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Judges Question FCC's Need for Contracts in Comcast-Time Warner Cable Deal

Has the FCC made the "necessary link" in justify its needs?

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Appeals court judges questioned government lawyers Friday about why media companies’ confidential programming contracts and related documents should be made available to some parties in the government’s ongoing review of Comcast’s acquisition of Time Warner Cable and AT&T’s deal to acquire DirecTV.

A three-judge panel heard arguments in the case Friday morning and questioned a Federal Communications Commission lawyer about why the agency needs to share thousands of confidential media company documents — including contracts, emails and other documents describing contract negotiations — with outside parties, including lawyers for other media companies and public interest groups.

CBS, Disney and 21st Century Fox are among the media companies that asked the U.S. Court of Appeals for the D.C. Circuit to overturn a Federal Communications Commission decision to allow outside parties involved in the government’s review of the Comcast-Time Warner Cable deal to see programming contracts. Although those parties would be required to sign confidentiality agreements, the media companies are worried that details of their contracts could leak out to competitors anyway.

Two judges — David Tatel and Sri Srinivasan — peppered the FCC’s attorney with questions about whether the agency had made the technical case for why it needed the documents released. They focused on technical language that the agency has used to argue for disclosure and focused on whether the FCC had made the “necessary link” to justify its needs.

The FCC has argued that it needs to make the documents available to outside parties so they can help agency lawyers complete their review of the deal. FCC attorneys have argued that since they require what are essentially non-disclosure agreements to be signed by outside parties, there should be no problem in allowing them to see the documents.

The other judge on the panel, Robert Wilkins, noted that the FCC’s protective order, which prevents parties who see the documents from sharing their contents, “doesn’t prevent them from using it.”

The programming contracts have been in the hands of Justice Department and FCC officials for months. The FCC wants to share the media companies’ programming contracts with outside parties in order to get extra input about whether it should allow Comcast* to acquire Time Warner Cable or how to craft conditions for the deal.

The media companies are worried competitors would use the data during future contract negotiations, even though the information is only supposed to be used in relation to the FCC’s reviews of the Comcast-Time Warner Cable and AT&T-DirecTV deals.

A lawyer for CBS said the FCC wants “hundreds of thousands of pages” to be released to third parties — including groups hoping to block the deal — because of a desire to do some “crowdsourcing,” he said.

After the hearing had concluded, hallway chatter among some media lawyers who had attended suggested that they thought the judges weren’t very sympathetic to the FCC’s argument. However, it’s often hard to tell how a case will go based on questions asked during oral arguments.

A spokeswoman for Comcast, which had several lawyers at the hearing, said the company had no comment.

A federal appeals court barred the FCC from sharing the programing contracts while the appeal was pending. The case has slowed, somewhat, the FCC’s review of the Comcast-Time Warner cable deal, which the cable giant had hoped would be approved by now. Last month, the two companies extended an agreement until August when it became clear the FCC wasn’t going to finish its review until later this spring.

* Comcast owns NBCUniversal, which is a minority investor in Revere Digital, Re/code’s parent company.

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