SENATORS RAISE QUESTIONS ABOUT NEWS CORP. MERGER, BUT NONE REJECT IT

Senate Judiciary Antitrust Subcommittee members said Wed. the proposed News Corp.-DirecTV merger raises concerns and needs to be closely examined, but none specifically said the merger should be rejected. Judiciary Committee ranking Democrat Leahy (Vt.) said the merger would “test the truth” of the assertion that the Justice Dept.’s “public interest” inquiry during merger reviews would protect consumers. Subcommittee Chmn. DeWine (R-O.) and ranking Democrat Kohl (Wis.) signed a letter sent Wed. to the FCC and DoJ urging the agencies to carefully review the merger, but not suggesting the merger should be rejected.

News Corp. Chmn. Rupert Murdoch reiterated the arguments he made to both the House Judiciary Committee and Senate Commerce Committee earlier this year, saying neither News Corp. nor DirecTV have the market share to create a situation that would be dangerous to consumers. The merger would make improvements in local-to-local service and lacks any horizontal or vertical merger concerns, he said. Eddy Hartenstein, DirecTV chmn., said the merger would make DirecTV a better competitor to cable, which controls about 80% of the subscription TV market.

Leahy raised the greatest concerns about the merger and said that while the recent FCC media ownership review wouldn’t directly affect the merger, it would “color the evaluation of all media deals,” including this merger. Kohl asked Murdoch to make commitments, including to make all News programming available to DirecTV competitors on the same terms and to work to increase the number of markets covered by local-to-local service. Leahy also pushed Murdoch to do better on local-into-local, noting that only EchoStar provided local-into-local in Vt.

Murdoch told Kohl he would sign a consent decree with the DoJ to enforce the promises he made about giving competitors access to News programming. Murdoch noted that all transactions had to be approved by the News and DirecTV boards, but Kohl said he wasn’t satisfied that an audit board set up to review transactions would be sufficient.

Gene Kimmelman of Consumers Union said there was nothing about the merger that would drive down prices for consumers. Robert Miron, Advance/Newhouse chmn., said the merger would drive up prices for all subscription TV services. The merger would greatly raise News Corp.’s negotiating leverage with subscription TV services for News programming, Miron said. Small cable operators would particularly be hurt by this arrangement, he said. Miron also said he was speaking for Cable One, Insight and Cox Cable.

Murdoch said he was surprised that Miron “would allow himself to be used by Cox.” He listed several entities that Cox owned and said the company was larger and had more concentrated than News. “When Mr. Kimmelman was fantasizing about what News Corp. might become, I thought he was talking about Cox,” Murdoch said. Kimmelman agreed there were problems with Cox’s size, but said the size of News was also a concern.