U.S. antitrust officials are reportedly in the midst of a probe into the conduct of cable companies attempting to ward off rising competition from online video suppliers like Netflix (NFLX) and Amazon.com (AMZN).
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According to The Wall Street Journal, investigators have questioned Comcast (CMCSA), the largest U.S. cable provider, as well as Time Warner Cable (TWC) and other cable companies. The Justice Department has also been in contact with Netflix and Hulu.
The investigation centers on how these cable companies, which also provide broadband Internet access, are limiting the ability of users to consume data needed to watch movies and TV shows online. Services like Netflix allow consumers to pick and choose from libraries what they would like to watch commercial-free, representing a threat to cable companies.
To further complicate the matter, Hulu is owned by ABC parent Walt Disney (DIS) as well as Comcast, which is the parent of NBC Universal. Rupert Murdoch’s News Corp. (NWSA), parent of FOX Business, also owns part of Hulu.
The DOJ probe comes months after executing a lawsuit in the emerging e-book sector that accused book publishers and Apple (AAPL) of price fixing.
Cable companies have defended their use of data caps, pointing to the strains put on their networks by users who watch online videos.
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Reed Hastings, CEO of Netflix, has been critical of Comcast’s decision earlier this year to not count the usage of its Xfinity app on Microsoft’s (MSFT) Xbox against subscribers’ data caps. Last month Comcast defended its handling of video over the Internet but suspended the data caps nonetheless.
Still, investigators at the DOJ are now looking into whether the Xfinity move broke Comcast’s legal commitments inked in 2011 to placate antitrust concerns about its buyout of NBC Universal, the Journal reported.
The report seemed to weigh on shares of some big cable companies Wednesday morning.
Shares of Philadelphia-based Comcast fell 0.95% to $30.17, while Time Warner lost 1% to $77.15. Verizon Communications (VZ), which owns FiOs but wasn’t named in the report, was up 0.12% to a new 52-week high of $42.99.
Netflix saw its shares dip 0.19% to $62.93, putting them on pace to extend a 9% decline so far this year.