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(Iv) the Effect of the Tying Arrangement Is to Foreclose Competition in T

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(Iv) the Effect of the Tying Arrangement Is to Foreclose Competition in T REDACTED - FOR PUBLICINSPECTION MB DOCKETNO. 10-56 products in separate and distinct product markets; and (iv) the effect ofthe tying arrangement is to foreclose competition in the tied product market. 724 NBCD's conduct meets none ofthese requirements. First, NBCD has demonstrated that it does not possess market power in any relevant programming market.72S As demonstrated in Section IV.B.I, this will remain true following the proposed transaction. Second, NBCD does not "coerce" or "force" MVPDs to select any particular combination or bundle ofchannels.726 To the contrary, upon an MVPD's request NBCU will offer any ofits non-broadcast networks on a standalone basis (except with respect to the HD simulcast versions ofNBCU's SD networks) and will negotiate a rate that reflects the value ofany such networks on a standalone basis. This approach is reflected in the fact that most MVPDs choose to carry 724 See, e.g., Jefferson Parish, 466 U.S. at 12-18; Northern Pac. Ry. Co. v. United States, 356 U.S. 1,5-6 (1958). 72S See NBCU 07-198 Initial Comments at 42-45. 726 FACT's comments are barren ofany credible showing to the contrary. For example, FACT alleges that "NRTC found that it was frequently compelled by the multichannel programmers, including NBCU, to carry all channels offered by the programmers and to carry them on the most widely distributed tier ofservice." FACT Comments at 15. Yet nowhere does FACT specify exactly what programming NBCU allegedly "forced" NRTC to carry, nor does it explain exactly how NBCU "forced" NRTC to carry unwanted channels. Likewise, FACT offers no specific evidence (or even a sworn statement from any ofthe supposedly affected parties) to support its broad allegation that ''NECD has required many ofFACT's members to carry as many as 10 channels on the most widely distributed tier ofprogramming even ifneither the telcos nor their subscribers desire those channels. .. NECD has even mandated that telco distributors reserve space on their expanded basic tier for a yet-to-be-Iaunched, yet-to-be­ named channel." Id. at 26. 213 REDACTED - FOR PUBLICINSPECTION MB DOCKETNO. 10-56 only a subset ofNBCU networks. 727 Ironically, this is also true ofthe smaller MVPDs who claim the greatest "hann" from wholesale bundling.728 Third, commenters have never attempted to establish which products are the tying products and which are the tied products or to show that these products are in separate and distinct markets. As noted, the Commission has generally declined to define narrow product markets within the broader video programming business, so there is no reason to believe that the alleged tying and tied products (whatever they may be) are in separate product markets. Finally, commenters have not demonstrated that NBCU's alleged conduct has foreclosed (i.e., excluded) competition in the tied product market.729 To the contrary, there is no evidence of tied market foreclosure - as demonstrated above, the video programming business is vibrant, dynamic, and highly competitive. 730 727 See NBCU 07-198 Initial Comments at 35 ("Dr. Owen examined the carriage patterns among 1,402 MVPD operators and/or systems for six non-broadcast networks owned by NBCU: Bravo, CNBC, CNBC World, MSNBC, Sci Fi and USA (the "NBCU Networks"). His analysis revealed that 18 percent ofthe MVPDs taking any NBCU network take only a single NBCU network. Only two percent ofthe MVPDs took all six ofthe networks.") (emphasis in original). 728 Compare id. ("Dr. Owen also examined a subset ofthe NBCU data, focusing only on the carriage patters ofsmall MVPDs that carry at least one NBCU network, but that do not contract for any NBCU networks through the National Cable Television Cooperative ("NCTC"). Based on this examination, Dr. Owen concludes that it is unusual for any ofthese small operators to take more than one or two ofthe six NBCU networks studied. Almost 50 percent take only one network, and an additional 35 percent take only two networks.") (footnotes omitted) and NBCU 07-198 Reply Comments at 7 ("Dr. Owen analyzed the carriage patterns of271 cable operators with fewer than 400,000 subscribers that carry at least one NBCU network but that do not contract for any NBCU networks through NCTC. Ofthe 161 operators in this group carrying USA Network, only- approximately nine percent­ carry a package ofchannels consisting ofUSA, MSNBC, CNBC, Sci Fi and Bravo. In fact, more than half the operators in this group carrying USA Network do not carry any ofthe other NBCD networks in this alleged 'bundle."') (footnotes omitted) with CWA Petition to Deny at 15 ("Tying arrangements are particularly problematic for small rural operators and new video competitors with a smaller subscriber base."). 