction in benefits associated with clustering, only that
    there is no significant statistical relationship between
    availability or penetration rates of advanced services and cluster
    size.

[^838]: For example, Time Warner does not indicate whether these savings
    will result from new volume discounts. *See also* DIRECTV Mar. 30,
    2006 Ex Parte at 3 (stating that the transactions should not have a
    material effect on programming costs because Comcast's national
    subscriber base is not increasing, and Time Warner's increase from
    10.9 million to 14.4 million subscribers is significant enough to
    result in further discounts).

[^839]: DIRECTV Surreply at 21-22; DIRECTV Mar. 30, 2006 Ex Parte at 3;
    CCVM Jan. 23, 2006 Ex Parte at 4.

[^840]: *EchoStar-DIRECTV HDO*, 17 FCC Rcd at 20631 ¶ 191 (citing *Bell
    Atlantic-NYNEX Order*, 12 FCC Rcd at 20063 ("Efficiencies generated
    through merger can mitigate competitive harms if such efficiencies
    enhance the merged firm's ability and incentive to compete. . .")).

[^841]: *See, e.g., id.* at 20637 ¶ 210.

[^842]: *Id.* at 20637-38 ¶ 212.

[^843]: We note that DBS providers resell DSL service pursuant to
    business arrangements with LECs, and thus, do not compete directly
    in the telephony service marketplace. DISH Network offers customers
    DSL and dial-up Internet access through EarthLink. DISH Network,
    Products and Services, *at*
    http://www.dishnetwork.com/content/products/internet/index.shtml
    (last visited June 21, 2006). DIRECTV offers DSL Internet access
    through various LECs, such as Verizon, BellSouth, Qwest, and
    EarthLink, depending on the customer's location. DIRECTV, Products,
    *at* http://www.directv.com/DTVAPP/imagine/InternetAccess.jsp (last
    visited June 21, 2006). DISH Network and DIRECTV customers, however,
    would receive both video and high- speed Internet service from a
    single provider, and thus, the package itself could be considered a
    competitive advantage.

[^844]: In September 2005, Verizon began offering its "FiOS TV" service
    in Keller, Texas, a community located within the Dallas/Fort Worth
    DMA. By April 2006, Verizon was offering FiOS TV to 17 Dallas/Fort
    Worth communities. By the end of 2006, Verizon expects to have built
    out its fiber optic system to serve 400,000 North Texas households,
    or 33% of Verizon's landline customers in Texas. In addition,
    Verizon began offering FiOS TV in Herndon, Reston, and surrounding
    parts of Fairfax County, Virginia; Nyack, South Nyack, and
    Massapequa Park, New York; Clarksville, Columbia, and Ellicott City,
    Maryland; Lynnfield, Reading, and Woburn, Massachusetts; Temple
    Terrace, parts of Southern Manatee County, and parts of
    Hillsborough, Florida; and Beaumont and Murrieta, California. *See*
    Verizon, *Verizon Begins Offering FiOS TV Service in its Largest
    Texas Market of Plano* (press release), Apr. 18, 2006. More
    recently, Verizon has launched service in the Town of Hempstead, New
    York; Wesley Chapel, Florida; some communities (Beach Park,
    Seminole, Hyde Park, Sulphur Springs, Bayshore Beautiful, Palma
    Ceia, New Tampa and areas of the city served by Verizon around the
    University of South Florida and Temple Terrace) within the Tampa,
    Florida city limits; and Plano, Texas. *See* Verizon, *Verizon
    Expands FiOS TV Availability in New York for Consumers in the Town
    of Hempstead* (press release), June 15, 2006; Verizon, *Verizon
    Customers in Wesley Chapel, Fla., Have a Choice for TV Service*
    (press release), May 19, 2006; Verizon, *Verizon Customers in Tampa
    Have a Choice for TV Service* (press release), May 17, 2006;
    Verizon, *Verizon Begins Offering* *FiOS TV Service in its Largest
    Texas Market of Plano* (press release), Apr. 18, 2006.

    In June 2006, AT&T launched its video service, U-verse TV, to 5,000
    homes in San Antonio. AT&T's service extends fiber to nodes close to
    homes, and from there will use existing copper infrastructure to
    deliver the service. Initially, U-verse, which uses IP technology,
    provides about 200 channels of programming, including premium-movies
    and sports channels. It also provides features such as fast channel
    changing, video-on-demand, three set-top boxes, and a digital
    recorder. When AT&T launches its service more widely, its service
    will offer additional features, including high-definition
    programming and home digital video recording. AT&T expects to offer
    the service to 15-20 markets by the end of 2006, and the company has
    plans to spend \$4.6 billion through 2008 to bring its video and
    high-speed Internet services to 19 million homes. AT&T, *AT&T
    Expands U-Verse Services in San Antonio* (press release), June 26,
    2006; CNET News; *AT&T Launches TV Service*, *at*
    http://news.com/2102-1034_3-6088359.html?tag=st.util.print (last
    visited June 29, 2006).

