Small cable operators claimed victory Monday in connection with merger conditions the Federal Communications Commission imposed on the takeover of DirecTV Inc. by Rupert Murdoch's News Corp.
The FCC, in 3-2 vote Friday along partisan lines, approved the merger, but not before including market protections for small cable companies, as demanded by the American Cable Association, the trade group for hundreds of small cable firms.
News Corp., DirecTV parent Hughes Electronics Corp. and Hughes parent General Motors Corp. announced Monday that the deal has closed.
"The FCC's order is a milestone in recognizing the unique concerns of independent cable and the harms that can be caused by the merger of Fox and DirecTV," ACA president Matt Polka said in a prepared statement. "We applaud the FCC's efforts to limit Fox's ability to use DirecTV, retransmission consent and Fox programming for anti-competitive purposes."
The ACA has complained bitterly about the market power of News Corp., The Walt Disney Co., General Electric Co. and Viacom Inc. News Corp. -- which already owns 35 TV stations and many cable networks -- was poised to become a pay TV competitor to cable after taking over DirecTV.
To minimize Murdoch's leverage over small cable companies, the FCC banned News Corp. from demanding cash and other programming compensation from cable companies with fewer than 5,000 subscribers in talks over carriage of Fox TV stations.
The agency also permitted small cable companies to appoint an agent to negotiate with News Corp. on the carriage of its local TV stations and regional sports networks. News Corp. must negotiate with the agent, the FCC said, and News Corp. is not allowed to pull its broadcast stations and regional sports networks during carriage disputes with all cable companies.
The FCC, however, did not go along with one ACA demand: allowing small cable companies with limited access to their local broadcasters to redistribute local TV signals provided by DirecTV.
"The ACA calls on Fox and DirecTV right now, as a sign of good faith, to negotiate with independent cable for the ability to purchase local-into-local," Polka said.