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Bloomberg Complaint Against Comcast

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Bloomberg Complaint Against Comcast Powered By Docstoc
					                                                                 )'YjT) \ H u~
                           COpy                             FOR PUBLIC INSPECTION



                                       Before the

                     FEDERAL COMMUNICATIONS COMMISSION

                                 Washington, D.C. 20554

                                                                       FILED/ACCEPTED
In re Complaint of
                                                                              JUN 13 2011
BLOOMBERG L.P.                                        File No.       Federaf Communlcallons CommissIon
                                                                             OffIce of the Secretary
       v.

COMCAST CABLE COMMUNICATIONS, LLC




To:    The Chief, Media Bureau


                                    COMPLAINT




       Gregory Roger Babyak                    Stephen Diaz Gavin
       BLOOMBERG L.P.                          Kevin J. Martin
       1399 New York Avenue, NW                Janet F. Moran
       Washington, DC 20005                    Matthew B. Berry*
       (202) 654-7300                          PATTON BOGGS LLP
                                               2550 M Street, N.W.
                                               Washington, D.C. 20037
                                               (202) 457-6000

                                               Robert Silver
                                               BOIES SCHILLER & FLEXNER LLP
                                               575 Lexington Avenue, 7'h Floor
                                               New York, New York 10022
                                               (212) 446-2300

June 13,2011                                   * Admitted only in Virginia
                                                             FOR PUBLIC INSPECTION



                                  TABLE OF CONTENTS


                                                                          Page
I.      INTRODUCTION AND SUMJ'v1ARY
                                        2
II.     THE   P~i\RTIES
                                                    3
III.    JURISDICTIONAL STATEMENT
                                           5
IV.     COMPLAINT PREREqUISITES                                             6

V.      STATUTORY AND REGULATORY BACKGROUND                                 7

VI.     STATEMENT OF THE FACTS                                             10

        A.   BTV                                                           10

        B.    Other Cable News Channels                                    10

        C.   Placement of News Channels on Comcast Cable Systems           13

        D.   Post-Merger Chronology                                        15

VII.    COUNT I - VIOLATION OF NEWS NEIGHBORHOODING CONDITION 18
VIII.   PRAYER FOR RELIEF                                                  21

                                                             FOR PUBLIC INSPECTION




                                  TABLE OF EXHIBITS


Exhibit A   Address and Telephone Number of Complainant and Defendant

Exhibit B   Bloomberg's Prefiling Notice (May 26, 2011)

Exhibit C   Comcast's Response to Bloomberg's Prefiling Notice Gune 6, 2011)

Exhibit D   Declaration of Daniel Doctoroff

Exhibit E   Declaration of Andrew Lack

Exhibit F   Declaration of Gregory S. Crawford

Exhibit G   Comcast Cable Headends in Top-35 DMAs (368) that Carry BTV and Have a News
            Neighborhood that Does Not Include BTV

Exhibit H   News Channels on Comcast Cable Headends in Top-35 DMAs that Carry BTV and
            Have a News Neighborhood that Does Not Include BTV

Exhibit I   Letter from Daniel Doctoroff to Neil Smit (March 10,2011)

Exhibit]    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)

Exhibit K   47 C.F.R. § 76.1302

Exhibit L   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)
                                                                              FOR PUBLIC INSPECTION




                                                   Before the

                         FEDERAL COMMUNICATIONS COMMISSION

                                          Washington, D.C. 20554



In re Complaint of                                             )
                                                               )
BLOOMBERG L.P.
                                                )       File No.
                                                               )
         v.                                                    )
                                                               )
COMCAST CABLE COMMUNICATIONS, LLC                              )
                                                               )
                                                               )
                                                               )


To:	     The Chief, Media Bureau


                                               COMPLAINT


I.	      INTRODUCTION AND SUMMARY

         BLOOMBERG 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"),l and Sections 76.7(a) and

76.1302 of the Commission's Rules,2 hereby submits trus 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


1 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 (reI. Jan.
20,2011) (the "FCC Order"), 26 FCC Red 4238 (2011). Such application, the "Merger Application."

