CBS Corp., Viacom, Disney, Fox and Univision have pushed back on a regulatory remedy to the AT&T-Time Warner Inc. merger jointly proposed by the American Cable Association and RCN last week.
ACA, a small operator-focused lobby and Princeton, New Jersey-based MSO RCN proposed a modification to AT&T’s offer to allow for baseball-style arbitration in program-licensing talks, enabling pay TV operators to access the programmers’ other distribution agreements before bidding.
But in a brief filed yesterday to the Washington, D.C., court overseeing the Justice Department’s attempt to stop the merger, the programmers said they simply can’t allow these contract terms to be disclosed.
“Because the content companies will suffer significant harm if the terms of their agreements are disclosed to third parties, the agreements are subject to strict internal controls and contain stringent mutual confidentiality provisions,” the brief said.
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“The content companies thus seek to intervene to ensure that any remedy fashioned by this Court protects their highly confidential, competitively sensitive information,” the filing added. “Because only the content companies can adequately protect their significant confidentiality interests, they are entitled to intervene as a matter of right.”
The programmers argued that the ACA proposal was, in fact, illegal, permitting “distribution competitors to engage in anticompetitive information sharing of prices and other competitively sensitive information about video programmers.”
According to the ACA-RCN filing, the two entities essentially side with the DOJ, but the government is asking for all-or-nothing remedies: it wants the court to either block the merger altogether or force AT&T to divest either DirecTV or Turner Networks, a deal breaker for the telecom.
ACA and RCN are asking the court to “fix” the AT&T-Time Warner proposal to incorporate provisions included in the approval of Comcast’s acquisition of NBCUniversal in 2011. Deal conditions calling for arbitration in programming disputes “should cover all programming managed or controlled by the post-merger entity,” they said.
Further, the filing said the court “should permit smaller distributors to use a bargaining agent for arbitration.” It should also entitle smaller distributors to fee shift if they prevail.
“Smaller distributors should expressly be permitted to use a bargaining agent, such as the NCTC [National Cable Television Cooperative], to invoke arbitration on its members' behalf to address the fact they may be less able to bear the costs of commercial arbitration than larger MVPDs, thus rendering the remedy of less value to them. Those with fewer than one million subscribers (or their agents) should also be permitted to recover fees as prevailing parties in any arbitration with the merged entity,” ACA explained.