In May 2015, Charter Communications, Inc. announced that it reached agreements with Time Warner Cable Inc. (TWC) to merge the two companies in a deal valued at $78.7 billion, including the assumption of debt, and with Advance/Newhouse Partnership to acquire Bright House Networks (BHN) for $10.4 billion. The combination of Charter, TWC, and BHN would create a single entity providing cable television and broadband access service to 23.9 million customers in 41 states, making it the nation's second-largest cable television operator and broadband access provider. At the federal level, the U.S. Department of Justice (DOJ) and the Federal Communications Commission (FCC) must approve the transactions before they can close. If the deal is not approved by regulatory authorities, Charter will pay TWC a breakup fee of $2 billion. Charter, TWC, and BHN filed an application for FCC approval in June 2015. As regulatory authorities begin their review of the proposed transactions, four key issues may merit analysis: 1. Members of Charter's board of directors also serve on the boards of several companies that create television programming, such as cable networks Discovery and Starz and film and television studio Lions Gate. These interlinks could potentially enable Charter to impede competition in the distribution of video programming. Charter's increased national market share after the proposed transactions would give it more leverage in negotiations with television programming creators. 2. John Malone, a major investor in Charter, controls a significant stake in Charter's competitor, DIRECTV. AT&T, a major provider of telephone, video, and broadband service, is in the process of acquiring DIRECTV, which would make it the largest U.S. distributor of video programming. Federal regulators have approved the transaction. That transaction, if completed, could result in Malone becoming a substantial shareholder in AT&T. Regulators may be concerned that Malone's influence over the combined AT&T-DIRECTV and the merged Charter could thwart competition among video distributors to acquire programming from creators and to sell programming to consumers. 3. TWC has various joint ventures and partnerships with Comcast Corporation, the largest cable television and broadband access provider in the United States. Regulators may be concerned that the merger would result in close relations between Comcast and Charter, potentially reducing competition to acquire programming from creators and among broadband access providers distributing programming from online video distributors. 4. Authorities may seek to investigate the reliability of Charter's claim that a key benefit of the transactions is Charter's commitment to investing in TWC's and BHN's products and services. The companies claim that the merged firm's wider national footprint and reduction in overhead costs will enable it to invest more than the three firms could on their own. However, Charter is expected to assume in excess of $24 billion of debt to finance the transaction. The FCC may be concerned that the debt could limit Charter's ability to fulfil its commitments to improve service quality and availability. To provide context for the analysis of these issues, this report describes recent trends in the television industry, the events leading up to the proposed transactions, and the criteria and process of regulatory review. The television industry comprises many players. These players assume several distinct roles: Content owners produce or control the copyright to video programming. Examples of content owners include television studios, movie studios, sports teams, and broadcast stations that produce local news programs. Aggregators/packagers pay the content owners for the right to use their programming. Examples of aggregators and packagers include broadcast television networks, cable networks, and broadcast television stations. Distributors purchase video programming from aggregators/packagers, content owners, or other distributors and sell it to paying subscribers. Congress has defined a class of multichannel video programming distributors (MVPDs) that have certain rights and obligations under the law. These include cable operators, satellite operators, and some traditional telephone companies that own and operate their own distribution facilities. The FCC is considering expanding the definition of MVPDs to include companies that distribute certain types of video programming over the Internet. Many companies fall into more than one of these categories, and some have multiple operations within a category. For example, all of the leading broadcast television networks also own cable networks and broadcast stations and produce content. In addition, while TWC and BHN are two separate distributors, BHN currently relies on TWC to negotiate programming agreements. Because of this complex structure, many companies in the television industry are in frequent negotiation with one another for the right to transmit programming or to retransmit broadcast signals. In some cases, these negotiations are governed by federal law, as when MVPDs negotiate with broadcast television stations for the right to carry broadcast signals. In other instances, negotiations over the right to broadcast or resell programming are based on market forces and reciprocal relationships, without government-imposed