Merger Records Show Horizontal And Vertical Harms To Consumers Served By ACA Members
PITTSBURGH, July 21, 2010 – Confidential business records submitted to the Federal Communications Commission by Comcast Corp. and NBC Universal to win license transfer approval reinforce the American Cable Association’s view that the transaction will raise cable rates for consumers and harm competition from pay-TV distribution rivals forced to pay excessive fees to access Comcast-NBCU’s vast inventory of must-have cable, broadcast and online content.
“The Comcast-NBCU transaction is the most serious media merger in years, justifying complete, robust, and durable remedies to address harms that will erupt on a local, regional and national basis,” ACA President and CEO Matthew M. Polka said. “Approving the biggest media merger in a decade without meaningful conditions would deal a serious setback to federal competition policy with the result that consumers will be forced to pay more for the same cable and broadcast programming that they are receiving today.”
From the time the merger was announced last December, ACA has highlighted the anti-competitive nature of the Comcast-NBCU combination, saying it required the FCC and the Department of Justice to impose meaningful conditions to protect consumers and competition.
Although Comcast and NBCU have maintained that the proposed transaction would present no horizontal or vertical competitive concerns, ACA disagrees with both contentions.
ACA spent the last month reviewing confidential records that Comcast and NBCU submitted under protective orders supervised by the FCC to ensure highly sensitive business records do not reach the general public.
In comments filed July 21, ACA relied heavily on these Comcast-NBCU business records and key documents to demonstrate that the horizontal and vertical harms could be even more significant and widespread than described by ACA in its initial comments one month ago. Pursuant to the FCC protective orders, ACA’s comments were redacted where necessary.
“Based on the record before it, the FCC simply cannot find that the proposed combination is in the public interest without adopting conditions that will address the harms this transaction will generate,” Polka said.
ACA has maintained that combining Comcast’s programming assets (primarily nine regional sports networks) with NBC’s large stable of owned-and-operated TV stations and marquee cable networks (such as No. 1 ranked USA Network) would give the combined entity the incentive and ability to use its horizontal market power to charge excessive programming fees that will be passed through to consumers of Multichannel Video Programming Distributors (MVPDs).
The ACA also argued that the combination of Comcast and NBCU would result in harmful vertical integration because uniting the largest cable operator with a major cable/broadcast programmer would give the new company the incentive and ability to extract higher programming rates from MVPDs that compete against Comcast cable systems.
In its filings, ACA has focused on highlighting the transaction-specific harms of the combination and quantifying their impact on its members and their customers, arguing that Comcast and NBCU will gain greater leverage in programming negotiations against other cable and satellite operators by joining forces. However, unlike other parties, ACA has yet to suggest to the government either structural or behavior remedies to alleviate the harms arising from the Comcast-NBCU combination.
“We thought it appropriate to begin this process by highlighting the harms of the deal, and then to wait and see the response from Comcast and NBCU that comes today. In our August 5 replies, we will reveal robust, complete, and long-lasting merger-specific conditions that will protect consumers and competition by addressing the clear harms of the deal,” Polka said.
About the American Cable Association
Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 900 smaller and medium-sized, independent cable companies who provide broadband services for more than 7.6 million cable subscribers primarily located in rural and smaller suburban markets across America. Through active participation in the regulatory and legislative process in Washington, D.C., ACA’s members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business. For more information, visit https://acaconnects.org/