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Charter-TWC Merger Wins FCC Backing

Republican Pai dissents, but Wheeler gets it done 5/09/2016 8:00 AM Eastern

WASHINGTON — The Federal Communications Commission’s proposed conditional approval of Charter Communications’s $78.7 billion acquisitions of Time Warner Cable and Bright House Networks is a done deal, having secured the requisite three votes (actually it got four) it needs to get the go-ahead, obtained more than a week after chairman Tom Wheeler circulated the item.

 

Senior Republican commissioner Ajit Pai voted against the deal, designed to create a new No. 3 pay TV distributor (with 17.3 million video customers), following Nos. 1 and 2, AT&T-DirecTV and Comcast; and the second-largest broadband provider (19.5 million Internet customers), after Comcast.

 

NO OFFICIAL DETAILS YET

 

At press time, Democratic commissioner Mignon Clyburn declined to comment on her vote, but a source confirmed she had voted to approve, though concurring only in part — likely wishing for even stronger diversity conditions. Wheeler was the first to cast his approving vote, with Democrat Jessica Rosenworcel and Republican Michael O’Rielly joining him later.

 

The FCC said Friday the order with details on the deal would be released “in the coming days.”

 

O’Rielly’s was a partial dissent over the same issues that pushed Pai to vote no: the number of deal conditions and the length of time they will be in effect.

 

“The FCC’s merger review process is badly broken,” a Pai spokesman said. “Chairman Wheeler’s order isn’t about competition, competition, competition; it’s about regulation, regulation, regulation. It’s about imposing conditions that have nothing to do with the merits of this transaction. It’s about the government micromanaging the Internet economy.”

 

While conditions placed on AT&T’s $48.5 billion acquisition of DirecTV in 2015 were for four years, the major terms in this approval last for seven years. (For more, see Multichannel News’ May 2 cover story, “Big Deal, Short Leash.”)

 

The broadband-centric conditions include prohibitions on usage-based pricing, data caps, charging for interconnection and contract terms, including “most-favored-nation” stipulations, “that could harm” online video distributors, though it is left up to the Justice Department to determine what constitutes such OVD harm.

 

Those issues remain in play at the FCC for the general population of pay TV distributors: The FCC is studying data caps and usage-based pricing under its Open Internet order general-conduct standard, for example. For the enlarged Charter, though, they will be off the table.

 

CHARTER PUSHES DIVERSITY

 

Charter worked hard to win Clyburn’s backing after deal critics urged her to seek stronger diversity conditions. Catherine Bohigian, executive vice president of government affairs at Charter, phoned the commissioner midweek to assure her of Charter’s commitment to various diversity- related initiatives, including broadband buildouts and a low-cost, low-income broadband offering. Clyburn is particularly concerned with over-the-top access as a new vehicle for diverse programmers.

 

Craig Aaron, president of passionate deal critic Free Press, slammed Wheeler for allowing the deal with the reported conditions. Public Knowledge was more sanguine, saying that while it wanted more, it appreciated the conditions that were imposed.

 

“The significant benefits of these transactions are clear: Greater competition, more consumer and OTT friendly broadband policies, broader access to affordable broadband, and added U.S. jobs,” Charter CEO Tom Rutledge said. “The conditions are largely extensions of the longstanding consumer-friendly values and practices of our company.”

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