FCC's Possible VPCI Rules Could End Up in Court
The FCC could end up back before the U.S. Court of Appeals if it goes ahead with proposed rules on treatment of confidential information, said an attorney for a cable programmer that's among a group of programmers raising concerns about how proprietary confidential information will be used and shared during Charter Communications' purchase of Bright House Networks and Time Warner Cable.
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Commissioners Ajit Pai and Michael O’Rielly last week publicly urged the FCC to begin its regulatory review of Charter/TWC/BHN and not let crafting of new confidential information rules supersede that (see 1507300064). The programmers -- CBS, Disney, Scripps Networks Interactive, Time Warner, 21st Century Fox and Viacom -- said in their filing posted Friday that they weren't trying to delay Charter/TWC/BHN "or prevent [FCC] personnel from reviewing highly sensitive commercial information contained in their affiliation and distribution agreements." But such information submitted to the FCC needs walling off "from being disclosed to third parties in a highly competitive marketplace," the programmers said.
Many of the same programmers took the FCC to court last year when, as part of its consideration of Comcast's now-scuttled purchase of TWC and of AT&T's now-completed buy of DirecTV, the FCC ordered them to submit video programming confidential information (VPCI) for review and to make it available for examination by other cable industry companies to help understand what the pay-TV market would look like post deal. It was a decision the U.S. Court of Appeals for the D.C. Circuit subsequently called "substantively and procedurally flawed" (see 1505080053).
New confidential information rules being considered by the commissioners in light of that D.C. Circuit decision would differ greatly from what the FCC tried to do in the AT&T/DirecTV and Comcast/TWC considerations, programmer and FCC officials say. That includes the creation of one category of highly confidential information, instead of segregating some as VPCI; determining that the appellate court standards don't apply if a protective order for the information is in place; and doing away with what had been the FCC's "necessary" standard of letting third parties review information only if there were some necessary link to the transaction. Since such rule changes might fly in the face of the Trade Secrets Act, that might open the door to appealing any rule change directly to the court of appeals instead of petitioning the FCC for reconsideration, said the programmer's lawyer.
VPCI needs to be segregated in the materials the FCC needs for reviewing Charter/TWC/BHN because that would let agency personnel "review the information and ... determine if any VPCI is necessary to review of the proposed transaction," the programmers said. Disclosing information turned out not to be necessary in reviewing such deals as AT&T/DirecTV, but if the FCC does end up changing its confidential information rules, it should first get public input, they said. The FCC declined to comment Tuesday.