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Charter Signs Agreement With Viacom Restoring Its Cable Networks to Spectrum Select

Phillip Dampier November 15, 2017 Charter Spectrum, Consumer News, Online Video 1 Comment

Viacom and Charter Communications today announced a multi-year renewal of a carriage agreement that will bring back Viacom’s cable networks to almost all Spectrum cable television customers.

As part of the agreement, Charter has agreed to return Nickelodeon, BET, MTV, Comedy Central, Spike (Paramount Network), VH1, TV Land and CMT to Spectrum Select, Charter’s entry-level cable television tier. In 2016, Charter began moving Viacom’s cable networks to its most expensive tiers, Spectrum Silver or Gold, to protest Viacom’s high carriage prices. Most existing customers never realized the networks were moved because the company grandfathered current customers to keep the channels from disappearing. But as Bright House Networks and Time Warner Cable customers migrated to Spectrum packages, many were annoyed to learn Viacom’s networks were missing from the lineup of Spectrum’s most popular cable television tier. Customers had to pay at least $11 a month extra to get many of those networks back.

Charter indicated its agreement allows Spectrum to keep other Viacom-owned networks not mentioned above on its Silver or Gold tiers. The agreement also grants Charter customers access to Viacom networks’ on-demand programming through set-top boxes or mobile apps.

Viacom and Charter have also entered into a partnership for co-production of new original content that will exclusively premiere for subscribers on Charter’s platform in the U.S. Under the agreement, Viacom’s Paramount Television and Charter will jointly produce programming. Viacom will distribute the co-produced programming internationally, as well as in additional domestic markets, including potentially on Viacom Networks, after Charter’s premiere period.

Viacom has also agreed to collaborate on Charter’s forthcoming effort to crackdown on unauthorized password sharing, allowing non-cable subscribers access to programming using a friend or family member’s Spectrum account details.

FCC Approves GCI Acquisition By John Malone’s Liberty Interactive With No Conditions

The Federal Communications Commission has quietly approved the acquisition of Alaska’s largest cable operator by John Malone’s Liberty Interactive with no deal conditions or consumer protections, despite fears the merger will lead to monopoly abuse.

The purchase of Alaska’s General Communications Inc. (GCI) in an all-stock deal valued at $1.12 billion was announced in April 2017. GCI currently offers cable TV and broadband service to 108,000 customers across Alaska, and runs a wireless company.

“We conclude that granting the applications serves the public interest,” the FCC wrote. “After thoroughly reviewing the proposed transaction and the record in this proceeding, we conclude that applicants are fully qualified to transfer control of the licenses and authorizations […] and that the transaction is unlikely to result in public interest harms.”

Various groups and Alaska’s largest phone company petitioned the FCC to deny the merger, claiming GCI’s existing predatory and discriminatory business practices would “continue and worsen upon consummation of the deal.”

Malone

Those objecting to the merger claimed GCI already has monopoly control over broadband-capable middle-mile facilities in “many locations in rural Alaska” and that GCI has refused to allow other service providers wholesale access to that network on “reasonable” terms. They also claimed GCI received substantial taxpayer funds to offer service in Alaska, but in turn charges monopoly rates to schools, libraries, and rural health care providers, as well as residential customers.

Essentially quoting from Liberty’s arguments countering the accusations, the FCC completely dismissed opponents’ claims, noting that Liberty does not provide service in Alaska, meaning there are no horizontal competitive effects that would allow GCI Liberty to control access to more facilities than it does now. On the contrary, the FCC ruled, the merger with a larger company meant the acquisition was good for Alaska.

“Rather than eliminating a potential competitor from the marketplace or combining adjacent entities in a manner that increases their ability to resist third-party competition, […] [this] transaction results in GCI becoming part of a diversified parent entity that will provide more resources for its existing Alaska operations.”

The FCC also rejected claims GCI engages in monopolistic, anti-competitive behavior, ruling that past claims of charging above-market prices are “not a basis for denying the proposed transaction because the allegations are non transaction-specific.”

“Although ACS [Alaska’s largest telephone company] claims that the transaction will exacerbate the behavior it finds objectionable, we see no reason to assume that GCI will have greater ability or incentive to discriminate against rivals in Alaska simply because it has access to more financial resources,” the FCC ruled. “To the contrary, the Commission has generally found that a transaction that could result in a licensee having access to greater resources from a larger company promotes competition, potentially resulting in greater innovation and reduced prices for consumers.”

GCI’s current internet plans are considered more expensive and usage capped than other providers.

In almost every instance, the FCC order approving the merger was in full and complete agreement with the arguments raised by Liberty Interactive in favor of the deal. This also allowed the FCC to reject in full any deal conditions that would have resulted in open access to GCI’s network on fair terms and a requirement to charge public institutions the same rates GCI charges its own employees and internal businesses.

