US Democratic presidential candidate Bernie Sanders and four colleagues in the Senate have told the Department of Justice (DoJ) and Federal Communications Commission (FCC) that they have “significant concern” that Charter Communications’ planned takeover of Time Warner Cable and Bright House Networks could have negative effects on consumer choice, competition and innovation in the broadband and online video distribution markets. Charter has responded by saying it is “a different type of cable company”.
US Democratic presidential candidate Bernie Sanders (pictured) and four colleagues in the Senate have told the Department of Justice (DoJ) and Federal Communications Commission (FCC) that they have “significant concern” that Charter Communications’ (NASDAQ:CHRTR) planned takeover of Time Warner Cable (NYSE:TWC) and Bright House Networks could have negative effects on consumer choice, competition and innovation in the broadband and online video distribution markets.
In a letter to attorney general Loretta Lynch and FCC chair Tom Wheeler, the five senators argued that the combined company, New Charter, would create a nationwide broadband duopoly with Comcast. They pointed to a 2015 FCC report which found that the two cablecos would control nearly two-thirds of the country’s homes with high-speed broadband.
As such, they called upon the federal regulators to “carefully evaluate” the proposed deal’s likely impact on the telecoms sector, noting that New Charter must prove it is in the public interest.
“Unfortunately, the proposed deal raises serious concerns about the future of this critical marketplace because it would establish a duopoly in the high-speed broadband industry,” they said. “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, who also included Elizabeth Warren, Ed Markey, Ron Wyden and Al Franken, argued that consolidation among broadband incumbents stands in direct contrast to what they believe the sector needs: greater competition.
They also expressed concern over the level of debt required to fund the merger, saying New Charter will emerge from the deal with billions of dollars of debt which might ultimately be passed on to consumers or hamper network investments.
In the case of the online video distribution (OVD) market, they contended that New Charter could have greater incentive to “close off the possibility of new OVD competitors, causing harms to the online streaming service market and consumers”.
Charter responded to the letter by saying it 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,” the company said.
It noted that it has received broad support from OVD provider Netflix “because of its online video friendly practices” as well as from independent programmers and regulators.
“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 week, John Malone-backed Charter said it has received approval for the merger with TWC from the State of New Jersey Board of Public Utilities. This followed clearance by the State of New York last month. The cableco still needs the approval of two more states as well as the federal regulators.
Charter agreed to buy TWC and Bright House for US$56bn and US$10.4bn respectively in May 2015.
In late January, over a dozen opponents to the merger formed the Stop Mega Cable Coalition to raise awareness about the threat they contend it poses to cable TV and broadband markets.
Charter was not immediately available for comment.