B236972 UNITED STATES OF AMERICA
In the Matter of CABLEVISION SYSTEMS CORPORATION, a corporation. Docket No. C-3804 DECISION AND ORDER The Federal Trade Commission ("Commission"), having initiated an investigation of the proposed acquisition by Cablevision Systems Corporation (“Cablevision”) of certain cable television systems owned and operated by Tele-Communications, Inc. (“TCI”), and it now appearing that Cablevision, hereinafter sometimes referred to as "respondent," has been furnished with a copy of a draft complaint that the Bureau of Competition proposed to present to the Commission for its consideration, and which, if issued by the Commission, would charge respondent with violations of the Clayton Act and Federal Trade Commission Act; and Respondent, its attorneys, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by respondent of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission’s Rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondent has violated the said Acts, and that a complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, and having duly considered the comment received, now in further conformity with the procedure prescribed in § 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:
ORDER I. IT IS ORDERED that: As used in this Order, the following definitions shall apply: A. “Agent” or “Representative” means a person that is acting in a fiduciary capacity on behalf of a principal with respect to the specific conduct or action under review or consideration. B. “Acquisition” means the acquisition by Cablevision of certain cable television systems owned and operated directly or indirectly by TCI and serving various communities in New Jersey and New York, as set forth in Paragraph five of the draft of complaint. C. “Respondent” or “Cablevision” means Cablevision Systems Corporation and all of its directors, officers, employees, Agents, and Representatives, and also includes (1) all of Cablevision Systems Corporation’s predecessors, successors, assigns, subsidiaries, and divisions and all of their respective directors, officers, employees, Agents, Representatives, successors, and assigns; and (2) any partnerships, joint ventures, and affiliates that Cablevision Systems Corporation Controls and the respective directors, officers, employees, successors and assigns of each. D. “TCI” means Tele-Communications, Inc. and all of its directors, officers, employees, Agents, and Representatives, and also includes (1) all of Tele-Communications, Inc.’s, predecessors, successors, assigns, subsidiaries, and divisions and all of their respective directors, officers, employees, Agents, Representatives, successors, and assigns; and (2) any partnerships, joint ventures, and affiliates that Tele-Communications, Inc., Controls and the respective directors, officers, employees, successors and assigns of each. E. “Control” has the meaning set forth in 16 C.F.R. § 801.1 as that regulation read on November 1, 1997. F. “Commission” means the Federal Trade Commission. G. “TCI Paramus and Hillsdale Systems Assets” means the Cable Television System Assets that were owned directly or indirectly by TCI prior to this Acquisition and that are physically located in the Relevant Geographic Area, and all other properties, privileges, rights, interests and claims, real and personal, tangible and intangible, of every type and description that are owned, leased, held or used in the provision of Cable Television Service by TCI solely in and for the Relevant Geographic Area, including governmental permits, franchises, intangibles, equipment and real property; provided, however, that “TCI Paramus and Hillsdale Systems Assets” shall not include:
H. “Cable Television Service” means the delivery of video entertainment and informational programming via a Cable Television System. I. “Cable Television System” means a facility, consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment that is designed to provide video entertainment and informational programming to multiple subscribers within a community. J. “Cable Television System Assets” means those physical assets including but not limited to coaxial cable and amplifiers, that make up the facility that is a Cable Television System. K. “Relevant Geographic Area” means that area within the official municipal boundaries of each of the Boroughs of Paramus and Hillsdale in the County of Bergen in the State of New Jersey. L. “Competitiveness, Viability and Marketability” of the TCI Paramus and Hillsdale Systems Assets means that, subject to Paragraph II.D., Cablevision shall continue the operation of the TCI Paramus and Hillsdale Systems Assets in the ordinary course of business without material change or alteration that may adversely affect the value or goodwill of the TCI Paramus and Hillsdale Systems Assets, which do not include a Headend and which are currently operated (including the selection of video programming for distribution over those Assets and the marketing