[^845]: Verizon, *Products and Services*, *at*
    http://www22.verizon.com/Foryourhome/ProductandService.aspx (last
    visited June 29, 2006); BellSouth, DIRECTV Service, *at*
    http://www.bellsouth.com/consumer/directv/index.html (last visited
    June 21, 2006).

[^846]: Applicants' Reply at 13-14.

[^847]: *Id*. at 14.

[^848]: *See In re Adelphia Communications Corp., et al.,* Order
    Authorizing (I) Sale of Substantially All Assets of Adelphia
    Communications Corporation and Its Affiliated Debtors to Time Warner
    NY Cable LLC and to Comcast Corporation, Free and Clear of Liens,
    Claims, Encumbrances, and Interests and Exempt From Applicable
    Transfer Taxes; (II) Assumption and/or Assignment of Certain
    Agreements, Contracts and Leases; and (III) the Granting of Related
    Relief, Case No. 02-41729 (Bankr. S.D.N.Y. June 28, 2006) ("Order
    Authorizing 363 Sale"); Debtors' Motion Pursuant to Sections 105,
    363, 365 and 1146(c) of the Bankruptcy Code and Rules 2002, 6004,
    6006, and 9014 of the Federal Rules of Bankruptcy Procedure Seeking
    Approval of: (I) A Form of Notice Regarding Certain Hearing Dates
    and Objection Deadlines; (II) New Provisions For Termination and for
    the Payment or Crediting of the Breakup Fee; (III) the Sale of
    Substantially All Assets of Adelphia Communications Corporation and
    Its Affiliated Debtors to Time Warner NY Cable LLC and Certain Other
    Assets to Comcast Corporation Free and Clear of Liens, Claims,
    Encumbrances, and Interests and Exempt from Applicable Transfer
    Taxes; (IV) the Retention, Assumption and/or Assignment of Certain
    Agreements, Contracts and Leases; and (V) the Granting of Related
    Relief, Case No. 02-41729 (Bankr. S.D.N.Y., May 26, 2006) ("363 Sale
    Motion").

[^849]: *See* *In re Adelphia Communications Corp., et al.,* Order
    Confirming Debtors' Third Modified Fourth Amended Joint Plan of
    Reorganization Under Chapter 11 of the Bankruptcy Code for
    Century-TCI Debtors and Parnassos Debtors (Bankr. S.D.N.Y. June 29,
    2006), plus the 363 Sale Motion and the Third Modified Fourth
    Amended Joint Plan of Reorganization Under Chapter 11 of the
    Bankruptcy Code for Century-TCI Debtors and Parnassos Debtors
    (Bankr. S.D.N.Y. June 22, 2006).

[^850]: Public Interest Statement at 60-62; 363 Sale Motion at 27.

[^851]: Public Interest Statement at 20, 60.

[^852]: *Id*. at 60-61.

[^853]: Applicants' Reply at 20 n.66.

[^854]: Public Interest Statement at 62.

[^855]: *Id*. at 61-62. The Applicants estimate the costs to Adelphia of
    remaining in bankruptcy during any renegotiations at \$20 million
    per month. Applicants' Reply at 22.

[^856]: *Id*. at 20-21.

[^857]: *Id*. at 21.

[^858]: DIRECTV Comments at 34-35. Indeed, DIRECTV speculates that these
    transactions would provide maximum value to creditors simply because
    the Applicants will share with them the anticipated monopoly rents
    made possible by the transactions. *Id.* at 35*.*

[^859]: *Id*. at 34.

[^860]: *Id*. at 35 (citing 47 U.S.C. § 310(d)).

[^861]: DIRECTV Surreply at 24-25.

[^862]: Applicants' Reply at 21.

[^863]: *Id*. at 22-23.

[^864]: *See, e.g*., *Id*. at 21 (obligation to consider the bankruptcy
    laws is an "integral part of the Commission's Section 310(d) public
    interest analysis"); DIRECTV's Comments at 35 (Commission has an
    "obligation to consider the national policies underlying the
    bankruptcy laws").

