Access Flap Won't Doom DirecTV Deal

Author:
Publish date:

Rupert Murdoch's News Corp. is unwilling to let a program-access flap hinder
its $6.6 billion deal to take control of DirecTV Inc. parent Hughes Electronics
Corp., a News Corp. source said.

Some in the cable industry raised a fuss when News Corp. announced that if
given the opportunity, it would bid to acquire Liberty Media Corp. programming
that Liberty decided to sell exclusively to the highest satellite bidder.

Reserving the right to exclusive deals with Liberty struck one senior
cable-industry lobbyist as possibly undercutting News Corp.'s overarching
promise to share Liberty's programming with other pay TV distributors while that
company remained a major investor in News Corp.

"If it becomes a problem, we will just get rid of that provision. There has
been so much made of this," a News Corp. source said. "We are not going to let
this be an issue. We'll just take if off the table."

When the deal was announced two weeks ago, News Corp., on its own motion,
agreed to comply with Federal Communications Commission rules that bar exclusive
carriage deals between cable operators and satellite-delivered programming
networks owned by cable companies.

Last year, the FCC extended the program-access rules another five years.

News Corp. did make one small exception for Liberty to avoid the possibility
of EchoStar Communications Corp.'s Dish Network obtaining access to Liberty's
DBS-exclusive programming by default.

"If Liberty ever decided to do a DBS-exclusive offering, we would want to bid
for that against EchoStar, so that EchoStar did not automatically get it. That's
what that was designed to do," a News Corp. source said.

Because it owns a cable system in Puerto Rico, Liberty is covered by the
FCC's program-access rules, according to the agency's latest cable-competition
report.

While Liberty is barred from withholding programming from DBS, it is not
barred from signing exclusive deals with satellite providers -- a fact that had
some wondering why News Corp. even bothered to call attention to possible
exclusivity with Liberty in the first place.

News Corp. was not saying when it would file a public-interest statement with
the FCC other than as soon as possible. In the filing, News Corp. plans to ask
the commission to make its program-access commitment a merger-approval
condition.

Related