Comcast-NBCU, Opponents Argue over Online Video
The implications for the fast-growing online video market of a planned deal for Comcast to buy control of NBC Universal were debated in new FCC filings by the two companies and opponents of their multibillion dollar transaction. As in the past, Comcast, NBC Universal and NBCU parent General Electric said their deal won’t stifle the market, because the risks to the combined company of withholding online programming from pay-TV rivals likely would exceed the profit from such a strategy. FCC staffers continue meeting with each other and outsiders to consider the deal, and much work appears to remain before the Media Bureau starts drafting a decision, commission and industry officials said.
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Opponents of the deal said Comcast-NBC Universal would have too much control over Web video and would thwart competition in over-the-top online content to be transmitted over set-top boxes. An association of black broadcasters asked the commission to require Comcast to sell some of its cable systems to companies owned by African Americans. The FCC was asked by a group representing public, educational and government (PEG) channels to require Comcast to carry those channels on the basic programming tier. And a coalition of several dozen bodies opposing the deal said Comcast’s replies -- submitted late Wednesday with confidential material blacked out, and not yet posted in docket 10-56 -- don’t make a case for commission approval.
Keeping online programming from rivals would have “clear costs and risks” that must be taken into account in considering whether the deal would produce that result, Comcast, NBC Universal and GE said. “For any potential strategy to be successful, the combined entity would need to have market power in online video content. The combined entity will not.” The merging companies lack “key online rights” for many programs shown on their broadcast and cable networks, they said. “Further, there is no evidence that content created by any single cable programmer is necessary for the viability of an online video distributor.” The departure of Viacom’s Comedy Central The Daily Show and The Colbert Report from Hulu, which puts broadcast shows on the Web and is part-owned by NBC Universal, didn’t impact that website’s size or growth, the merging companies said. “This demonstrates that the withholding of even very popular programming is not sufficient to make an online video distributor lose its viability, and that the owner of such programming must have many alternative distribution platforms other than Hulu.”
The deal would eliminate “head-to-head competition” between Hulu and Comcast’s FancastXfinity online video service, and initial comments to the FCC on the deal show the combined companies could “squelch the fledgling online video industry,” said New Jersey’s Division of Rate Counsel. That industry is viewed by Comcast and NBC Universal “as a direct threat to their traditional cable revenue streams,” it said. “Furthermore, the merged entity could deny rival, independent online video providers access to content that Comcast uses in its online service, `slow-roll’ negotiations, or offer the content at unreasonable rates, terms and conditions. By requiring consumers to subscribe to a traditional cable provider in order to view the most popular online videos, Comcast could eliminate potential competition and also protect its profitable cable television revenue stream."
Comcast should host content from PEG channels on VOD and online and keep those networks on the basic programming tier, said American Community Television. “We are very concerned with 1) Comcast’s apparent exclusion of public access in its mission to promote localism, 2) the suggestion that Comcast will develop On Demand and On Demand Online support for PEG that is different from On Demand platforms for other programming types, and 3) the probability that Comcast will force PEG programming to On Demand in lieu of full channel support."
For the deal to be approved, Comcast must pledge to sell a “significant number” of cable systems to African American owned companies so they can “control the bottleneck facilities through which content received by the American public is provided and controlled,” the National Association of Black Owned Broadcasters said. “Unless some of the cable television systems serving the African American community are owned by African Americans, we will never control the news, information, entertainment programming and Internet access that is delivered to our communities.” Blacks spend billions of dollars annually for Comcast services, but the company “spends very little with us,” the group said: Of the $1.5 billion total that Comcast and NBC Universal spent on ads last year, $6.3 million was for black-targeted media.
Comcast’s reply “is a weak attempt to make regulators and consumers forget that they still have not offered any reasoning as to why this merger is good for consumers,” said the Coalition for Competition in Media. Members include deal opponents Bloomberg, Free Press and WealthTV, which is in a program carriage dispute at the FCC with the cable operator. Comcast also submitted to the commission late Wednesday two studies by economists. That Web video and cable compliment each other motivates Comcast to expand online programming and encourage competition, said one of the reports, by Mark Israel and Michael Katz. “Indeed, online video may be the ‘killer application’ for broadband services that is capable of generating sizeable economic returns for Comcast’s investment in broadband Internet access infrastructure.”