and pricing of Cable Television Service delivered over those Assets) as a part of and from the single Headend of the TCI Northern New Jersey Cable Television System. M. “Headend” means the control center of a Cable Television System, where incoming signals are amplified, converted, and combined, together with signals originated in the Cable Television System, in a common transmission medium for distribution to subscribers. N. “Person” means a corporation, partnership, joint venture or other business entity, whether incorporated or unincorporated. O. “News 12 N.J.” means the regional video programming service known as News 12 New Jersey. P. “TCI Northern New Jersey Cable Television System” means the Cable Television System owned directly or indirectly by TCI that serves fifty-three communities in northern New Jersey from a single Headend located in Oakland, New Jersey, and that, at the time of the Acquisition, includes the TCI Paramus and Hillsdale Systems Assets. Q. “Signing Date” means the date the Respondent executes the Agreement Containing Consent Order. R. “Divestiture Period” means the six (6) month period from the Signing Date. S. “Signal Services” means the transmission by Cablevision from one or more of its Headends of the signals of one or more programming services (including broadcast television signals) to the acquirer of the TCI Paramus and Hillsdale Systems Assets, subject to Cablevision’s and such acquirer’s having the necessary licenses or other authorizations to re- transmit such programming service(s). T. “Bergen Cable Television System” means the Cable Television System owned by Cablevision prior to the Acquisition that serves the Relevant Geographic Area and a number of other communities in and around Bergen County in New Jersey from a single Headend. II. IT IS FURTHER ORDERED that: A. Cablevision shall divest, absolutely and in good faith, the TCI Paramus and Hillsdale Systems Assets within the Divestiture Period; provided, however, that, if Respondent has entered into a binding contract with and has obtained the Commission’s approval for an acquirer and filed all applications for other required governmental approvals within six (6) months from the Signing Date, the Divestiture Period shall be extended by (i) an additional period of time equivalent to the number of days that any governmental body (other than the Commission) takes to approve or disapprove an application necessary to be approved or disapproved prior to completion of the divestiture, and (ii) an additional five business days to enable the closing of the divestiture. Cablevision shall undertake its best efforts to facilitate any governmental approvals required to effect divestiture of the TCI Paramus and Hillsdale Systems Assets and their continued use in Cable Television Service in the Relevant Geographic Area. Cablevision shall grant to the acquirer or acquirers of the TCI Paramus and Hillsdale Systems Assets an indefeasible right to use the two fibers (the “Fibers”) that link the TCI Cable Television System Assets in Paramus and the TCI Cable Television System Assets in Hillsdale for so long as the acquirer or acquirers (and/or their successors in interest) use the Fibers to provide Cable Television Service, and/or voice, data or internet transmissions, in or to the TCI Paramus and Hillsdale Systems Assets. To ensure the availability of cable programming services to the TCI Paramus and Hillsdale Systems Assets after divestiture, for the period of this Order, Cablevision shall waive and not obtain, solely with respect to delivery by the acquirer of the TCI Paramus and Hillsdale Systems Assets by means of a Cable Television System in the Relevant Geographic Area, any exclusive rights to cable programming services, except for News 12 N.J. B. For the purpose of facilitating the divestiture of the TCI Paramus and Hillsdale Systems Assets, Cablevision shall, within the earlier of the termination of the Divestiture Period or divestiture:
C. Cablevision shall divest the TCI Paramus and Hillsdale Systems Assets only to an acquirer or acquirers that receive the prior approval of the Commission and only in a manner that receives the prior approval of the Commission. The purpose of the divestiture of the TCI Paramus and Hillsdale Systems Assets is to ensure the continued use of the TCI Paramus and Hillsdale Systems Assets as an ongoing, viable deliverer of Cable Television Service in the Relevant Geographic Area, and to remedy the lessening of competition resulting from the proposed acquisition of the TCI Paramus and Hillsdale Systems Assets by Cablevision as alleged in the Commission’s complaint. D. Until divestiture of the TCI Paramus and Hillsdale Systems Assets, Cablevision shall take such actions as are necessary to maintain the Competitiveness, Viability and Marketability, as such existed at the time of the Acquisition, of the TCI Paramus and Hillsdale Systems Assets and to prevent the destruction, removal, wasting, deterioration, or impairment of any of the TCI Paramus and Hillsdale Systems Assets except for ordinary wear and tear; provided, however, that nothing in this Order or the annexed Agreement to Hold Separate shall be construed:
