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February 2016

Charter Pitches Buildout Bonus of TWC Deal

Top Charter executives including COO John Bickham and CFO Christopher Winfrey met with Federal Communications Commission officials during the week of Feb 8 to make the case that the Charter-Time Warner Cable merger will mean faster residential broadband buildouts and upgrades. New Street Research says it believes chances of outright rejection of the deal are low as the FCC staffers hone in on possible conditions, like broadband buildouts, citing the recent meeting as one example.

During the Feb. 11 meeting, according to an ex parte document, the executives argued that deal synergies means improving "investment payback horizons," which means more residential lines and faster upgrades in the first four years following approval of the deal than if there were no merger. Also representing Charter was Michael Katz, Sarin Chair Professor of Economics at the Berkeley Haas School of Business, who also argued that the deal would improve the buildout "metrics." Among the FCC staffers at the meeting were Media Bureau chief Bill Lake and general counsel Jonathan Sallet. "Both the FCC staff and the Charter team had a full complement of heavy hitters to discuss the economics of building out new residential line extensions and accelerating the upgrade of existing lines," said New Street of the meeting. "If the issue of residential line extensions was not central to the FCC’s current thinking, we doubt there would have been such a meeting focused on the topic."

The danger of political correctness — in the words of an FCC commissioner

The Federal Communications Commission is the closest thing to a political correctness police force. It dictates what kind of material is acceptable on American airwaves and what is “obscene, indecent and profane.” So you might not expect to hear an FCC commissioner suggest that the country is growing too politically correct for its own good. Yet that’s the exact problem described by FCC Commissioner Ajit Pai in an interview with the Washington Examiner.

Commissioner Pai lamented that free speech is being squelched by a culture that is too quick to take offense and too slow to promote debate. “Largely what we're seeing, especially on college campuses, is that if my view is in the majority and I don't agree with your view, then I have the right to shout you down, disrupt your events, or otherwise suppress your ability to get your voice heard,” he said. His dim view of widespread political correctness echoes a refrain sung over and over during the presidential race by leading Republican candidates like Donald Trump, Sen Ted Cruz (R-TX) and Sen Marco Rubio (R-FL). “I think it's dangerous, frankly, that we don't see more often people espousing the First Amendment view that we should have a robust marketplace of ideas where everybody should be willing and able to participate,” he said.

Nexstar Wants To Keep Media General Joints Sales Agreements

In winning Federal Communications Commission approval of its $4.6 billion merger with Media General, Nexstar Broadcast Group may have more trouble than it thought when it announced the deal late in Jan. In the filing seeking the FCC blessing, Nexstar and Media General ask for "a temporary waiver" that would allow Nexstar to maintain Media General joint sales agreements in six markets until 2025. The markets: Albany (NY), Augusta (GA), Springfield (OH), Lansing (MI), Topeka (KS), and Youngstown (OH).

However, during the week of Feb 8, in granting approval of Gray Television's purchase of Schurz Communications radio and TV stations, the FCC denied the transfer of the single JSA in Wichita-Hutchinson (KS), setting a precedent that Nexstar and Media General may not be able to get around. Nexstar and Media General argue the FCC should OK the JSAs just as it did when Media General merged with LIN Television in 2014. In that deal, they say, the FCC said that “[w]hen evaluating the transaction as a whole, it is clear that these agreements are only an incidental aspect of a large multi-station, multi-market transaction." The Nexstar-Media General merger involves "a substantially larger number," making the six JSAs once again incidental to the whole deal, the companies say. "Granting a temporary waiver to allow the legacy JSAs incident to this transaction to continue to Sept. 30, 2025, will serve the public interest and is consistent with Congress's directive," they say.

