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While Time Warner Cable’s current merger à trois with Charter and Bright House is getting significantly less attention than TWC’s recent failed fling with Comcast, but these nuptials aren’t without their detractors.
While many people took today to celebrate and ruminate on Columbus’ accidental non-discovery of land near the United States, the National Association of Broadcasters filed a petition [PDF] with the Federal Communications Commission asking it to suspend its ongoing review of the three-way telecom tie-up — at least until the FCC reformed its rules on broadcast TV ownership.
“The Commission has no legal or public policy basis for continuing to approve pay-TV mergers that tilt the competitive playing field against local broadcast TV stations subject to asymmetric FCC regulations uniquely disfavoring locally-oriented free television services,” reads the petition.
Section 202(h) of the Telecommunications Act requires the FCC to regularly review its rules and “repeal or modify any regulation it determines to be no longer in the public interest.” That review is long overdue, says the NAB, which believes there are a number of rules in place that unfairly favor cable companies.
One of the big issues involves rules that effectively block local TV operators from jointly selling advertising airtime in the same market. The NAB argues that pay-TV providers are not bound by such a rule and can unfairly “create a single platform for local and national advertisers.”
And this imbalance only increases when the FCC approves pay-TV consolidation, contends the petition. The proposed merger, which the NAB estimates would consolidate 79% of pay-TV subscribers in the hands of just four providers, would, according to the petition, “be able to compete more vigorously for advertising than a broadcast TV station prohibited from entering into even a single joint agreement for the sale of advertising. Approval of the merger will therefore further undermine economic support for the public’s free TV option.”
In the petition the NAB rails against the “creation of yet another pay-TV behemoth” that it believes “would further competitively disadvantage local broadcast stations kept by outdated ownership rules from achieving a fraction of the vital economies of scale and scope” that these pay-TV providers enjoy.
The broadcast trade group argues that there is no public benefit to allowing this merger to go forward.
“[T]he competitive hobbling of free broadcast TV services only leaves viewers more dependent on increasingly expensive subscription services offered by companies with abysmal customer service ratings,” reads the petition. “Because a viable, free over-the-air broadcast service is more important than ever in an era of consolidated pay-TV providers that consistently raise consumer prices above the rate of inflation, the Commission should not consider yet another massive pay-TV merger,” until it completes review of, and reforms, the broadcast ownership rules.
“If the Commission refuses to reform its broadcast-only ownership restrictions to reflect current competitive realities, however, then it should deny the proposed merger,” concludes the NAB.
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