DirecTV 'Power’ Play?
EchoStar, Others Try to Rein In Liberty’s Clout
By Linda Moss -- Multichannel News, 4/1/2007 8:00:00 PM
Nearly a dozen companies and groups have voiced concern about Liberty Media’s $11 billion deal for DirecTV Group, with EchoStar Communications warning federal regulators that John Malone is trying to re-establish his “market power,” in terms of programming clout, via ownership in the nation’s largest satellite provider.
EchoStar, the No. 2 direct-broadcast satellite company, has asked the Federal Communications Commission to deny approval of Liberty’s proposed $11 billion purchase of News Corp.’s 38.5% ownership of DirecTV, unless there are commitments “to ensure that consumers and the programming market are not adversely affected.”
CROWD OF DISSENTERS
Many of the other comments filed March 23 with the FCC — by RCN, the American Cable Association, the National Association of Broadcasters, the National Cable Television Cooperative, Consumers Union, the Consumer Federation of America, the Free Press and the Media Access Project — seek various strictures and conditions on the Liberty-DirecTV deal.
Both EchoStar and RCN, for example, argued that DirecTV should be barred or limited from acquiring any additional exclusive rights to programming, such as the “NFL Sunday Ticket” package of out-of-market National Football League games.
In its 34-page FCC filing, EchoStar cited in depth the kind of tactics it alleges Liberty engaged in when it benefited from its affiliation with another distribution outlet, namely Liberty chairman Malone’s then-cable company, Tele-Communications Inc.
EchoStar claimed that “it is well-established that TCI and Liberty operated ruthlessly in acquiring and creating programming, and in its treatment of unaffiliated MVPDs [multichannel video-programming distributors] and programmers.”
In its filing, EchoStar also charged that programmer Liberty and its sister companies have “determined that [the] additional 'distribution muscle’ of DirecTV’s national platform is critical to its efforts to expand and enhance its programming assets.”
The net result of the Liberty-DirecTV transaction “is that Liberty will rejoin the ranks of vertically integrated major media conglomerates [including News Corp.] that can dictate the terms and conditions of programming — e.g. higher price and less choice — to MVPDs and consumers,” EchoStar claimed.
LIBERTY: LOTS OF CONTENT
Liberty, which couldn’t be reached for comment, has ownership in programming services such as Discovery, Starz, QVC, Game Show Network and Hallmark Channel. It will also get News Corp.’s stakes in three regional sports channels as a result of its acquisition of Rupert Murdoch’s piece of DirecTV, a national distribution platform with 16 million subscribers.
The FCC imposed various conditions on News Corp. in 2003 in exchange for approving the media giant’s purchase of a stake in DirecTV. EchoStar has asked the agency to tweak those strictures so that they will be specifically tailored to Liberty taking News Corp.’s DirecTV stake.
For example, one of the 2003 conditions was that a distributor could take a dispute with a News Corp. regional sports network to arbitration. EchoStar argued that this arbitration right “should apply to any Liberty-affiliated RSN, including after-acquired or new RSNs.” Liberty’s attempt to “limit the condition to the three RSNs included in this transaction should be rejected,” EchoStar said in its filing.
ACCESS RULES SHOULD APPLY
EchoStar and the ACA also maintained that program-access protections should apply to DirecTV-affiliated programming.
“Efforts to limit the reach of those protections to a subset of Liberty’s holdings [Liberty Media] should be denied,” EchoStar said in its filing, adding that program-access protections should provide for third-party arbitration for all Liberty programming.
“It is apparent that Liberty will capitalize on its reintegration with a MVPD and either acquire or create new programming, hence creating more vertical integration,” EchoStar said in its papers.
The ACA asked that the FCC impose even more stringent conditions on the proposed Liberty-DirecTV deal than the old ones from the News Corp.-DirecTV deal. The ACA wants a 10-year term on the strictures, not six years, and for program-access and non-discrimination conditions to also cover Discovery’s networks.
“Here, we face yet another proposed combination aligning the market power of 'must-have’ channels with the market power of one of the nation’s top MVPDs,” the ACA said in its petition.
In its FCC filing, the NAB asked whether Liberty plans to keep News Corp.’s DirecTV commitment to provide local-to-local service into all 210 TV markets by 2008.
In a separate petition, a group of TV stations, North Dakota Broadcasters, asked the FCC to reject the Liberty-DirecTV deal because the satellite provider is not offering local-to-local service in the 158th-ranked Minot-Bismarck-Dickinson market. The North Dakota broadcasters said DirecTV should not be allowed to devote channel capacity to HDTV service in big markets before providing local TV service in all 210 markets.
An Industry Metronome
08/23/2009EchoStar: Beware Liberty-DirecTV
03/26/2007News Corp. Wants Out Of DirecTV Conditions
04/02/2008News Corp.: Lift Limits
04/15/2007
