Source: https://www.scribd.com/doc/57754219/Bloomberg-Complaint-Submitted-to-FCC-June-13-2011
Timestamp: 2017-02-24 15:31:10
Document Index: 584604139

Matched Legal Cases: ['§ 76', '§ 76', '§ 76', '§ 76', '§ 76', '§ 76', '§ 76', '§ 76', '§ 76', '§ 76', '§ 76']

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Before the COMMUNICATIONS COMMISSION Washington, D.C. 20554
In re Complaint of BLOOMBERG L.P.
JUN 1 ~
CABLECOMMUNICATIONS, LC L ) ) ) ) )
Federal CommunicaHons C . Office of the S ommlsslon ecretary
JUN 1 3 ZOll
The Chief. Media Bureau
Gregory Roger Babyak BLOOMBERG L.P. 1399 New Y ark Avenue, NW Washington, DC 20005 (202) 654-7300
Stephen Diaz Gavin Kevin J. Martin Janet F. Moran Matthew B. Berry* PATTON BOGGS LLP 2550 M Street, N.W. Washington, o.c 20037 (202) 457-6000 Robert Silver BOIES SCHILLER & FLEXNER 575 Lexington Avenue, 7th Floor New York, New York: 10022 (212) 446-2300
Page I. II. III. IV. V. VI. INTRODUCTION T'HE PARTIES JURISDICTIONAL STATEMENT AND SUMMARY 2 3 5 6
COMPLAINT PREREQUISITES STATUTORY AND REGULATORY BACKGROUND STATEMENT OF THE FACTS A. B.
10 10 10 13 15 CONDITION18 21
BTV Other Cable News Channels Placement of News Channels on Comcast Cable Systems Post-Merger Chronology VIOLATION OF NEWS NEIGHBORI-IOODING
D. VII. VIII.
Address and Telephone Number of Complainant and Defendant Bloomberg's Prefiling Notice (May 26, 2011) Comcast's Response to Bloomberg's Pre filing Notice (Iune 6, 2011) Declaration of Daniel Doctoroff Declaration of Andrew Lack Declaration of Gregory S. Crawford Comcast Cable Headends in Top-35 DMAs (368) that Carry BTV and Have a News Neighborhood that Does Not Include BTV News Channels on Comcast Cable Headends in Top-35 DMAs that Carry BTV and Have a News Neighborhood that Does Not Include BTV Letter from Daniel Doctoroff to Neil Smit (March 10, 2011) In the Matter of Applications of Comcast Corp., General Electric Co., and NBC Universal Inc. For Consent to Assign Licenses and Transfer Control of Licenses, Memorandum Opinion and Order, MB Docket No. 10-56,26 FCC Rcd 4238 (2011) (through Appendix A) 47 C.P.R. § 76.1302 All Channels on Comcast Cable Headends in Top-35 DMAs that Carry BTV and Have a News Neighborhood that Does Not Include BTV (electronic file)
Exhibit I Exhibit
Exhibit K Exhibit L
COMCAST CABLECOMMUNICATIONS, LLC
The Chief, Media Bureau
L.P. ("Bloomberg"), pursuant to the Commission's order granting the
application of Comcast Corporation, General Electric Company ("GE"), and NBC Universal, Inc. to transfer control of licenses from GE to Comcast ("the FCC Order"),' and Sections 76.7(a) and 76.1302 of the Commission's Rules/ hereby submits this Complaint directed at Defendant COMCAST CABLE COMMUNICATIONS, LLC ("Comcast" or the "Company").
Despite a clear requirement in the FCC Order that Comcast include independent news channels, such as Bloomberg Television ("BTV"), in Comcast's existing news neighborhoods, Comcast refuses to implement the Commission's express direction. Bloomberg has asked Comcast to place BTV in Comcast's existing news neighborhoods on all Comcast systems in the 35 most-
) See In the Matter of Applications of Comcast Corp., General Electric Co., and NBC Universal Inc. For Consent to Assign Licenses and Transfer Control of Licenses, Memorandum Opinion and Order, MB Docket No. 10-56 (re!. Jan. 20,2011) (the "FCC Order"), 26 FCC Rcd 4238 (2011). Such application, the "Merger Application."
