News Corp. and Hughes, parent of DirecTV, wrote the Federal Communications Commission on their pending transaction and issues raised about the deal from the Center for Digital Democracy, saying concerns floated by the organization are "a solution in search of a problem."
The Center for Digital Democracy has been active at the FCC, raising issues such as News Corp.'s control of key TV technologies and how its takeover of DirecTV and Hughes may impact retransmission consent. The companies said CDD's "unsupported allegations do not even define a relevant market that it claims News Corp. will dominate, much less provide the level of support necessary to show that the proposed conditions would be an appropriate reaction to specific consequences arising from this transaction."
The News Corp./Hughes letter touched on retransmission consent. The Center has said that, post-transaction, News Corp. will have a "triple play" of broadcast TV, programming and DBS distribution. CDD argued at the FCC that new forms of retransmission consent, such as cash consideration and digital must carry, will "extend the power of News Corp. over cable."
News Corp. and Hughes said, "What CDD does not even attempt to establish – beyond pointing out that this transaction will give News Corp. an interest in a DBS distributor – is that this transaction has anything to do with cash consideration, (and) digital must carry. The companies added, "Without an explanation tying these issues to the transaction under consideration, CDD's concerns are non-cognizable in this proceeding as a matter of law."
Also in its claims, the Center said that after the transaction is complete, News Corp. will have control over programming through interactive technologies "that are at the heart of the digital TV distribution business today."
News Corp. and Hughes said they're "not sure what to make of this discussion," and added that the FCC "is left to guess exactly how CDD believes News Corp. will be able to disadvantage others and whether there is any reason to believe that it would have the market power required to carry out such a plan." The companies said, "Mere speculation is no substitute for evidence and probative analysis."
Meanwhile, on Monday, the FCC's Media Bureau re-started its "clock" gauging its progress in reviewing the News Corp./DirecTV deal. Both sides said they hope to wrap up the regulatory process by the end of the year.