The FCC also accepted at face value Liberty’s arguments that as a larger, more diversified company, it can invest in and operate GCI more reliably than its existing owners can.

“We find that this is likely to provide some benefit to consumers,” the FCC ruled. But the agency also noted that because Liberty executives did not specify that the deal will result in specific, additional deal commitments, “the amount of anticipated service improvements that are likely to result from the […] transaction are difficult to quantify.”

The Justice Department and the Federal Trade Commission earlier approved the merger deal. Most analysts expect the new company, GCI Liberty, exists only to allow Malone to structure the merger with little or no owed tax. Most anticipate that after the merger is complete, the company will be eventually turned over to Charter Communications, where it will operate under the Spectrum brand.

AT&T CEO Denies Anyone in Government Asked Him to Sell CNN

Stephenson

AT&T’s top executive has found himself uncomfortably caught in a political fracas pitting Trump loyalists who want to punish CNN, career staffers that claim they are genuinely concerned about the media concentration that would result from AT&T’s multi-billion dollar acquisition of Time Warner, Inc., and Trump critics rushing to defend whatever they perceive the administration is against.

A frustrated Randall Stephenson, AT&T chairman and CEO, appeared at The New York Times Dealbook Conference in New York Thursday to talk about his astonishment that the company’s merger has become a public political hot potato that theorizes on President Donald Trump’s active dislike of CNN and opponents of the president who suspect the Trump Administration is attempting to punish the news media for its negative coverage of the president.

“I have never been told that the price of getting the deal done was selling CNN, period. And likewise I have never offered to sell CNN,” Stephenson said, refuting rumors that emerged in a Financial Times piece on Wednesday that claimed AT&T would have to dump CNN to get its merger deal approved. “There is absolutely no intention that we would ever sell CNN.”

While repeatedly stressing his conversations with the Department of Justice were strictly confidential, Stephenson was willing to publicly deny that CNN was ever discussed as part of the merger review. Stephenson was not so willing to comment on rumors the DoJ was seeking a divestiture of DirecTV, which AT&T acquired for $48.5 billion in 2014.

Stephenson declared it “makes no sense” to sell CNN or Turner Broadcasting, the Time Warner-owned division that runs TBS, CNN, Headline News, TNT and other cable channels.

“There is a lot of information and data that we think can be used to stand up a new advertising business,” Stephenson said. “Pairing that with the Turner advertising inventory is a really powerful thing, we believe. That is what we aspire to do. Selling CNN makes no sense in that context.”

AT&T CEO Randall Stephenson: ‘I have never been told that the price of getting a deal done was selling CNN’ from CNBC. (2:19)

The political backlash that has since emerged may actually help AT&T’s PR effort to win approval of the deal as Trump critics now rush to defend AT&T as a victim of presidential authoritarianism.

Bloomberg News published an editorial this afternoon calling for the merger to be approved just to stick it to the Trump Administration:

You don’t have to be a fan of the merger to realize that there is something seriously wrong here. As others have noted, the merger appears to be in trouble for a worrisome reason: President Donald Trump hates CNN and wants to inflict some punishment.

That Trump has long opposed the merger is hardly a secret. During his campaign, he said that if AT&T and Time Warner were allowed to combine it would “destroy democracy.” He put out a campaign statement vowing to “break up the new media conglomerate oligopolies” that “are attempting to unduly influence America’s political process.”

As for his antipathy towards CNN, it’s been a running subplot ever since he decided to run for president. He bashed the station all through the campaign and hasn’t let up as president, accusing it of being one of the media outlets that trafficks in “fake news.” A few months ago, he shockingly tweeted an image of a train running over a CNN reporter.

Trump has every right to oppose the deal and to criticize CNN; as they say, it’s a free country. But he doesn’t have the right to bend the Justice Department to his will. Yet that appears to be what is happening. That antitrust expert who said last year that the deal didn’t pose any problems? Makan Delrahim is now the head of the Justice Department’s antitrust division. And wouldn’t you know it: He’s suddenly had a change of heart about the antitrust implications of the deal.

[…] It is appalling that the Justice Department’s antitrust department appears poised to do Trump’s bidding. The good news is that AT&T has vowed to go to court if the government tries to block the merger. So far, the judiciary has been the branch of government that has stood up to the president’s authoritarian impulses. I never thought I would be rooting for two very big companies to combine into one giant company, but I am. If the AT&T-Time Warner merger goes through, it will mean that the rule of law has won. At least for now.

AT&T couldn’t be luckier if the deal becomes a referendum on whether the Trump Administration is opposing the deal as part of a personal political dispute. Suggesting it is “good news” for AT&T to go to court to win its merger may make AT&T feel better, but ordinary consumers and ratepayers are once again forgotten in the debate over media consolidation.