[^865]: As the Commission stated in the *WorldCom/MCI Transfer Order,*
    "facilitating a telecommunications service provider's successful
    emergence from bankruptcy advances the public interest by providing
    economic and social benefits, especially including the compensation
    of innocent creditors." *WorldCom, Inc. and its Subsidiaries,
    (debtors-in-possession), Transferor, and MCI, Inc., Transferee,
    Applications to Transfer and/or Assign Section 214 Authorizations,
    Section 310 Licenses, and Submarine Cable Landing Licenses,* 18 FCC
    Rcd 26484, 26503 ¶ 29 (2003) ("*WorldCom/MCI Transfer Order*").

[^866]: *See* Order Establishing New Confirmation Procedures and
    Deadlines and Approving Supplemental Disclosure, (Bankr. S.D.N.Y.
    June 8, 2006).

[^867]: One example is the *WorldCom/MCI Transfer Order*. Similar recent
    examples include *Application of Orbital Communications Corporation
    and ORBCOMM Global, L.P., Assignors, for Consent to Assign
    Non-Common Carrier Earth and Space Station Authorizations,
    Experimental Licenses and VSAT Network to ORBCOMM License Corp. and
    ORBCOMM LLC,* Assignees, 17 FCC Rcd 4496 (IB 2002) *(*"*ORBCOMM
    Transfer Order*") (approved transfer to company controlled by new
    investors; no change in business); *Applications of Space Station
    System Licensee, Inc., Assignor, and Iridium Constellation LLC,
    Assignee, et al., for Consent to Assignment of License*, 17 FCC Rcd
    2271 (2002) (same); *Sirius Satellite Radio Inc. Application for
    Transfer of Control of Station Authorization*, 18 FCC Rcd 215 (2003)
    (approved transfer to continuing company following change in
    ownership; no change in business).

[^868]: In the *ORBCOMM Transfer Order*, for example, the Bureau noted
    that the new investors held no significant investments in
    telecommunications firms that provide telecommunications services
    in, to or from the United States, so the transaction would not
    lessen competition in any relevant product or geographic markets.
    *ORBCOMM Transfer Order,* 17 FCC Rcd 4496, 4504 ¶¶ 14-15. To the
    contrary, if ORBCOMM did not emerge from bankruptcy, domestic and
    international telecommunications markets might lose a competitor
    that could make available efficient telecommunications services to
    much of the world's unserved and underserved markets. *Id.* By
    contrast, in recent transfer orders following bankruptcies where the
    new ownership interests were held by telecommunications companies
    (or by firms that had interests in telecommunications companies),
    the Commission has conducted a more extensive public interest
    analysis. *See, e.g*., *Applications for Consent to the Assignment
    of Licenses Pursuant to Section 310(d) of the Communications Act
    from Urban Comm-North Carolina, Inc., debtor-in-possession, to
    Cellco Partnership d/b/a Verizon Wireless*, 20 FCC Rcd 10440 (WTB
    2005); *Applications of XO Communications, Inc. for Consent to
    Transfer Control of Licenses and Authorizations Pursuant to Sections
    214 and 310(d) of the Communications Act and Petition for
    Declaratory Ruling Pursuant to Section 310(b)(4) of the
    Communications Act,* 17 FCC Rcd 19212 (IB 2002).

[^869]: *See* DIRECTV Comments at 34-35. There were other bids for the
    cable system assets of the Adelphia estate. Adelphia received 15
    bids for the acquisition or recapitalization of the company in its
    entirety, or the acquisition of one or more clusters of assets. An
    additional bid for the entire company was submitted after the
    bidding deadline. *Debtors' Fourth Amended Disclosure Statement
    Pursuant to Section 1125 of the Bankruptcy Code*, Nov. 21, 2005, at
    247. Although the transactions before us are said to offer the
    debtor-in-possession more money than the alternatives, we recognize
    that they are not the only way in which the Adelphia bankruptcy
    proceeding could be resolved.

[^870]: The Commission "may not consider whether the public interest,
    convenience, and necessity might be served by the transfer,
    assignment, or disposal of the permit or license to a person other
    than the proposed transferee or assignee." 47 U.S.C. § 310(d); *see
    also* *Global Crossing Ltd (debtor-in-possession), Transferor, and
    GC Acquisition Limited, Transferee, Applications for Consent to
    Transfer Control of Submarine Cable Landing Licenses, Int'l and
    Domestic Section 214 Authorizations, and Common Carrier and
    non-Common Carrier Radio Licenses, and Petition for Declaratory
    Ruling Pursuant to Sections 310(b)(4) of the Communications Act*, 18
    FCC Rcd 20301, 20330 ¶ 37 (2003) (stating that "the bankruptcy court
    approved the proposed transaction currently before us, and we will
    not speculate on what other transactions the court might or might
    not have approved").

