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U.S. is probing how pay-TV industry affects online competitors

The Justice Department is looking at whether Comcast and other pay-TV operators are engaging in practices that could derail or hold back competition from such broadband distributors as Netflix.

June 13, 2012|By Joe Flint, Los Angeles Times

Such a clause typically enables a large distributor to get programming more cheaply than a smaller distributor, much like the way a chain store such as Wal-Mart often gets products from suppliers at a lower cost than a stand-alone supermarket can.

Another topic that may get attention from the Justice Department is how programmers package channels that are licensed to distributors, a practice known as bundling.

Programmers such as Viacom Inc. and Disney often package less popular channels with their more successful ones. For example, a distributor would have to pay more to carry Disney's ESPN but not its various spin-off channels than to carry all the ESPN channels.

Bundling is a sore point for distributors as well as for smaller programmers such as Herring's Wealth TV, but efforts to eliminate it through the courts have not succeeded.

"We see little or no chance that the DOJ will take on that issue," Moffett of Sanford Bernstein wrote.

News of the Justice Department's inquiry was first reported by the Wall Street Journal.

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