populous DMi\s. Comcast, however, has refused, claiming that it does not currently have any news neighborhoods and, in any event, that the Commission's news neighborhooding condition applies only to neighborhoods that will be created in the future. Neither of these assertions has any merit. As will be demonstrated below, the evidence clearly indicates that Corncast right now extensively groups news channels into news neighborhoods. Moreover, the FCC Order expressly states that the news neighborhooding condition applies to news neighborhoods that Comcast carries "now or in the future.i" thus meaning that it applies to any news neighborhood that Comcast carried as of the date of the FCC Order or any news neighborhood that Comcast carries after that date. Accordingly, in light of Comcast's intransigence, Bloomberg requests, among other things, that the Commission order Comcast to take steps to comply immediately and in any event in no more than sixty (60) days with the news neighborhooding condition set forth in the FCC Order by requiring the placement ofBTV in existing news neighborhoods, as defined herein, on Comcast systems located in the 35 most-populous Designated Market Areas ("DMi\s") in the United States.4
1. Complainant Bloomberg is an internationally recognized provider of financial news and
information and wholly owns BTV, which provides 24-hour business news programming, is delivered over Multichannel Video Programming Distributors ("MVPDs"), and is also available online. Ex. D, ~ 2; Ex. E, ~ 3. 2. When BTV was launched in 1994, it was initially targeted to serve the narrow market of professional investors who were already clients of Bloomberg's computer terminal service. In 2008,
247 C.F.R. §§ 76.7(a) and 76.1302.
3 Id. 4
at 4358 (App. A, Sec. II I.2) (emphasis added); see also id. at 4287, '1122.
See FCC Order at 4358 (App. A, Sec. III.2); .ree also id. at 4287, ~ 122.
however, BTV was redesigned to appeal to a much wider audience. Since that time, Bloomberg has made major capital investments in BlY and significantly changed its personnel and programming. Bloomberg hired Andy Lack, former chairman and CEO of Sony Music Entertainment, President and COO of NBC, and President of NBC News to head its television, radio and interactive divisions. Bloomberg also hired Norman Pearls tine, formerly Editor-in-Chief of Time, Inc. and Executive Editor of The Wall Streetjotlrllai, to be its chief content officer, as well as establishing an entirely new management team for BTV. Ex. D, ~ 4. Bloomberg employs more than 2,300 reporters and editors worldwide, making it among the largest newsgathering organizations in the world. Ex. D,
Indeed, BTV is currently the only worldwide 24-hour business and financial
television network. BlY is also the last major source of news in the United States independent of either MVPDs or integrated programmers. Ex. D, ~ 6. As a result ofBTV's recent investments and hires, it is fast becoming a formidable competitor to CNBC, the current dominant provider of televised business news. Ex. E, ~ 7. 3. See Exhibit A for the contact information for Bloomberg required by Section 76.1302(c)(1) of the Commission's Rules.s 4. Defendant Comcast is the largest MVPD in the United States. Comcast owns and operates cable systems serving nearly 24 million subscribers in 39 states and the District of Columbia.6 As a result of the FCC Order approving the Merger Application, Comcast now controls NBCUniversal, LLC, which, in turn, owns NBC News, MSNBC, CNBC, and the Spanish-language Telemundo news programming, as well as regional news channels such as New England Cable News. CNBC, the business news channel now controlled by Comcast, was the second most
47 C.F.R. § 76.1302(c)(1). See FCC Order at 4243,
profitable NBCU property in the Merger.' CNBC describes itself as "the recognized world leader in business news, providing real-time financial market coverage and business information to more than 340 million homes worldwide, including more than 95 million households in the United States and Canada."s 5. See Exhibit A for the contact information for Comcast required by Section 76.1302(c)(1)
of the Commission's Rules.9
6. The FCC Order states in pertinent part: "For purposes of enforcing the Conditions of
this Section III, any Video Programming Vendor may submit a dispute to the Commission in accordance with the Commission's program carriage complaint procedures, 47 C.F.R. § 76.1302."10 7. The news neighborhooding condition set forth in the FCC Order is located in Section III of the Conditions (Appendix A). Specifically, Section III.2 requires that "[i]f Comcast now or in the future carries news and/or business news channels in a neighborhood, defined as placing a significant number or percentage of news and/or business news channels substantially adjacent to one another in a system's channel lineup, Comcast must carry all independent news and business news channels in that neighborhood.i'"
See Andrew Edgecliffe Johnson, CNBC Profits from a Crisis, http://www.ft.comlintl/cms/s/0/58992544-0b77-11df8232-00144feabdcO.html#axzzlNrEfbmqS (last visited May 30, 2011) ("NBC Universal does not disclose such numbers, but CNBC is reputed to have become its second-most lucrative channel after USA Network, with an operating profit of between $300m and $400m. As such, it serves as a microcosm of what Comcast sees in NBC Universal.")
CNBC, About CNBC, http://www.cnbc.comlid/15907487 C.P.R. § 76.1302(c)(1).
PCC Order at 4359 (App, A, Sec. III A).
I (last visited June 7, 2011).
947 10 11
Id. at 4358 (App. A, Sec. III.2).
8. Bloomberg is a "video programming vendor" as defined by the FCC Order and Section 76.1300(e) of the Commission's rules because it is engaged in the production, creation, and wholesale distribution of video programming for sale.12 9. The FCC Order required Comcast to comply with the "conditions set forth in [the] Order, including Appendix A and the commitments set forth in the Applicants' letter of January 17, 2011.,,13 10. Comcast is a "multichannel video programming distributor" ("MVPD") because it is a cable operator "engaged in the business of making available for purchase, by subscribers or · . customers, mu ItlpIe ch anne Is 0 f vid eo programml11g.,,14 Vl 11. Accordingly, the jurisdiction of the Commission over this matter is proper.
