Justice Department OKs huge cable TV deal

NEW YORK — The Justice Department has approved Charter’s bid to buy Time Warner Cable and create another cable giant.

Buying Time Warner Cable and Bright House Networks will turn Charter Communications, a mid-size cable company, into the country’s No. 2 home Internet provider, after Comcast. The new Charter will be No. 3 in video, trailing Comcast and AT&T, which bought DirecTV last year.

Monday’s OK comes with conditions meant to preserve competition from online services. Before giving its own approval, the Federal Communications Commission is also expected to prohibit charging consumers more for using more data, the way wireless services are priced. California’s utility regulator also needs to give permission before the deal can close. Approval is expected in May.

Public-interest groups have protested industry consolidation, saying it has led to high prices and will give big companies the power to undermine online video rivals. But opposition to Charter’s deal was muted compared with the backlash in recent years to Comcast’s failed bid for Time Warner Cable. That’s because a bigger Charter would still be smaller than Comcast. And Charter, learning from Comcast’s failures, has made several promises to address concerns.

Charter will continue Time Warner Cable’s efforts to increase Internet speeds. Over the next few years, Charter says it will raise the minimum Internet speeds in acquired markets to a minimum 60 megabits per second, which lets you download a highdefinition movie in about 10 minutes. That costs $40 a month, for now.

Charter’s prices are cheaper than Time Warner’s overall, says UBS analyst John Hodulik. But Time Warner has some cheaper deals with slower Internet speeds; Charter will get rid of most of those for new customers.

There could possibly be better customer service. Charter says it will hire 20,000 people in the U.S., replacing Time Warner’s overseas customer service representatives and its use of contractors for technicians, to provide better support. It doesn’t give a time frame for the hires.

Bills will still probably go up. Cable companies have been passing on to customers the higher prices they pay for rights to carry channels on cable lineups, and their costs are still rising. Still, Charter will use its bigger size to seek better deals with channel owners like Disney and Fox.

But the cable industry has been consolidating for decades, and bills have only gone up.

“Cost savings to the company don’t necessarily translate to cost savings to the customer unless the company has competition that forces them to offer it,” said John Bergmayer, staff attorney at public-interest group Public Knowledge. “I don’t see anything about this merger that changes that basic dynamic.”

Charter will be the only supplier of broadband speeds, as defined by the FCC, for twothirds of the homes in areas where it operates, according to FCC data.

But even if bills still go up, Charter said they won’t be as high as they would have been as separate companies.

There will be a $15-amonth Internet service for some low-income households.

The Justice Department is forbidding Charter from restricting what media companies make available online. The government says Time Warner has been aggressive at imposing such restrictions in contracts, and without a ban, a bigger company could make online services less competitive.

But this doesn’t make it easier for a company like Apple to launch a streaming TV service.

“The real limiter of online video hasn’t been restrictions from distributors. It’s been the self-interest of the programmer,” MoffettNathanson analyst Craig Moffett said. The traditional big bundle has lined the pockets of entertainment companies like Disney. A skinny bundle of channels online isn’t as lucrative and could steal viewers away from the fat TV packages supporting hundreds of channels.