Charter Communications Inc. won U.S. antitrust approval for its $55 billion takeover of Time Warner Cable Inc., which would create the No. 2 U.S. cable provider, after agreeing to measures intended to protect distribution of online video.
Charter can’t strike agreements with programmers that would make it more difficult for streaming services like Netflix to obtain content, according to a Justice Department filing in federal court in Washington Monday. Tom Wheeler, the head of the Federal Communications Commission, also supports approval of the merger, according to a person familiar with the matter.
U.S. officials are trying to protect the growing market for online video services and have moved to prevent cable companies from thwarting distribution of content by entertainment companies over the Internet. Charter and No. 1 Comcast Corp. would have an effective duopoly over broadband service to U.S. homes, critics of the deal have said. Charter said it will serve less than 21 percent of the broadband market.
The enlarged Charter, which is also buying Bright House Networks, would supplant Time Warner Cable as the second-largest U.S. cable operator, gaining 13 million customers in cities including New York, Los Angeles and Dallas. Charter last year said after the deals close it would have 23.9 million customers in 41 states — a figure that includes customers paying for broadband or telephone and not for video.
Charter in May agreed to acquire New York-based Time Warner Cable and Bright House, a cable company based in Syracuse, New York, for $55.1 billion and $10.4 billion, respectively. The deal came together after Comcast’s plan to buy Time Warner Cable collapsed last year after opposition from the Justice Department and the FCC over Comcast’s nationwide control of broadband.
Stamford, Connecticut-based Charter has worked to ease concerns over broadband, saying it won’t impose caps on data usage that might discourage viewing of Internet video. The company said it wouldn’t interfere with Web traffic and would connect video providers to Charter’s network free of charge — a pledge that led top Web video provider Netflix to support the merger.
The deal still needs approval from California regulators.
The Justice Department said that without the settlement, the enlarged Charter would have greater incentive and ability to impose restrictions on programmers that limit their ability to distribute content through online video-streaming sites.
Under the settlement, Charter is prohibited from entering into or enforcing any agreement with a programmer that forbids or limits the provision of content to online services. Charter also can’t retaliate against programmers for licensing to those services.