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Court tosses FCC order for sharing cable programming deals

The court struck down the Federal Communications Commission’s order that programmers reveal details of their carriage agreements with Comcast as part of the agency’s review of the now defunct Comcast-Time Warner Cable merger.

Programmers including CBS, Fox, Disney and others challenged the order last fall in D.C. district court, arguing that the agreements were proprietary and highly sensitive and should not be shared with other cable players in the industry, a key part of the FCC’s order.

In deciding CBS et. al vs. the Federal Communications Commission, the court sided with the programmers, tossing out the FCC’s order.

Judge David Tatel, writing the opinion for the three-judge court, stated: “We find the commission’s action both substantively and procedurally flawed.”

The key reasons why: the FCC  failed to establish that the information was “necessary” to the merger review and the FCC did not explain why it was changing its past practices.

“By failing to explain why VPCI [ video programming confidential information ] is a ‘necessary link in a chain of evidence that will resolve an issue before the commission,’ the commission has failed to overcome its—and Congress’s—presumption against disclosure of confidential information,” Tatel wrote.

The court also found that the commission “acknowledged nowhere in its Order that the new rule departs from longstanding practice” and did not explain, as required, why the policy was changed.

“When an agency departs from past practice, it must provide a reasoned analysis indicating that prior policies and standards are being deliberately changed, not casually ignored,” wrote Tatel.

An FCC spokesperson said the commission was “studying the opinion now and considering the options available to the commission.”

GOP commissioner Ajit Pai, who noted that the order was passed by the FCC in a party-line vote, hailed the decision, calling it “a good case study of how bad process leads to bad outcomes” because he was given only hours to cast his vote. “No justification was provided for this extremely truncated review process. Based on today’s D.C. Circuit decision, it is obvious that the commission’s order would have benefited from more thoughtful deliberation,” Pai said in a statement.

With this court case resolved, the FCC should be ready to restart the informal 180-day merger review shot clock on the AT&T / DirecTV merger.  When the FCC paused the AT&T clock at day 170, it said that “the commission would be advantaged by knowing the resolution of the pending Petition for Review.”

The FCC declined to comment about the AT&T-DirecTV merger shot clock.