Michael Grotticelli /
01.20.2011
Originally featured on BroadcastEngineering.com
Critics say Comcast-NBCU deal is blow to online video

Reaction to the Comcast-NBCU deal has been mixed, to say the least. Some groups said the deal would lead to higher media prices for consumers and harm Internet users by slowing the migration of premium content to the Web. Others thought the government conditions went too far, while others consider it risky business.

Walt Disney and News Corp. warned FCC members against conditions that would insert the government into the online video market, saying that such mandates could harm their own business deals. There was also concern that a government order that NBC stations enter deals with nonprofit local news outlets could create more competition for profit-making news organizations in the same towns.

Analysts said that if history is a guide, a similar merger between Time Warner and America Online showed the difficulties of melding businesses with too many disparate interests.

“There is a lot more evidence that this doesn’t work than it does,” said Craig Moffett, an analyst at Sanford C. Bernstein. “Everyone will watch to see if Comcast can achieve what no one else has, but it’s not going to be easy.

”For Comcast, we continue to view the deal as a net negative, even if it now appears less unattractive than the worst-case scenario of an outright acquisition,” Moffett added.

Deutsche Bank Securities analyst Doug Mitchelson said that the transaction looks “intriguing” for Comcast, but more details would have to emerge before final judgments can be made.

On one hand, Mitchelson said, the deal would give Comcast “a seat at the table” as Internet-based video distribution models are developed and would add to the company’s free cash flow, the key metric for cable companies.

Consumer organization Free Press said the decision demonstrated the FCC’s failure to live up to its own public interest mandate as well as President Obama’s campaign promise to prevent excessive media consolidation.

“This deal will give Comcast unprecedented control over both media content and the physical network that delivers it,” said Josh Silver, president and CEO of Free Press. “The FCC has opened a Pandora’s box, and we can soon expect a whole new swarm of mega-mergers that will have dire consequences for media and the Internet.”

While the FCC has adopted conditions, they are insufficient short-term or voluntary fixes that will fail to prevent permanent harm to competition, consumer choice and the future of the Internet, Silver said. This deal will drive up cable and Internet costs for subscribers while further eliminating diverse, independent media content that is already “woefully lacking” in the commercial media.

“Free expression online and on TV will be worse off as a result of the action,” said Andrew Jay Schwartzman, senior vice president and policy director of the Media Access Project. “Commissioner Copps was right to dissent, since the conditions adopted by the Commission do not go far enough to justify approval of this deal.”

Meanwhile, the American Cable Association commended the FCC for imposing “meaningful conditions” on Comcast.

“We applaud the FCC chairman and commissioners for producing an order faithful to the exacting review that FCC staff performed in response to transaction-specific harms demonstrated by (the American Cable Association) in numerous filings and economic studies during the past year,” said Matthew Polka, ACA president and CEO.



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