Even while a federal court continues to examine a plea from programmers to keep the details of their contracts with service providers confidential, the FCC has issued a new request for information from eight media companies on their licensing deals with Comcast and Time Warner Cable.
As it weighs Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s proposed buyout of Time Warner Cable Inc. (NYSE: TWC), the Federal Communications Commission (FCC) specifically wants to know if the two US cable giants tried to prevent their programming partners from signing distribution deals with online rivals as part of the licensing negotiations. The FCC sent its request to 21st Century Fox, CBS Corp. (NYSE: CBS), Discovery Communications Inc. (Nasdaq: DISCA, DISCB, DISCK), Scripps Networks , Walt Disney Co. (NYSE: DIS), Time Warner Inc. (NYSE: TWX), Univision and Viacom Inc. (NYSE: VIA).
In 2013, the issue of cable operators using money to crowd out online competitors became headline news with a report filed by Bloomberg. According to the story at the time, Time Warner Cable and other pay-TV providers offered cash incentives to programmers to keep them from licensing content to over-the-top distributors. Sometimes these service providers reportedly wrote larger checks in exchange for a programmer's agreement to keep video assets exclusive. Other times, pay-TV providers reportedly threatened to drop a programmer from distribution altogether if there wasn't agreement to keep OTT competitors locked out of a deal. (See Cable Operators Show Them the Money.)
While cable companies may have used their substantial financial clout in negotiations, the reality is that online video services have only become more competitive since 2013. The FCC sees that as a positive sign in the market and is working to promote a more level playing field to keep competition healthy. The agency is even considering classifying some online video companies as multichannel video programming distributors (MVPDs). (See FCC Ready to Reclassify Some OTTs – Report .)
Ironically, while programmers may have felt coerced by cable companies in past negotiations, they have also shown themselves to be violently opposed to sharing the details of their content agreements. Several media entities, including CBS and Walt Disney, are fighting in court now to keep the FCC from releasing other contract information to individuals reviewing the proposed Comcast/TWC and AT&T Inc. (NYSE: T)/DirecTV Group Inc. (NYSE: DTV) mergers. Most recently, CBS and the FCC presented arguments to the United States Court of Appeals for the District of Columbia Circuit on February 20. It is not known when the court will rule on the case.
— Mari Silbey, special to Light Reading