[^871]: Applicants' Reply at 22 n.75.

[^872]: *Id.* at 22-23.

[^873]: *Comcast-AT&T Order*, 17 FCC Rcd at 23258-59 ¶ 38.

[^874]: The TWE Restructuring transformed the TWE Interest from a purely
    limited partnership interest in Time Warner Entertainment, L.P. into
    a mix of shares of Time Warner Inc., shares of Time Warner Cable,
    Inc. (which itself held 95% of a newly restructured TWE), and \$2.1
    billion in cash that was immediately distributed to Comcast. *See*
    *Comcast-AT&T Order*, 17 FCC Rcd at 23273-75 ¶¶ 73-77.

[^875]: *Id.* at 17 FCC Rcd at 23331 ¶ 225 (Appendix B of the
    *Comcast-AT&T Order* sets forth certain safeguards and enforcement
    mechanisms requiring Comcast to refrain from involvement in or
    communications concerning the video programming activities of (i)
    TWE, (ii) Texas Cable Partners, and (iii) Kansas City Cable Partners
    or any successor firms).

[^876]: *Comcast-AT&T Order*, 17 FCC Rcd at 23273 ¶ 72.

[^877]: *Id*. at 17 FCC Rcd 23274 ¶ 74. Comcast retained a 17.9% equity
    interest in Time Warner Cable as a consequence of the TWE
    Restructuring.

[^878]: Public Interest Statement at 2.

[^879]: *Id*. at 67.

[^880]: *Id*. at 66-67.

[^881]: *Id*. at 67.

[^882]: *Id*.

[^883]: DIRECTV Comments at 41-42, CWA/IBEW Reply Comments at 2. The
    Trustee of the TWE Trust has advised that, as of the quarter ending
    December 31, 2005, the TWE Trust holds 57,000,000 shares of the
    common stock of Time Warner Inc. This represents approximately 1.27%
    of the issued and outstanding common stock of Time Warner Inc. While
    the transactions before us will not dispose of this part of the TWE
    Interest, it is *de minimis* and does not affect our conclusions
    herein. Letter from Anita L. Wallgren, Sidley Austin, LLP, to
    Marlene H. Dortch, Secretary, FCC (May 9, 2006) at 1-2.

[^884]: Applicants' Reply at 24.

[^885]: *Id*.

[^886]: *Comcast-AT&T Order*, 17 FCC Rcd at 23271-72 ¶ 70.

[^887]: *See* 47 U.S.C. § 310(d). *See also News Corp.-Hughes Order*, 19
    FCC Rcd at 624 ¶ 358; *Comcast-AT&T Order*, 17 FCC Rcd at 23329 ¶
    215.

[^888]: As noted in Section VI.D.1. *supra*, Comcast SportsNet
    Philadelphia is covered only in part by these conditions.

[^889]: *See* 47 U.S.C. § 537; 47 C.F.R. § 76.502. A cable operator must
    obtain local franchising authority approval for the transfer or sale
    of its cable system only if the franchise agreement so requires. 47
    U.S.C. § 537.

[^890]: The Applicants report that the following jurisdictions denied
    their franchise transfer applications, without prejudice, in
    California, City of Hermosa Beach; in North Carolina, Town of
    Bailey, Town of Cornelius; Town of Davidson; Town of Dortches; Town
    of Huntersville; Mecklenburg County; Town of Middlesex; Town of
    Mooresville; Nash County; Pitt County; Town of Spring Hope; Town of
    Troutman; Town of Whitakers; and in Virginia, Henry County. Upon
    approval, the Applicants state that all of the referenced franchises
    would be held by Time Warner affiliates, with the exception of Henry
    County, Virginia, which would be held by a Comcast affiliate. *See*
    Letter from James R. Coltharp, Comcast Corp., Steven N. Teplitz,
    Time Warner Inc., and Michael H. Hammer, Willkie Farr & Gallagher,
    LLP, Counsel for Adelphia Communications Corp., to Marlene H.
    Dortch, Secretary, FCC (July 12, 2006) at 1-2; *see also* Letter
    from James R. Coltharp, Comcast Corp., Steven N. Teplitz, Time
    Warner Inc., and Michael H. Hammer, Willkie Farr & Gallagher, LLP,
    Counsel for Adelphia Communications Corp., to Marlene H. Dortch,
    Secretary, FCC (Mar. 31, 2006) at 1-2.

[^891]: *See* Public Interest Statement at Ex. P.

