Will US Regulators Balk at Comcast-NBC Deal?

Many media watchdogs expect regulators will eventually approve Comcast-NBC deal, but they hope for greater protection of the public interest.

Chicago – The merger of cable giant Comcast with entertainment leader NBC Universal is expected to take nine months to a year for regulatory approval. But already it is raising antitrust concerns about how it will affect the public interest.

A report by the Free Press, a think tank that tracks media reform, says the deal would give Comcast too much control over the market, which would mean unregulated rate hikes for consumers.

“I don’t see it as concern as [to] whether consumers will pay for [content] or if it’s free, but [rather] how much will it cost,” says Ben Scott, policy director for the Free Press. “When you have that kind of market power, you can raise rates above what competition will normally produce in the free market.”

Comcast is the largest cable operator in the US and the third-largest broadband Internet provider; it also offers stand-alone and bundled mobile and land-line phone service. Under the deal announced Thursday, it would take a majority ownership of NBC Universal, meaning Comcast would be in the new position of dictating not only what content gets produced but also how the public can see it – exactly the concern of those who represent creative interests in Hollywood. Comcast plans to buy a majority stake in NBC Universal for $13.75 billion.

Darrell Miller, an entertainment attorney who represents independent directors and producers with Fox Rothschild in Los Angeles, expects that the US Justice Department will ultimately approve the deal, but he hopes federal authorities will revisit past deregulation that he says gave a handful of content distributors too much power, forcing production companies either to share ownership of their shows or to never see them air.

Comcast on Par with Viacom, Disney?

Before the advent of cable in the 1990s, broadcast networks were forced to follow federal rules that prevented them from creating the content they aired, which allowed independent producers to sell shows to whomever wanted to purchase them.

The repeal of those rules starting in the 1990s “opened the floodgates to allow all kinds of vertical integration,” which included similar deals between Viacom and CBS and between ABC and Disney, says Mr. Miller. Those marriages locked up content and distribution under one roof. “In the last 10 years, there has been quite a lot of precedent … and Comcast is just trying to play on that level,” he says.

In a letter to investors posted on Comcast’s website, executive vice president David Cohen says “that this transaction is, and will be determined to be, pro-competitive, pro-consumer, and strongly in the public interest [and that] we recognize that competitive concerns will be raised about the combination of such significant multiplatform assets in a single company…. Therefore, we also intend to make a number of affirmative voluntary commitments in our applications for approval that we believe will effectively address any such concerns.”

Hopes for Greater Attention to the Public Interest

Media watchdog groups such as the Free Press argue that regulators should force Comcast to ensure that it will allow NBC content on websites at fair rates or to nonpremium subscribers. Also, in an effort to allow more independent programmers into homes, Comcast should be required to refrain from booting out non-NBC networks from its cable system.

Mr. Scott of the Free Press hopes the Obama administration will use the proposed merger as an opportunity to demonstrate it is more vigilant about protecting the public trust.

“The issue of precedents may go the other way,” he says. “Even though Justice and the FCC [Federal Communications Commission] have approved every merger that has gone through them over the past eight years, it gives a new incentive for Obama officials to show they are different and more interested in serving the public rather than these corporations.”

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See Also:


Three Ways the Comcast-NBC Merger Could Change Television