John Malone Avoids FCC Conditions With Charter, Unlike Comcast-NBCU
Federal regulators opted to place no conditions related to John Malone’s sprawling media and telecom holdings in approving Charter Communication ’s ( CHTR ) acquisitions of Time Warner Cable ( TWC ) ( IBD ) and Bright House Networks. California regulators are expected to approve Charter’s deals as soon as Thursday, the final hurdle to Charter’s makeover. Charter will leap to No. 2 in the cable TV industry, behind Comcast ( CMCSA ). Comcast owns NBCUniversal and NBCU-related conditions that the FCC imposed on Comcast in 2011, which are set to expire in 2018. NBCU’s assets include the broadcast TV network, cable channels and a movie studio. Consumer group Public Knowledge, the American Cable Association and others asked the FCC to look into Malone’s holdings as part of the Charter review. Dish Network ( DISH ) waged the biggest fight against the TWC deal, while Netflix ( NFLX ) stayed on the sidelines. Malone controls Liberty Broadband ( LBDRA ), which will own about 18% of the new Charter and has rights to name three board members. Privately held media firm Advance/Newhouse will own about 13.5% of Charter. Liberty Broadband stock touched a record high for the second straight day on Wednesday. Malone holds a 28.7% voting interest in Discovery ( DISCA ); a 31.8% voting interest in Starz ( STRZA ); a 37.7% voting interest in the QVC Group, and a 3.3% voting interest in Lions Gate Entertainment ( LGF ), which holds a stake in Epix, according to the FCC. While much of Malone’s media holdings will now constitute Charter’s “affiliated programming,” the FCC says it already has rules in place to govern those companies’ relationships with other pay-TV providers. “Because New Charter will lack the incentive or ability to withhold or raise prices of affiliated programming, we further find it unnecessary to extend or modify our program access rules or impose other conditions on the licensing of New Charter’s affiliated content,” the FCC said in its May 6 order approving Charter’s acquisitions. The FCC’s conditions on Charter’s acquisitions aim to protect competition from Internet video providers such as Netflix, Hulu and Amazon.com ( AMZN ). Charter will not be allowed to charge data usage-based prices or impose data caps on broadband customers for seven years. Those conditions could impact Comcast if it makes more acquisitions. Some analysts have speculated that Malone could consolidate some of his media assets and/or acquire more. Malone also controls Liberty Global, a Europe-based telecom company. “Malone’s ownership of distribution and content assets globally implicitly has a scale larger than even Comcast, but with a much more fragmented ownership structure and working relationships,” said a Barclays report in January.