COMPLAINT PREREQUISITES
12. By letter dated May 26, 2011, Bloomberg gave Comcast written notice of its intent to file
a complaint with the Commission based upon Comcast's blatant violation of the news neighborhooding condition set forth in the FCC Order. This pre filing notice is attached to the Complaint as Exhibit B in accordance with the requirement set forth in 47 C.F.R. § 76.1302(c)(4). 13. By letter dated June 6, 2011, and addressed to counsel for Bloomberg (the "Comcast Response");" Comcast asserted that the "neighborhooding condition is prospective in nature, and only applies in the event Comcast engages in neighborhooding in the future.,,16 Further, the Comcast Response asserted that Comcast does not currently engage in neighborhooding under the
Id. at 4353 (App. A, Sec. I); 47 C.F.R. § 76.1300(e).
at 4353, '1285.
1447 C.F.R. § 76.1300(d). 15Letter from Arthur R. Block, Senior Vice President, General Counsel and Secretary of Comcast, to David Boies, Esq., Boies Schiller & Flexner LLP, and Stephen Diaz Gavin, Esq., Patton Boggs LLP (Iune 6, 2011). 16 Id. at 2, n. 5.
definition applied by the Commission.17 The Comcast Response is attached to the Complaint as Exhibit C. 14. Accordingly, Complainant Bloomberg has complied with the requirement of Section 76.1302(b) of the Commission's Rules and is now eligible to seek the relief sought in this Complaint. IS In addition, Bloomberg has attached Affidavits certifying to the veracity of the factual portions of this Complaint as Exhibits D-F, as required by Section 76.6(a)(3) of the Commission's rules.19
15. On January 28,2010, Comcast, GE, and NBC Universal filed the Merger Application.
Specifically, they sought the Commission's consent to transfer control of licenses from GE to
Comcast.t"
16. On January 18, 2011, the Commission adopted the FCC Order, which approved the Merger Application "subject to the conditions set forth in [the] Order, including Appendix A and the commitments in the Applicants' letter of January 17, 2011."21 These conditions were designed to address transaction-specific harms, safeguard competition and protect the public interest. 17. As a result of the record compiled during its consideration of the Merger Application, and "consistent with the concerns about vertical integration addressed by Congress in Section 616 of the Cable Act,',n the Commission found that "the combination of Comcast, the nation's largest cable service provider and a producer of its own content, with NBCU, the nation's fourth largest owner of national cable networks, will result in an entity with increased ability and incentive to harm
Id. at3. C.F.R. § 76.1302(b). '1'11, 20.
1947 C.F.R. § 76.6(a)(3).
FCC Order at 4239,4246, Id. at 4353, '1285.
by engaging in foreclosure networks.v'"
or other discriminatory
actions against unaffiliated noted that "Comcast's greater
In making that finding, the Commission highest-ranked example, DMAs is considerably market share is as
share in some of the nation's market share]-for
[than its 24 percent
much as 62 percent Commission Comcast NBCU
in the Chicago DMA and 67 percent that "[w]hile the transaction that share gives Comcast that compete
DMA ..,,24 The share that
has in distribution, to disadvantage
an ability not possessed with NBCU networks.?"
by pre-transaction
18. The Comcast-NBCU acquiring a controlling ownership
merger resulted in Comcast, interest in CNBC,
largest cable operator, business news network. specifically
CNBC is BTV's dominant recognized
Ex. D, ~ 6. In the FCC Order, both Comcast's incentive
that the merger would increase
in favor of its explicitly found
affiliated programming that "Bloomberg Neworks,,27 increase
as well as its ability to do SO.26 Moreover, for Comcast-NBCU's
TV is likely a close substitute
CNBC and CNBC World networks, Comcast can
and that "[b]y foreclosing or advertising
or disadvantaging revenues
rival programming
for its own programming
content.v'" news channels at the
19. As a result of Comcast's expense of independent
ability and incentive
to favor its affiliated
and the "special importance a condition particularly
of news programming designed to protect
public interest.r'" the Commission
Id. at 4284, ~ 116. Id. Id. at 4285, ~ 116. Id. Id. at 4285-86,
u. at 4286,
'I~ 116-118.
