AT&T says not opposed to Charter-Time Warner deal, asks FCC for careful review

NEW YORK AT&T Inc said it does not oppose the proposed merger of Charter Communications Inc and Time Warner Cable Inc, but in a letter to the U.S. Federal Communications Commission it asked for a careful review on the impact of cable deals on emerging online video products.

Wireless company AT&T, which acquired satellite-TV provider DirecTV in July for $48.5 billion, said in its letter on Tuesday that the $55 billion Charter-TWC deal warranted “careful scrutiny.”

The FCC should “review the transaction carefully and consider the impact of cable consolidation and coordination on emerging competition,” AT&T said.

AT&T has said it plans to roll out new TV streaming and mobile video products. Representatives at Charter and TWC could not be reached for comment.

The U.S. cable industry is undergoing a wave of consolidation as cable companies grapple with declining subscriber numbers, reflecting viewers’ shift to cheaper and more flexible streaming services offered by Netflix Inc, Amazon.com Inc, Hulu, Dish Network Corp and others.

Charter and others have beefed up their higher-margin Internet businesses through consolidation to offset TV subscriber losses.

Charter and TWC combined would control about one-fifth of the U.S. broadband Internet market, according to research firm MoffettNathanson. They hope the proposed merger, announced in May, can bring greater economies of scale, including in negotiations with programmers.

In April, regulatory opposition scuttled a proposed merger of Comcast Corp and TWC. Consumer and industry groups worried it would create a monolith with too much control over what Americans do online and watch on TV.

On Tuesday, Dish filed a petition asking the FCC to deny the proposed Charter Communications-TWC merger, saying the merger would harm emerging competitive online video products and reduce competition and consumer choice.

“The Commission’s Staff and the Department of Justice concluded that allowing Comcast and TWC to merge would create a dominant national platform that could “block the adoption of innovative products, including ‘over-the-top’ video services that threaten the traditional cable business model,” AT&T said. “The instant merger may be different, but the Commission must ensure that the cable industry cannot use coordination to replicate the same mega-cable threat to competition.”

AT&T urged the FCC to consider Charter’s biggest shareholder John Malone’s investments in media and content companies such as Discovery Communications.

“(Cable companies) have an incentive to share programming with each other at reasonable rates, while using that same programming to raise their rivals’ costs,” AT&T said.

(Reporting by Malathi Nayak- Editing by Ken Wills)