Tomahawk, WI 10/27/2014 (Basicsmedia) – A review of Comcast Corporation (NASDAQ:CMCSA) and Time Warner Cable Inc. (NYSE:TWC) merger has been put on hold by the Federal Communication commission as the agency tries to review programming agreements. The contentious issue according to Bloomberg’s Trish Regan has to do with whether dish networks are entitled to know what programmers are paid for content.
A pause of the review is also expected to affect the merger between AT&T Inc. (NYSE:T) and DIRECTV (NASDAQ:DTV); translating to $90 billion worth of transactions put on hold in the space. During an interview on Bloomberg, Intermediary partners, Leo Hindery reiterated that dish companies are barred by law to view contracts offered by the likes of Comcast Corporation (NASDAQ:CMCSA) on content providers.
“Very obscurely you are allowed to do what is called volume discount; that programming sold in larger quantities to a distributor can be less costly than programming sold to a smaller distributor. The confidentiality agreements around these carriage agreements are just profound, dish should not be the one to look at someone’s confidential contract the FCC has those provocative,” said Mr. Hindery.
Volume discounting is predominant in the space with companies purchasing content in large volumes being allowed to pay less at the expense of smaller companies according to Hindery. The $45 billion merger between Comcast Corporation (NASDAQ:CMCSA) and Time Warner Cable Inc. (NYSE:TWC) has now been put on hold on day 85 of the 180 days deadline.
Content companies are concerned that sharing details of agreements they have signed could affect the level of confidentiality a move that might give competitors an insight into sensitive business arrangements.
“This stuff is so sealed; it is impossible to get access to this as a reporter covering the industry. You basically have to wait for the stuff to go to court and then hope you get unredacted version of the contract. In order to see what one company pays another one for programming,” said Bloomberg’s Alex Sherman.
Dish companies are trying to gain access to some of the contracts as this would allow them to have an advantage when negotiating for other programs.