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Competitor raises concerns over Comcast-NBC merger

Competitors are starting to speak out against Comcast's expected bid to take over NBC Universal.

Dish Network CEO Charlie Ergen said last week in an earnings conference call with analysts that he is concerned about a mega merger between the nation's largest cable system and television and movie producer NBC Universal. And he said look to Comcast's current practices with content distribution on how a merged Comcast/NBC may act in the future. Ergen said:

"Obviously, we would have concerns with anybody who owns programming and ... distribution, particularly if they owned distribution in both broadband and cable. Programming access and broadband neutrality would be important issues there."
"We've purchased programming content from Comcast for a long time. We're not treated fairly when it comes to the sports teams in Philadelphia. That ... has always smelled a little bit... So, there always have been some issues there."

Comcast spokeswoman Sena Fitzmaurice noted in an email that their carriage decisions over SportsNet Philadelphia abides by the 1992 Cable Act. The Federal Communications Commission has examined the issue twice at the request of satellite competitros and in both instances found that Comcast complied, she said.

"Congress specifically and intentionally exempted local terrestrial programming from the same requirements as satellite-delivered programming to foster local programming diversity,"

She added that Comcast sells Comcast SportsNet Philadelphia programming to Verizon and RCN.

Public interest groups have also expressed concern that by combining the biggest deliverer of video content with a company that creates so much of the content consumed by cable customers would give one company too much control over entertainment and distribution. They are concerned the company could force consumers to buy services they may not want in bundled packages or pay high fees to get videos over televisions or computers. Check out my post from weeks ago about regulatory hurdles the merger would have to clear.

Yesterday, Comcast top lobbyist David Cohen told Bloomberg that Comcast's ownership of content is "totally appropriate," pointing to its ownership already of the Golf Channel and former ownership of shopping channel QVC.

“We’ve always seen a synergy, and a valuable synergy, between distribution and content,” Cohen told Bloomberg editors and reporters. “It’s totally appropriate for us to be involved on both sides of the business.”

Comcast appears to be moving closer to finalizing a deal to purchase NBC Universal, which owns broadcast programming and Universal Studios. But before the parties can complete a deal, France's Vivendi would have to divest its stake in NBC, according to reports. That could happen later this week.

By Cecilia Kang  |  November 17, 2009; 9:30 AM ET
Categories:  Comcast  
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Comments

Cecilia Kang gives the impression, in this article, that Comcast's sole goal in this acquisition would be to restrict the flow of content and/or violate the "network neutrality" regulations toward which she is biased. But this isn't the case. One has to remember that producers of television programing (such as ESPN/Disney) and cable providers are constantly doing battle with one another, with the programmers holding out for the highest possible price per subscriber and the cable providers trying to keep their rates reasonable. (The programmers sometimes abuse their market power by insisting that cable companies buy "bundles" of channels when they don't want them all, forcing the cable providers to pass these "bundling" requirements through to the customer.) If the cable provider owns the source of the programming, this tug of war goes away. It thus may benefit cable customers so long as it isn't exploited in other ways that are anticompetitive.

Posted by: squirma | November 17, 2009 12:55 PM | Report abuse

OK, I'll bite:

"If the cable provider owns the source of the programming, this tug of war goes away. It thus may benefit cable customers so long as it isn't exploited in other ways that are anticompetitive."

Perhaps you are not aware, but cable programmers also sell progamming to Dish Network, DirecTV, Verizon FiOS, AT&T U-Verse, and RCN -- all competitors to Comcast. Can you not imagine that in such a case, that it would be in Comcast's interest to act like Disney, and treat the NBCU channels as an overpriced bundle? Can you not see how that might be "anti-competitive?"

-- The Real Brett Glass (now w/ more hair!)

Posted by: brettglass | November 17, 2009 1:08 PM | Report abuse

Yes, Comcast as a producer of programming would be in the position of selling to its competitors. However, it doesn't dare cut off this income stream; it couldn't afford to produce the shows and its ratings and advertising revenues would go down. Also, there are few areas with more than one cable franchise.

--Brett Glass (The original; that's why I have less hair)

Posted by: squirma | November 17, 2009 3:39 PM | Report abuse

Running an organization for Internet Service Providers over the last ten years, we saw Comcast time and time again not allow ISPs to purchase advertising space on their service. Would they follow the same practice with competitors on NBC.
I think that these types of communications mergers really need to be looked at very closely. Comcast currently is in Cable, Phone, Wireless so there is a need to look at how much media space we allow one company to control.

Posted by: rfceo | November 19, 2009 11:46 AM | Report abuse

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