Id. at 4287, ~ 119. Id. ~ 122.
independent sources of news programming. The condition requires that "[i]f Comcast now or in the future carries news and/or business news channels in a neighborhood, defined as placing a significant number or percentage of news and/or business news channels substantially adjacent to one another in a system's channel lineup, Comcast must carryall independent news and business news channels in that neighborhood.Y" 20. "For purposes of this condition," the Commission defined "independent news channel" as "a video programming network that is (i) unaffiliated with Comcast-NBCU or any of its affiliates or subsidiaries, (ii) unaffiliated with one of the top 15 programming networks, as measured by annual revenues, and (iii) whose programming is focused on public affairs, business, or local news reporting and analysis during the hours of 6:00 a.m. through 4:00 p.m. in the U.S. Eastern Time Z one. ,,31 21. By letter dated January 21, 2011, Comcast (along with GE and NBCU) represented to the Commission that they "accept as binding the conditions and enforceable commitments included in the MO&O and expressly waive any right they may have to challenge the Commission's legal authority to adopt and enforce such conditions and commitments.V'" 22. On January 29, 2011, the parties to the Merger Application closed the transaction and created NBCUniversal, LLC, which, among other things, owns and controls programming networks, including CNBC.
See id. at 4358 (App. A, Sec. III.2); see also id. at 4287, ~ 122. See id. at 4288, n.292.
Letter from Kathryn A Zachem, Vice President, Regulatory and State Legislative Affairs, Comcast Corporation; Ronald A Stern, Vice President and Senior Competition Counsel, General Electric Company; and Richard Cotton, Executive Vice President and General Counsel, NBC Universal, Inc. to Marlene I-I. Dortch, Secretary, Federal Communications Commission, MB Docket No. 10-56 (filed Jan. 21, 2011).
23. BTV is a network that provides 24-hour business and financial news programming, seven days a week. It is carried by MVPDs, including Comcast. Ex. D, ~ 2. In May, Bloomberg launched a high-definition version of BTV ("BTV HD"). However, BTV HD is not currently carried by Comcast. 24. BTV is not affiliated with Comcast or any of its affiliates or subsidiaries. Ex. D, ~ 7. 25. BTV is not affiliated with any of the top 15 programming networks, as measured by annual revenues. Ex. D, ~ 8. 26. From 6:00 a.m. through 4:00 p.m. in the U.S. Eastern Time Zone, BTV's programming is focused on reporting and analysis related to business and public affairs. Ex. E, ~ 4. B. Other Cable News Channels It is carried
27. CNBC is a network that provides business and financial news programming. by MVPDs, including Comcast. Ex. E, ~ 8.
28. CNBC is owned by NBCUniversal, LLC, which is, in turn, controlled by Comcast. Ex. E, ~8. 29. From 6:00 a.m. through 4:00 p.m. in the U.S. Eastern Time Zone, CNBC's programming is focused on reporting and analysis related to business and public affairs. Ex. E, ~ 8. 30. CNBC \'\!orld is a network that provides international business and financial news programming. It is carried by MVPDs, including Comcast. Ex. E, ~ 10; Ex. F, ~ 14.
31. CNBC World is owned by NBCUniversal, LLC, which is, in turn, controlled by Comcast. Ex. E, ~ 10. 32. From 6:00 a.m. through 4:00 p.m. in the U.S. Eastern Time Zone, CNBC World's programming is focused on reporting and analysis related to business and public affairs. Ex. E, ~ 10. -10 -
33. Fox Business Channel is a network that provides business and financial news programming. It is carried by MVPDs, including Comcast. Ex. E,
'19; Ex. F, ~ 14.
34. From 6:00 a.m. through 4:00 p.m. in the U.S. Eastern Time Zone, Fox Business Channel's programming is focused on reporting and analysis related to business and public affairs. Ex. E, ~ 9. 35. Fox News Channel is a network that provides news programming. It is carried by MVPDs. Ex. E, ~ 12. 36. From 6:00 a.rn, through 4:00 p.m. in the U.S. Eastern Time Zone, Fox News Channel's programming is focused on reporting and analysis related to public affairs. Ex. E, ~ 12. 37. CNN is a network that provides news programming. It is carried by MVPDs, including Comcast. Ex. E, ~ 12; Ex. F, '114. 38. From 6:00 a.m. through 4:00 p.m. in the U.S. Eastern Time Zone, CNN's programming is focused on reporting and analysis related and public affairs. Ex. E, ~ 12. 39. HLN (formerly Headline News) is a network that provides news programming. It is carried by MVPDs, including Comcast. Ex. E, '112; Ex. F, ~ 14. 40. From 6:00 a.m. through 4:00 p.m. in the U.S. Eastern Time Zone, HLN's programming is focused on reporting and analysis related to public affairs. Ex. E, ~ 12. 41. CNN International is a network that provides international news programming. It is carried by MVPDs, including Comcast. Ex. E, ~ 13; Ex. F, ~ 14. 42. From 6:00 a.m. through 4:00 p.m. in the U.S. Eastern Time Zone, CNN International's programming is focused on reporting and analysis related to public affairs. Ex. E, ~ 13. 43. MSNBC is a network that provides news programming. It is carried by MVPDs, including Comcast. Ex. E, ~ 11; Ex. F, ~ 14.
