Smaller Cable Companies Concerned About AT&T/DirecTV Merger’s Impact On Prices For Regional Sports Networks

Root Sports Pittsburgh is one of several regional sports networks owned by DirecTV.

Root Sports Pittsburgh is one of several regional sports networks owned by DirecTV.

As we’ve seen with the ongoing locals sports broadcasting messes in Houston, Los Angeles, and Philadelphia, pay-TV operators with exclusive regional and team-specific networks sometimes put too high a price on their content, meaning other providers can’t afford to carry these stations and large swaths of fans are left in the dark. And a trade group representing small and midsize cable operators are worried that this problem may only get worse without certain conditions being put on the pending $49 billion merger of AT&T and DirecTV.

DirecTV currently operates a handful of regional sports networks under the Root Sports banner, including Root Sports Southwest, which it and AT&T jointly bought on the cheap for $1,000 after the controversial forced bankruptcy of Comcast’s CSN Houston. AT&T does not own any other regional sports channels, but it does provide U-Verse pay-TV service to millions of subscribers.

The American Cable Association represents several hundred smaller cable operators around the country, and in a filing [PDF] with the FCC about the AT&T/DirecTV merger, the ACA raises concerns that the merged company would have “an increased incentive to charge greater fees” to pay-TV providers whose biggest — and sometimes only — competition is from satellite providers like AT&T.

The filing contends that DirecTV already has an incentive to charge high prices to competing cable operators for access to its Root Sports content. A merged company would have both DirecTV and AT&T’s interests to protect would, according to the ACA, be even more incentivized to price smaller competitors out of access to these channels.

Since all information about carriage fees — the price paid by a cable company to carry a channel — is confidential, the ACA says that it can’t even enter into arbitration with regional sports networks because there is not enough data to “effectively formulate and make a best and final offer at the outset of the arbitration.” However, DirecTV and AT&T, as both a pay-TV provider and broadcaster, would allegedly have the unfair upper hand of knowing exactly what these costs are.

The ACA also mentions the possible “threat of retaliation” from a merged AT&T/DirecTV in carriage negotiations to come.

[via FierceCable]

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