Comcast SportsNet in Philadelphia is exempt from the rule

[RFtech]

FCC OKs Adelphia sale to Comcast and Time Warner, with conditions
DEBORAH YAO
Associated Press

PHILADELPHIA - The Federal Communications Commission on Thursday approved a $17 billion deal to sell the assets of bankrupt cable provider Adelphia Communications to Comcast and Time Warner Cable, removing the last federal regulatory hurdle to the transaction.

But the agency's approval, which came in a 4-to-1 vote, came with conditions.

The FCC said Philadelphia-based Comcast Corp. and Time Warner Cable, a unit of Time Warner Inc. of New York, are prohibited from engaging in tactics that would effectively make regional sports programming unavailable to rivals, such as satellite TV.

"Time Warner and Comcast must make their affiliated RSNs (regional sports networks) available to others," FCC Chairman Kevin J. Martin said.

However, Comcast SportsNet in Philadelphia is exempt from the rule and will continue to be unavailable to DirecTV Group Inc. and EchoStar Communications Corp., owner of the DISH Network.

SportsNet is home to several local professional sports teams, including the Philadelphia 76ers, the Phillies and the Philadelphia Flyers of the National Hockey League.

The lone dissenter, Commissioner Michael Copps, said: "this decision is about big media getting bigger with consumers holding the bag."

Copps also noted that Philadelphia was "inexplicably" exempted from an order to make regional sports programming available to competitors. "Residents of Philadelphia are still stuck without competitive choice," Copps said.

The FCC also requires the two cable companies to enter into binding arbitration if they can't reach a deal with competitors on local sports programming. A similar requirement was imposed on News Corp. before its acquisition of a controlling interest in DirecTV was approved in 2004.

The agency also waded into the dispute over the airing of the Washington Nationals baseball team's games in the Baltimore-Washington area.

Comcast was told to enter into binding arbitration with the Mid-Atlantic Sports Network, or MASN, which carries the Nationals games.

MASN is owned by the Baltimore Orioles and Major League Baseball. Comcast has refused to carry the channel because of a dispute with Orioles owner Peter Angelos over TV rights to the team and control of the region's sports programming market.

Angelos plans to move Orioles telecasts to the MASN network next season after its deal with SportsNet expires. Comcast believes its contract was improperly terminated.

Earlier this month, three House members asked the FCC to tie its approval of the Adelphia purchase to resolution of the dispute.

Blair Levin, an analyst with Stifel Nicolaus, said the FCC decision was a mixed bag for Comcast and Time Warner. "Some competitors were very pleased," he said.

He also said the Adelphia purchase creates two cable companies that are significantly larger than other cable competitors. Comcast has 21.7 million subscribers while Time Warner has 11 million. Levin said third would be Cox Communications in Atlanta, with over six million subscribers.

The FCC did not add any "Net neutrality" requirements as part of the approval. Some Internet firms are seeking legislation or administrative rulings that would prohibit cable providers from charging extra to move data faster for Web sites willing to pay higher fees.

Comcast and Time Warner, the nation's top two cable operators, plan to divide the assets of Adelphia Communications Corp. and swap systems to strengthen their positions in several markets. Adelphia, with 4.8 million subscribers, was the nation's fifth-largest cable TV provider.

The acquisition strengthens Time Warner's positions in New York, Texas, California, Ohio and the Carolinas. Comcast boosts its presence in Pennsylvania, Washington, D.C., Florida and Massachusetts.

Comcast is expected to end up with over 23 million subscribers while Time Warner would have more than 14 million.

Adelphia declared bankruptcy in 2002 after disclosing $2.3 billion in off-balance-sheet debt. Founder John Rigas and one of his sons were convicted for their roles in company fraud. A second son received 10 months of home confinement after pleading guilty to a charge of making a false entry in a company record.

Time Warner said in a statement that the FCC approval puts the deal on track to close by its target date of July 31.

 

[psumattDE]

Thanks a lot FCC. The only city in America - and just my luck i'm a Philly sports fan.