44. MSNBC is owned by NBCUniversal, LLC, which is, in turn, controlled by Comcast. Ex.
45. From 6:00 a.m. through 4:00 p.m. in the
Time Zone, MSNBC's
programming is focused on reporting and analysis related to public affairs. Ex. E, '111. 46. C-SPAN is a noncommercial network that provides public affairs programming. It is
carried by MVPDs, including Comcast. Ex. E, '114; Ex. F, ~ 14. It is a cable network of CableSatellite Public Affairs Network ("C-SPAN"). C-SPAN describes itself as "a private non-profit
service of the cable industry" and "earns its operating revenues through license fees paid by cable systems that offer the network to their cusromers.v'" It is run by a Board of Directors that is Neil Smit,
"comprised of executives from large and small cable television operating companies.t'" President of Comcast Cable Communications, Directors.35 47. From 6:00 a.m. through 4:00 p.m. in the U.S. Eastern Time Zone, C-SP AN's programming is focused on reporting and analysis related to public affairs. Ex. E, ~ 14.
LLC, currently sits on C-SPAN's Board of
48. C-SP AN2 is a noncommercial network that provides public affairs programming. carried by MVPDs, including Comcast. It is a cable network ofC-SPAN.
Ex. E, ~ 14; Ex. F, ~ 14.
49. From 6:00 a.m. through 4:00 p.m. in the U.S. Eastern Time Zone, C-SPAN2's programming is focused on reporting and analysis related to public affairs. Ex. E, ~ 14. 50. C-SPAN3 is a network that provides public affairs programming. MVPDs, including Comcast. It is a cable network ofC-SPAN. It is carried by
51. From 6:00 a.m. through 4:00 p.m. in the U.S. Eastern Time Zone, C-SPAN3's programming is focused on reporting and analysis related to public affairs. Ex. E, ~ 14.
http://1egacy.c-span.orgLabout/companylindex.asp?code=COMPANY Id.
(last visited June 7, 2011).
52. There are local news networks carried by MVPDs, including Comcast, that provide local news programming. Ex. F, '114-15. 53. From 6:00 a.m. through 4:00 p.m. in the
Time Zone, the following
networks carried by Comcast focus their programming on local news reporting and analysis: 10 News 2; Chicagoland Television News; Local News (9 News Colorado); New England Cable News; News 12 New Jersey; News Channel 3 Anytime; News Channel 5; Newschannel207 (KMGH
News); Northwest Cable News; Pittsburgh Cable News Channel; News Channel 8; Ohio News Network; News 12 Westchester (WEST12); SNN News 6; Texas Cable News; and News First. Ex. F, '115, Appendix B. 54. There are regional noncommercial networks carried by MVPDs, including Comcast, that provide public affairs programming. Ex. F, ~ 15. 55. From 6:00 a.m. through 4:00 p.m. in the
networks carried by Comcast focus their programming on public affairs reporting and analysis: CTN Connecticut Public Affairs; California Channel; Pennsylvania Cable Network; New York State Legislative Channel; TV WASHINGTON. C. Ex. F, ~ 15, Appendix B.
Placement of News Channels on Comcast Cable Systems
56. Comcast distributes programming to its customers through 1,014 headends located throughout the United States as of May 4, 2011. Ex. F, ~ 10, 13. 57. Of Comcast's 1,014 headends, 759 headends carry BTV. Ex. F, ~ 41. 58. Of Comcast's 1,014 headends, 604 headends are located in the 35 most-populous DMAs. Of these 604 head ends in the 35 most-populous DMAs, 485 headends carry BTV. Ex. F, ~ 42.
See http://legacy.c-span.org/about/companylindex.asp?code=BOARD
59. Of Comcast's 1,014 headends, 676 (or 66.7%) have channel groupings that include at least four standard definition news channels in a block of five adjacent channel positions ("news neighborhoods"). Ex. F,
'1 40.
Of Comcast's 485 headends that are located in the 35 most Ex. F, '142.
populous DMAs and carry BTV, 418 headends (or 86.2%) have news neighborhoods.