E. Until divestiture of the TCI Paramus and Hillsdale Systems Assets, any promotion for the Cable Television Service delivered over Cablevision's Bergen Cable Television System that is offered by Cablevision to existing or potential subscribers located in the Relevant Geographic Area shall be offered on comparable terms to other existing or potential subscribers to the Bergen Cable Television System. III. IT IS FURTHER ORDERED that: A. If Cablevision has not obtained the Commission’s approval of an acquirer for the TCI Paramus and Hillsdale Systems Assets within the Divestiture Period:
B. If Cablevision has, prior to the end of the Divestiture Period, both obtained the Commission’s approval of an acquirer for the TCI Paramus and Hillsdale Assets and filed all applications for other governmental approvals that must be obtained prior to divestiture, but one or more of such approvals are denied after the Divestiture Period, then the Divestiture Period shall be extended by a period of time equal to the time between the date of submission of the application for the approval(s) that were denied and the date that such approval(s) were denied. Notwithstanding this extension of the Divestiture Period, the requirements of Paragraph III.A.2. shall apply. C. If a trustee is appointed by the Commission or a court pursuant to Paragraph III.A.1. of this Order, Cablevision shall consent to the following terms and conditions regarding the trustee’s powers, duties, authority, and responsibilities:
IV. IT IS FURTHER ORDERED that: Cablevision shall comply with all terms of the Hold Separate Agreement, attached to this Order and made a part hereof as Appendix I. The Hold Separate Agreement shall continue in effect until such time as the TCI Paramus and Hillsdale Systems Assets shall have been divested as required by this Order. V. IT IS FURTHER ORDERED that: A. For a period of ten (10) years from the date this Order becomes final, Cablevision shall not, without providing advance written notification to the Commission, directly or indirectly through subsidiaries, partnerships or otherwise:
B. Notification required under this provision shall be given on the Notification and Report Form set forth in the Appendix to Part 803 of Title 16 of the Code of Federal Regulations as amended (hereinafter referred to as “the Notification”), and shall be prepared and transmitted in accordance with the requirements of that part, except that no filing fee will be required for any such notification, notification shall be filed with the Secretary of the Commission, notification need not be made to the United States Department of Justice, and notification is required only of Respondent and not of any other party to the transaction. Respondent shall provide the Notification to the Commission at least thirty days prior to consummating the transaction (hereinafter referred to as the “first waiting period”). If, within the first waiting period, representatives of the Commission make a written request for additional information or documentary material (within the meaning of 16 C.F.R. § 803.20), Respondent shall not consummate the transaction until twenty days after submitting such additional information or documentary material. Early termination of the waiting periods in this paragraph may be requested and, where, appropriate, granted by letter from the Commission’s Bureau of Competition; Provided, however, that prior notification shall not be required by this Paragraph V. for a transaction for which notification is required to be made, and has been made, pursuant to Section 7A of the Clayton Act, 15 U.S.C. § 18a. VI. IT IS FURTHER ORDERED that: A. Within sixty (60) days after the date this Order becomes final and every sixty (60) days thereafter until Cablevision has fully complied with the provisions of Paragraphs II., III., and IV. of this Order, Cablevision shall submit to the Commission a verified written report setting forth in detail the manner and form in which it intends to comply, is complying, and has complied with Paragraphs II., III., and IV. of this Order. Cablevision shall include in its compliance reports, among other things that are required from time to time, a full description of the efforts being made to comply with Paragraphs II., III., and IV. of the Order, including a description of all substantive contacts or negotiations for the divestiture and the identity of all parties contacted. Cablevision shall include in its compliance reports copies of all written communications to and from such parties, and all reports and recommendations concerning divestiture. B. One (1) year from the date this Order becomes final, annually for the next nine (9) years on the anniversary of the date this Order becomes final, and at