Comcast/TWC Review Panel Said to Indicate ‘Deep Dive,’ Not a Clear Result

The makeup of the FCC review team that will oversee Comcast’s proposed buy of Time Warner Cable (CD July 8 p1) seems designed to show that the commission will be taking extra care with the transaction, but doesn’t indicate the direction the regulatory approval process will take, said industry officials in recent interviews. The inclusion of Northwestern University economists William Rogerson and Shane Greenstein on the task force indicates the commission is planning a “deep dive” on Comcast/Time Warner Cable, said BakerHostetler cable attorney Gary Lutzker. It’s not unusual for the FCC to seek high-level help on such a massive, important transaction, said Fletcher Heald attorney Tom Dougherty, who handles many communications deals. Comments on such a deal are likely to be voluminous and complicated, and that requires expert staff, Dougherty said.

Rogerson, a former FCC chief economist, worked with the American Cable Association on its filings during the Comcast/NBCUniversal approval process, and has recently worked with ACA on its efforts to change FCC program access rules. He will be the senior economist overseeing the deal, the FCC has said (http://bit.ly/1qLaizQ). Rogerson told FCC officials in 2010 (CD Sept 23/10 p13) that Comcast/NBCUniversal would lead to higher programming rates for other pay-TV companies. Rogerson’s work for ACA means he “understands the issues the merger would create for smaller cable operators,” said Thomas Larsen, Mediacom vice president-legal and public affairs. Despite his past testimony against Comcast, the industry observers we spoke with said Rogerson’s involvement in the regulatory review doesn’t indicate an unfavorable outcome for Comcast. He’s not seen as bringing bias to the proceedings, said cable attorneys.

Greenstein is a leading economist on the subject of how the Internet affects the economy, said economist and former FCC Commissioner Harold Furchtgott-Roth, now director of the Hudson Institute’s Center for Economics of the Internet. Greenstein, who was Kellogg chair in information technology at Northwestern’s Kellogg School of Management, will be senior economic consultant on the deal. Greenstein’s inclusion is a sign that the panel will focus on the Internet aspects of Comcast/Time Warner Cable alongside the pay-TV aspect, said a cable attorney. Although industry officials aren’t sure of Greenstein’s stance on large cable deals, he was a member of the FCC Open Internet Advisory Committee and has written about net neutrality. In a 2006 essay (http://bit.ly/1l8Jbee) on the subject for the magazine IEEE Micro, Greenstein said he was “skeptical of speculative visions that assign vague, malevolent motives to corporate behavior.” In the same essay he was also critical of AT&T for offering to abide by open Internet principles as a deal condition. That sort of offer doesn’t “inspire trust,” he said.

Though neither Rogerson nor Greenstein is seen as having a bias for or against the deal, the FCC’s effort to bring in outside help and the indications that the commission plans to take a painstaking look at the deal wouldn’t be considered a positive development for any company trying to have a transaction approved, said Lutzker. Due to the scale of the deal, it’s unlikely that Comcast and Time Warner Cable are surprised that the FCC wants to take a close look, he conceded. The outside help may not even be much of an indication of extra scrutiny, said Furchtgott-Roth. Though it would have been an unusual move during his time on the commission, it became more common on large deals under former FCC Chairman Julius Genachowski, he said.

The Wireline Bureau’s Bill Dever being assigned as deputy on the review team is also part of the FCC’s effort to have experienced personnel on the deal, said cable attorneys. Dever is involved in nearly every cable deal brought to the commission, the attorneys told us. His involvement also signifies that the panel will focus on the Internet, Public Knowledge Senior Vice President Harold Feld told us last week.

Former Justice Department antitrust lawyer Hillary Burchuk, now in the FCC Office of General Counsel and heading up the Comcast/Time Warner Cable working team, has worked on both approved and blocked deals, said industry attorneys. With both the successful AT&T/Leap and the rejected AT&T/T-Mobile on her resume, her inclusion on the panel doesn’t send a clear signal on the outcome of Comcast/Time Warner Cable, said the attorneys. Her experience with large deals will help the commission in assigning conditions to the deal, Dougherty said. Burchuk will have insight into “what sort of merger conditions would eliminate or ameliorate potential consequences” of the deal, he said. Burchuk’s ties to DOJ “will probably strengthen the FCC and DOJ’s coordination,” said Guggenheim Partners analyst Paul Gallant in an email to investors. That will “make it harder for the companies to capitalize on any potential daylight between the agencies,” he said.

Burchuk’s working team will report to a steering committee chaired by FCC General Counsel Jonathan Sallet. The committee includes the chiefs of the International, Media, Wireline and Wireless bureaus, the FCC has said. Burchuk, Greenstein and Rogerson didn’t comment.