 

[RFtech]

I use to be a Philly sports fan, now I just enjoy seeing all the Philadelphia area idiots paying comcast the monthly fees and getting nothing in return. You have to look at it this way no matter what crimecast does or holds up CSN they will never be able to buy a championship for any of the 3 teams. I love seeing them lose , it a whole lot more fun knowing that they will never win. Who's the Fool

 

[jrbdmb]

So did FCC Chairman Martin ever explain why Philadelphia was exempted?

 

[RFtech]

So did FCC Chairman Martin ever explain why Philadelphia was exempted?

FCC chairman offers cable sports deal, but leaves out Philadelphia
By Miriam Hill and Jeff Gelles
INQUIRER STAFF WRITERS

The chairman of the Federal Communications Commission has proposed a deal with Comcast Corp. and Time Warner Inc.: If they agree to conditions that include offering their local sports programming to competitors at reasonable prices, the FCC will approve their acquisition of cable systems owned by the bankrupt Adelphia Communications.

But the proposal will change nothing in Comcast's hometown of Philadelphia, said people familiar with its details.

Viewers here could watch most Phillies, Flyers and Sixers games on TV only on cable. Unless Comcast decides to change its policy, satellite customers would continue to miss out.

The FCC's bargain would apply only to other markets. FCC Chairman Kevin Martin's goal is to bar Comcast and Time Warner from keeping local sports to themselves elsewhere, according to two FCC officials who have seen the proposal and spoke today on condition of anonymity. Details of Martin's proposal were first reported Monday by USA Today.

The proposal, similar to rules imposed on News Corp., owner of Fox News, when it acquired DirecTV in 2003, would also require Comcast and Time Warner to accept binding arbitration in disputes over how much it can charge competitors for professional sports telecasts.

Comcast's ownership of local sports channels around the country, and the possibility that it could withhold sports elsewhere as it does in Philadelphia, was among the main reasons the Adelphia deal has become something of a logjam at the FCC, the officials said.

The complex deal, worth about $17 billion, was first proposed in April 2005, and includes a swap of systems already owned by Comcast and Time Warner that would increase their footprints in major markets that they already dominate. Comcast would not comment for this story because the deal is pending. The FCC also turned down a request for comment.

Separately, the judge overseeing Adelphia's bankruptcy case today granted the company permission to sell its assets to Time Warner and Comcast.

Judge Robert Gerber of the Southern District of New York said he would approve an order to detach the asset sale from the rest of Adelphia's bankruptcy process, allowing it to be executed without the approval of an overall restructuring plan. Adelphia sought the separation to bypass creditor disputes that have slowed the company in its filing of its plan.

The sale agreement with Time Warner and Comcast had been put in jeopardy because of a July 31 deadline at which the buyers could retract their offer. The offer includes a $12.7 billion cash component and the rest as shares in Time Warner. Once complete, the acquisitions would secure Time Warner's and Comcast's status as the two biggest cable operators in the nation.

Comcast's representatives have met repeatedly with FCC commissioners and staffers to press its case, and have done the same in testimony to congressional committees weighing proposals to rewrite an exemption in program-access requirements set by Congress in the Cable Act of 1992.

The law requires a cable company that owns programming distributed by satellite to allow other pay-TV companies to carry it. But it exempts programming distributed by land-based cables or wires.

Satellite companies such as DirecTV and Echostar, and competitive cable companies such as RCN Corp., argue that the exemption was intended to encourage cable companies to invest in news coverage and other local programming.

Echoed recently by some in Congress, they say the rule should not allow a cable company to restrict rivals' access to "must-have" local sports events, as Comcast does by withholding SportsNet from the satellite carriers.

Comcast has responded by pointing out that it has not used the exemption beyond Philadelphia, where the $22-billion-a-year company is headquartered, even though it now owns similar channels in Washington, D.C., Chicago and California.

The FCC chairman apparently accepted Comcast's argument that Philadelphia should remain an exception.

"The chairman just said, 'Let's make a deal. We'll protect your crown jewel,'" one of the FCC officials said.