Charter Communications (NASDAQ:CHTR) received an approval with conditions from the Department of Justice (DOJ) to complete its proposed acquisition of Time Warner Cable (NYSE:TWC) for $78 billion and its related acquisition of Bright House Networks for $10.4 billion.
The merger would create the second-largest Broadband provider and third-largest multi-channel video programming distributor (MVPD) in the United States.
According to the DOJ, the condition prohibits the combined company, referred to as “New Charter” from entering into or enforcing agreements designed to make it more difficult for online video distributors (OVDs) to obtain content from programmers.
The New Charter is also not allowed to avail the most favored nation (MFN) provisions from other distributors. It is also prohibited from retaliating against programmers for licensing OVD.
The proposed merger is still subject to the approval of the Federal Communications Commission (FCC). Its chairman will also circulate an approval with conditions. The DOJ and the FCC consulted and coordinated extensively their reviews of the proposed merger and developed a consistent and comprehensive solution.
The FCC’s order required the New Charter to make interconnection available in on a non-discriminatory, settlement-free basis to companies that meet basic criteria.
Conditions on New Charter protects competition
The DOJ’s conditions protect competition within the pay TV industry. According to Renata Hesse, Principal Deputy Assistant Attorney General and head of the Antitrust Division, said, “This merger would have threatened competition by increasing the merged company’s leverage to demand that programmers limit their licensing to these online providers.”
Hesse added, “Together with our counterparts at the FCC, we have secured comprehensive relief and we will work together to closely monitor compliance to ensure that New Charter will not have the power to choke off this important source of disruptive competition and deny consumers the benefits of innovation and new services.”
The DOJ’s Antitrust Division filed a civil antitrust lawsuit to block the merger together with a proposed settlement to resolve the alleged competitive harm cited in the case.
The agency alleged that the New Charter would have greater incentive and power to implement or broaden contractual restrictions on programmers that reduces their ability to distribute their content to OVDs.
The DOJ argued that Time Warner Cable has been a leader in the industry seeking such restrictions. The New Charter stands to gain more from preventing OVD competition.
 from the DOJ to complete its proposed acquisition of Time Warner Cable & Bright House Networks){kind=link}