With the FCC taking a closer look at pay-TV contract clauses that guarantee operators the best rates in select markets, Comcast (NASDAQ: CMCSA) has come to the defense of so-called "most favorite nation" clauses.
Responding to an FCC Notice of Inquiry relating to the amount of access independent programmers have — or may lack — to the pay-TV ecosystem, Comcast has argued that in the current "ultra-competitive market" for video services, such practices are "benign."
(Comcast's response to the FCC inquiry was obtained by Broadcasting & Cable.)
MFNs, Comcast argued, are necessary tools to ensure operators are not "shut out" from better deals that might emerge after an operator enters a program licensing contract. The clauses help protect operators, the MSO added, from the "significant risk" they expose themselves to when they enter a program licensing deal.
The issue of MFNs is currently prominent in the FCC's review of Charter Communications' (NASDAQ: CHTR) takeover attempts of Time Warner Cable (NYSE: TWC) and Bright House Networks. FCC commissioners are concerned that MFN clauses aid in the restriction from premium programming becoming available to online video channels.
According to recent reports, the FCC will strip Charter from the ability to integrate MFN language into future program licensing contracts.
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