other times as the Commission may require, Cablevision shall file a verified written report with the Commission setting forth in detail the manner and form in which it has complied and is complying with this Order. VII. IT IS FURTHER ORDERED that: Respondent shall notify the Commission at least thirty (30) days prior to any proposed change in Cablevision such as dissolution, assignment, or sale resulting in the emergence of a successor corporation, or the creation or dissolution of subsidiaries of Cablevision or any other change in Cablevision that may affect compliance obligations arising out of the Order. VIII. IT IS FURTHER ORDERED that: For the purpose of determining or securing compliance with this Order, and subject to any legally recognized privilege, upon written request and on reasonable notice to Cablevision, Cablevision shall permit any duly authorized representative of the Commission: A. Access, during office hours and in the presence of counsel, to inspect any facilities and to inspect and copy all books, ledgers, accounts, correspondence, memoranda and other records and documents in the possession or under the control of Cablevision relating to any matters contained in this Order; and B. Upon five (5) days’ notice to Cablevision and without restraint or interference from it, to interview officers, directors, or employees of Cablevision, who may have counsel present, relating to any matters contained in this Order. By the Commission. Donald S. Clark [SEAL] ISSUED: April 27, 1998 UNITED STATES OF AMERICA In the Matter of CABLEVISION SYSTEMS CORPORATION, a corporation. File No. 971 0095 AGREEMENT TO HOLD SEPARATE This Agreement To Hold Separate (“Agreement”) is by and between Cablevision Systems Corporation (“Cablevision”), a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its principal office and place of business at 1 Media Crossways, Woodbury, New York, 11797; and the Federal Trade Commission (“Commission”), an independent agency of the United States Government, established under the Federal Trade Commission Act, 15 U.S.C. § 41, et seq. WHEREAS Cablevision entered into an agreement with Tele- Communications, Inc. (“TCI”), a Delaware corporation, whereby Cablevision will acquire certain Cable Television Systems owned and operated by TCI (hereinafter the “Acquisition”); and WHEREAS the Commission is now investigating the Acquisition to determine if it would violate any of the statutes enforced by the Commission; and WHEREAS if the Commission accepts the attached Agreement Containing Consent Order (“Consent Agreement”), which would require the divestiture of the TCI Paramus and Hillsdale Systems Assets (as defined in the Consent Agreement), the Commission must place the Consent Agreement on the public record for a period of at least sixty (60) days and may subsequently withdraw such acceptance pursuant to the provisions of Section 2.34 of the Commission’s Rules; and WHEREAS the Commission is concerned that if an understanding is not reached, preserving the independent pricing and marketing of the Cable Television Service provided over the TCI Paramus and Hillsdale Systems Assets in the Relevant Geographic Area during the period prior to the final acceptance and issuance of the Consent Agreement by the Commission (after the 60-day public comment period), divestiture resulting from any proceeding challenging the legality of the Acquisition might not be possible, or might be less than an effective remedy; and WHEREAS the Commission is concerned that if the Acquisition is consummated, it will be necessary to preserve the Commission’s ability to require the divestiture of the assets described in Paragraph II of the Consent Agreement; and WHEREAS the purpose of this Agreement and the Consent Agreement is to preserve the TCI Paramus and Hillsdale Systems Assets pending divestiture, and to remedy any anticompetitive effects of the Acquisition; and WHEREAS Cablevision’s entering into this Agreement shall in no way be construed as an admission by Cablevision that the Acquisition is illegal or has any anticompetitive effects; and WHEREAS Cablevision understands that no act or transaction contemplated by this Agreement shall be deemed immune or exempt from the provisions of the antitrust laws or the Federal Trade Commission Act by reason of anything contained in this Agreement. NOW, THEREFORE, upon the understanding that the Commission has not yet determined whether it will challenge the Acquisition, and in consideration of the Commission’s agreement to accept the Consent Agreement for public comment and grant early termination of the HSR waiting period, the parties agree as follows:
FOR THE FEDERAL TRADE COMMISSION By: _________________________________ FOR CABLEVISION SYSTEMS By: _________________________________ _________________________________ The Commission accepted the consent agreement for public comment on January 15, 1998. Donald S. Clark,
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