[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