Senate Commerce Committee chairman John McCain has arranged the first hearing to scrutinize News Corp.'s $6.6 billion deal to gain control of Hughes Electronic Corp. — owner of DirecTV Inc., the 11 million-subscriber pay TV service attacking cable operators from the heavens.
But the Arizona Republican's hearing tomorrow (May 6) won't be exclusively about the News-Hughes combo. For years, McCain has complained about cable rates and program-packaging options for cable subscribers. On Tuesday, McCain will have his chance to quiz some experts.
Although Murdoch is skipping the McCain hearing, he is scheduled to be the star attraction two days later before the House Judiciary Committee, under chairman James Sensenbrenner (R-Wisc.).
Murdoch is expected to testify before that panel, along with Consumers Union's Gene Kimmelman and small cable operator Neil Schnog, president of Uvision LLC in Oregon.
Acquiring DirecTV would position Murdoch's News Corp. as a chief distribution rival to cable, while also serving as one of its key content providers.
With control of a broadcast network, a Hollywood studio, TV stations, cable networks, newspapers and a book publisher, Murdoch's move into the U.S. pay-TV distribution market has cable operator large and small and direct-broadcast satellite rival EchoStar Communications Corp. wondering how they are to compete against Murdoch's empire.
According to McCain's press office, other hearing witnesses include Cox Communications Inc. CEO James Robbins, Cablevision Systems Corp. chairman Charles F. Dolan, CableDirect CEO Jim Gleason and Kimmelman.
A Cox official said Robbins plans to testify about how rising programming costs and broadcaster retransmission-consent "abuses" have affected cable rates, and about media concentration issues in general.
Leo Hindery — once a familiar face on Capitol Hill from his cable-operator days — has agreed to testify, likely on the Yankees Entertainment & Sports Network's arduous, extra-inning campaign to secure distribution from Cablevision, and how that reflects on other independent programmers trying to obtain carriage with vertically integrated cable operators.
EchoStar chairman and CEO Charlie Ergen — who is expected to raise a number of concerns about the News Corp.-Hughes combination — is unable to testify because EchoStar is holding its annual shareholders' meeting in Denver, on the same day as the hearing.
Ergen met pols
Ergen visited Washington, D.C., last Wednesday and Thursday, but sources would not disclose whether he met with McCain, other lawmakers, or regulators.
Last Friday, News Corp. and Hughes filed jointly a merger application with the Federal Communications Commission, which must approve the DBS license transfer. The Justice Department is expected to review the deal, too.
To appease local TV stations, News Corp. said it was committed to expanding DirecTV's local-into-local commitment "by providing local-into-local service in as many of the 210 DMAs as possible."
News Corp. said it was exploring new technologies in order to expand the local-into-local offering, including the possibility of using some of the Ka-band satellite capacity on Hughes' SpaceWay system to provide DBS service.
News Corp. also said that it's exploring the potential of incorporating digital terrestrial television tuners into DirecTV set-tops in order to give subscribers access to digital over-the-air signals from local broadcasters.