The next big mega-merger between media companies seems poised to go forward, with Comcast officially taking a 51 percent stake in NBC-Universal from its longtime corporate parent General Electric, creating an entertainment giant with an estimated value of nearly $44 billion, control of nearly 82 percent of the American cable landscape, and a dizzying array of TV options, including a majority stake in popular
online TV portal Hulu.
"Combining the assets of NBCU, ranging from our suite of cable properties and two broadcast networks to a legendary film studio and global theme park business, with the content assets and resources of Comcast, will enable us to continue to thrive in an ever-changing media landscape," said NBC-Universal president and CEO Jeff Zucker.
Comcast CEO Brian Roberts said that "Today’s announced transaction will increase our capabilities in content and cable networks. At the same time, it will enhance consumer choice and accelerate the development of new digital products and services."
But several consumer groups are voicing their opposition to the merger, claiming it may violate antitrust laws and deprive consumers of competition for their entertainment dollar.
Free Press and the Consumer Federation of America (CFA) jointly released a report today claiming that the Comcast-NBC merger posed a "major threat to video competition that antitrust authorities cannot ignore."
According to CFA`s Mark Cooper, "This merger’s potential to foreclose competition and stifle innovation is significant and real."
"Just say no"
According to the groups` analysis:
• A merged Comcast-NBC would be able to sidestep negotiating costs of purchasing shows from content providers to broadcast on networks, since it would have control of dozens of cable and broadcast networks, ranging from the SyFy channel and USA Networks to G4, CNBC, MSNBC, and Telemundo. It would simply "pay itself" to broadcast content from networks it owns, while charging competitors such as DirecTV and Verizon FIOS exorbitant rates to share the same content.
• Comcast, already the nation`s leading broadband Internet service provider, might accelerate NBC`s stated desire to move more online TV content behind "paywalls," where users would have to pay monthly subscription fees to access the content. Hulu, currently free in the United States, has been rumored to be placed behind a paywall sometime in 2010, and Comcast has already experimented with tying paid cable subscriptions to online content hidden behind paywalls via its "TV Everywhere" online portal.
• A merged Comcast-NBC would not only be the dominant cable and broadcast player in multiple regions across the country, but could trigger a wave of more mergers as competitors struggle to gather assets in order to stay in the game. The result, the groups say, could lead to more media consolidation and less competition and choice for consumers.
"[The Obama administration] can`t ignore the severe threat this merger poses and must take the necessary measures to prevent harm to competition and consumers," said Free Press` policy counsel Corie Wright. "The correct response to this merger is to just say no."
Done deal?Wall Street was pleased with the formal acquisition of NBC, giving Comcast shares a substantial boost after the merger was announced. Comcast, for its part, promised the merged entity would do nothing to violate antitrust laws or reduce competition, and would engage in voluntary initiatives to ease the concerns of federal regulators.
The Federal Communications Commission (FCC), one of the many federal agencies that has oversight of the merger, released a terse statement today, where it promised to "carefully examine the proposed merger and will be thorough, fair, and fact-based in its review."
The FCC and Comcast are currently engaged over the cable giant`s blocking of content via "throttling" users` usage of the popular BitTorrent file-sharing engine. The FCC had ruled that it had jurisidiction over Comcast`s actions and that it should be penalized for blocking users` Internet access. Comcast is currently appealing the ruling.
Some members of Congress aren`t waiting for the FCC or other agencies to issue rulings on the merger. Senator Herb Kohl (D-WI), chairman of the Judiciary Committee`s subcommittee on antitrust issues, wasted no time calling for a full hearing on the potential effects of the merger.
""This acquisition will create waves throughout the media and entertainment marketplace and we don`t know where the ripples will end," Kohl said. "Antitrust regulators must ensure that all content providers are treated fairly on the Comcast platform, and that Comcast does not get undue advantages in gaining access to programming."
Kohl`s counterpart in the House, Judiciary Committee chairman John Conyers (D-MI), stated that his committee would hold hearings on the prospective antitrust issues surrounding the Comcast-NBC-Universal combination. House Energy & Commerce Committee chairman Henry Waxman (D-CA) also promised vigorous investigation of whether or not the deal could restrict video content distribution across multiple platforms.
Between the many agencies jockeying for jurisdiction on the issue, the complex issues of distribution and programming at stake, and the promise of numerous hearings, the completion of the merger is expected to take up to a year or more.
