Federal authorities must impose conditions on Comcast (CMCSA), the nation's largest cable company, as it seeks to buy NBC Universal from General Electric (GE), public interest groups and others said Monday. Several of the groups said they oppose the deal, which would create a $30 billion media colossus.
If approved, the merger would be a spectacular coup for Comcast, which could combine NBC Universal's rich news and entertainment offerings with its own massive cable system to achieve its long sought-after "Holy Grail" of a unified content and distribution network.
'Strongly in the Public Interest'
As the Federal Communications Commission's deadline for public comment closed Monday, the agency received scores of letters, both in favor and opposed.
Concast has insisted that the deal is "pro-consumer, pro-competition, and strongly in the public interest" and achieves many FCC goals, including "diversity, localism, competition and innovation." To blunt critics' concern, Comcast has volunteered several "commitments" -- including, most recently, a pledge not to move NFL Football or Olympic programming to cable. In a blog post, Comcast touted the support of influential politicians and lawmakers around the country.
Too Much Power?
Critics -- including one group that labeled Comcast "Orwellian" -- worry that the deal could place too much power in one company's hands by allowing it to discriminate against rivals or use its market power to achieve an unfair advantage. Critics also worry the new company could threaten independent producers or Web video startups. Consumer groups fear higher prices, labor groups fear layoffs, and rivals fear discrimination.
"Because the proposed merger of Comcast-NBCU will upend the media and Internet markets as we know them, we oppose this merger as it stands today," consumer groups Free Press and Media Access Project wrote in a letter to the FCC Monday. Financial news giant Bloomberg -- which fears Comcast could favor CNBC against its own TV news channel -- joined the groups in opposition, as did Common Cause, the National Consumers League and the Communications Workers of America.
"If the Comcast-NBC deal goes through, it would be one of the largest media mergers in a generation, leaving Americans with even higher cable bills and fewer diverse, independent choices on the dial," Free Press chief Josh Silver said in a statement.
Higher Prices, Online Video Shutout Feared
In particular, the groups warned that the combined Comcast/NBCU could use its position to charge rivals higher prices for NBCU content like cable programming on Bravo, or sports content from Comcast's popular regional channels. "A merged Comcast/NBC would control a massive amount of content -- on broadcast TV, cable TV and the Internet," Silver said. "Comcast/NBC would control one in every five hours of television viewing."
The groups are also concerned the new company could discriminate against start-ups in the fast-growing online video sector. Both Comcast and NBC have moved into Web videos, and critics worry the new company could favor its own offerings. "The merged entity will have the ability and incentives to harm the emerging online video distribution market," the groups wrote. "This conduct will constrict competition in the emerging online space and harm the diversity of information and Internet sources available to the public."
Silver added: "If the merger is approved, Comcast could prioritize its own online content and stifle the free flow of Internet traffic, giving you less choice in what you watch and how you watch it online."
Three Proposed Conditions of a Merger
Although the deal faces opposition, some groups may be satisfied if the FCC imposes conditions addressing their concern. On Monday, Washington, D.C.-based consumer rights group Public Knowledge asked the agency for three specific conditions on the merger.
The first condition would impose "strict non-discrimination rules that prevent the entity from interfering with the distribution of non-affiliated content through filtering, blocking, or degrading distribution." Public Knowledge says this would bar the company from favoring its own content or withholding its content from rivals.
The group also wants the FCC to force the new company to sell wholesale broadband access to "unaffiliated" third-party Internet service providers, as well as impose "expanded program access requirements for all content controlled by the newly merged entity."
Comcast said it will "comprehensively address all other concerns raised in our response to today's filings, which will be filed by July 21." Hoping to avoid onerous conditions, the company said that if there are FCC rules -- such as those governing "program access" -- that need to be fixed, "the appropriate place to fix them is in general FCC proceedings that apply to all companies, not by putting discriminatory restrictions on the new Comcast/NBCU."
Opponents Line Up Against Proposed Comcast/NBC Merger