Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) Applications of AT&T and DIRECTV for ) MB Docket No. 14-90 Consent to Assign and Transfer Control of ) FCC Licenses and Authorizations ) ) ) JOINT PETITION TO DENY OF THE ALLIANCE FOR COMMUNITY MEDIA, THE ALLIANCE FOR COMMUNICATIONS DEMOCRACY, AND COMMON CAUSE Michael S. Wassenaar James N. Horwood ACM Public Policy Advocate Tillman L. Lay Alliance for Community Media Spiegel & McDiarmid LLP 4248 Park Glen Road 1875 Eye Street, NW Minneapolis, MN 55416 Suite 700 (612) 298-3805 Washington, DC 20006 (202) 879-4000 Todd O’Boyle Program Director Media and Democracy Program Common Cause 1133 19th Street, NW 9th Floor Washington, DC 20036 September 16, 2014 TABLE OF CONTENTS Page I. INTRODUCTION AND SUMMARY .................................................................................... 1 II. THE AT&T/ DIRECTV TRANSACTION WOULD NOT SERVE THE PUBLIC INTEREST. ..................................................................................................... 4 A. Claims to the contrary notwithstanding, AT&T and DIRECTV are clearly MVPD competitors, and the transaction would substantially lessen competition. ........... 5 B. AT&T/DIRECTV’s proffered public benefits are illusory and prove too much. ............. 8 1. “Enhanced” video and broadband services. ................................................................ 8 2. Reduced programming costs and other cost savings. ................................................. 10 3. The Application’s other alleged public benefits. ........................................................ 12 III. THE AT&T/DIRECTV TRANSACTION WOULD DISSERVE THE PUBLIC INTEREST BY HARMING PEG AND LOCALISM. .......................................... 13 A. PEG programming is essential to preserving localism, diversity and an informed electorate. ......................................................................................................... 14 B. The AT&T/DIRECTV transaction would inflict substantial and incurable harm on PEG, localism and the public interest ............................................................... 18 1. AT&T’s channel 99 “PEG Product” suppresses PEG accessibility and viewership and violates the Cable Act and FCC rules. .............................................. 19 2. The transaction would undermine localism. ............................................................... 21 a. The transaction would lead to less localism in MVPD programming content. ................................................................................................................... 21 b. The transaction would promote migration to DBS and away from PEG obligations, thereby undermining localism. ................................................... 24 IV. CONCLUSION ..................................................................................................................... 26 The Alliance for Communications Democracy: Aggregate Data on Cable Viewership ...................................................................................................... Appendix 1 Results of ACM Fall 2012 Survey of Over 200 PEG Centers’ Election Coverage and Programming .......................................................................................... Appendix 2 Examples of PEG Election-Related Programming ........................................................ Appendix 3 Analysis of Recent PEG Access Center Closures, Funding Cutbacks and Related Threats........................................................................................................ Appendix 4 Declaration of Michael S. Wassenaar ............................................................................ Appendix 5 i JOINT PETITION TO DENY OF THE ALLIANCE FOR COMMUNITY MEDIA, THE ALLIANCE FOR COMMUNICATIONS DEMOCRACY, AND COMMON CAUSE I. INTRODUCTION AND SUMMARY The Alliance for Community Media (“ACM”), the Alliance for Communications Democracy (“ACD”), and Common Cause submit this petition to deny the application of AT&T and DIRECTV to transfer control of DIRECTV’s FCC and other authorizations to AT&T (“Application”). ACM is a national nonprofit membership organization representing over 3,000 public, educational and governmental (“PEG”) access organizations and community media centers, and PEG programmers throughout the nation. Those PEG organizations and centers include more than 1.2 million volunteers and 250,000 community groups that provide PEG access television programming in local communities across the United States. ACD is a national membership organization of nonprofit PEG organizations that supports efforts to protect the rights of the public to communicate via cable television, and promotes the availability of the widest