60. In 368 of the 418 headends that are located in the 35 most populous DMAs, carry BTV and have news neighborhoods, there are currently news neighborhoods that do not include BTV. Ex. F, '1 43. These 368 head ends are located in 21 DMAs. Ex. F, ~ 43. A list of these 368 headends is attached to this Complaint as Exhibit G. The lineups of news channels on these 368 head ends are attached to this Complaint as Exhibit H. 61. A total of 365 of these 418 headends currently have news neighborhoods that include CNBC but do not include BTV. Ex. F, ~ 44. Only 17 of these 418 headends currently include both CNBC and BTV in the same news neighborhood. Ex. F, ~ 44. one that is
62. A small minority of Comcast headends have two news neighborhoods:
located between channels 1-100 and another that is located above channel 100. In 48 of the 368 headends that are located in the 35 most populous DMAs and carry BTV but have a news neighborhood that does not include BTV, there is a news neighborhood located between channel 1100 that includes CNBC, and a separate neighborhood located above channel 100 that includes BTV. Ex. F, ~ 45. 63. In the 368 Comcast headends that carry BTV in the most populous 35 DMAs and have news neighborhoods that do not include BTV, the average news neighborhood currently contains 5.05 news channels. Ex. F, ~ 47. The majority of these headends, 268, have neighborhoods with five news channels whereas 46 of these headends have news neighborhoods with four news channels, 46 of these headends have news neighborhoods with six news channels, and 8 of these headends have news neighborhoods with seven or more news channels. Ex. F, ~ 47. -14 -
64. In the 368 Comcast head ends that carry BTV in the 35 most-populous DMf\s and have news neighborhoods that do not include BTV, the average headend currently carries 11.03 standard definition news channels. Ex. F, ~ 48. A total of 151 headends carry exactly 11 such news channels. A total of78 headends carry 12 news channels. A total of93 headends carry 10 news channels. A total of 19 headends carry nine or fewer news channels, and 27 carry 13 or more news channels. Ex. F, ~ 48. 65. In the 368 Comcast headends that carry BTV in the 35 most-populous DMAs and have news neighborhoods that do not include BTV, the average headend carries almost half of its standard definition news channels (46.2%) in news neighborhoods that do not include BTV. Ex. F, ~ 49. D. Post-Merger Chronology
66. Following the closing of the Comcast-NBCU merger, Dan Doctoroff, President of Bloomberg, reached out on March 3, 2011 to Steve Burke, Executive Vice President of Comcast Corporation, the Company's parent, to initiate discussions about implementing the Commission's news neighborhooding condition. Mr. Burke told Mr. Doctoroff that Comcast expected to comply with all of the conditions contained in the FCC Order but that Neil Smit, who had recently been appointed President of the Company, was the appropriate contact point within Comcast for discussing next steps. Ex. D, ~ 9. 67. Shortly thereafter, on March 9, 2011, Dan Doctoroff and Andy Lack, CEO of Bloomberg Media Group, had a brief telephone conversation with Neil Smit attempting to begin substantive discussions about implementing the news neighborhooding condition. Mr. Smit indicated that the topic was a new issue for him and that he would need time to evaluate it. In order to facilitate discussions between Bloomberg and Comcast, Mr. Smit asked Mr. Doctoroff to send him a letter setting forth Bloomberg's view of what the news neighborhooding condition required -15 -
Comcast to do with respect to BTV. Mr. Smit reiterated that Corncast fully intended to abide by the conditions set forth in the FCC Order. Ex. D, '110; Ex. E, '116. 68. On March 10,2011, Dan Doctoroff followed up on the previous day's conversation by
sending a letter to Neil Smit, which is attached to this Complaint as Exhibit 1. In this correspondence, Mr. Doctoroff explained that the plain terms of the news neighborhooding that currently exists on any in the FCC Order. Mr.
condition required Comcast to move BTV into any news neighborhood
Comcast system, with citations to the provisions regarding neighborhooding
Doctoroff also provided Comcast with a list of markets where Comcast currently has news neighborhoods that do not include BTV. As expressly indicated in the letter, this list was not
intended to be exhaustive but rather illustrative in order to provide guidance to Comcast in implementing the news neighborhooding condition. Mr. Doctoroff concluded the letter by on Comcast cable systems within
requesting that Comcast place BTV in all news neighborhoods
three months and stating that he looked forward to working with Mr. Smit to effectuate the FCC's Order. Ex. D, ~ 11; Ex. 1. 69. Neither Mr. Smit nor anyone else at Comcast ever responded in writing to Mr. Doctoroff's letter. Ex. D, ~ 12. However, on March 18, 2011, Dan Doctoroff and Andy Lack
spoke again to Neil Smit. During this call, Mr. Smit indicated that Comcast had a number of people studying the issue, including looking into the technological issues associated with neighborhooding, and that Mr. Smit needed more time to respond to Bloombergwith 13; Ex. E, ~ 17. 70. Approximately two weeks later, on April 4, 2011, Dan Doctoroff and Andy Lack had their final telephone conversation with Neil Smit prior to Bloomberg sending its pre filing notice. During this call, Mr. Smit took the position that the FCC Order did not require Comcast to do anything that it was not already doing with respect to the placement of independent news channels. -16 respect to other issues. Ex. D, ~
Therefore, he said that there was nothing to implement with respect to the news neighborhooding condition and that Comcast had no interest in discussing implementation of the FCC Order with Bloomberg. Among other things, Mr. Srnit took the position that the news neighborhooding condition applied only to news neighborhoods that might be created in the future, not to existing news neighborhoods, and that Comcast currently does not have any news neighborhoods on its cable systems. Rather than discussing implementation of the FCC Order, Mr. Smit instead indicated that Comcast would be willing to engage in commercial negotiations with Bloomberg. At best, these negotiations would require significant delay and would lead to an arrangement where Bloomberg would pay Comcast to comply partially with the FCC Order. Mr. Lack responded that Bloomberg previously had entered into commercial negotiations with Comcast over the issue of neighborhooding and that they were entirely unproductive, and that, therefore, there was no basis for further negotiation. Ex. D, '114-15; Ex. E, ~ 18-19. 71. On May 26, 2011, Bloomberg sent Comcast the "pre filing notice" letter required by the Commission's Rules. In particular, Bloomberg informed Comcast that "unless Comcast advise[d] in writing within 10 days that it agree[d] to ... plac[e] BTV in [Comcast's] existing news neighborhoods on all systems in the 35 most-populous DMAs in the United States within 60 days of this letter, Bloomberg [would] submit 'this dispute to the Commission in accordance with the Commission's program carriage complaint procedures, 47 C.F.R. § 76.1302.",36 Ex. B. 72. OnJune 6, 2011, Comcast responded to Bloomberg's "prefiling notice" letter. In its response, Comcast claimed that it was not in violation of the FCC Order for two principal reasons. First, Comcast asserted that the "neighborhooding condition is prospective in nature, and only
36Pre filing
Notice at 7 (quoting FCC Order at 4359 (App. iI., Sec. III.4)).
