Houston MSO enTouch Systems has asked the FCC to impose restrictions on the amount of program licensing fees a combined AT&T (NYSE: T) and DirecTV (NASDAQ: DTV) will be able to charge rival operators for access to regional sports networks.
Specifically, enTouch is concerned about Root Sports Southwest, the channel--formerly co-owned by Comcast (NASDAQ: CMCSA) and branded CSN Houston--now under the control of DirecTV and AT&T. It is the exclusive local TV home to the NBA's Houston Rockets and MLB's Houston Astros.
"The FCC needs to craft conditions that will prevent AT&T and DirecTV from undermining competition to an even greater extent than they are doing now in our market by charging excessive fees for their Roots Sports Southwest RSN," said J Findley, president and CEO of enTouch Systems.
"Access to regional sports programming at reasonable rates is essential to attracting and retaining an important segment of the customer base that wants to view live sports on TV, as government analyses of the pay-TV market at the local level has been documenting for years," he added.
The enTouch memo echoes a similar position that the American Cable Association filed with the FCC in June. If the $49 billion merger between AT&T and DirecTV is consummated, the ACA said, "it will have significant deleterious competitive effects by enhancing the existing harms of DirecTV's vertical integration with 'must have' RSN programming."
Greater scale and leverage, the memo added, "will give AT&T an increased incentive to charge greater fees for its RSNs to rival MVPDs, which will raise their costs. These rate increases will be passed down to subscribers in various ways."
Of course, all of this might be too late--analysts say the Justice Department and FCC have all but wrapped up their regulatory process for the AT&T-DirecTV merger. Closure of the deal could be announced as soon as next week.
- read this enTouch Systems press release
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