AT&T CEO Randal Stephenson: Sale of CNN never came up with Department of Justice from CNBC. (5:45)

AT&T – Time Warner Merger Sails Into Rough Waters Over CNN

WASHINGTON (Reuters) – U.S. antitrust regulators believe that AT&T Inc’s proposed acquisition of Time Warner Inc would raise costs for rival entertainment distributors and stifle innovation, a Department of Justice official told Reuters on Thursday.

Allaying those concerns is the rationale for the Justice Department’s demand that AT&T sell assets in order for the deal to be approved, said the official, speaking on condition of anonymity.

The Justice Department wants AT&T to sell its DirecTV unit or sell Time Warner’s Turner Broadcasting unit, which includes news company CNN, sources told Reuters on Wednesday.

AT&T has signaled it would not agree to sell DirecTV, which it acquired for $49 billion in 2015, leaving CNN and other cable TV assets as the main sticking point in negotiations between the Justice Department and AT&T.

The antitrust regulator is worried the combined company could make it harder for rivals to deliver content to consumers using new technologies, the official said. AT&T has said it wants to disrupt “entrenched pay TV models.”

The Justice Department’s desire for asset sales has raised concerns about political influence on the $85.4 billion deal, given U.S. President Donald Trump’s frequent criticism of CNN. As a candidate, Trump vowed to block the deal shortly after it was announced in October 2016, but has not addressed the issue publicly as president.

The head of the Justice Department’s antitrust division, Makan Delrahim, said in a statement late on Thursday that he has “never been instructed by the White House” on the AT&T deal.

Raj Shah, a White House spokesman, said in a separate statement that Trump “did not speak with the Attorney General about this matter, and no White House official was authorized speak with the Department of Justice on this matter.”

AT&T chief executive Randall Stephenson defended the merger at a New York City media conference on Thursday, and said he did not want to sell CNN.

The company has opposed divesting assets and has told the government it is willing to fight in court to win approval, sources said on Wednesday.

The deal is opposed by an array of rivals and consumer groups worried that it would give the combined company too much power. Opponents are pushing for conditions that would limit AT&T’s ability to charge media rivals higher prices to carry Time Warner content.

Shares of Time Warner were down slightly in afternoon trading at $88.35. AT&T shares rose 2 percent to $34.09.

Charter/Spectrum Will Offer Gigabit Speeds Using DOCSIS 3.1

Charter Communications has informed shareholders it will soon introduce gigabit speed broadband plans in select cities.

“In a couple of months, we’ll launch gigabit speeds offerings in several key markets using DOCSIS 3.1, with more launches planned through 2018,” said Charter CEO Thomas Rutledge. “We expect DOCSIS 3.1 modems to be priced similarly to DOCSIS 3.0 modems when purchased at scale, and we’ll begin to buy exclusively DOCSIS 3.1 modems and drive higher entry-level speeds.”

Charter will not be following Comcast and Altice with fiber to the home upgrades for customers looking for the fastest possible speed. Instead, it will begin limited rollouts of current DOCSIS 3.1 technology, which will support gigabit download speeds with a considerably more limited upload speed.

Charter may have accidentally leaked the first place it plans to offer gigabit service – Oahu, Hawaii, by jumping the gun on a support page (quickly removed yesterday) discovered by a DSL Reports reader.

Charter executives have consistently told shareholders the priority for the company this year is to continue upgrading its acquired Time Warner Cable and Bright House cable systems to support Spectrum’s standardized internet speed of 100Mbps. (An unadvertised upgrade option to 300Mbps is also available for approximately $105/mo with a one time $199.99 upgrade fee. Legacy markets still awaiting upgrades continue to receive 60Mbps with an unadvertised upgrade option to 100Mbps for approximately $105/mo with a one time $199.99 upgrade fee.)

Charter is facing competitive pressure from Google and telephone company competitors upgrading to fiber to the home service. Hawaiian Telcom, for example, now offers gigabit broadband options on Oahu. Charter’s gigabit offerings are most likely to be introduced in markets where it already faces gigabit competition. For areas that don’t, Charter is moving forward with less dramatic upgrades that currently top out at 300Mbps.

“As of today, we offer [standard] internet speeds of 100Mbps in over 75% of our entire footprint, up from just 50% at the end of the second quarter,” added Rutledge. “And we expect to offer minimum speeds in excess of 100Mbps in nearly all of our passings by year-end.”

Rutledge did not define what the next set of broadband speed tiers would be.

Rutledge also announced new Spectrum broadband customers would be getting an improved Wi-Fi router, known as Wave 2, specifically developed and designed by Charter’s engineers.

“It has much faster speeds and even better propagation of reliability throughout the home,” Rutledge offered.

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