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populous DMAs. 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 Comcast 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,,,3 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 of BTV in existing news neighborhoods, as defined herein, on Comcast

systems located in the 35 most-populous Designated Market .t\reas ("DMAs") in the United States. 4


II.         THE PARTIES

            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,



2   47 C.F.R. §§ 76.7(a) and 76.1302.

3   !d. at 4358 (App. A, Sec. III.2) (emphasis added); see also id. at 4287, ~ 122.

4   See FCC Order at 4358 (App. A, Sec. III.2); see also id. at 4287, ~ 122.

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however, BTV was redesigned to appeal to a much wider audience. Since that time, Bloomberg has

made major capital investments in BTV 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 Pearlstine, formerly Editor-in-Chief of Time, Inc. and

Executive Editor of The Wall Street Journal, to be its chief content officer, as well as establishing an

entirely new management team for BTV. Ex. D, 'il4. Bloomberg employs more than 2,300

reporters and editors worldwide, making it among the largest newsgathering organizations in the

world. Ex. D, 'il 5. Indeed, BTV is currently the only worldwide 24-hour business and financial

television network. BTV is also the last major source of news in the United States independent of

either MVPDs or integrated programmers. Ex. D, 'il6. As a result of BTV's recent investments and

hires, it is fast becoming a formidable competitor to CNBC, the current dominant provider of

televised business news. Ex. E, 'il7.

            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




S   47 C.F.R. § 76.1302(c)(1).
6   See FCC Order at 4243, 'il9.
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profitable NBCU property in the Merger. 7 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


III.       JURISDICTIONAL STATEMENT

           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."11




7 See Andrew Edgecliffe Johnson, CNBC Profits from a Crisis, http://www.ft.com/ind/cms/s/0/58992544-0b77-11df­
8232-00144feabdcO.html#axzz1NrEfbmqS ~ast 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.")

S CNBC, About CNBC, http://www.cnbc.comlid/15907487/ ~ast visited June 7, 2011).


9 47 C.F.R. § 76.1302(c)(1).

10
     FCC Order at 4359 (App. A, Sec. IlIA).

11   Id. at 4358 (App. A, Sec. III.2).
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         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 ofJanuary 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, multiple channels of video programming."14

            11. Accordingly, the jurisdiction of the Commission over this matter is proper.


IV.      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 prefiling 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"),15 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




12 Id. at 4353 (App. A, Sec. I); 47 C.F.R. § 76.1300(e).
13 Id. at 4353, ~ 285.
14
   47 C.F.R. § 76.1300(d).
15 Letter 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 aune 6, 2011).
16 Id. at 2, n. 5.

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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. 18 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


v.            STATUTORY AND REGULATORY BACKGROUND
              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. 20

              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 ofJanuary 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,,,22 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


17   Id. at 3.

18 47 C.F.R. § 76.1302(b).

19 47 C.F.R. § 76.6(a)(3).

20 FCC Order at 4239, 4246, ~~ 1, 20.

21   ld. at 4353, ~ 285.


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competition in video programming by engaging in foreclosure strategies or other discriminatory

actions against unaffiliated programming networks.,,23 In making that finding, the Commission

noted that "Comcast's market share in some of the nation's highest-ranked DMAs is considerably

greater [than its 24 percent nationwide market share]-for example, Comcast's market share is as

much as 62 percent in the Chicago DMA and 67 percent in the Philadelphia DMA.,,24 The

Commission concluded that "[w]hile the transaction does not increase this significant share that

Comcast has in distribution, that share gives Comcast an ability not possessed by pre-transaction

NBCU to disadvantage rival networks that compete with NBCU networks.,,25

            18. The Comcast-NBCU merger resulted in Comcast, the nation's largest cable operator,

acquiring a controlling ownership interest in CNBC, the nation's top-ranked business news network.