possible diversity of information sources and services to the public.1 The organizations represented by ACD have helped thousands of members of the public, educational institutions, and local governments make use of PEG channels that have been established in their communities pursuant to franchise agreements and federal law. 47 U.S.C. § 531. Common Cause is a nonpartisan, grassroots organization dedicated to restoring the core values of American democracy, reinventing an open, honest, and accountable government that 1 ACD’s members are: Access Humboldt, Eureka, California; Capital Community TV, Salem, Oregon; Chicago Access Network Television, Chicago, Illinois; CreaTV, San Jose, California; Manhattan Neighborhood Network, New York City, New York; MetroEast Community Media, Gresham, Oregon; and Alliance for Community Media Western Region. works for the public interest, and empowering ordinary people to make their voices heard. Its 400,000 members are organized in 35 state chapters. The Public Notice sought comments from all interested persons to assist the Commission in its independent review of the proposed transfer of control of FCC licenses and other authorizations which, if effectuated, would result in the sale of all of the assets of DIRECTV and its subsidiaries and related entities to a subsidiary of AT&T. 2 For the reasons set forth below, consent to the proposed transfers and other authorizations should be denied. First, the supposed public interest benefits asserted by AT&T and DIRECTV are illusory. The transaction would eliminate a competitor from the multichannel video programming distributor (“MVPD”) market throughout AT&T’s 22-state incumbent local exchange carrier (“ILEC”) region. Moreover, the Application’s proffered justifications for the transaction prove too much: the supposed minimum scale efficiencies that the transaction seeks to achieve merely prove that the MVPD market is inherently not competitively structured and that approval of this transaction would thwart localism. Second, the transaction would have a substantial adverse effect on the public interest by undermining localism, which is served by PEG access programming on cable television systems, including the U-Verse video service offering on AT&T’s cable systems. AT&T has resisted any meaningful accommodation of PEG access on its U-Verse platform. The combination of AT&T with DIRECTV, which does not provide for any PEG programming on its platform, would lead to a localism race-to-the-bottom and threaten the continued availability and viability of all local independent programming and content. That risk is particularly acute for PEG, the one area in 2 See Commission Seeks Comment on Applications of AT&T Inc. and DIRECTV to Transfer Control of FCC Licensees and other Authorizations, Public Notice, MB Docket No. 14-90, DA 14-1129 (rel. Aug. 17, 2014). 2 the Cable Communications Policy Act of 1984 (“Cable Act”) with a specific and enduring mission to encourage public participation and to foster diversity and localism. The legislative history of the 1984 Cable Act recognizes the importance of providing for local needs in cable franchising: The ability of a local government entity to require particular cable [PEG] facilities (and to enforce requirements in the franchise to provide those [PEG] facilities) is essential if cable systems are to be tailored to the needs of each community [and the legislation] explicitly grants this power to the franchising authority. 3 ACM and ACD filed joint Comments on August 25, 2014, in MB Docket No. 14-57, Applications of Comcast Corporation, Time Warner Cable Inc., Charter Communications, Inc. and SpinCo to Assign and Transfer Control of FCC Licenses and Other Authorizations, in which they took the position that if the Commission were to find that the transactions would otherwise be in the public interest, the FCC should find that (a) the PEG conditions proposed in those comments are essential to ensuring that those transactions are in the public interest; (b) the PEG conditions offered by Comcast are inadequate; and (c) the conditions proposed in the ACM/ACD comments should be required in any consent given by the FCC. In submitting comments in the Comcast proceeding, ACM and ACD did not take a position that the Commission should approve those transactions. Rather, ACM and ACD recognized that other parties would be taking positions opposing the merger or proposing additional conditions beyond those proposed by ACM and ACD. In contrast to the Comcast proceeding, where Comcast voluntarily offered conditions to address PEG access (albeit in a meager and wholly inadequate way), AT&T does not even acknowledge or otherwise recognize the existence, let alone importance, of PEG. Moreover, the 3