FCC gives go-ahead for News Corp. to acquire DirecTV with conditions

The Federal Communications Commission has cleared the way for News Corp. to acquire a controlling interest of Hughes Electronics and its subsidiary DirecTV when it consented last month to the transfer of control of various licenses and authorizations to News Corp.

The FCC action is subject to certain conditions, primarily related to News Corp. agreeing to arbitrate disputes that might arise with cable operators and other satellite providers carrying its programming.

Under the terms of the Commission approval, General Motors is required to spin off Hughes Electronics as a separate company. Controlling interest (34 percent) in Hughes will be held by News Corp, while the remaining 66 percent will be held by three GM employee benefit trusts and the general public. The $6.6 billion deal gives News Corp. control of one of the nation’s two direct broadcast satellite services.

The Commission approved the license transfers in a 3-2 vote that fell along party lines. In a statement published on the Commission Web site, Commissioner Michael Copps objected to the sale, contending that it is just the latest FCC action that promotes media ownership concentration at the expense of the public interest.

“When is ‘Big Media’ big enough?” Copps asked in the statement. “With spectrum always scarce and diversity hanging by a thread, where is the logic -where is the public interest benefit- of giving more and more media power to fewer and fewer players? In the end, it all comes back to this: to putting too much power in one conglomerate’s hands and creating opportunities for abuse that accompany such concentrated power.”

However, Chairman Michael Powell disagreed with the Copps’ assessment and said in a statement on the Commission’s Web site that the decision to allow the transfer promotes the public interest and ultimately “consumers are the winners.”

“Enhanced competition will increase pressure to improve service and lower prices for both cable and satellite television subscribers. This is a particularly compelling public interest benefit in light of continued cable rate hikes,” Powell said in his statement. “Increased availability of local channels over satellite in rural America means access to more local programming in an additional 30 markets by year end 2004.”

Powell also pointed to specific aspects of the order that he said would assure that the public interest is protected. Those include:

  • “An arbitration mechanism to prevent exorbitant consumer prices or loss of access to valuable programming;”
  • “Conditions to ensure that the merged entity does not discriminate against unaffiliated programmers and ensures that News Corp.’s other programming is offered on a non-discriminatory basis;”

For more information, please visit: www.fcc.gov.

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