No one expects one of the biggest media mergers of all time to sail through regulatory approval quickly, particularly since the proposed deal to have Comcast acquire a 51% stake in NBC Universal from General Electric is the first major merger to face scrutiny by the Obama Administration. Critics are lining up to try to kill the latest move toward media consolidation.
Free Press and the Consumer Federation of America were quick out of the box with a new analysis showing why the organizations believe the deal poses a major threat to video competition that would seriously harm the public interest.
“The pundits who are predicting this merger will be a cakewalk haven’t done a careful analysis of the damage it will do to the competitive fabric of the video marketplace. This merger’s potential to foreclose competition and stifle innovation is significant and real,” said Mark Cooper, research director for the Consumer Federation of America.
The report claims that:
— A Comcast-NBC merger would hurt competition in traditional video markets. A merger between the nation’s No. 1 cable operator and a major television network threatens competitive rivalry and diversity in the video marketplace. The new entity could leverage its control over content to charge more to its rivals — costs that will ultimately be paid by consumers.
— A Comcast-NBC merger would hurt competition in the emerging online video market. Comcast is the largest residential broadband Internet service provider; NBC produces top-notch content and has a substantial interest in the online video provider Hulu. A merged company would have a powerful motive to starve competing online video sources by denying them access to vital content.
— A Comcast-NBC merger would trigger more media consolidation. Approval of this deal will undoubtedly trigger a merger wave, as the remaining players in both the distribution and content markets seek to muscle-up to match this new behemoth. As a result, competition from new entrants will be limited, consumer choice will be restricted, and prices will rise.
“The Obama administration has made a commitment to reinvigorating the nation’s antitrust laws,” said Corie Wright, policy counsel of Free Press. “They can’t ignore the severe threat this merger poses and must take the necessary measures to prevent harm to competition and consumers. The correct response to this merger is to just say no.”
Even before the deal was official, the Seattle Times had published an editorial calling for regulators to say no. The newspaper was quick with a second editorial stating that not only should Comcast not own NBC Universal, but that GE shouldn’t either. “NBC Universal should be independent,” the newspaper declared. “The consolidation in media is dangerous — to the economic interests of the public and to democracy itself. The trend toward media giantism should be stopped, and the place to begin is this proposed deal,” the Seattle Times editorial concluded.
“This mega-merger clearly spotlights the dangers of media consolidation in the Internet Age,” declared the Communications Workers of America (CWA).
“Comcast is not only the nation’s largest cable company, with 24 million customers, but it has 15 million Internet users and controls most must-have regional sports programming. If it takes on NBC Universal, it adds a major television network, 27 local televisions, cable channels including CNBC, MSNBC, Telemundo, Bravo, USA Network and more, plus Hulu, a growing stop especially for households under age 35,” the union noted.
“This vertical integration of two very different companies – one controlling distribution and another controlling content – would give the merged company leverage over both in broadcast and network television and the market power to control pricing of content on the Internet. It clearly would threaten competition in the distribution of content and programming,” the CWA said.
The union is also worried about what might happen to its members at NBCU under Comcast ownership. “Comcast also has a long history of violating workers’ rights, firing workers who want union representation, refusing to bargain fairly for contracts, running aggressive campaigns to decertify unions and much more,” the union said. CWA said it represents about 2,000 Comcast workers and about 2,500 NBC Universal broadcast technicians and other workers.
The American Cable Association (ACA) issued a statement urging regulators to scrutinize the proposed Comcast-NBC Universal transaction “and take appropriate action, whether through conditions or forced divestiture, to prevent the new programming giant from using its enhanced market power to raise prices and limit choices for consumers of small and medium-sized cable and broadband operators.”
ACA represents small cable system operators, while Comcast is the giant of the industry. ACA has already been fighting for government to curtail retransmission consent payments to TV stations – and worries that Comcast-NBCU will up the ante.
“Without broad government intervention, regulators in Washington, DC will see Comcast-NBCU wield its unprecedented power to drive up artificially the cost of its programming, particularly for its newly acquired local broadcast TV stations and its ‘must-have’ national and regional cable networks that air live sporting events. Without restrictions, the new media conglomerate will also leverage its enhanced market power to force other pay-television providers to distribute all of its combined Comcast-NBCU programming on basic tiers, regardless of consumer interest in paying for this content,” said ACA President and CEO Matthew Polka.