Access Issues Stall DirecTV
By Ted Hearn -- Multichannel News, 10/21/2007 8:00:00 PM
Washington — Program-access issues are holding up the Federal Communications Commission review of the $11 billion deal in which John Malone’s Liberty Media would claim News Corp.’s 38.5% ownership stake in DirecTV, FCC chairman Kevin Martin said last Wednesday.
“It raises a few complicated issues, and we’re working hard on trying to address some of those issues,” Martin told reporters after testifying before a House subcommittee on digital-television transition issues.
Martin’s comments were the first indication that the deal for the top U.S. satellite-TV provider was running into problems inside the five-member agency, where Republicans appointed by President Bush hold a one-vote advantage. Compared to recent cable and phone mergers, the Liberty-News Corp. transaction has not kicked up a lot of dust clouds or garnered much attention in the consumer press.
EchoStar, small cable operators and consumer groups have raised concerns about the deal, including Malone’s return to the distribution side of the pay TV business. Malone was the hard-charging, controversial boss of Tele-Communications Inc., the largest U.S. cable company, before it was sold to AT&T in the late 1990s.
In its own FCC filings, Liberty dismissed the concerns as baseless, claiming competitors were trying to use the FCC merger process to further their own commercial interests.
The FCC has been studying the deal for 239 days (as of Oct. 19), well beyond the 180-day limit the agency has informally imposed on itself to complete a merger review. Parties in a transaction this size have the burden of demonstrating that it would serve the public interest.
Martin — a vocal proponent of the a la carte sale of pay-TV channels — didn’t indicate that he wanted to condition the deal on some kind of commitment from Malone that DirecTV will beef up its per-channel offerings.
“There [are] some issues related to access to programming and how the commitments that have been made by News Corp. and DirecTV will be implicated, in terms of access to programming, now that DirecTV is now going to be not held jointly by News Corp. How some of those commitments are going to transfer, I think, are the issues,” Martin said.
The Justice Department, which has the News-Liberty transaction under review, is apparently taking a close look at the competitive impact of Liberty’s relationship with a Puerto Rico cable company while holding a controlling interest in DirecTV. EchoStar has highlighted the Puerto Rico cross-ownership issue in its own FCC filings.
Liberty has ownership in programming services such as Discovery Channel, Starz, QVC, GSN 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.
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