Can Dish’s Charlie Ergen sink ‘New Charter’ before it floats? Maybe

By Jim O'Neill on Dec 03 2015 at 6:00 AM
Can Dish’s Charlie Ergen sink ‘New Charter’ before it floats? Maybe

Dish Network Chairman Charlie Ergen has taken the satellite operator’s campaign against the proposed Charter-Time Warner Cable merger to a new level, this week slamming the deal at a gathering of top FCC staffers as one that could harm “degrade” or “destroy” online video competition, and again singled out his own OTT play, Sling TV, as a potential casualty if the merger is approved.

The combination of the three operators into “New Charter” would create the third largest pay-TV provider in the country, serving roughly 17.3 million customers. Additionally, the new company would bring together 19.4 million broadband subscribers, creating the second largest broadband Internet provider in the country and would provide services to customers across portions of nearly 40 states.

Ergen said New Charter, which would control 30% of the high-speed Internet connections in the U.S., would be part of a “suffocating duopoly” with Comcast that could freeze growth of online video distribution services and other broadband reliant video businesses.

Ergen gave short shrift to promises from Charter that it would not impose data caps or otherwise stifle competition.

“The gatekeeper role that New Charter would perform thanks to its broadband access service would be complex. [OVD] sabotage can be achieved in many opaque and subtle ways,” Ergen said, according to the filing. “The applicants’ commitments are inadequate to mitigate the harm to consumers, competition, and innovation that would result from the merger.”

Ergen, in fact, isn’t seeking additional regulations or oversight for the merger, he wants the FCC to simply kill it.

Ergen’s meeting was the second front in a growing campaign Dish is waging against the merger. The company on Monday also filed an ex parte with the FCC that disputed the public interest a New Charter would carry, specifically pointing to increases in broadband speeds and deployment that already happening in the market.

Dish took issue with Charter’s contention that a merger will allow Bright House Networks to accelerate deployment of higher-speed Internet, saying the company already is moving in that direction.

“Far from making those deployments possible, or even accelerating their deployment, it seems the proposed merger may have had the reverse effect,” Dish said in the filing.

“Put simply, it is unclear what Charter's management of BHN will do to improve upon BHN's existing and ongoing network deployment plans,” Dish said in the ex parte. “Additionally, and as noted in DISH's Reply, it would not be a benefit for Bright House customers to be forced to pay for a higher speed tier of 60 Mbps without a lower cost alternative.”

Dish has long maintained that New Charter would be able to – and would have reason to -- hurt rival online video distributors, something other opponents to the merger also have pointed out.

Consumer advocates Public Interest and Common Cause have filed their own petition to deny the merger, as has industry association Comptel, which told the FCC the merger would harm future broadband deployment.

A Charter spokesman Monday reiterated the company’s position that the merger would provide multiple benefits to consumers.

“New Charter’s many commitments — including to provide faster broadband service without data caps or modem fees, establish industry-leading interconnection policies, offer advanced video services, increase competition in the SMB and enterprise business markets, and return thousands of overseas jobs to the U.S. — puts this transaction squarely in the public interest,” Charter said.

This week’s hubbub is the latest in a long campaign from Dish to block the deal.

In November, Dish, in reply to a defense of the merger by Charter, Time Warner Cable and Bright House Networks, filed a comment with the FCC saying the deak “is harmful for consumers, competition and innovation, and should be denied," adding that the deal would create a “dominant duopoly” between New Charter and Comcast, a warning other operators – including AT&T, which just completed its own megamerger with DirecTV – have reiterated.

Dish also filed a petition with the FCC in October seeking to block the merger citing its impact on consumer and competitors.

Charter had expected the deal to close by the end of 2015, but now concedes it may not occur until late in the first half of 2016. The merger, announced in May, would unite Charter with Time Warner in a $55 billion transaction, as well as seeing Charter take over Bright House for $10.4 billion.

The big push from Ergen, and other opponents, could carry enough weight for the FCC – especially Chairman Tom Wheeler – take a harder look at the deal than originally anticipated, specifically because of the unlikely championing of all thing online video by Wheeler, who has routinely ticked off the cable industry.

Combine that with concerns from some content owners that megamergers create an unfair marketplace for them, one in which size unfairly dictates carriage deals, and the plot may be thickening.

Stay tuned.

Follow me on Twitter @JimONeillMedia and on LinkedIn

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