FOR IMMEDIATE RELEASE
Thursday, July 13, 2006
Contact:
- Jeannine Kenney, CU, 202.462.6262
- Mark Cooper, CFA 301.384.2204
Consumer Groups Say FCC Approval of Cable Deal Leaves Consumers with Fewer Programming Choices, Prospect of Higher Cable Rates
Consumer groups today said the Federal Communications Commission's approval of the sale of Adelphia Communications to the nation's two largest cable companies, TimeWarner and Comcast, will solidify cable dominance and give the companies even greater control over what channels are available to consumers nationally.
"Today FCC largely rubberstamped a deal that allows two cable giants to divide and conquer the already concentrated cable market that has delivered skyrocketing cable rates to consumers," said Mark Cooper, director of consumer research for the Consumer Federation of America. "The Commission failed to impose meaningful requirements that prevent TimeWarner and Comcast from squeezing out any existing local competitor and make it next to impossible for new competitors to gain a foothold."
The $17.6 billion transaction not only transfers bankrupt Adelphia's properties to TimeWarner and Comcast and allocates them to reinforce their control of specific markets; it swaps the existing properties that include nearly 2 million subscribers of the two cable giants. The asset swaps provide the companies with market dominance in regions where both companies now operate.
"This deal not only promises Comcast or TimeWarner customers more of the same cable rate hikes they've seen in the last ten years," said Gene Kimmelman, vice president for Consumers Union, the non-profit publisher of Consumer Reports, "it tightens the companies' stranglehold over what channels are available to consumers and strengthens their ability to force-feed consumers channels they don't want and don't watch."
Both TimeWarner and Comcast not only operate the country's two largest cable systems with some 50 million subscribers but also produce many popular national channels like E! Entertainment (Comcast), and CNN (TimeWarner) as well as regional sports channels such as Sportsnet Philadelphia. The FCC imposed conditions that prevent the cable companies from denying competitors carriage of must-have regional sports networks they own or refusing to carry sports networks owned by unaffiliated companies. The FCC also required the cable companies to engage in binding arbitration with independent programmers who seek to lease space on cable systems.
Consumer groups had sought additional conditions to prevent the cable giants from requiring their competitors to buy all the channels TimeWarner and Comcast own just to receive must-have channels the companies own?known as bundling. The groups alleged that bundling arrangements not only drive up costs to consumers and foreclose carriage opportunities for unaffiliated, independent channels.
"Though FCC's conditions are welcome, they do nothing to alter the even stronger gatekeeper role these companies play over what channels consumers have access to," Kimmelman said. "By letting these companies grow larger and more regionally consolidated, they have even more control over what programs consumers have access to."
The groups also criticized the Commission's failure to impose network neutrality requirements on the two cable companies as it did in the SBC/ATT and Verizon/MCI mergers approved last year.
"Given the dramatic expansion of the companies' regional power, FCC should have prevented them from using that power to discriminate against their competitors offering services over broadband," said Cooper. "The approval of this merger only makes the inclusion of network neutrality language even more in critical in any legislation," concluded Cooper.
-30-