729 As the Supreme Court explained, plaintiffs must show that the challenged restraint "foreclosed so much of the market from penetration by [the defendants'] competitors as to unreasonably restrain competition in the affected market." Jefferson Parish, 466 U.S. at 31 n.51. 730 Note that "[T]here can be no adverse impact on competition" "when a purchaser is 'forced' to buy a product he would not have otherwise bought even from another seller in the tied product market." Id. at 16. 214 REDACTED - FOR PUBLICINSPECTION MB DOCKETNO. 10-56 It should be noted that the Commission has explicitly declined to condemn the practice of offering carriage ofa broadcast signal in conjunction with one or more non-broadcast channels. The Commission has stated that examples ofbargaining proposals "presumptively ... consistent with competitive marketplace considerations and the good faith negotiation requirement" include "proposalsfor carriage conditioned on carriage ofany otherprogramming, such as a broadcaster's digital signals, an affiliated cable programming service, or another broadcast station either in the same or a different market.,,731 The Commission also has held that such a proposal contains "presumptively legitimate terms and conditions or forms ofconsideration" and found nothing to suggest that such a request is "impermissible" or anything "other than a competitive marketplace consideration."732 b. Package or Bundled Discounts Are Generally Pro-Competitive. While NBCU does not engage in tying, it does often offer MVPDs discounted prices if they purchase a larger package ofNBCU programming networks. Such packages or bundled discounts are as ubiquitous in the U.S. economy as volume discounts and are generally pro- competitive. As the Ninth Circuit recently found, "[s]eason tickets, fast food value meals, all-in- one home theater systems - all are bundled discounts. Like individual consumers, institutional purchasers seek and obtain bundled discounts, tOO."733 The pervasive use ofbundled discounts 731 Implementation ofthe Satellite Home View Improvement Act of1999; Retransmission Consent Issues, Good Faith Negotiation and Exclusivity, First Report and Order, 15 FCC Rcd 5445 ~ 56 (2000) (emphasis supplied). 732 Id. The Commission has also considered, but refused to adopt rules specifically prohibiting ehannel­ bundling arrangements. Carriage ofDigital Television Broadcast Signals; Amendments to Part 76 ofthe Commission's Rules, Implementation ofthe Satellite Home View Improvement Act of1999, First Report and Order and Further Notice ofProposed Rulemaking, 16 FCC Red 2598 ~ 35 (2001). 733 Cascade Health Solutions v. PeaceHealth, 515 F.3d 883,894 (9th Cir. 2008). 215 REDACTED - FOR PUBLICINSPECTION MB DOCKETNO. 10-56 throughout American industries shows that they are an essential, ann's-length bargaining tool for both buyers and sellers.734 Programming is no different from other aspects oftelecommunications, where bundling has proved beneficial to customers. 73S Congress expressly endorsed the right ofbroadcasters to bargain for carriage ofan affiliated non-broadcast programming service in exchange for retransmission consent. 736 Cable operators also made clear to broadcasters that they strongly preferred to provide in-kind consideration (such as carriage ofadditional content) rather than cash in exchange for the right to retransmit broadcast signals. As a result, a negotiated combination ofin-kind consideration, cash subscriber fees, and other elements tailored to the preferences ofMVPD purchasers evolved as the fonn oftransaction generally preferred by parties in the wholesale video programming marketplace.737 Bloomberg and others argue that, by increasing the portfolio ofnetworks that Comcast- NBCU can include in a "bundle" for carriage, the transaction potentially excludes carriage of networks that are substitutes for Comcast-NBCU networks, such as unaffiliated business news networks. 738 Bloomberg asks the Commission to prohibit Comcast from offering to any MVPD 734 Id. 73S It is common for telecommunications fmns to offer phone service, Internet service, and television service with bundled discounts for customers who purchase a package. See Ken Belson, Dial Mfor Merger, N.Y. Times, Jan. 28,2005, at Cl; Ken Belson, Cable's Rivals Lure Customers with Packages. N.Y. Times, Nov. 22,2004, at Cl. Similarly, consumers receiving video programming by cable typically subscribe to a "tier" ofservice that allows them to access a bundle ofchannels and pay a monthly subscription fee for that service. 736 See NBCD 07-198 Initial Comments at 9-10. 737 Id. at 13. 738 Marx Report ~ 13. Bloomberg asserts that the transaction "will provide Comcast with the incentive to discriminate against [Bloomberg TV] by offering programming bundling opportunities involving CNBC." Bloomberg Petition to
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