Comcast and Bloomberg Battle Over Channel Placement

Published August 24, 2011

Comcast Corporation responded to a complaint filed against the cable company with the Federal Communications Commission (FCC) by filing its own complaint with the regulatory agency against Bloomberg LP.

At the center of the quarrel is the debate over the definition of a “neighborhood,” the placing of similar channels adjacent to one another in the system’s lineup, with Bloomberg saying Comcast is violating an agreement with the FCC about it.

Bloomberg claims its financial news channel, Bloomberg TV, isn’t near its rival—or located in the same neighborhood—as CNBC on the Comcast cable network, which was a concession Bloomberg argues Comcast agreed to in order to obtain FCC approval of the company’s purchase of NBCUniversal.

On July 27, Comcast retaliated with its own complaint, which states in part, “The complaint represents Bloomberg’s second attempt to extract preferential channel placement on Comcast’s cable systems through regulatory gamesmanship” and that Bloomberg’s complaint is “based on an arbitrary and baseless definition of a news neighborhood as ‘four news channels within five positions.’ But that definition was neither supplied nor endorsed by the Commission. Instead, it is entirely Bloomberg’s invention.”

Change Established Channel Lineups
Ryan Radia, associate director of technology studies for the Competitive Enterprise Institute, a Washington, DC-based think tank, said in most cases cable companies aren’t tightly regulated by the FCC. Therefore, he says, the FCC would normally have no say over decisions cable companies make involving the channels they carry or where they are placed.
“However, since Comcast recently acquired NBCUniversal, the firm was strong-armed by the FCC into accepting ‘voluntary’ conditions on the deal,” Radia said, noting major telecom mergers that involve license transfers do require FCC approval. “This explains the conditions to which Bloomberg is referring in its complaint regarding Comcast’s behavior,” he said.

“Bloomberg is not attempting to remedy anything arising out of the NBCUniversal transaction,” said Sena Fitzmaurice, Comcast vice president of communications. “It is just trying to use the order to change longstanding channel lineups to its advantage—something it asked for during the proceeding, and the FCC refused to do.”

‘Preferential Channel Placement’
In its January 2011 approval of the sale of NBCU to Comcast, the FCC ordered “that Comcast not discriminate in video programming distribution on the basis of affiliation or non-affiliation with Comcast-NBCU. Moreover, we require that, if Comcast ‘neighborhoods’ its news (including business news) channels, it must include all unaffiliated news (or business news) channels in that neighborhood.”

Comcast said this is Bloomberg’s second attempt to “extract preferential channel placement” on their cable systems.

“Advocates of free markets and the rule of law have long criticized FCC merger conditions. Former FCC Commissioner Harold Furchtgott-Roth likened the conditions to a ‘racket’ in a 1999 article in The Wall Street Journal, pointing out that there are no clear guidelines or precedents governing the conditions FCC regulators can require firms to accept in order to earn approval of their license transfer requests,” said Radia.

Fitzmaurice said Bloomberg’s definition of a neighborhood will cause disruptions. “Bloomberg’s current definition of ‘neighborhooding’ is inconsistent with its own advocacy before the FCC, leads to nonsensical and incoherent results, and would cause mass consumer confusion and disruption to other channels,” she said.
“If the FCC agrees to investigate Bloomberg’s complaints, it will not be helping consumers. Bloomberg has presented no evidence that its channel placement on Comcast has adversely affected its viewership,” Radia said. “And, as Comcast pointed out, Bloomberg’s channel placement was determined long before Comcast acquired NBC Universal,” he concluded.

Alyssa Carducci ([email protected]) writes from Tampa, Florida.