By Brent Kendall
WASHINGTON--A federal court case about access to sensitive
cable-industry documents could further delay U.S. regulators'
review of two major mergers: Comcast Corp.'s deal for Time Warner
Cable and AT&T Inc.'s planned acquisition of DirecTV.
A three-judge panel of a Washington federal appeals court voiced
concerns Friday about a decision by the Federal Communications
Commission to give third-party opponents of the mergers limited
access to video-programming contracts between the merging companies
and TV-channel owners like CBS Corp., Walt Disney Co. and Viacom
Inc.
Robert Long, a lawyer for the content companies, argued the FCC
acted in a "totally unprecedented" manner in allowing
representatives for third parties like DISH Network to have access
to their highly sensitive business documents, including hundreds of
thousands of pages of materials on pricing and negotiating
strategies for dealing with distributors like Comcast. Disclosure
of that confidential material "would be highly damaging," Mr. Long
said during an argument session that lasted nearly an hour.
David Gossett, a lawyer for the FCC, said the commission has put
strong protections in place limiting access to the documents to a
limited number of outside lawyers and consultants who work with
third parties challenging the mergers. Those individuals will have
access to the materials only for the purposes of providing input
during the FCC proceedings and are barred, under the threat of
severe sanctions, from disclosing or using the information for
competitive decision-making purposes, Mr. Gossett said.
Because the FCC is examining the buying power of companies like
Comcast in the video-programming market, the documents are critical
for the agency's review, and for the ability of third-party
challengers to make informed input to the government, Mr. Gossett
said.
Judges on the U.S. Court of Appeals for the District of Columbia
Circuit peppered the FCC with skeptical questions.
Judge David Tatel said everyone agreed the FCC should get access
to the documents, but he questioned whether the agency followed its
own policies in allowing access to third parties.
Judge Sri Srinivasan suggested the FCC, before allowing
disclosure of the documents, needed to do more than just show that
the material was relevant for the merger reviews. He suggested the
agency needed to show the disclosure was necessary to the FCC
resolving its reviews.
The judges didn't signal exactly how or when they would rule.
The court previously issued a stay blocking the FCC from allowing
access to the material while the case continued.
The FCC and the merging parties have warned the video
programmers' objections to document access threatened unacceptable
delays in the merger review process.
Both the FCC and the Justice Department are reviewing the
proposed deals.
Write to Brent Kendall at brent.kendall@wsj.com
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