CNBC is BTV's dominant competitor. Ex. D, ~ 6. In the FCC Order, the Commission specifically

recognized that the merger would increase both Comcast's incentive to discriminate in favor of its

affiliated programming as well as its ability to do SO.26 Moreover, the Commission explicitly found

that "Bloomberg TV is likely a close substitute for Comcast-NBCU's CNBC and CNBC World

Networks,,27 and that "[b]y foreclosing or disadvantaging rival programming networks, Comcast can

increase subscribership or advertising revenues for its own programming content.,,28

            19. As a result of Comcast's ability and incentive to favor its affiliated news channels at the

expense of independent news channels and the "special importance of news programming to the

public interest,,,29 the Commission adopted a condition particularly designed to protect and promote




22   Id at 4284, ~ 116.

23
     Id.

24   ld at 4285, ~ 116.

25   !d.

26   I d. at 4285-86, ~~ 116-118.

27   I d. at 4286, ~ 119.

28   ld at 4287, ~ 119.

29   Id. ~ 122.

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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 carry all independent news and business

news channels in that neighborhood."30

             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

Zone.,,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.,,32

             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.




30   See id. at 4358 (App. A, Sec. III.2); see also id. at 4287, ~ 122.

31 See id. at 4288, n.292.

32 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 H. Dortch, Secretary, Federal
Communications Commission, MB Docket No. 10-56 (filed Jan. 21, 2011).
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VI.       STATEMENT OF THE FACTS
          A.      BTV

          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 ofBTV ("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

          27. CNBC is a network that provides business and financial news programming. It is carried

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 World 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.

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         33. Fox Business Channel is a network that provides business and financial news

programming. It is carried by :t\fVPDs, including Comcast. Ex. E,           ~   9; 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.m. 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 lvIVPDs, including

Comcast. Ex. E,   ~   12; Ex. F, ~ 14.

         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, ~ 12; 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.



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           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 U.S. Eastern Time Zone, MSNBC's

programming is focused on reporting and analysis related to public affairs. Ex. E, lIJ 11.

           46. C-SPAN is a noncommercial network that provides public affairs programming. It is

carried by MVPDs, including Comcast. Ex. E, lIJ 14; Ex. F, lIJ 14. It is a cable network of Cable-

Satellite 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 customers.,,33 It is run by a Board of Directors that is

"comprised of executives from large and small cable television operating companies."34 Neil Smit,

President of Comcast Cable Communications, LLC, currently sits on C-SPAN's Board of

Directors. 35

           47. From 6:00 a.m. through 4:00 p.m. in the U.S. Eastern Time Zone, C-SPAN's

programming is focused on reporting and analysis related to public affairs. Ex. E, lIJ 14.

           48. C-SPAN2 is a noncommercial network that provides public affairs programming. It is

carried by MVPDs, including Comcast. It is a cable network of C-SPAN. Ex. E, lIJ 14; Ex. F, lIJ 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, lIJ 14.

           50. C-SPAN3 is a network that provides public affairs programming. It is carried by

MVPDs, including Comcast. It is a cable network of C-SPAN. Ex. E, lIJ 14; Ex. F, lIJ 14.

           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, lIJ 14.


33   http://legacy.c-span.org/about I companylindex.asp?code=COMPANY Qast visited June 7, 2011).
34   !d.


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           52. There are local news networks carried by MVPDs, including Comcast, that provide local

news programming. Ex. F, ~ 14-15.

           53. From 6:00 a.m. through 4:00 p.m. in the U.S. Eastern 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, ~ 15, 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 U.S. Eastern Time Zone, the following

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. Ex. F, ~ 15, Appendix B.

           C.       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 Corncast's 1,014 headends, 759 headends carry BTV. Ex. F, ~ 41.

           58. Of Corncast's 1,014 headends, 604 headends are located in the 35 most-populous

DMAs. Of these 604 headends in the 35 most-populous DMAs, 485 headends carry BTV. Ex. F, ~

42.




35   See http://1egacy.c-span.org/about/company/index.asp?code=BOARD ~ast visited June 7, 2011).
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       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, ~ 40. Of Comcast's 485 headends that are located in the 35 most

populous DMAs and carry BTV, 418 headends (or 86.2%) have news neighborhoods. Ex. F, ~ 42.

       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, ~ 43. These 368 headends 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 headends 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.

       62. A small minority of Comcast headends have two news neighborhoods: one that is

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 1­

100 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.