[^892]: City of San Buenaventura Petition at 1-2. Century-TCI
    California, L.P., the cable franchisee in Ventura, is a partnership
    of Adelphia and Comcast that Adelphia controls. City of San
    Buenaventura represents that the franchise agreement precludes any
    assignment or transfer of the franchise, or any change in ownership
    of the franchisee's parent corporation, without the prior written
    consent of the City of San Buenaventura. It states that it has
    requested additional information from the franchisee and the
    transferee and, if it does not approve the transfer of the
    underlying cable system, the assignment of the accompanying four
    CARS licenses would be "pointless." *Id.* at 2-4. In this regard, we
    note the ex parte submission from the Attorney General of the State
    of Maine seeking denial of the transfer or assignment to Time Warner
    of any Adelphia CARS or TVRO Earth Station licenses based on the
    Attorney General's concern that approval of the transactions will
    reduce competition in the relevant Maine markets, particularly rural
    areas. *See* Maine Attorney General Ex Parte at 1-5.

[^893]: City of San Buenaventura Petition at 4-5 (stating that
    conditional approval of the CARS license transfers will help the
    LFAs to avoid disruption in cable service). *See Stern,* 4 FCC Rcd
    at 5061.

[^894]: Applicants' Reply at 96.

[^895]: *Id.* The Applicants further argue that the 120-day LFA review
    process as provided for in Section 617 of the Communications Act
    will likely expire before the Commission rules on the Applications,
    thus eliminating the need for any additional delay. *Id.* at 97.

[^896]: *Id.*

[^897]: *Stern,* 4 FCC Rcd at 5062.

[^898]: *Id.*

[^899]: In this regard, we note that the United States Bankruptcy Court
    for the Southern District of New York has ordered Adelphia to
    prepare a "Contract Notice" for LFAs and other interested parties.
    These Contract Notices would identify agreements, contracts, and
    leases to be retained or assigned by Adelphia under the
    Reorganization Plan and would state the "Cure Amount" to cure any
    defaults and compensate LFAs for pecuniary losses. LFAs will have
    the opportunity to challenge the Contract Notice and the Cure
    Amounts proposed by Adelphia, as well as the proposed retention or
    assignment of cable franchises by Adelphia. *See In re Adelphia
    Communications Corporation, et al.,* Order Pursuant to Sections
    105(a) and 365 of the Bankruptcy Code Establishing Procedures to
    Determine Cure Amounts and Deadlines for Objections for Certain
    Assumed Contracts and Leases to be Retained, Assumed and/or Assigned
    by the Debtors, Case No. 02-41729 (Bankr. S.D.N.Y. Oct.14, 2005
    (Gerber, J.)).

[^900]: *See, e.g., Comcast-AT&T Order*, 17 FCC Rcd at 23254 ¶ 25 n.55
    (indicating that 26 LFAs had not consented to the filed transfer
    applications at the time of Commission grant of the merger
    applications).

[^901]: 47 C.F.R. § 78.35(e).

[^902]: *Id.*

[^903]: 47 C.F.R. § 1.65(a).

[^904]: As stated *supra* note 121, we expect the Applicants, if they
    are unable to consummate the transactions as granted herein
    consistent with Commission rule, 47 C.F.R. § 78.35(e), to file a
    request for extension of time to consummate. Moreover, if the
    failure to consummate results in violation of a Commission rule, the
    Applicants must file within 30 days of the action that results in
    violation of the rule(s) the necessary applications to remedy the
    violation.

[^905]: Comcast Opposition to Free Press, et al., Motion to Hold
    Proceeding in Abeyance, MB Docket 05-192, filed Nov. 7, 2005,
    ("Comcast Opposition") at 1; *see also* Letter from James R.
    Coltharp, Comcast Corp., Steven N. Teplitz, Time Warner Inc., and
    Michael H. Hammer, Willkie, Farr & Gallagher, LLP, Counsel for
    Adelphia Communications Corp., to Marlene H. Dortch, Secretary, FCC
    (Jan. 31, 2006) at 4 n.13.

[^906]: Comcast Opposition at 3.

[^907]: *See* Letter from Wayne D. Johnsen, Wiley Rein & Fielding, LLP,
    Counsel for Comcast Corp., to Marlene H. Dortch, Secretary, FCC
    (Dec. 12, 2005).

[^908]: Comcast of Southeast Pennsylvania, LLC, CAR-20051221AN-08, filed
    Dec. 20, 2005. Comcast's application states that it agreed to
    acquire all of Susquehanna Cable Company's assets, including cable
    systems serving nine communities in six different states: DuQuoin,
    Illinois; Olney, Illinois; Lawrenceburg, Indiana; Shelbyville,
    Indiana; Rankin County, Mississippi; Brunswick, Maine; Carmel, New
    York; Williamsport, Pennsylvania; and York, Pennsylvania. Comcast
    Opposition at 2, 4. This referenced lead application incorporates
    the authorizations for the assignment of licenses for all of the
    Susquehanna cable systems in the foregoing communities.

