*Pages 1--5 from Microsoft Word - 35443* 4 much proof of commercial success. Be that as it may, Applicants did not demonstrate that any of these alleged savings would be passed on to consumers nor did they evince great enthusiasm for so doing. It is telling that Applicants produced so little data as to how this transaction could possibly discipline rising cable rates. The likelihood of its doing so is so remote as to be invisible. Lower prices seldom ensue from industry combinations. When we approve a transaction that further increases concentration in programming production and distribution, it is reasonable to assume that we are setting the stage for upward pressure on consumer rates. An entirely plausible outcome of this decision is escalating rates for multi- channel services from both cable systems and DirecTV. When faced with a similar scenario, the Federal Trade Commission in the Time Warner/ Turner merger adopted a benchmark price index mechanism. Here, the majority dismisses such an approach, adopting instead so- called baseball arbitration. I am not convinced that arbitration has succeeded in bringing down costs in baseball. More to the point, this is not baseball and it is surely not a game. Although the majority allows the Commission to review the arbitration decisions, it then ties the Commission’s hands by requiring us to choose between each party’s final offer. This reduces the Commission’s obligation to protect the public interest to a multiple choice test. Let’s be clear here: what the arbitrators will most often be arbitrating are two companies’ proposals about how much more programming is going to cost. The only question to be decided is: how much more. Payment for higher programming license fees will be borne, of course, by consumers. Moreover, although the majority seems to recognize the possibility of increased consumer rates from this level of consolidation, it inexplicably provides a sunset for these conditions of six years. This sunset is adopted without any explanation of why the majority expects these harms to be resolved within that timeframe. I am troubled by other aspects of this decision. I am troubled by the lack of analysis on the foreign ownership implications of the transaction. In section 310( b) of the Act, Congress adopted a broad provision that limits the ability of foreign entities to own or operate parts of our communications system. This foreign ownership restriction applies across a broad range of communications services. For decades, the Commission applied these restrictions to DBS. Last year, with inadequate justification, the Commission determined that the foreign ownership restrictions in 310( b) should not apply to DBS. As a result, the majority, in approving this deal under which News Corp., an Australian company, purchases control of a U. S. DBS licensee, concludes that it need not consider the foreign ownership implications. I am troubled by the majority’s failure to consider the impact of this merger on minority communities. The Congressional Hispanic Caucus in a recent letter raised numerous serious issues related to the negative impact of this merger on the Latino community, on minority- owned independent programmers and on local and Latino- focused programming. The majority fails to do justice to these concerns. I am troubled that the Commission is approving this merger without resolving issues specific to the Applicants that have been raised regarding service in Alaska and Hawaii. Parties have filed complaints that DirecTV fails to provide reasonably comparable packages of services to Alaska and Hawaii, as required by our rules. If these companies are violating Commission rules, we should address these issues as part of our public interest analysis. 4 5 Finally, I am troubled by the failure to clarify that DirecTV, or any other DBS provider, may not discriminate against some local broadcasters by requiring consumers to obtain a second dish to receive those broadcasters. In 1999, Congress passed the Satellite Home Viewer Improvement Act (SHVIA). That Act required that, if a provider carries any local broadcast signals, it must carry all local broadcast signals, and must do so at a nondiscriminatory price and in a nondiscriminatory manner. In 2002, Commissioner Martin and I issued a joint statement making clear our view that a plan to require consumers to obtain a second dish to receive only some of the local broadcast stations in a market did not comply with the statute or Commission rules. In sum, I simply cannot support the level of concentration by a single owner that will result from this merger absent compelling public interest circumstances. Unfortunately, I do not find that the potential public interest benefits of this transaction outweigh the real and potential harms. This decision is the wrong decision – wrong for the media industry, wrong for consumers, wrong for democracy in America. 5