American Antitrust Institute Submits Comments on Comcast/NBCU Joint Venture to FCC

Jun 21 2010
Testimony and Interventions

The  American Antitrust Institute (AAI) today submitted comments to the Federal Communications Commissions regarding the proposed joint venture between Comcast and NBCU.     On December 3, 2009, Comcast and GE (parent of NBCU) agreed to pool assets in a joint venture (JV) valued at about $30 billion. Under the JV, GE will have a 49 percent ownership share and Comcast will have a 51 percent share.

The AAI’s comments urge the FCC to reject the merger as not consistent with the agency’s public interest standard. The AAI emphasizes that with the JV, Comcast and NBCU would have increased control over two major media content and distribution “platforms.” Those platforms encompass content distributed via cable television MVPD and content distributed via cable modem high-speed internet.

The AAI comments explain that the JV could have two major adverse effects on competition and consumers, not considered by Comcast and NBCU in their filings with the FCC. One competitive concern is that the JV would increase Comcast’s and NBCU’s incentives to strategically control the development, innovation, positioning, and viability of the content/MVPD and content/HSI platforms.

Such control could have indelible effects on competition and consumers, explained AAI Vice President and Senior Fellow Diana Moss. “Comcast/NBCU would be in a position to control how consumers access content across and within these large systems, pre-determining the contours of competition, innovation, and choices available to consumers.”

A second competitive concern raised by the AAI is that the JV between Comcast and NBCU would eliminate the important vertical competition between content and distribution. “Hard bargaining between content producers and distributors is critical for getting consumers the quality, diversity, and lower prices,” Moss stated. “We disagree with Comcast/NBCU’s claim that the elimination of negotiating friction between content and distribution is a major benefit of the merger.”

Short of the FCC rejecting the merger, the AAI proposes that the FCC impose a number of remedies. Those fixes would include divestiture of online content aggregation and marketing assets such as Hulu and Fancast, establishment of firewalls between the JV and the rest of Comcast, and prohibitions on current and possible Comcast practices that control how consumers access and utilize the content/MVPD and content/HSI systems.