Feds OK DirecTV Takeover

(AP)  Federal regulators on Friday approved News Corp.'s takeover of DirecTV, the nation's largest satellite television provider, but imposed certain conditions on the $6.6 billion deal.

The Federal Communications Commission said News Corp. must agree to arbitration to iron out disputes with companies that carry its broadcast and cable channels, such as cable companies and other satellite providers.

The arbitration was to alleviate concerns that Fox would pull its network programming, which includes pro baseball and football, off cable systems to encourage viewers to subscribe to DirecTV. News Corp. agreed not to pull either the network programming or its regional sports networks while a dispute was being arbitrated.

The Republican-dominated FCC split along party lines, 3-2, to approve the deal. News Corp. owns the Fox broadcasting network and the Fox News Channel, headed by former GOP political operative Roger Ailes.

Under the deal announced in April, News Corp. would acquire 34 percent of DirecTV parent Hughes Electronics, a subsidiary of General Motors Corp. The deal would give News Corp. the largest block of shares in Hughes and controlling interest in DirecTV, which has more than 11 million subscribers.

Some consumer groups, who said that it would further reduce competition by shrinking the number of media companies, and would drive up the price of cable and satellite services, opposed the deal.

"Given Rupert Murdoch's Fox Corporation's already bloated holdings in over-the-air TV and cable programming, the FCC should have rejected this deal," said Jeff Chester, executive director of the Center for Digital Democracy, a media watchdog group. "At the very least, they should have imposed stringent safeguards that would have ensured unfettered opportunities for new and competing programmers on DirecTV."

In May 2002, a dispute over how much Time Warner should pay for the Walt Disney Co.'s cable channels led to Disney's ABC network being removed from Time Warner cable systems in New York and six other cities. In January, some 400,000 Cox Communications customers in the Washington, D.C., area, Cleveland, Dallas and Houston lost the Fox network for a week in a dispute over whether the cable company should also carry two Fox cable channels.

In arguing for the merger, News Corp. said the acquisition would not harm competition or limit consumer choices, but instead would provide consumers with more local TV stations and better high-speed Internet access.

The FCC last year rejected a proposed merger between DirecTV and its chief competitor, EchoStar Communications Corp., ruling it would unfairly limit consumer choices.