Senate Commerce Committee chairman Ted Stevens (R-Alaska) asked the Federal Communications Commission to consider imposing programming conditions on the sale of Adelphia Communications Corp. to Time Warner Inc. and Comcast Corp., informed sources said Wednesday.
In an April 4 letter to the FCC co-signed by Sen. Byron Dorgan (D-N.D.), Stevens took the side of DirecTV Inc. and EchoStar Communications Corp. that Comcast and Time Warner would have the market power to control access to and the price of widely popular regional sports networks, perhaps giving the MSOs too much leverage over pay TV competitors.
“We are greatly concerned about a merger of such scope and believe you should act carefully before approving such a merger,” the lawmakers said.
Stevens is a powerful lawmaker with direct oversight of the FCC. He is preparing a sweeping telecommunications bill that is expected to expedite phone-company entry into cable markets and to address the kinds of financial relationships cable operators may build with Internet-content providers.
Dorgan is an outspoken foe of media consolidation.
A copy of the entire letter was not immediately made available by Stevens and Dorgan aides. But an industry source who had the letter agreed to describe its contents and furnish one quotation.
Time Warner and Comcast have agreed to pay $16.7 billion to acquire bankrupt Adelphia’s 5 million subscribers. Although the Federal Trade Commission approved the deal in February without conditions, the FCC has had it under review for 305 days. It is expected that the FCC won’t act on the Adelphia merger until Robert McDowell has been confirmed to give Republicans a 3-2 majority.
In their letter, Stevens and Dorgan voiced concern that Comcast and Time Warner might migrate programming services to terrestrial-distribution formats in order to withhold the programming from competitors in a manner consistent with federal program-access rules. Those rules require MSOs to sell just satellite-delivered programming that they own.
The lawmakers also said they were concerned that Comcast and Time Warner would control large regional clusters with a high percentage of pay TV subscribers, and that they would use that clout to obtain unaffiliated programming on an exclusive basis, an informed source said.
Stevens and Dorgan also suggested that Comcast and Time Warner might make programming available to satellite on discriminatory terms by offering a license-fee structure designed to ensure that satellite providers pay more than cable for the same programming, an informed source said.
“Competitors can distinguish themselves with certain exclusive content, as DirecTV does with ‘NFL Sunday Ticket,’” Comcast said in a prepared statement.
“Complaints about our decision not to license our Philadelphia sports network to satellite providers have been repeatedly rejected by the FCC and the courts,” the MSO added. “We have again addressed this issue in the FCC's review of the Adelphia transaction, even though it is not relevant.”
Comcast continued, “These transactions do, however, promise great benefits for consumers, including accelerating the deployment of advanced entertainment and communications services and lifting the Adelphia systems out of bankruptcy and placing them on solid financial footing. Approval of this transaction should not be delayed because of this issue.”