By Greg Hammond, J.D.
The Federal Communications Commission (FCC) has approved, with conditions, Charter Communications, Inc.’s proposed $78 billion acquisition of Time Warner Cable and its related $10.4 billion acquisition of Bright House Networks LLC, the agency announced today. An order detailing the FCC’s reasoning and the conditions will be issued shortly.
FCC Chairman Wheeler issued a statement on April 25, 2016—the date the Justice Department conditionally approved the proposed transaction—asserting that “[i]n conjunction with the Department of Justice, specific FCC conditions [on the transaction] will focus on removing unfair barriers to video competition.” For instance, the merged company could be prohibited from charging usage-based prices or imposing data caps, as well as charging interconnection fees, including to online video providers, which deliver large volumes of Internet traffic to broadband customers.
In its complaint, filed along with the proposed settlement, the Justice Department alleged that the transactions would likely lessen competition substantially in the market for “video programming distribution” to residential customers in violation of Section 7 of the Clayton Act. The combination would create the second-largest cable company and the third-largest multi-channel video distributor in the United States, according to the government. Time Warner has purportedly been the most aggressive multi-channel video distributor in the industry in securing Alternative Distribution Means clauses in its contract with programmers that either prevent the programmer from distributing its content to online video distributors or place certain restrictions on such online distribution.
The proposed final judgment would prohibit the merged company from entering into or enforcing agreements that could make it more difficult for online video distributors to obtain content from programmers, such as Disney or Twentieth Century Fox. In addition, the merged entity would not be permitted to avail itself of other distributors’ most favored nation provisions if they are inconsistent with this prohibition. The settlement would also prohibit retaliation against programmers for licensing to online video distributors.
Companies: Charter Communications Inc.; Bright House Networks LLC; Time Warner Cable Inc.
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