The Federal Communications Commission and Department of Justice each issued statements Tuesday January 18, 2011; giving the approval Comcast needs to continue with previously announced plans to purchase NBC Universal.
The approval was granted dependant on a few conditions imposed jointly by the Department of Justice and the FCC. An official DOJ press release states that Comcast will have “to license programming to online competitors to Comcast’s cable TV services, subject themselves to anti-retaliation provisions and adhere to Open Internet requirements.“ The conditions aim to ensure that Comcast does not deny access to, or block competitors and prevent a monopoly. The press release is not clear what restrictions will be placed on Comcast with regard to rates and contract agreements, which its competitors will need to re-broadcast the content it will now own.
Assistant Attorney General Christine Varney, shed a little more light on the issue in a press briefing Tuesday, where she said, “In the department’s complaint, we allege that the transaction as originally proposed would have allowed Comcast, the largest cable company in the United States, to limit competition from traditional competitors such as cable overbuilders, satellite services and telephone companies. Specifically, the merger would have enabled Comcast to harm competition by either withholding, or raising the price of NBCU content. During the course of our review and coordination with the FCC, we became satisfied that the transaction-specific conditions that the parties have agreed to resolve some of the competitive concerns.
The acquisition that was proposed in December 2009 has undergone heavy opposition. California, Florida, Missouri, Texas and Washington, have filed a civil antitrust lawsuit along with the Department of Justice’s Antitrust Division, alleging anti-competitiveness in the merger. The division and states are however, awaiting court approval on a settlement that would resolve those issues.
One opposing voice is that of Senator Al Franken of Minnesota, who in an open letter to Attorney General Eric Holder and FCC Chairman Julius Genachowski wrote,
“This deal would mean higher cable rates and less freedom of choice for American consumers, and it would give a single media conglomerate unprecedented control over the flow of information in America. Whenever the same company owns both the content and the pipes delivering that content, consumers lose.”
Comcast, one of the largest cable providers in the United States, will now control its networks such as E!, Style Network, Golf Channel, Versus, G4, several regional sports networks, and PBS Kids along with those of NBC Universal. Some of NBC Universal’s networks include Bravo, Oxygen, Syfy, Telemundo, The Weather Channel, USA, and CNBC. The merger will not only give Comcast a 51 percent majority control over those networks, but over other holdings of NBC Universal as well. Additional holdings of NBC Universal include Universal Studios Entertainment, Universal Studios theme parks, and Hulu. Additional holdings of Comcast include the Philadelphia 76ers (NBA) and the Philadelphia Flyers (NHL}, and the Wells Fargo Center Arena in Philadelphia. Another component of the antitrust settlement announced by Varney on Tuesday, will force Comcast to “relinquish its management rights in Hulu so Comcast cannot use NBCU’s partial ownership of Hulu to diminish its competitive significance.”
Regular readers of this column will recall a few weeks ago a similar issue involving Comcast was addressed, when the company that provides streaming services for Netflix, accused the cable giant of trying to impose unfair fees on them. Then shortly after that, the FCC stepped in laying out a policy to ensure net neutrality. Now that I have reported the news of this event, I would like to take a few moments to comment on it. Although I am all for basic laws that ensure copyright protection and antitrust protection, I am also leery when government steps in more and more to make regulations for that purpose, while simultaneously allowing companies to gain that ability. First off that seems to be a bit like taking out of both sides of the mouth. When I see government saying trust us, we will protect you, I am reminded of the old adage absolute power corrupts absolutely. If corporate America is allowed to amass large amounts of control over the media, and is kept in check only by the government it could spell disaster. My predictions for this are as follows, Comcast will raise the cost of re- transmission rights, even if they have to “negotiate” with the government to do so. This will in turn raise the cost for non – Comcast customers. I also believe the polices and regulations we see the government form, will increase in their broadness giving them more and more power, and we will teeter totter on the edge of a state run media. It would be encouraging to see other Comcast competitors such as ABC and CBS begin to form some sort of cooperative banding together, while still maintaining control of their respective networks and thus provide some balance to keep Comcast, and perhaps to some degree the government in check.
Note: All views expressed in this column belong solely to the author and may not necessarily reflect those of the management staff or editors of any publications in which this column is published.
Written By: Chris Nelson