Reed Hastings Calls Charter/Time Warner Cable Merger a 'Tremendous Positive'

19 Jan, 2016 By: Erik Gruenwedel

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Despite Dish Network and Time Warner separately lobbying federal regulators against approving Charter Communication’s $55 billion acquisition of Time Warner Cable on grounds the union would harm the over-the-top video market, Netflix CEO Reed Hastings continues to applaud the deal.

Speaking Jan. 19 on the subscription streaming pioneer’s fiscal webcast, Hastings said a combined Charter/TWC would be a boon to the OTT market since Charter has agreed to a multiyear net neutrality policy, which among other provisions, would negate peering charges Netflix currently pays Comcast and other major ISPs.

“That’s something no-one else has publicly agreed to do,” Hastings said, adding that the policy would cover both Charter and TWC territories and greatly enable SVOD services such as Hulu Plus, Amazon Prime Instant Video, Netflix and others to compete on an open basis.

On Jan. 15, Time Warner (a separate entity from TWC), in a regulatory filing, said the merger would negatively impact continued rollout of HBO Now and other OTT video services. Time Warner owns HBO — the latter last year launching HBO Now in the U.S., and has expanded similar standalone service launches in Latin America, Scandinavia and later this year in Spain — all territories Netflix operates in.

Specifically, Time Warner alleges the union would “raise concerns” because it would be inclined to “take action directed at programmers” in response to the development of competing OTT video services with the effect of slowing down the development of OTT options to “the detriment of consumers.”

Federal Communications Commission regulators earlier this month said they needed more time to scrutinize the deal and its impact on regional sports networks and consumer pricing, among other issues. Regulators are operating on a 180-day clock to review corporate mergers. The extension meant a 15-day pause (ending Jan. 20) on the clock.

“We are working well with the FCC on its review of our deal and continue to look forward to a timely approval,” Charter spokesman Justin Venech said in a statement.

Dish Network, Compel and other groups last October filed objections with the FCC claiming a unified Charter/TWC would stifle competition and negatively affect broadband users nationwide. Dish CEO Charlie Ergen reportedly told a FCC committee that a unified Charter/TWC would create a “suffocating duopoly” that could “degrade” and or “destroy” online video competition.

"The applicants’ commitments are inadequate to mitigate the harm to consumers, competition, and innovation that would result from the merger as presently constructed,” Ergen said, according to Multichannel News.

Netflix, which two years ago lobbied against Comcast’s proposed acquisition of TWC, contends Charter would make a better suitor.

“We think it would be a huge step forward for U.S. policy in terms of OTT,” Hastings said.

Regardless, shortly after regulators in New York approved the merger, TWC reportedly sent letters to subscribers informing them of pending rate hikes.

“Changes in your bill are mainly driven by the increase we must pay to deliver your favorite channels,” TWC wrote in the letter.

Charter, which last year rolled out Spectrum TV Plus, an online TV service priced at $12 month targeting Charter broadband-only subs, has informed broadband-only subs that it will raise the high-speed Internet fee to $60 — double the introductory price two years prior.

 

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