As part of conditions it will require for approval of the merger of Charter Communications (NASDAQ: CHTR) with Time Warner Cable (NYSE: TWC), the FCC will restrict the combined cable operator from using contract terms with programmers to stifle their online video efforts.
According to the Wall Street Journal, the FCC recently held meetings with Disney, 21st Century Fox, Time Warner Inc. and other media companies, in an effort to determine how pay-TV program-licensing contract language impacts their ability to migrate video content to the Internet.
The paper said as a condition for the approval of "New Charter," the agency will attach conditions that limit the use of these contract clauses. Consumer advocates are hoping that these conditions will set a precedent affecting the broader pay-TV industry.
Public Knowledge President Gene Kimmelman told WSJ the issue is "front-and-center" for the FCC, which wants to "prevent the two dominant firms from … blocking the expansion of online video stream competition."
Charter spokesman Justin Venech was unavailable for immediate comment. However, he has previously noted to FierceCable that, "New Charter has received significant and broad support from leading OVD provider Netflix because of its online video friendly practices."
Meanwhile, Berin Szoka, president of TechFreedom, a market-oriented think tank, warned that the FCC may be responding to an anti-cable lobbying agenda.
"Banning such clauses is simply part of a long-standing regulatory agenda for critics of cable, who happen to have enormous political sway over this FCC and a very compelling-sounding story to tell," Szoka said WSJ. "The real economics of the situation simply don't matter to them."
- read this Wall Street Journal story
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