Bernie Sanders, Al Franken and three other U.S. senators have raised sharp concerns about the potential for Charter Communications and Comcast to exert “duopoly” control of broadband service if the feds approve the pending $61 billion merger agreement of Charter, Time Warner Cable and Bright House Networks.
The five Democratic senators, who include Ed Markey and Elizabeth Warren of Massachusetts and Ron Wyden of Oregon, sent a letter Thursday citing their skepticism about the public interest merits of the Charter combination to FCC chairman Tom Wheeler and Attorney General Loretta Lynch. The FCC and Justice Department are still in the midst of their review of the merger agreement; the FCC has 28 days left on its 180-day “shot clock” that provides an informal timetable for review of the deal reached last May.
But it’s noteworthy that the letter stops short of asking the agencies to block the deal entirely. The senators urge the regulators to “thoroughly address all of the potential harms” that the Charter/TW Cable/Bright House combo could bring to the telecom marketplace. Last April, Comcast’s planned acquisition of Time Warner Cable was torpedoed by the vocal opposition raised because the combination of the nation’s two largest cable operators would have given Comcast control of a huge chunk of the nation’s broadband subscribers.
Charter swooped in with a deal to acquire TW Cable just weeks after Comcast pulled the plug on its deal as it became clear the feds would not approve the deal without massive conditions. Charter is the nation’s fourth-largest cable operator, so the concentration with TW Cable and Bright House will not be as significant. As such, the opposition to the merger has not been as strenuous, and the betting in the biz is that it will be approved, with conditions.
The letter from the senators — one of whom, Sanders of Vermont, is prominently on the stump as a presidential candidate — appears to be an effort to influence those conditions. “Comcast and New Charter’s dual dominance of the market could lead to a number of concrete harms to consumers, including higher prices and fewer innovative services,” the senators wrote.
Specifically, the letter cites the potential for Comcast and Charter to use their heft in broadband service to “stifle” the emergence of over-the-top distributors. An enlarged Charter would have “increased bargaining power” with programmers that could hurt smaller cablers and “new entrant video services.”
The letter also raises the question of Charter taking on significant debt to finance the transaction and whether that debt would be borne by consumers in the face of higher prices.
Charter has positioned the deal as a benefit to consumers in allowing the company to invest in infrastructure to offer higher speeds in broadband service and better and more innovative programming options for video customers.
“Charter is a different type of cable company—committed to creating American jobs, offering the most innovative products, preserving an open internet and advancing policies that are friendly to both consumers and online video providers. New Charter’s consumer-friendly, pro-broadband policies and national footprint, will enable it to be an industry leader committed to providing superior broadband and video services at competitive rates, improved customer service and a better platform for online video and independent programming,” Charter said in a statement. “New Charter has received broad support from leading OVD provider Netflix because of its online video friendly practices; independent programmers including AXS, Fuse Media and RFD-TV due to its commitment to diverse programming; national multicultural organizations like National Urban League, NAN and LULAC with whom it is collaborating to expand diversity and inclusion; and from the State of New York which recently approved the merger. These parties have taken a close and honest look at the benefits of these transactions and have all come to the same conclusion: these transactions are in the public interest.”
Earlier this month, Sen. Mike Lee (R-Utah) and Sen. Amy Klobuchar (D-Minn.) also sent a letter to Lynch and Wheeler.
Lee, the chair of the Senate antitrust subcommittee, and Klobuchar , its ranking member, didn’t urge them to block the transaction, but they did call attention to two key areas — whether the increased size would give Charter “incentive and ability to interfere with online video distribution services,” and whether the newly merged company will be so big as to demand less money for content and would freeze out independently owned channels.