[Federal Register Volume 63, Number 22 (Tuesday, February 3, 1998)]
[Notices]
[Pages 5545-5546]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-2573]
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FEDERAL TRADE COMMISSION
[File No. 971-0095]
Cablevision Systems Corporation; Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the draft
complaint that accompanies the consent agreement and the terms of the
consent order--embodied in the consent agreement--that would settle
these allegations.
DATES: Comments must be received on or before April 6, 1998.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
William Baer or Phillip Broyles, FTC/H-374, Washington, DC 20580. (202)
326-2932 or 326-2805.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby
given that the above-captioned consent agreement containing a consent
order to cease and desist, having been filed with and accepted, subject
to final approval, by the Commission, has been placed on the public
record for a period of sixty (60) days. The following Analysis to Aid
Public Comment describes the terms of the consent agreement, and the
allegations in the complaint. An electronic copy of the full text of
the consent agreement package can be obtained from the FTC Home Page
(for January 16, 1998), on the World Wide Web, at ``http://www.ftc.gov/
os/actions/htm.'' A paper copy can be obtained from the FTC Public
Reference Room, Room H-130, Sixth Street and Pennsylvania Avenue, NW.,
Washington, DC 20580, either in person or by calling (202) 326-3627.
Public comment is invited. Such comments or views will be considered by
the Commission and will be available for inspection and copying at its
principal office in accordance with Section 4.9(b)(6)(ii) of the
Commission's Rules of Practice (16 CFR 4.9(b)(6)(ii)).
Analysis To Aid Public Comment on the Provisionally Accepted Consent
Order
I. Introduction
The Federal Trade Commission (``Commission'') has accepted for
public comment from Cablevision Systems Corp. (``CVS'') an Agreement
Containing Consent Order (``Agreement'' or ``Proposed Consent Order'').
The Proposed Consent Order is designed to remedy likely anticompetitive
effects arising from CVS's proposed acquisition of certain cable
television systems presently owned and operated by Tele-Communications,
Inc. (``TCI'') in two relevant markets. This Agreement has been placed
on the public record for sixty (60) days for receipt of comments from
interested persons.
II. Description of the Parties and the Acquisition
CVS is the nation's sixth largest provider of cable television
services to approximately 2.9 million subscribers in 16 states. Through
its majority ownership of Rainbow Media Holdings, Inc., CVS also owns
interests in and manages a number of cable television programming
networks. TCI is the nation's largest provider of cable television
services, with over a 27% share of all U.S. cable television
households. Through its Liberty Media Corp. subsidiary, TCI also owns
an interest in a large number of cable programming networks.
On June 6, 1997, CVS and TCI entered an agreement (the
``acquisition'') whereby TCI will contribute to CVS cable television
systems in New Jersey and New York serving approximately 820,000
subscribers. TCI will receive CVS voting securities valued at
approximately $423 million.
III. The Complaint
The draft complaint accompanying the Proposed Consent Order alleges
that the acquisition would substantially lessen competition in
violation of Section 7 of the Clayton Act, as amended, 15 U.S.C.
Sec. 18, and Section 5 of the FTC Act, as amended, 15 U.S.C. Sec. 45.
According to the draft complaint, the relevant line of commerce
(i.e., product market) is the distribution of multi-channel video
programming by cable television. The distribution of multi-channel
video programming by technologies other than cable television (e.g.,
Direct Broadcast Satellite (``DBS'') or Multichannel Multipoint
Distribution Systems (``MMDS'')) is not included in the relevant
product market because they do not have a significant price-
constraining effect on the prices charged by cable operators to
subscribers. Most cable television subscribers are not likely to switch
to another technology (e.g., DBS or MMDS) in response to a small price
increase by cable television providers. In addition, cable television
operators do not typically change their prices in response to prices
charged by other providers of multi-channel video programming.
According to the draft complaint, the relevant sections of the
country (i.e., the
[[Page 5546]]
geographic markets) in which to analyze the acquisition by CVS of
certain TCI cable television systems are the boroughs of Paramus and
Hillsdale, New Jersey. As alleged in the draft complaint, these markets
are highly concentrated, with only CVS and TCI providing cable
television service in Paramus and Hillsdale. The acquisition would
significantly increase concentration in Paramus and Hillsdale, with
only CVS left to provide cable television service.
According to the draft complaint, entry into the distribution of
multi-channel video programming by cable television is unlikely to be
timely or effective to prevent anticompetitive effects in the relevant
geographic markets.
CVS's acquisition of the TCI cable systems may substantially reduce
competition in the relevant geographic markets by eliminating actual
competition between CVS and TCI to serve existing neighborhoods,
hotels, and apartment complexes, by eliminating actual competition
between CVS and TCI to serve new residential homes, neighborhoods,
hotels, and apartment complexes, and by eliminating actual and
potential competition between CVS and TCI to extend their cable systems
throughout the relevant geographic area. Each of these effects
increases the likelihood that the price of cable television services
will increase, or the quality of that service will decrease in the
relevant sections of the country.
IV. Terms of the Proposed Consent Order
The Proposed Consent Order attempts to remedy the Commission's
competitive concerns about the acquisition. Under the terms of the
Proposed Consent Order, CVS must divest TCI's cable systems in Paramus
and Hillsdale, New Jersey, to a buyer or buyers approved by the
Commission. CVS must have a buyer approved by the Commission within six
(6) months after the date it signs the Agreement Containing Consent
Order. CVS is not required to complete the divestiture within this six-
month time period because municipal approvals can take in excess of
ninety (90) days. If CVS obtains the Commission's approval and files
all necessary applications for other governmental approvals (e.g.,
municipal approvals for franchise transfers) within this six-month
period, the divestiture period is extended by a period of time equal to
the number of days such other governmental body takes to approve or
disapprove the necessary applications.
If CVS has not obtained the Commission's approval for an acquirer
within the mandated six-month divestiture period, the Commission may
appoint a trustee to divest TCI's Paramus and Hillsdale cable systems.
To insure that the trustee can divest the assets, the Commission is
requiring that CVS begin constructing a headend with the necessary
technological capabilities to serve the Paramus and Hillsdale cable
systems if CVS has not obtained the Commission's approval of an
acquirer within the six-month divestiture period.
For a period of ten years from the date that the Proposed Consent
Order becomes final, CVS, with certain exceptions set forth in the
Proposed Consent Order, may not acquire any stock or related assets of
any entity engaged in providing cable television services in Paramus or
Hillsdale without giving the Commission prior notice.
V. Opportunity for Public Comment
The Proposed Consent Order has been placed on the public record for
sixty (60) days for receipt of comments by interested persons. Comments
received during this period will be come part of the public record.
After sixty (60) days, the Commission will again review the Agreement
and the comments received and will decide whether it should withdraw
from the Agreement or make final the Proposed Consent Order.
By accepting the Proposed Consent Order subject to final approval,
the Commission anticipates that the competitive problems alleged in the
complaint will be resolved. The purpose of this analysis is to invite
public comment on the Proposed Consent Order, in order to aid the
Commission in its determination of whether it should make final the
Proposed Consent Order contained in the Agreement. This analysis is not
intended to constitute an official interpretation of the Agreement and
Proposed Consent Order, nor is it intended to modify the terms of the
Proposed Consent Order in any way.
Donald S. Clark,
Secretary.
[FR Doc. 98-2573 Filed 2-2-98; 8:45 am]
BILLING CODE 6750-01-M
