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Small cable, online video companies warn of anticompetition in Comcast, NBC merger

What worries cable and online video companies most about the expected merger between Comcast and NBC Universal?

They say the combined entertainment giant would have too much control over a wide body of content. And it could make it difficult for competitors to offer NBC broadcast and cable shows and Universal movies in the same way Comcast subscribers would receive it.

RCN, a smaller cable operator based in Herndon, Va., says a merger between Comcast and NBC Universal would be "bad for competition and therefore bad for consumers."

The company said it fears that such an entertainment goliath could hurt smaller cable competitors who already struggle getting good programming to their consumers. Even with federal rules that ensure choice programming held by Comcast is available to competing cable operators, it says Comcast doesn't always do so easily.

"The rumored Comcast-NBC Unviersal merger would hugely expand Comcast's control over 'must have' cable programming and add a broadcast network to its empire. Existing program access rules, even as expanded by arbitration conditions imposed in prior mergers, have been largely ineffective in controlling the discriminatory impact of Comcast's existing vertical integration of content and distribution," Richard Ramlall, senior vice president of strategic & external affairs & programming for RCN, said in a statement.

He said the Federal Communications Commission and antitrust watchdogs at the Justice Department or Federal Trade Commission need to look at "the dangers of such an increased vertical integration" by combining the nation's largest cable programming distributor with a major producer the content.

As reported, the merger would face regulatory hurdles and would tread into new territory for some regulators becuase of the convergence of cable and online technology.

"Dangerous stuff happens when people who move content control the news. That’s when all worst things happen," said Tim Wu, a professor at the Columbia University School of Law who is writing a book that chronicles the history of media consolidation and how major mergers and partnerships between content creators and distributors hurt the public.

He points to the partnership between Western Union and the Associated Press in the late 1800s that led to a "two-headed monopoly" for news. It manipulated election results and favored companies in coverage.

RCN's comments echo those of satellite rival Dish Network CEO Charlie Ergen, who said last week:

"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," Ergen said. "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."

In a previous post on Ergen's comments, Comcast spokeswoman Sena Fitzmaurice noted in an email that its 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 competitors and in both instances found that Comcast complied, she said.

Online video startups say the cable industry's TV Everywhere strategy offers a glimpse into how Comcast will treat its video content from the merger. Comcast's On Demand Online project, scheduled to launch next month, would give free online videos to its cable subscribers. So if you want to watch "Big Love" on your laptop, you will be able to watch some of those episodes for free as long as you are a Comcast cable subscriber.

Vuze, an online file sharing site, has warned that the merger could derail similar startups, which could essentially be starved of content. Other online video distributors are afraid to talk on the record, they tell me. They will need that valuable NBC content and if it's owned by Comcast, they don't want to burn bridges now by criticizing a deal that could marginalize their businesses, they say.

By Cecilia Kang  |  November 19, 2009; 8:30 AM ET
Categories:  Comcast , DOJ , Online Video , comcast  
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