strictures. Table 1 describes the involvement of several media companies in various parts of the television industry. Within the past decade, several companies have begun offering consumers the opportunity to view television programs, movies, and sports online. These companies license programming from content owners and rely on Internet service providers (ISPs) to distribute the programming to viewers. The FCC has called these firms online video distributors (OVDs). They fall into three general categories: 1. Electronic sell-through and rental OVDs charge consumers a one-time fee to download a television program or movie for viewing for an indefinite or limited time period. These services are generally owned by retailers, including Apple, Amazon, and Walmart. They usually offer a limited selection of recent and popular movies and television series that are in high demand from consumers. This product is similar to the pay-per-view services offered by MVPDs. 2. Subscription OVDs charge consumers monthly or annual fees for unlimited access to video programming. Subscription OVDs share attributes of broadcast and cable networks as well as MVPDs. Hulu Plus is co-owned by three major broadcast networks (ABC, FOX, and NBC), which in turn are subsidiaries of major entertainment conglomerates. The other two major subscription OVDs are Netflix and Amazon Prime Instant. In 2015, however, several studios, networks, and MVPDs launched or announced plans to launch their own OVDs. Subscription OVDs compete with the "TV Everywhere" services offered by MVPDs. The TV Everywhere services allow MVPD subscribers to view cable channels on computers and mobile devices, as well as on television sets. 3. Advertising-supported OVDs include advertising along with the programming and do not charge consumers directly. They are generally owned and operated by television networks and studios. Two major advertising-supported OVDs are Hulu and Sony Corporation's Crackle. In order to operate, OVDs need both the ability to negotiate for programming and the ability to interconnect with retail Internet service providers (also known as broadband access providers) to enable the delivery of programming to subscribers. Some programming and most broadband access providers are controlled by companies that also operate as MVPDs. The structure of the television industry, as described in Table 1 , plays an increasingly important role in determining how MVPDs and OVDs compete with each other. The proposed Charter transactions, by altering the television industry's structure, could affect competition as well. MVPDs and OVDs may distinguish themselves by offering customers exclusive access to original programming, or exclusive access to programming during certain time periods. For example, subscription OVDs and MVPDs are battling over the right to offer their customers exclusive access to all of the episodes in a current season of a television program. (This is known in the television industry as "in-season stacking rights.") Netflix reportedly demanded a discount for the online rights to the 21 st Century Fox studio's television drama Empire , claiming that the studio devalued the program by providing MVPDs with in-season stacking rights. Hulu, which is partly owned by the studio and its affiliated broadcast network, reportedly stepped in by exceeding Netflix's original offer. Networks are increasingly choosing to license programming from co-owned studios rather than outside providers, in order to maximize revenues from licensing programs to MVPDs' video on demand (VOD) services and to OVD services. The FCC, pursuant to the 1992 Cable Act, has rules in place governing the behavior of cable operators and cable networks that have common ownership or control. The FCC rules prohibit cable operators from exercising "undue influence" over the decisions of affiliated cable and broadcast networks concerning the sale of programming (program access rules). The rules also bar cable and broadcast networks affiliated with cable operators from discriminating against unaffiliated MVPDs with respect to the prices, terms, and conditions for sale of programming (program carriage rules). These rules do not apply to television or movie studios owned by cable operators, and they do not guarantee program access or nondiscriminatory treatment to on-demand services offered by cable providers or OVDs. In 2014, the FCC proposed extending these rules to benefit certain OVDs. FCC Chairman Tom Wheeler stated that he expected the FCC to issue final rules about this proposal in the fall of 2015. To deliver their programming to consumers, OVDs have different options for interconnecting with services that provide broadband access to the public, also known as retail ISPs. Several use specialized transit providers, known as wholesale ISPs, as intermediaries. Others generate sufficient traffic to make it economically feasible for them to bypass the intermediaries by using content delivery networks (CDNs), which store ("cache") copies of the videos and deliver them to broadband access providers as close as possible to viewers' locations. Netflix owns and operates its own CDN. MVPDs also use their own proprietary CDNs to store programming for services such as video on demand. All transit providers and CDNs must interconnect with broadband access providers to reach individual homes and businesses.