Cablevision Objects to News Corporation’s Attempted Takeover of DirecTV

Jun. 25–Cablevision Systems Corp. says its planned satellite TV venture could be severely hurt if Rupert Murdoch’s News Corp. gains control of DirecTV.

“The marriage of News Corp. with DirecTV provides the perfect match of incentive and ability to hamper the development of national [satellite TV] competition,” Cablevision said in a new filing with the Federal Communications Commission.

Andrew Butcher, a News Corp. spokesman, declined to comment on the filing.

Cablevision, the biggest cable TV operator in the New York metro area, plans to launch a satellite July 17, spin off the $900 million venture into a new company and start offering satellite TV service to much of the nation.

News Corp., whose holdings include the Fox broadcast network, 20th Century Fox studio and Fox News Channel, is seeking regulatory approval for its deal to gain control of Hughes Electronics, the parent of DirecTV, which is the nation’s biggest direct-broadcast-satellite TV provider.

Following such a merger, News Corp. could refuse to provide its Fox broadcast TV stations to the Cablevision satellite venture, which is called Rainbow DBS, Bethpage-based Cablevision said in its filing. Or, using that refusal as a threat, it could force Rainbow DBS to carry and pay high fees for cable networks controlled by News Corp., including the National Geographic Channel, the Speed Channel and the planned “Extreme Fox” sports and lifestyle network, Cablevision said.

Because the Cablevision satellite venture has the potential to become a more “formidable” competitor “quite soon,” Cablevision said, DirecTV has a “strong incentive to hobble Rainbow DBS” — and News Corp. would give it the means.

Cablevision said regulators should impose a condition preventing News Corp. from using its Fox broadcast stations as leverage in negotiations with satellite and cable TV providers, which federal regulations allow owners of TV networks to do.

Cablevision goes a step further, and requests that DirecTV help it.

Rainbow DBS won’t have enough capacity at first to provide local broadcast TV stations to customers in most markets across the country, putting it at a disadvantage against DirecTV and EchoStar. Cablevision suggests that the FCC could require DirecTV to use its own satellite capacity to provide Rainbow DBS with access to the full range of local broadcast TV signals in many markets.

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