FCC OKs News Corp/DirecTV Deal

News Corporation is about to become the biggest player on the television playing field, thanks to a December 19 approval by the Federal Communications Commission (FCC) of its proposed $6.6 billion acquisition of satellite broadcaster DirecTV. The deal would give News Corp. a 34% controlling interest in DirecTV parent company Hughes Electronics. DirecTV has more than 11 million subscribers.

On a 3-2 party line vote, the FCC gave the nod to the deal that would transfer control of Hughes from General Motors to News Corp. The agency didn't give the impending merger a carte blanche blessing, however. At the insistence of cable providers fearful of News Corp.'s new power, the agency built in some restrictions on how the company may charge for and allocate use of its Fox Network programming. Cablers have long complained about the rates Fox charges for use of its programming, especially Fox Sports, and had asked for some protection in exchange for acceding to the merger.

Once the deal is complete, News Corp. will be the dominant force in US television, with 35 local stations, its own satellite system, and distribution by competing satellite and cable services. Cable providers fear that News Corp. could pull highly desirable programming from them to make DirecTV subscriptions more attractive.

News Corp. reportedly fought hard against any constraints on how it leveraged its programming. The FCC will require the company to offer Fox programming to other distributors at the same rates DirecTV will pay, and will require the company to accept arbitration of any disputes with cable operators over fees to carry local Fox stations or regional sports networks, with the disputed programming to remain on the air during arbitration. News Corp. has also pledged to deliver local stations to rural DirecTV subscribers, an offer FCC commissioner Jonathan S. Adelstein described as a "sham" because it involves attaching conventional antennas to DirecTV receivers to capture the local signals.

Dissenting commissioner Michael Copps said the merger would reduce competition, not encourage it. "This merger with strict conditions ultimately benefits the American public," stated FCC Chairman Michael Powell. The US Justice Department has already given the deal its nod of approval.