[^909]: *See* Public Notice, Rep. No. 4035 (Apr. 26, 2006), File No.
    CAR-20051221AN-08 (granted Apr. 13, 2006) (granting the assignment
    of authorization for call sign KB60120 from York Cable Television,
    Inc. to Comcast of Southeast Pennsylvania, LLC). Comcast filed its
    notification of consummation with the Commission on May 2, 2006.
    *See* Letter from Steven J. Horvitz, Cole, Raywid & Braverman,
    L.L.P., to Marlene H. Dortch, Secretary, FCC (May 2, 2006)
    (regarding Comcast of Southeast Pennsylvania, LLC (FRN
    0003-26-4132)).

[^910]: On November 14, 2005, Comcast filed a Petition for Special
    Relief seeking a waiver of attribution under section 76.503 note
    2(c) of the Commission's rules. *See* 47 C.F.R. § 76.503 note 2(c).
    If common or appointed directors or officers have duties and
    responsibilities that are wholly unrelated to video programming
    activities for both entities, the relevant entity may request the
    Commission to waive attribution of the director or officer. *Id.*
    *See also Cable Attribution Order*, 14 FCC Rcd at 19042 ¶ 68.
    Comcast explains that when it appointed Robert S. Pick, Senior Vice
    President -- Corporate Development to the Board of Directors of
    Susquehanna Cable Company approximately six years ago it
    inadvertently neglected to file a waiver petition pursuant to
    Commission rule 47 C.F.R. § 76.503 note 2(c). Comcast represents
    that Pick's duties for Comcast were solely related to acquisitions
    and dispositions of properties or businesses and did not involve the
    video programming activities for Comcast. Comcast further avers that
    the Susquehanna Board of Directors does not address video
    programming activities. Comcast's petition for special relief
    remains pending and will be handled separately. On June 22, 2006,
    Comcast filed a Motion to Dismiss its Petition for Special Relief
    (File No. CSR 6950-X), stating that the Commission's approval of the
    assignment of Susquehanna cable systems to Comcast rendered the
    attribution issue moot. Comcast indicated that it completed its
    acquisition of the Susquehanna cable systems on May 1, 2006, and all
    Susquehanna subscribers are now fully attributable to Comcast. *See*
    Letter from Michael H. Hammer, Willkie Farr & Gallagher, LLP,
    Counsel for Comcast Corp., to Marlene H. Dortch, Secretary, FCC
    (June 22, 2006).

[^911]: *See* Agreement and Declaration of Trust, by and among MOC
    Holdco II, Inc., Edith E. Holiday, Trustee, and The Capital Trust
    Company of Delaware, Section 5(e) (dated Mar. 31, 2003). Such assets
    include the Time Warner Cable and TWE interests to be redeemed
    pursuant to the Time Warner Cable Redemption Transaction and the TWE
    Redemption Transaction. Public Interest Statement at 5 n.9; *see
    also* Public Interest Statement at Ex. P (list of affected FCC
    licenses and authorizations subject to *pro forma* assignments
    and/or transfers of control to a newly formed Time Warner
    subsidiary, and, thereafter, control of the entity to Comcast).

[^912]: Public Interest Statement at 5 n.9.

[^913]: Agreement and Declaration of Trust, by and among MOC Holdco II,
    Inc., Edith E. Holiday, Trustee, and The Capital Trust Company of
    Delaware, Section 5(e) (dated Mar. 31, 2003).

[^914]: *Comcast-AT&T Order,* 17 FCC Rcd at 23246 ¶¶ 74-77.

[^915]: 47 C.F.R. § 78.35(e).

[^916]: The Commission's ruling does not address any state or local
    franchising requirements or authorizations necessary to be fulfilled
    or obtained prior to consummation.

[^917]: BTNC submitted its filing after the deadline for filing reply
    comments. *See* Order at note 64.

[^918]: 47 C.F.R. § 76.1002.  The conditions in this section B(1) are
    intended to prohibit all exclusive arrangements, including those
    that may not be effectuated by a formal agreement.  A "Covered RSN"
    is an RSN (i) that Comcast or Time Warner currently manages or
    controls, or (ii) in which Comcast or Time Warner, on or after the
    date of adoption of this Order and during the period of this
    condition, acquires either an attributable interest, an option to
    purchase an attributable interest, or one that would permit
    management or control of the RSN.  The Applicants 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.

[^919]: 47 C.F.R. § 76.1002.

