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Tech Edge

AT&T and DirecTV Survive Hearing Double-Header

By Laura Ryan (@NJLJRyan) with help from Alex Brown (@AlexBrownNJ), Brendan Sasso (@BrendanSasso), and Dustin Volz (@dnvolz).

TODAY'S TOP PARAGRAPH: AT&T and DirecTV avoided any major blows to their merger during two hearings Tuesday, but the companies acknowledged that prices probably won't drop. More TV stations are going out of business, and the Republican FCC commissioners are blaming new ownership rules. Lawmakers will continue their review of music licensing with a house Judiciary Committee hearing today.

TOP NEWS

MERGER IN GOOD SHAPE: The CEOs of AT&T and DirecTV took some lumps at back-to-back congressional hearings Tuesday, but it could have been worse. The deal appears to face less resistance from lawmakers than Comcast's bid for Time Warner Cable.

 

A key political point in the deal's favor is that AT&T is unionized, so the merger could be a win for organized labor (and Democrats). Rep. Hank Johnson, the top Democrat on the Judiciary Antitrust Subcommittee, said the merger would have "transformational benefits for thousands of employees by giving labor a strong foothold in the industry." He concluded there is "ample" evidence the deal would have public interest benefits. AT&T, however, made a similar pitch back in 2011 to buy T-Mobile that was ultimately unsuccessful.

Sen. Mike Lee, the top Republican on the Senate Judiciary Antitrust Subcommittee, said DirecTV and AT&T offer complementary services (video and broadband), and that such mergers are usually approved. Rep. Spencer Bachus, the chairman of the House subcommittee, also said the companies offer "very different services," reducing competitive concerns.

...BUT LAWMAKERS SKEPTICAL ON PRICING: Lawmakers, however, didn't buy AT&T's claim that the deal would put "downward pressure" on prices. Sen. Richard Blumenthal pressed AT&T CEO Randall Stephenson, who admitted that the company is only saying bills will probably rise less quickly.

Some Democrats also expressed frustration with the wave of industry consolidation and rejected the argument that companies need to get bigger to fight other big companies.

"We could have a 'race to the bottom' whereby large companies seek more and more mergers and acquisitions in response to mergers and acquisitions by other companies, ultimately leaving fewer choices for all consumers," Rep. John Conyers, the top House Judiciary Democrat, said.

LAWMAKERS LOOK AT MUSIC COPYRIGHT, PART 2: Grammy-winning singer-songwriter Rosanne Cash, along with broadcasters, SiriusXM, and Pandora, will testify before the House Judiciary Committee about updating music licensing laws. During the second hearing on the topic this month, lawmakers will ask about legislation aimed at fixing individual pieces of copyright law versus a comprehensive reform bill, which Rep. Jerry Nadler says is in the works.

Representatives from the music industry will push for an overhaul of music copyright laws–which the chairman of the Recording Industry Association of America describes as "arcane and complex and dysfunctional" in his written testimony–and call for AM/FM radio to start paying royalties to recording artists.

Executives from SiriusXM radio and Pandora will defend the consent decrees that determine how songwriters, represented by ASCAP and BMI, license out their music, and at least SiriusXM will tell lawmakers that if AM/FM radio doesn't pay royalties to recording artists, they shouldn't either.

REPUBLICANS LAMENT MORE STATIONS GOING DARK: Three TV stations in Nebraska and North Dakota are going off the air because of new FCC ownership rules, according to Commissioners Ajit Pai and Michael O'Rielly. In a statement Tuesday, the Republicans claimed there were agreements in place to save the stations before the agency's crack down on joint sales deals. The commissioners even asked: "has the real goal all along just been to drive television stations off the air?"

A spokesman for Chairman Tom Wheeler declined to comment, but media attorney Andy Schwartzman accused the Republicans of "grandstanding" on the issue. "It is more profitable for the operators to take the tax loss and eliminate [a] competitor," he said. "They're doing what's best for them, not for the public."

TOP LINES

GOOGLE TO UNVEIL TV SET-TOP BOX: Google is expected to introduce a TV set-top box today to compete with the likes of Roku, Apple TV, and Amazon's Fire TV. (Rolfe Winkler, WSJ)

FBI FACIAL RECOGNITION PROGRAM ALARMS PRIVACY GROUPS: Advocates are pushing Attorney General Eric Holder to assess the privacy impact of the FBI's controversial database that is expected to become fully operational later this year. (Volz, NJ)

ANTI-THEFT CAUCUS SINGLES OUT FOUR COUNTRIES FOR PIRACY: The bipartisan group issued a report targeting China, Russia, Switzerland and India for a lack of copyright enforcement, while Italy and the Philippines were highlighted for their progress on piracy issues.

FAA SHOOTS DOWN AMAZON DRONE PLAN: The FAA is grounding Amazon's plans to deliver packages with drones. (David Kravets, Ars Technica)

GERMAN BOOKSELLERS POINT FINGERS AT AMAZON: Book publishers in Germany are accusing Amazon of violating antitrust laws. (Melissa Eddy, NYT)

RESEARCHERS UNCOVER GOVERNMENTS' PHONE-HACKING POWERS: Two research teams discovered components used in surveillance tools deployed by more than 60 governments; the iOS and Android modules give intelligence teams near-complete control of targeted phones. (Kim Zetter, Wired)

MICROSOFT LAWYER SLAMS FISA COURT: "It's hard to be a litigant before this court," Microsoft General Counsel Brad Smith said. "Do we not deserve at least the right to read what the government is arguing?" (Shira Ovide, WSJ)

CHAMBER WANTS CHANGES TO CYBER BILL: The Senate Intelligence Committee should tweak its cybersecurity bill to make information sharing more "workable in practice," the U.S. Chamber of Commerce said in a letter. The business group helped kill the administration's prefered cybersecurity bill in 2012. (Charlie Mitchell, Inside Cybersecurity)

THE DAY AHEAD

  • The Supreme Court will release decisions at 10 a.m.
  • Executives Pandora and SiriusXM will face off with the heads of ASCAP and the Recording Industry Association of America during the the House Judiciary Subcommittee on Courts, IP, and the Internet's second hearing on updating music licensing laws at 10 a.m.
  • The Senate Homeland Security Committee will vote on various cyber bills at 10 a.m.
  • The House Homeland Security Committee and House Education Committee will hold a joint hearing on data mining and student privacy at 11 a.m.
  • The USPTO and NTIA will hold a second roundtable on copyright policy and innovation in Cambridge, Mass., at 8:30 a.m.
  • The Free State Foundation will host Sen. John Thune and FCC Commissioner Ajit Pai for a discussion on communications policy reform at 9 a.m.
  • The International Institute for Strategic Studies will hold a discussion on "How the U.S. is Perceived in the Cyber Domain by Other Major Actors," at 10 a.m.
  • R Street will hold a lunch discussion on what's next for patent reform at 12 p.m.
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