NYT Editorial: Concerns About Comcast-NBC Merger
[Source: The New York Times; December 6, 2009 ]
With technology changing Americans’ media experience at breakneck speed, it might seem quaint to worry about the merger of an old-style cable company with a beleaguered broadcast TV company. But there is much to be concerned about in Comcast’s proposed takeover of NBC and its sister company Universal Studios.
The pairing of the nation’s largest cable company with one of the leading television broadcasters, which also owns several popular cable networks, could limit choices and raise prices for viewers and advertisers. As they evaluate the proposed merger, antitrust and communications watchdog agencies should also consider the risks to the emerging business of delivering video entertainment over the Internet — the main competitive threat to cable TV.
Despite shrinking ratings, network TV shows still have the biggest audiences in the country. Under current rules, Comcast could bar rival cable and satellite TV companies from access to desirable NBC shows, or it could offer them only at a high price, bundled with less-attractive content.
It would also have an incentive to bar rivals’ content from its cable network. Programmers have complained to the Federal Communications Commission that Comcast keeps their channels off its system. Owning NBC’s Spanish-language network Telemundo, for instance, Comcast might be less inclined to carry other channels in Spanish. There is also a potential threat to advertisers. The merged company would own more than two dozen TV stations in many of the biggest media markets, which would give it huge clout to negotiate ad rates.
Yet the biggest potential threat from a combination of Comcast and NBC is to the development of video delivery over the Internet and its promise of à la carte programming — which promises to expand viewers’ choices, allowing them to elude the bundling strategies common to cable and satellite TV that force them to pay hundreds of dollars for content they do not want.
In 2007 the F.C.C. accused Comcast of violating net-neutrality principles by trying to block the content from BitTorrent services that allow users to share files online, and then ordered it to stop. Comcast is appealing the order in court.
Being one of the largest broadband Internet service providers in the country, Comcast could now be tempted to limit access to NBC content on rival Internet services, or charge them high fees. And Comcast could take its bundling business model to the Internet by forcing customers to buy cable packages in order to see content from NBC’s network online.
NBC is part owner of Hulu.com, an ad-driven service offering TV shows over the Internet. Comcast could well see such services as a threat and bundle them with cable services or abandon them entirely.
These concerns might not justify blocking a merger. But they do justify a careful review. In a letter to regulators, Comcast offered several commitments to quell concerns over the merger, including a promise that NBC would remain a free over-the-air network and that it would offer NBC and Telemundo channels to rivals under the current rules that apply to cable networks.
These commitments are welcome. They would carry more weight if they were made legally binding. And regulators could impose their own conditions on the deal. They might demand that the merged companies divest stations. They could also require that Comcast’s network carry content from independent cable channels.
Online, regulators could demand that the company offer unbundled Internet content, and ensure that it is made available to consumers regardless of whether they buy cable or broadband services from Comcast. What regulators must not do is let this deal pass unchallenged. The risks to the development of the new media industry are too significant to simply ignore.