[^920]: 47 C.F.R. § 76.1002.

[^921]: The condition is not intended to affect the application of the
    program access rules to Comcast's and Time Warner's
    satellite-delivered networks, which will continue to be subject to
    the program access rules even after these conditions expire.
    Although most of the program access rules have no sunset date,
    Section 76.1002(c), the prohibition on exclusive contracts, sunsets
    on October 5, 2007, unless the Commission finds that the prohibition
    continues to be necessary to protect competition in the distribution
    of video programming. *See* 47 C.F.R. § 76.1002(c)(2). In the year
    prior to the sunset, the Commission will conduct a proceeding to
    evaluate the circumstances in the video programming marketplace.

[^922]: *See infra* para. 4. The Applicants 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.

[^923]: A first time request for carriage does not include a request for
    a previously carried RSN that has experienced a change in ownership.

[^924]: The Adelphia transactions are (1) the sale of certain cable
    systems and assets of Adelphia to subsidiaries or affiliates of Time
    Warner; (2) the sale of certain cable systems and assets of Adelphia
    to subsidiaries or affiliates of Comcast; (3) the exchange of
    certain cable systems and assets between affiliates or subsidiaries
    of Time Warner and Comcast; and (4) the redemption of Comcast's
    interests in Time Warner and TWE. *See* Order at para. 1.

[^925]: This definition of a small cable company was developed, with the
    Small Business Administration's approval, for purposes of rate
    regulation. *See* 47 C.F.R. § 76.901(e).

[^926]: For example, prices can be differentiated based on cost
    differentials. *See* 47 C.F.R. § 76.1002(b). In addition, the rules
    do not cover programming that is delivered to the headend entirely
    by terrestrial means. *See* 47 C.F.R. §§ 76.1000(h)-(i); 76.1002(b).
    Therefore, the uniform price increase analysis does not apply to
    such programming.

[^927]: DIRECTV Surreply, Ex. A at 12-16.

[^928]: This result also assumes that all areas served by the competing
    MVPD are also served by other MVPDs so that
    ![](media/image18.wmf){width="0.9722222222222222in"
    height="0.2638888888888889in"}.

[^929]: For this purpose, we include in the definition of "regional
    sports programming network" only those regional networks that carry
    regular season sporting events from Major League Baseball, the
    National Basketball Association, the National Football League, or
    the National Hockey League.

[^930]: Andrew S. Wise and Kiran Duwadi, *Competition between Cable
    Television and Direct Broadcast Satellite: The Importance of
    Switching Costs and Regional Sports Networks*, 1 [J. Competition L.
    & Econ]{.smallcaps}*.* 679 (2005).

[^931]: We eliminate observations from cable systems that do not offer
    digital programming. This eliminates 22 of the 682 cable systems
    with complete data.

[^932]: This transformation allows the coefficients on the continuous
    variables to be interpreted as elasticities.

[^933]: More than 90% of subscribers purchase at least the first two
    tiers of services. In addition, most regional sports networks are
    carried on one of these two tiers.

[^934]: We define a multiple dwelling unit as one that contains two or
    more housing units in one building.

[^935]: We do not calculate a value for Charlotte because the
    coefficient is not statistically different from zero at the 95%
    level of confidence.

[^936]: Edward Moran, *Comcast Target of DirecTV Complaint Accused of
    Monopolizing Sports Coverage*, [Philadelphia Daily
    News,]{.smallcaps} Sept. 25, 1997, at 84; Jay Posner, *Padres to
    Become HD-TV Showpiece*, [San Diego Union-Tribune]{.smallcaps}, Feb.
    20, 2004, at D-9.

[^937]: Comcast Dec. 22, 2005 Response to Information Request III.B.5.

[^938]: *News Corp.-Hughes Order*, 19 FCC Rcd at 646-48, App. D, ¶¶
    39-47.

[^939]: *Id.* at 648, App. D, ¶ 46.

[^940]: Applicants June 21, 2005 Ex Parte; Time Warner Feb. 23, 2006 Ex
    Parte.

[^941]: *See* Comcast Dec. 22, 2005 Response to Information Request
    II.G; Time Warner Dec. 22, 2005 Response to Information Request
    II.G.

[^942]: This information is embodied in
    ![](media/image19.wmf){width="0.5in" height="0.5277777777777778in"}
    and ![](media/image20.wmf){width="0.5277777777777778in"
    height="0.5277777777777778in"} in equation (4).

[^943]: We select 2% as the alternative assumption based on
    Cablevision's loss of 2.1% of its subscribers when it did not offer
    YES.

