Thursday, December 14, 2017
Business

Concerns grow over Charter Com­mu­ni­ca­tions' planned purchase of Bright House

Comcast's proposed $45 billion merger with Time Warner Cable collapsed last year under pressure from regulators, who found that the combined company would have had both the power and incentive to inhibit the future of streaming video.

Now, as rival Charter Communications seeks approval for its $67.1 billion takeover of Bright House Networks — one of Tampa Bay's main providers — and Time Warner Cable, critics point to the same potential for harm.

"If Comcast's deal for Time Warner Cable was a Category 5 hurricane, Charter-Time Warner is a Category 4," said Jeff Blum, deputy general counsel of Dish Network, the satellite television provider.

If approved, the merger would create a powerful force in the country's broadband market. The combined company would rank as the country's second-largest broadband provider behind Comcast with about 19.4 million subscribers, and the country's No. 3 video provider with 17.3 million customers, across about 40 states.

That increased heft is coming under close scrutiny as federal regulators continue their review of the Charter deals. If approved, the merger would most likely include strong conditions meant to prevent Charter from leveraging its market power to hurt rival streaming services, regulatory experts said. With increased clout, for instance, the company could restrict television networks from selling their content through stand-alone streaming services.

Charter has argued that its deals pose no threat to the online video market because the future of its business depends more on broadband than its legacy video business. Alex Dudley, a Charter spokesman, said in a statement that the company is committed to faster Internet speeds, preserving an open Internet and online video with no data caps or modem fees.

Federal regulators declined to discuss their reviews of Charter's proposed merger with Time Warner Cable and Bright House. But in recent months, antitrust officials have provided some insight into their priorities when considering cable mergers. Central to their analysis has been whether bigger cable firms — with strong bargaining power with programmers and fast-growing broadband Internet businesses — could harm their newest threat: streaming video providers like Netflix and Hulu.

In a September speech, Jonathan Sallet, the general counsel for the Federal Communications Commission, said the agency focused on the streaming companies in its decision to reject Comcast's bid for Time Warner Cable.

The biggest concern was how a combined cable giant, with more than half of the high-speed Internet market and a major portion of the cable video market, could pressure programmers to keep their best content off online video services that competed with cable TV. Such market concentration over distribution would have given the company too much of an incentive to do so, Sallet said.

Announced a month after Comcast aborted its bid last spring, Charter's proposed acquisitions have been the target of significantly less backlash than the Comcast merger.

Some of the loudest critics of the Comcast deal, like Net­flix, have come out in support of Charter's takeover bid. Reed Hastings, Netflix's CEO, said this week that it would be a "tremendous positive" for the streaming industry because of Charter's agreement to a "multiyear, strong net neutrality policy" across its new, bigger footprint.

Yet criticism of the deal has escalated in recent weeks as a number of media and technology companies, public interest groups and others stepped forward to voice concerns over Charter's proposed acquisitions.

In a meeting with FCC officials last week, for example, executives from the media giant Time Warner said that public and private statements by Charter executives suggested that the deal could deter the development of streaming video options, to the detriment of consumers. Dish, one of the most vocal opponents, has urged regulators to reject the proposed merger; its new Sling TV video service, which offers streaming television without a traditional cable or satellite subscription, is one of the offerings that could be harmed.

Dish has joined other opponents of the deal to form a Stop Mega Cable coalition, which wants to raise awareness of the harms that could result from the deal, including increased costs and worse service for customers. In addition to Dish, members of the coalition include the public interest group Public Knowledge, industry trade group USTelecom and Consumers Union, the advocacy arm of Consumer Reports.

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