applies in the event Comcast engages in neighborhooding
in the future.t"
Second, Comcast Ex. C.
asserted that the Company does not currently engage in neighborhooding.f
COUNT I - VIOLATION OF NEWS NEIGHBORHOODING CONDITION
73. Bloomberg hereby incorporates by reference all the allegations contained in Paragraphs 1
through 72 above. 74. The news neighborhooding condition in the FCC Order states: "[I]f Comcast now or in defined as placing a
the future carries news and/or business news channels in a neighborhood,
significant number or percentage of news and/ or business news channels substantially adjacent to one another in a system's channel lineup, Comcast must carry all independent news and business news channels in that neighborhood.t" 75. Comcast currently carries, on numerous headends, news and/ or business news channels in a neighborhood. A news neighborhood exists wherever at least four news channels are located in Any Comcast headend with such a channel grouping
any block of five adjacent channel positions.
has "a significant number or percentage of news and/ or business news channels substantially adjacent to one another in a system's channel lineup." The term "significant" is defined to mean "of a noticeably or measurably large amount" and also "probably caused by something other than mere
chance.T'" The fact that most Comcast cable systems have groups of at least four news channels
within a block of five adjacent channel positions supports the conclusion that such an arrangement is not random, but rather done deliberately. Indeed, the probability that such a channel grouping would occur by chance on a single Comcast headend is only between 0.9-1.2%. Ex. F, ~ 53. And
Comcast Response at 2, n. 5. !d.
. See supra note 30.
the probability that such a channel grouping would occur by chance on at least 418 of the 485 headends that carry BTV in the 35 most-populous DMAs is so infinitesimal that it cannot be calculated with precision by a computer; the chance is approximately 10 to the negative seven hundredth power (or a decimal point followed by 699 zeros and then a "1"). Ex. F, ~ 53. 76. Although a channel grouping need contain only a significant number or significant percentage of news channels to meet the definition of neighborhood set forth in the FCC Order, channel groupings of at least four news channels within a block of five adjacent channel positions rise above that standard because they contain both a significant number and a significant percentage of news channels that are substantially adjacent to one another.41 In light of the fact that more than three-quarters of Comcast headends carry between 10 and 12 standard definition news channels, four news channels is a significant number; it is "of a noticeably or measurably large amount.T'" Moreover, of the 368 headends that carry BTV in the 35 most-populous DMAs and have a neighborhood that does not include BTV, 362 carry 33% or more of their standard definition news channels in that neighborhood. Ex. F, ~ 49. This distribution of channels results from a deliberate
decision to group news channels together rather than the random placement of channels. As a result, news neighborhoods on Comcast systems that include at least four news channels within a block of five adjacent channel positions contain a significant percentage of news channels. 77. Furthermore, on Comcast headends, the most widely viewed and most lucrative news channels are generally carried in groupings of at least four news channels in a block of five adjacent channel positions. The five most watched news channels in the United States are Fox News, CNN,
Merriam Webster's Collegiate Dictionary,
10th Edition, Merriam-Webster,
Inc., 1995, at 1091.
In the FCC Order, the Commission specifically recognized that business news channels "could be considered close substitutes by viewers." FCC Order at 4286, n.284. Accordingly, a business news neighborhood exists for purposes of the neighborhooding condition whenever a significant number or percentage of business news channels are substantially adjacent to one another in a system's channel lineup. At this time, Bloomberg has not identified any existing business news neighborhoods on Comcast systems which do not include BTV. However, should Comcast create such neighborhoods, Bloomberg intends to request BTV's inclusion in these channel groupings.
