HBO warns that Charter-TWC merger poses risks to online video

Executives for Time Warner Inc. and its HBO programming division met with officials for the FCC's Media and Wireline Competition Bureaus earlier this week, warning them that Charter's (NASDAQ: CHTR) purchases of Time Warner Cable (NYSE: TWC) and Bright House Networks could threaten the deployment of over-the-top services.

"We explained that HBO has long had a strategy of making its content available on multiple platforms and technologies, including through its recent launch of HBO Now," Time Warner Inc. attorneys wrote in an ex parte letter detailing Monday's meeting. 

"We discussed the current status of the programming distribution relationship between HBO and Charter and described in general terms recent interactions between HBO and Charter," the letter said. "The discussion focused on certain statements made by representatives of Charter, both in private interactions and in public forums, including analyst calls and television interviews. Some of these statements raise concerns because they suggest that a combined Charter/Time Warner Cable would be inclined to take action directed at programmers in response to the development of OTT services with the purpose and/or effect of slowing down the development of OTT options to the detriment of consumers."

As for the comments Time Warner Inc. was referring to, Charter President and CEO Tom Rutledge has made a number that fit the description, including this one on Liberty Media's investment day late last year: "Anybody who sells their content over the top and also expects to continue to exist within a bundle sold to cable or satellite providers is really deluding themselves," he said.

With only a steady stream of Dish Network (NASDAQ: DISH) ex parte filings providing dissent, BTIG Research analyst Richard Greenfield, a noted cynic regarding the three-way merger's regulatory chances, had lightened up a bit on the prospect. The Time Warner Inc. meeting, however, soured his outlook. 

"Part of our rising confidence in Charter-Time Warner Cable closing was tied to the lack of 'noise' surrounding the transaction beyond Dish and some public interest groups (compared to seemingly every single constituency loudly complaining about the Comcast-Time Warner Cable transaction last year)," Greenfield said Friday on his blog. "While the noise level still remains far lower, an ex-parte filing yesterday from Time Warner and its HBO division has us wondering if we should be less confident in deal approval than we currently are."

For more:
- read this Time Warner Inc. ex parte filing
- read this BTIG Research blog post

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