Judge and Former NCTA Legal Head Dan Brenner Dies in Auto Accident

Los Angeles (CA) Superior Court Judge Dan Brenner, former head of legal at the National Cable & Telecommunications Association, was struck and killed by a car while crossing the street in Los Angeles Feb 15. Judge Brenner was named a judge in December 2012. He was appointed by Gov Edmund G. Brown Jr (D-CA), and had been a partner in the communications, media and entertainment practice at Hogan Lovells in Washington and a source of legal expertise on communications issues. Before joining Hogan Lovells he was a senior VP of NCTA, in charge of its legal department.

He was also a former advisor to FCC Chairman Mark Fowler, an adjunct professor at the Gould School of Law at the University of Southern California, and co-author of "Cable Television: Law and Policy. Judge Brenner also served on the adjunct faculties of Georgetown University Law Center, Washington College of Law at American University, Cardozo Law School, and on the communications program faculties at UCLA, USC Annenberg, and George Washington University. Judge Brenner was vice chair and a member of the board of the Corporation for Public Broadcasting, as well as on the boards of the Stanford Library Visitors Board, Cable Positive, the Federal Communications Bar Foundation, Tekelec, a technology company, as well as the board of advisors of Falcon Cable Systems. He received the NCTA's President’s Award for service to the cable industry in 2009.

Public television spectrum valued at up to $6.8 billion in FCC auction

A recently completed computer simulation commissioned by Public Media Company from CRA International Inc. predicts that television spectrum held by public TV stations could be valued at as much as $6.8 billion in the Federal Communications Commission auction taking place in 2016. Actual outcomes of the auction will vary based upon which stations participate, as well as the amount of broadcast spectrum the FCC decides to purchase, or “clear,” from stations in each market.

The computer simulation uses information publicly released by the FCC and proprietary models developed by CRA to estimate actual potential auction prices for each television station in the country. Under its agreement with CRA, PMC is able to offer projected auction prices to all public television stations. The reports that PMC provides include projected prices for all of the stations in the client station’s designated market area.

Why Presidential-Candidate Spin Is Showing Up On Page One Of Google Search Results

As the presidential campaign kicks into high gear with the upcoming Republican primary in South Carolina, more voters are turning to Google to learn about the remaining candidates in both parties. When you search for a candidate using Google, the results page includes the latest news reports about a candidate, his or her personal story, policy positions, links to their websites, and a little bit of campaign spin. Unbeknownst to most people, you'll also find, at mid-page, a new Google creation in which tweets, quotes, story links, and promo videos from the campaigns themselves are displayed in a "card" format—meaning the candidates themselves are controlling some of what you find in your search results. The "candidate cards," as they're known, have a small icon above them with the candidate's name and thumbnail photo ("Donald Trump on Google"), but otherwise, there's no indication that the content is being provided by the candidates.

Google describes the cards as "a new way to hear directly from candidates themselves, in real-time—right in Google Search results." The new feature, Google says, "helps voters make more informed choices, and levels the playing field for candidates to share ideas and positions..." The cards also show up when you search for a campaign event such as a primary or a debate. Google uses a ranking algorithm to determine when and where users might want to hear directly from a candidate, the company says. While the cards may have been intended to provide crib notes on the candidates for voters, in reality candidates are using them more like small carousel ad units for their campaign spin machines.

Opposing usage-based pricing means opposing all commerce

[Commentary] In a recent blog, I described the increasing reliance by regulatory agencies on narratives, instead of careful analysis, to make policy. Such a narrative was the key driver of the Federal Communication Commission's 2015 imposition of telephone-era rules on the Internet in the name of network neutrality. “Paid prioritization” of data packets was made to sound scary but was in fact a phantom menace. Nevertheless, the FCC used the fictional specter of future bad behavior to fundamentally transform Internet law. Not content with their historic bureaucratic conquest of the Internet, however, activists are pushing new narratives to extend Washington’s reach even further into the digital economy. In their words, the latest threat to the Internet is so powerful it will “defeat the spirit...of net neutrality,” rendering the FCC’s historic action meaningless. It will “beat down economic growth.” It “sounds so innocent!” but in fact is “evil.”

[Bret Swanson is president of Entropy Economics LLC]

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