HLN, MSNBC, and CNBC. Ex. E, ~ 6. Of the 368 head ends in the 35 most-populous DMAs that carry BTV and have a channel grouping of at least four news channels within five adjacent channel positions that does not include BTV, 93.5% (or 344) of these headends include Fox News in a neighborhood that does not include BTV, 97.3% (or 358) include CNN in a neighborhood that does not include BTV, 99.7% (or 367) include HLN in a neighborhood that does not include BTV,
99.2% (or 365) include CNBC in a neighborhood that does not include BTV, and 61.7% (or 227)
include MSNBC in neighborhood that does not include BTV. Ex. F, ~ 46. The prevalence in such channel groupings of the most significant news channels in the cable news market reinforces the conclusion that these neighborhoods contain a significant number or percentage of news and/or business news channels.43
78. A channel grouping of at least four news channels within a block of five adjacent
channel positions consists of channels that "are substantially adjacent to one another." "Adjacent" is defined as "not distant," "having a common endpoint or border," or "immediately preceding or following.,,44 And "substantial" is defined as "being largely but not wholly that which is specified.Y" Therefore, to the extent that the word "substantially" is to be given any meaning whatsoever, four channels that are within five channel positions of each other are substantially adjacent to one another.
79. The news neighborhooding condition applies to Comcast's existing news
The condition explicitly states that the news neighborhooding condition is triggered
"if Comcast now or in the future carries news and/ or business news channels in a neighborhood" (emphasis added). "Now" is defined to mean "at the present time or moment" and "under the
- See supra note 40. can also mean "having or likely to have influence or effect: important." 10th Edition, Merriam-Webster, Inc., 1995, at 1091. Merriam Webster's Collegiate
43"Significant"
IrI. at 14. IrI. at 1174. -20 -
present circumstances.,,46 Therefore, the news neighborhooding neighborhood
condition applies to any news
that Comcast carried as of the date of the FCC Order or any news neighborhood that
Comcast carries after that date. 80. Bloomberg is an independent news channel for purposes of the condition because it "is a video programming network that is (i) unaffiliated with Comcast-NBCU or any of its affiliates or
subsidiaries, (ii) unaffiliated with one of the top 15 programming networks, as measured by annual revenues, and (iii) whose programming is focused on public affairs, business, or local news reporting and analysis during the hours of 6:00 a.m. through 4:00 p.m. in the U.S. Eastern Time Zone.,,47 Ex. D,
,r 7-8; Ex. E '14.
81. Comcast currently has numerous news neighborhoods
that do not include BTV. For
example, in the 35 most-populous neighborhoods
DMAs, there are 368 Comcast headends that carry BTV and have
that do not include BTV. Ex. F, ,-r 43. A list of these headends is attached as
Exhibit G, and the lineups of news channels on these headends are attached as Exhibit H. 82. By refusing to place BTV in existing news neighborhoods, news neighborhooding condition set forth in the FCC Order. Comcast is in violation of the
WHEREFORE, Commission: (a) Find that Comcast carries news channels in neighborhoods; (b) Find that Comcast has willfully refused to place BTV in news neighborhoods systems; on its in light of the foregoing, Complainant respectfully requests that the
47FCC
Id. at 795-96. Order at 4288, '\]122, 11.292.
(c) Find Comcast in violation of the news neighborhooding (Section III.2 of Appendix A); (d) Declare that the news neighborhooding
condition in the FCC Order,
condition requires Comcast to place BTV in any
channel grouping containing at least four news channels within a block of five adjacent channel positions; (e) Require Comcast, within sixty days, to carry BTV in any channel grouping containing at least four news channels within a block of five adjacent channel positions on any Comcast headend in the top 35 most-populous DMAs that carries BTV (the list of these headends with these channel
groupings that currently do not include BTV is contained in Exhibit G); and (f) Any other relief the Commission finds appropriate.
BY(~~ba~~--~-t_:ep=h~e=-n-D-i-a~-G-a-v-l1n:___---
1399 New York Avenue, NW Washington, DC 20005 (202) 654-7300
Kevin]. Martin Janet F. Moran Matthew B. Berry*
2550 M Street, N.W. Washington, D.C. 20037 (202) 457-6000 * Admitted only in Virginia
575 Lexington Avenue, 7tb Floor New York, New York 10022 (212) 446-2300 Its Counsel Dated: June 13, 2011
-23 5170921
I, Gregory Roger Babyak, do declare and hereby state under penalty of perjury, as follows: 1. I am Head of Government Affairs for Bloomberg l.P. 2. I have read the foregoing Complaint. To the best of my knowledge, information, and belief, it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law. It is not interposed for any improper purpose.
Gregory Roger Babyak
I, Matthew Berry, a partner in the law firm Patton Boggs LLP, do hereby certify that the foregoing "Program Carriage Complaint" was served on the parties listed below by Federal Express this 13th day of June 2011.
Mr. Neil Smit President Comcast Cable Communications One Comcast Center Philadelphia, PA 19103-2838
Arthur Block Senior Vice President General Counsel and Secretary Comcast Corporation One Comcast Center Philadelphia, PA 19103-2838
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