News Corp wins battle for DirecTV
In a 3-2 decision, America's Federal Communications Commission has given a green light to the $6.78bn takeover of the country's biggest satellite provider. Importantly, the Justice Department's anti-trust department indicated it would not challenge the decision. DirecTV serves 12m subscribers.
Some conditions have been attached to the go-ahead, mainly due to concerns that News Corp may use its ownership of the Fox broadcast network and some cable channels as leverage in programme carriage negotiations with local cable operators across America, as well as other satellite TV operators such as EchoStar and Cablevision's HD-heavy Voom. The FCC has said it will not allow News Corp to withhold Fox broadcast programming or the regional Fox Sports networks from cable operators during a complicated dispute resolution process, which can be called upon should either side be unhappy with negotiations. Other conditions mandate that News Corp must offer existing cable programming on non-discriminatory terms and conditions to rivals, and that the company must allow small local cable operators to bargain carriage deals collectively.
FCC chairman Michael Powell said:
"This merger with strict conditions ultimately benefits the American public. News Corporation has a history of taking significant risks and introducing new and innovative media services. Enhanced competition will increase pressure to improve service and lower prices for both cable and satellite television subscribers. This is a particularly compelling public interest benefit in light of continued cable rate hikes. Increased availability of local channels over satellite in rural America means access to more local programming in an additional 30 markets by year end 2004. Consumers are the winners."
As the split decision at the FCC commissioners' board level shows, the move is not without controversy. The FCC is already under fire from when it tried to relax media ownership regulations - a move later reversed in part by lawmakers. One of the commissioners, Jonathan Adelstein, pointed to News Corp's operations in the UK, saying:
"In both the U.K. and Australia, News Corp. employs a strategy of seizing key sporting rights and using them to secure favorable carriage terms. Indeed, as early as 1996, Rupert Murdoch made clear his intention to use his company’s formidable sports programming assets as a 'battering ram' to squeeze out concessions from his rivals."
The FCC previously blocked a merger between DirecTV and its smaller rival, EchoStar.
Check out the full statements from FCC chairman Michael Powell (in support), commissioner Kevin Martin (in support), commissioner Jonathan Adelstein (dissenting), and commissioner Michael Copps (dissenting).