As we stated at the beginning of our analysis, our task under the Communications Act is to determine whether the “public interest, convenience and necessity will be served” by the granting of the Application.489 Having determined that the proposed transaction does not violate the Communications Act, other applicable statutes, or our rules, we now employ a balancing process, weighing the potential public interest harms of the proposed transaction that we have found against the potential public interest benefits.490 The Applicants bear the burden of proving, by a preponderance of the evidence, that the proposed transaction, on balance, will serve the public interest.491 Our options are to approve the application without conditions, approve it with conditions, or hold a hearing if we are unable to make the findings required for approval.492 The Application and the substantial record before us make clear that, on balance, the public interest will be served by approval of the Application subject to the conditions that we have discussed above.
Liberty Media’s proposed acquisition of DIRECTV is in many respects similar to News Corp.’s acquisition of DIRECTV, which the Commission approved with conditions in 2003. Liberty Media, like News Corp., controls video programming, and both the potential harms and the potential benefits of the combination of Liberty Media’s and DIRECTV’s assets are in many respects those inherent in the supplier/distributor integration. As we stated in 2003, on the one hand, certain of the potential competitive harms inherent in vertically integrated programming/MVPD providers have been recognized as requiring special remedies to prevent potential abuses. On the other hand, the remedies chosen, at least in recent years, have not generally been structural remedies, such as prohibitions on common ownership of programming and distribution assets, but behavioral remedies, such as requirements for program access and nondiscrimination.493
Recognizing these issues, the Applicants here have generally offered to be bound by the same conditions that the Commission imposed in News Corp. For the reasons discussed above in Section V.C., we accept the Applicants’ proffer and impose similar conditions here, with some small modifications that take into account both the different assets controlled by Liberty Media and News Corp. and the parties’ experience with the implementation of the conditions over the past few years. We conclude that these conditions are sufficient to ameliorate any potential vertical integration harms that might otherwise occur.
On the other hand, unlike in News Corp.-Hughes, this transaction also involves a potential horizontal overlap. If the transaction were to be approved as filed, John Malone would control two of the three MVPD providers serving parts of Puerto Rico: DIRECTV-Puerto Rico (through his control of Liberty Media) and LCPR (through his control of Liberty Global). The transaction would therefore decrease the number of independent MVPD providers serving many Puerto Rico consumers from three to two, and would likely result in increased prices, reduced quality, or decreased choices for those consumers. For the reasons discussed in Section V.C, we therefore are requiring that within one year of the adoption date of this Order, all of the attributable interests connecting DIRECTV-Puerto Rico and LCPR be severed.
We agree with the Applicants that the transaction will benefit the public interest. In particular, we find that the transfer of control of DIRECTV from News Corp. to Liberty Media, which owns fewer programming assets, only two broadcast stations, and far fewer RSNs than News Corp., will lead to less media vertical integration. Liberty Media also owns a minority interest in News Corp. itself, and the transaction will cause Liberty Media and News Corp. to sever their ownership interests with each other. We therefore conclude that the transaction will decrease media consolidation and that this decrease will likely benefit the public.
In sum, we find that the proposed transaction, as conditioned, will not likely cause harm to the public interest, and, that, indeed, it will result in some public interest benefits. Accordingly, after reviewing the record and weighing the potential harms against the potential benefits, we conclude that, on balance, the proposed transaction, as conditioned, will serve the public interest, convenience, and necessity.
VIII.PROCEDURAL MATTERS
A.Applicants’ Waiver Request
The Applicants request a waiver of the Commission’s space station application “cut-off” rules with respect to all pending applications filed by DIRECTV or its subsidiaries for additional space and earth station authorizations, “to the extent that those applications are subject to the Commission’s ‘first-come, first-served’ processing regime.”494 Our rules provide that any pending application that is modified by a “major amendment” after a “cut-off” date specific to that application will be considered to be a “newly filed” application, therefore losing its place in the application processing queue. Prior to 2003, the Commission treated transfer of control applications as major amendments that could affect the length of time of the processing of an application. In 2003, however, the Commission determined that transfers of control would no longer be treated as major amendments of space station applications and would therefore not affect the processing of a space station application under its first-come, first-served procedures. Accordingly, the Commission eliminated the subsection of section 25.116 that classified transfer of control and assignment applications as “major amendments” for purposes of space station processing.495 Thus, for purposes of processing space station applications subject to our first-come, first-served procedures, a transfer of control would have no impact on the status of the application. Accordingly, based on the foregoing, we dismiss the waiver request as moot.
