Satellite TV operator DISH Network Corp. DISH recently filed a petition urging the U.S. Federal Communications Commission (FCC) to dismiss the pending merger between Charter Communications, Inc. CHTR and Time Warner Cable Inc. TWC.
In May 2015, Charter had reached an agreement to buy Time Warner Cable for $78.7 billion, including debt. Moreover, in September this year, the shareholders of both the companies approved all proposals associated with the pending merger, casting more than 99% votes in favor of it. Additionally, Charter’s investors sanctioned the company’s impending buyout of Bright House – the sixth largest U.S. cable operator – for $10.4 billion.
The main motive behind DISH’s move is to highlight the competitive impact that the merger is likely to have on the industry.
Through the appeal, DISH mainly emphasized on the crucial role of high-speed broadband in the video industry and how the merger might harm the competitive development of over-the-top (OTT) video products and services and also restrict consumer access to online video programming.
We remind investors that DISH had also raised objection against the Comcast Corp. CMCSA-Time Warner Cable deal, which eventually fell through following the FCC’s intervention. The regulatory body disapproved the merger as the combined entity would have controlled 35% of the U.S. pay-TV market (exceeding the FCC limit of 30% share) and almost 60% of the high-speed broadband (Internet) market.
Interestingly, DISH’s recent filing states how the planned Charter-Time Warner Cable merger would not be favorable for the public, similar to the one proposed between Comcast-Time Warner Cable.
While the Comcast-Time Warner Cable deal would have created a single dominating entity, this transaction will clear the way for the establishment of two powerful players – Comcast along with Charter-Time Warner Cable – that would serve roughly 90% of the high-speed Internet homes in the U.S. Historically, regulators have emphasized on the importance of pricing competitiveness by maintaining a reasonable number of players in the industry.
Nonetheless, though the Charter-Time Warner Cable deal is likely to face close scrutiny by the FCC, the merged entity of Charter, Time Warner Cable and Bright House, once formed, will jointly serve 23.9 million customers across 41 states. The figure is duly below the highest market share limit set by the FCC.
However, DISH is one of the few companies that is raising objection against this deal, in contrast to the previous merger proposition between Comcast and Time Warner Cable, which had several votes against it.
DISH currently has a Zacks Rank #3 (Hold).
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