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           64. 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 currently carries 11.03 standard

definition news channels. Ex. F,   ~   48. A total of 151 headends carry exactly 11 such news channels.

A total of 78 headends carry 12 news channels. A total of 93 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 Srnit, 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. Srnit

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

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Comcast to do with respect to BTV. Mr. Smit reiterated that Comcast fully intended to abide by the

conditions set forth in the FCC Order. Ex. D, ~ 10; Ex. E,   ~   16.

        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

condition required Comcast to move BTV into any news neighborhood that currently exists on any

Comcast system, with citations to the provisions regarding neighborhooding in the FCC Order. Mr.

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

requesting that Comcast place BTV in all news neighborhoods on Comcast cable systems within

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.

Doctoroffs 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 Bloomberg with respect to other issues. Ex. D, ~

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 prefiling 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.

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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. Smit 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, ~ 14-15; Ex. E,            ~   18-19.

            71. On May 26, 2011, Bloomberg sent Comcast the "prefiling 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."'3(, Ex. B.

            72. On June 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




36   Prefiling Notice at 7 (quoting FCC Order at 4359 (App. A, Sec. IlIA)).
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applies in the event Comcast engages in neighborhooding in the future.,,3i Second, Comcast

asserted that the Company does not currently engage in neighborhooding. 38 Ex. C.


VII.	 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: "[1] 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."39

           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 block of five adjacent channel positions. Any Comcast headend with such a channel grouping

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.,,4o 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


37   Comcast Response at 2, n. 5.
38 [d.
39
. See supra note 30.

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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.,,42

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,


40   Merriam Webster's Collegiate Dictionary,   lOlil   Edition, Merriam-Webster, Inc., 1995, at 1091.
41In 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.

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HLN, MSNBC, and CNBC. Ex. E,                ~   6. Of the 368 headends 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."45

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

neighborhoods. 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


42
     See .flfpra note 40.

43 "Significant" can also mean "having or likely to have influence or effect: important." Merriam Webster's Collegiate

Dictionary, 10'h Edition, Merriam-Webster, Inc., 1995, at 1091.

44!d. at 14.

45 ld. at 1174.

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present circumstances."46 Therefore, the news neighborhooding condition 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.

             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,~7-8;Ex.E~4.


             81. Comcast currently has numerous news neighborhoods that do not include BTV. For

example, in the 35 most-populous DMAs, there are 368 Comcast headends that carry BTV and have

neighborhoods that do not include BTV. Ex. F,        ~   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, Comcast is in violation of the

news neighborhooding condition set forth in the FCC Order.


VIII. PRAYER FOR RELIEF
            WHEREFORE, in light of the foregoing, Complainant respectfully requests that the

Commission:

            (a) Find that Comcast carries news channels in neighborhoods;

            (b) Find that Comcast has willfully refused to place BTV in news neighborhoods on its

systems;




46   [d. at 795-96.

47 FCC Order at 4288, ~ 122, 0.292.

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                                                                   FOR PUBLIC INSPECTION



        (c) Find Comcast in violation of the news neighborhooding condition in the FCC Order,

(Section III.2 of Appendix A);

        (d) Declare that the news neighborhooding condition requires Comcast to place BTV in any

channel grouping containing at least four news channels within a block of five adjacent channel

posl11ons;

        (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.




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                                                            FOR PUBLIC INSPECTION



                                              Respectfully submitted,

                                              BLOOMBERG L.P.




ByLQ:iib~~~--~-te-p='h-en-D-ia-Z?Y=-G-a""'vlf-n----
          BLOOMBERG L.P.	                     Kevin J. Martin
          1399 New York Avenue, NW	           Janet F. Moran
          Washington, DC 20005	               Matthew B. Berry*
          (202) 654-7300	                     PATTON BOGGS LLP

                                              2550 M Street, N.W.

                                              Washington, D.C. 20037

                                              (202) 457-6000

                                              * Admitted only in Virginia

                                              Robert Silver
                                              BOIES SCHILLER & FLEXNER LLP
                                              575 Lexington Avenue, 7th Floor
                                              New York, New York 10022
                                              (212) 446-2300

                                              Its Counsel

Dated: June 13, 2011




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