[^944]: [Drew Fudenberg and Jean Tirole, Game Theory]{.smallcaps} 117
    (1991).

[^945]: DIRECTV Surreply, Ex. A at 13-14.

[^946]: This implies that
    ![](media/image20.wmf){width="0.5277777777777778in"
    height="0.5277777777777778in"} = 0.85

[^947]: This implies that ![](media/image21.wmf){width="0.5in"
    height="0.5277777777777778in"} = 0.98.

[^948]: The Key DMAs are those that are home to a professional sports
    team that is a member of Major League Baseball, the National
    Basketball Association, the National Football League, or the
    National Hockey League.

[^949]: We use a 10% annual discount factor for this calculation. The
    Commission also used this value in *News Corp.-Hughes. News
    Corp.-Hughes Order*, 19 FCC Rcd at 635, App. D, ¶ 4.

[^950]: Subsequent to the commencement of this proceeding, Adelphia
    applied for and received authorizations for new CARS stations,
    WLY-850 and WLY-851 (Martha's Vineyard Cablevision, L.P., DIP,
    granted 8/25/2005) and WLY-852 (FrontierVision Operating Partners,
    L.P., DIP, granted 10/17/2005). These systems are part of these
    transactions. We expect that the parties will file the requisite
    applications to complete approval of the license transfers.

[^951]: We note that assignment applications for receive-only FCC earth
    station licenses held by Adelphia and subject to the Asset Purchase
    Agreement have not been filed as of this date.  In the case of
    receive-only earth stations, our procedures do not require the
    filing of transfer or assignment applications, but instead require
    that the Applicants report the changes in station operator on FCC
    Form 312 and Schedule A.  These changes are then published in the
    International Bureau's routine Actions Taken public notices and
    recorded in the Bureau's appropriate data base.  *See* *Deregulation
    of Domestic Receive-Only Satellite Earth Stations*, 104 F.C.C.2d
    348, 353 (1986); *New Rules for Part 25 -- Satellite
    Communications*, 6 FCC Rcd 3738 (1991); *Implementation of New Part
    25 Regulations for Satellite Space and Earth Station Application and
    Licensing Procedures*, 12 FCC Rcd 13850 (1997).  Thus, following
    consummation of the transactions approved herein, the Applicants
    should report changes in the ownership of the receive-only earth
    stations listed above on FCC Form 312 and Schedule A as required by
    our rules.  As we view these receive-only earth stations within the
    scope of the transactions reviewed in this proceeding, FCC
    publication of the assignment of the receive-only earth stations
    will provide notification of the change of ownership as set forth in
    the filed FCC Form 312 assignment applications and consistent with
    this Order.

[^952]: The Applicants have filed applications for consent to transfer
    of control of domestic 214 authority from 1) Adelphia to Time
    Warner, 2) Adelphia to Comcast, 3) Comcast to Time Warner, and 4)
    Time Warner to Comcast.

[^953]: Original file 0002159943 was dismissed and replaced with file
    0002448868 for purely administrative reasons. There were no
    substantive changes.

[^954]: These transfer of control applications reflect proposed
    "step-two" transactions that are to occur after the associated
    assignment application is approved, and the assignment is
    consummated. They have been filed manually because the listed
    licensee in the transfer of control application is not the current
    licensee of record, but the entity that will become the licensee of
    record only after consummation of the proposed "step-one"
    assignment. Some licenses may be involved in two transactions in
    connection with the proposed transactions. *See* Attachment for
    cross-references between file numbers for "Step-One" and "Step-Two"
    transactions.

[^955]: *See supra* note 4.

[^956]: *Annual Assessment of the Status of Competition in the Markets
    for the Delivery of Video Programming*, Seventh Annual Report, 16
    FCC Rcd 6005, 6072-73 (2001).

[^957]: I strongly support prompt resolution of the Commission's cable
    horizontal and vertical ownership rules that were reversed and
    remanded by the U.S. Court of Appeals for the District of Columbia
    in 2001. *Time Warner Entertainment Co. v. U.S.,* 240 F.3d 1126
    (D.C. Cir. 2001). As a result of this transaction Comcast's national
    subscribership jumps .7 percent, from 28.2 percent to of 28.9
    percent -- a mere 1.1 percent below our 30 percent ownership limit.
    TWC's national subscribership will be nearly 18 percent.

[^958]: As a result of this transaction, Comcast will have more
    consolidated cable operations in Southern Florida, Minnesota, New
    England area, Boston, Pennsylvania, Washington, D.C., Maryland and
    Virginia. TWC will have more consolidated cable operations in
    California, Maine, Western New York, North Carolina, South Carolina,
    Ohio and Texas.