Court rules companies can keep merger docs secret

A federal appeals court on Friday decided to keep secret controversial documents about business deals as part of regulators’ review of AT&T’s proposed $48.5 billion merger deal with DirecTV. 

The ruling from the U.S. Court of Appeals for the D.C. Circuit is a victory for programming companies such as CBS and Disney, which had challenged the Federal Communications Commission’s (FCC) demand that they make some business records public.

ADVERTISEMENT

The FCC’s move was “both substantively and procedurally flawed,” Judge David Tatel wrote on behalf of the three-judge panel.

At issue were business documents about the relationships that content providers such as Viacom, Disney and CBS had with DirecTV and other service providers. Last year, the FCC had ordered the companies to release those documents to the public, so that academics, economists and advocacy groups throughout the country would be able to review them and comment on whether or not the merger was in the public interest.  

The programmers, however, had contested the move, saying that disclosing the deals “will cause substantial harm” to their business by giving away the details of their negotiations, which they consider to be trade secrets. 

The FCC’s order had also originally also covered documents submitted as part of Comcast’s proposed merger with Time Warner Cable, though the companies’ decision to abandon that deal in the face of regulatory opposition last month made the matter moot. 

In its ruling on Friday, the appeals court declared that the FCC did not adequately prove why it was “necessary” to make the confidential information public in order to carry out its review.

“[W]e simply have no idea whether [the confidential information] is necessary to that process,” Tatel wrote.

Additionally, the court ruled that the FCC violated procedural rules by giving programmers just five days to appeal the order from its media bureau to the full agency.

By providing so little time to ask for additional review, the "order thus amounts to a substantive and important departure from prior commission policy,” Tatel declared.

The decision came as a blow to outside advocacy groups such as Public Knowledge, which had hoped to review the details of the companies' deals.

"It's unfortunate that this decision could put hurdles in the way of outside parties who are trying to make the case against the AT&T/DirecTV or any other merger,” Public Knowledge said in a statement.

While the decision itself is “relatively narrow,” it could lead to new limits on public review of merger processes, the group feared.