Four cable companies Tuesday called on federal regulators to reject the
proposed merger of News Corp. and DirecTV Inc. parent Hughes Electronic Corp. if
the companies fail to endorse conditions designed to curb their bargaining power
over cable companies.
The rejection message was delivered by Cox Communications Inc.,
Advance/Newhouse Communications, Cable One Inc. and Insight Communications Co.
Inc. -- which together serve about 10 million cable subscribers -- in comments
filed with the Federal Communications Commission.
In their own comments, News-Hughes proclaimed that the 40 separate conditions
proposed by merger opponents were self-serving and largely designed to obtain
access to Fox broadcast programming free-of-charge.
"This suggests that what the [cable companies and others] fear is not that
News Corp. and Hughes will act anti-competitively, but rather that they will
compete more effectively," News-Hughes told the FCC in comments defending the
$6.6 billion deal.
The four MSOs effectively endorsed a proposal made by Cablevision System
Corp. last month that News Corp. should be allowed to elect only must-carry for
its 35 local TV stations after completion of the merger.
The cable companies fear that in retransmission-consent negotiations, News
Corp. would threaten to withhold TV-station access until cable companies paid
exorbitant prices not only for the stations, but also for affiliated News Corp.
The MSOs added that failure to reach carriage deals that resulted in the loss
of Fox broadcast network programming even for brief periods would cause the
cable companies to lose subscribers to DirecTV.
"There is ample support in the record for conditions limiting News Corp.'s
ability to use retransmission consent to force higher prices and unwanted
program services on cable subscribers," the MSOs said.
In another endorsement, the MSOs said News-Hughes should be prevented from
driving up the price of sports programming. Consumers, the operators added,
should not have to buy the most widely penetrated programming tier in order to
gain access to News Corp.'s regional sports networks.
"Further safeguards are required to prevent News Corp. from inflating
sports-programming costs," the MSOs said.