FCC OKs Adelphia Split

At long last, Comcast and Time Warner Cable received the official OK to carve up Adelphia . The FCC has granted the top two cable companies in the nation conditional approval to split the fifth largest, which fell into bankruptcy four years ago. In a 4-1, vote, with Commissioner Michael Copps dissenting , the commis
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At long last, Comcast and Time Warner Cable received the official OK to carve up Adelphia. The FCC has granted the top two cable companies in the nation conditional approval to split the fifth largest, which fell into bankruptcy four years ago.

In a 4-1, vote, with Commissioner Michael Copps dissenting, the commission got the $17.6 billion Adelphia deal out the door after sitting on it for more than a year. As a condition of the FCC's approval, neither cable operator can enter exclusive contracts for regional sports networks, with the exception of Comcast's own SportsNet in Philadelphia. Competing multichannel video providers that already carry SportsNet, such as overbuilding RCN, are grandfathered in.

Comcast and TWC are also required to seek arbitration if carriage negotiations with regional sports nets not affiliated with a cable operator reach a standstill. Such is the case with Comcast and Mid Atlantic Sports Network -- the stalemate has prevented Washingtonians, including lawmakers, from being able to watch Washington Nationals games at home. Indie networks in general were also granted binding arbitration if unable to reach a leased access agreement with the Big Two. The conditions were imposed for a period of six years.

Splitting Adelphia's 5 million subscribers will leave TWC with more than 14 million subs, up from around 11 million; and Comcast is expected to grow from around 21.7 million to 23 million subs. The companies have said they hope to close the deal July 31, at which point they'll begin swapping systems to concentrate their penetration in various markets. TWC, for example, is expected to end up with about 75 percent of the Los Angeles market, according to the Los Angeles Times.

FCC Chairman Kevin Martin said the arbitration condition "addresses the potential for anti-competitive behavior and facilitates the ability of parties to compete with the incumbent cable operator, to the benefit of consumers."

Copps thought arbitration was lipstick on a pig.

"The potential for harm here is in the sheer economic power of distribution and content that can, and likely will, ensue," he said. "While rescuing Adelphia from the perils of bankruptcy is laudable, the anti-competitive division of assets proposed by the applicants is not. The swapping of media properties contemplated by these two giants has the clear potential, even the probability, of limiting competition in numerous media markets across the country... this decision is about Big Media getting bigger, with consumers left holding the bag."