NewsCorp/Direct TV Deal Threatens Competition
And Leads to Higher Prices for Consumers
Washington, DC – Gene Kimmelman of Consumers Union testified today before the Senate Commerce Committee on the cable industry and the proposed merger between the News Corporation (“News Corp./Fox”) and Hughes Electronics Corporation’s satellite television unit DIRECTV. Kimmelman said that that deal combined with the Federal Communications Commission’s (FCC) current efforts to relax or eliminate media ownership “Threaten to harm meaningful competition between media companies. Most importantly, this lack of competition will mean that control of media that Americans rely upon most for news, information and entertainment could eventually be placed in the hands of a few powerful media giants.”
Kimmelman also said in his testimony, “The expected benefits of cable deregulation have not been realized. Robust competition did not materialize, the industry consolidated into a few dominant firms, and rates charged to consumers skyrocketed. Since passage of the 1996 Telecommunications Act, cable rates have risen over 50 percent.
“Consumers Union and the Consumer Federation of America believe Congress should review and alter the laws that enabled industry consolidation spurred by excessive deregulation to weaken or undermine competitive conditions in media markets. The News Corp./DirecTV merger is likely to lead to higher prices for both satellite TV and cable TV, since the combined company can maximize its earnings by inflating the prices it charges for its broad array of popular programming that all cable and satellite customers purchase. And this transaction, in conjunction with relaxed media ownership rules, will spur a wave of mergers among the remaining national broadcast networks, satellite and cable giants.
“We believe it is time for Congress to intervene and finally deliver more choices and lower prices for the media services consumers want, and to prevent excessive relaxation of media ownership which threatens the critical watchdog function media companies play in our nation’s democracy.”
For the complete text of Kimmelman’s testimony click here.