Comcast-NBC merger comes with strings attached

Tuesday, January 18, 2011
Consumer Groups Say Regulators’ Conditions for Comcast-NBC Come with Real Strings Attached
WASHINGTON, D.C — As federal regulators today moved toward approval of Comcast’s acquisition of NBC Universal, Consumers Union (CU), the nonprofit publisher of Consumer Reports, and Consumer Federation of America (CFA) said the approval is coming with some real strings attached.
CU and CFA had expressed objections to combining the nation’s largest broadband and cable provider with one of the largest content owners, concerned that a combination this large could constrict competition and choice, and lead to higher cable and broadband prices for consumers.
Parul P. Desai, policy counsel for CU, said, “By approving the transaction with conditions and enforcement measures, regulators are acknowledging that the combination of two media giants poses some very real threats. Based on what we now know about some of the conditions attached to the transaction, we think that they are significant and could help to limit anti-consumer, anti-competitive behavior by Comcast-NBCU.”
Desai said, “The conditions that are reportedly attached to the deal certainly provide some needed assurances for consumers. Regulators appear to be addressing the right issues, and they are well aware that there must be strict and swift enforcement of them. Toothless enforcement could allow Comcast-NBCU to engage in delaying tactics and anti-competitive behavior until the conditions just expire.”
Mark Cooper, director of research at CFA, said, “The Justice Department’s expected action would address the problem of vertical leverage in the video market more aggressively than at any time in decades. Defining the video market to include Online Video Distribution as part of the market and extending DOJ oversight are critical to promoting a more competitive, consumer-friendly video market. The enforcement activities of the DOJ add a new dimension to efforts to promote and protect the public interest that is extremely important.”
The consumer groups said the reported conditions would ensure that Comcast abides by the FCC’s Open Internet rules and would not be able to prioritize its own content. Under these reported conditions Comcast would have to provide for affordable high-speed broadband access to low-income families with school age children. In addition, Comcast-NBCU would be required to offer its programming to on-line video competitors, leaving open the possibility of long-overdue competition in the video market. The FCC would also have an expedited process to handle complaints over lack of access to Comcast-NBCU programming.
While the groups said regulators appear to have appropriately addressed the concerns over access to Comcast-NBCU programming, the groups said it does not appear regulators have adequately addressed the ability of independent programmers to be carried on Comcast’s cable system. CU and CFA have argued for years in favor of increasing the diversity of programming on all cable systems. Acknowledging the FCC’s intent to move in this area, the consumer groups said they hoped the Commission would move swiftly to adopt reforms that address the industry-wide concerns of independent programmers.
“As fewer companies control the distribution and programming of broadband and TV, it is essential that these conditions are implemented in a way that will move the market to a place where consumers have legitimate choices and competitive prices,” Desai said.