The Department of Justice will not comment, but sources confirm that it is conducting a wide-reaching antitrust investigation into cable and satellite TV companies.
None of the companies will go on the record, but sources tell me the companies under investigation are hoping to work with the DOJ to narrow the scope of the investigation, in which the companies involved will have to turn over as many as half a million e-mails from just one executive.
What does this mean for cable companies? It re-introduces regulatory uncertainty, which is never great for stocks.
Bernstein analyst Craig Moffett says he expects the investigation to have two effects—1) accelerating the shift to usage based pricing for broadband, and 2) slowing the pace of innovation and reinforcing “the closed nature of the cable infrastructure.” But this investigation is quite unlikely to break up the current pay TV model.
The primary question: are they inappropriately limiting competition from online video services like Netflix and Hulu by capping the amount of data/videos subscribers can stream every month?
This was prompted by Netflix CEO Reed Hastings complaining on Facebook that Comcast applied data caps inconsistently and unfairly—not counting viewing of its own Xfinity streaming video against those caps, while counting viewing of Netflix and Hulu.