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Consumer groups: Comcast-NBC is a horizontal merger that hurts viewers, Internet users

Update: NBC is not the majority owner of Hulu, but owns 32 percent stake
Mark Cooper will represent consumers in two hearings this Thursday on Comcast and NBC Universal’s proposed $30 billion merger. And the way the veteran consumer advocate sees the deal, television viewers and Internet users aren’t going to end up the better from it.

If approved by regulators, the merger would combine the nation’s biggest cable and Internet service provider with a media powerhouse that owns franchise television shows and movie properties. The companies argue that regulators should view the deal as a vertical merger of two companies whose main businesses don't overlap – sort of like the union of a light bulb maker with an electricity company.

Cooper, director of research at the Consumer Federation of America, however, says that Comcast and NBC Universal also have significant business lines that do overlap. To him, that makes the deal a horizontal merger with much greater competition concerns. On Thursday, Cooper will appear as a witness before the House Subcommittee on Communications, Technology and the Internet at 9:30 a.m. and the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights at 2:30 p.m.

“This is a hugely complicated deal and Justice has to look at all the aspects, including the many horizontal aspects that will take away competition if this merger is approved,” he said. “The fact that they keep saying it’s a vertical merger is to confuse you.”

Comcast executives declined to comment for this posting, saying they will make their arguments at the hearing Thursday.

The merger would bring together Comcast’s cable channels with NBC Universal’s broadcast and cable programs. Comcast has said that broadcast and cable programming are viewed as separate markets by the Federal Communications Commission. But Cooper and public interest groups say the combined company could charge competitors more for NBC content and would have greater control over prices charged to advertisers.

Comcast’s cable video business would also compete with online video distributor Hulu, of which 32 percent is owned by NBC. Comcast and NBC executives have said they see a future where both businesses could co-exist, but consumers groups say the merged company should divest its stake in Hulu. They also are pushing for the FCC to set conditions that would ensure Comcast share broadcast and cable shows and movies with online distributors such as YouTube, Vuze, and Hulu.

By Cecilia Kang  |  February 2, 2010; 8:00 AM ET
Categories:  Antitrust , Comcast , DOJ , FCC , Media , Online Video  
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