During a conference call today between Comcast, Time Warner Cable, and analysts from the investment industry, David L. Cohen, executive vice-president for Comcast, reiterated that conditions from the Comcast-NBC Universal merger would govern the transaction and that net neutrality principles would be adhered to. Let’s take a look at those conditions from the merger back in January 2010. The following is taken from the Federal Communications Commission’s order in In the Matter of Comcast Corporation, General Electric Company, and NBC Universal, Inc., MB Docket No. 10-56.
“Ensuring Reasonable Access to Comcast-NBCU Programming for Multichannel Distribution. Building on successful requirements adopted in prior, similar transactions, we make available to rival multichannel video programming distributors (“MVPDs”) an improved commercial arbitration process for resolving disputes about prices, terms, and conditions for licensing Comcast-NBCU’s video programming. We believe that this remedy, designed to prevent harms from integrating content and distribution market power, will be even more effective and less costly than previous procedures. We apply the arbitration and standstill remedies to all Comcast-NBCU affiliated programming.”
I don’t see where this condition would be violated by a merger between Comcast and Time Warner. Time Warner has been receiving access to Comcast-NBCU programming as a stand alone video distributor and as part of a merged Comcast-Time Warner, access to Comcast-NBCU programming should continue. It would make no business sense for Comcast to allow access to some of its customers, say in Atlanta, while restricting access to its customers in New York.
“Protecting the Development of Online Competition. Recognizing the danger this transaction could present to the development of innovative online video distribution, we adopt conditions designed to guarantee bona fide online distributors the ability to obtain Comcast-NBCU programming in appropriate circumstances. These conditions respond directly to the concerns voiced by commenters—including consumer advocates, online video distributors (“OVDs”) and MVPDs—while respecting the legitimate business interests of the Applicants. Among other things, the Commission:
- Requires Comcast-NBCU to provide to all MVPDs, at fair market value and non-discriminatory prices, terms, and conditions, any affiliated content that Comcast makes available online to its own subscribers or to other MVPD subscribers.
- Requires Comcast-NBCU to offer its video programming to any requesting OVD on the same terms and conditions that would be available to an MVPD.
- Obligates Comcast-NBCU to make comparable programming available on economically comparable prices, terms, and conditions to an OVD that has entered into an arrangement to distribute programming from one or more of Comcast-NBCU’s peers.
- Restricts Comcast-NBCU’s ability to enter into agreements to hamper online distribution of its own video programming or programming of other providers.
- Requires the continued offering of standalone broadband Internet access services at reasonable prices and of sufficient bandwidth so that customers can access online video services without the need to purchase a cable television subscription from Comcast.
- Prevents Comcast from disadvantaging rival online video distribution through its broadband Internet access services and/or set-top boxes.
- Addresses threats to Hulu, an emerging OVD to which NBCU provides programming, that arise from the transaction.”
Unless Comcast expects to exit New York City and any other of Time Warner’s service territories after the merger, online distributors of content such as Hulu and Netflix will still be able to connect with their subscribers. Given wireless broadband providers such as AT&T and Verizon will still be available for consumers to choose from, Hulu, Netflix, and other edge providers will still be able to transmit their entertainment and other content.
“Access to Comcast’s Distribution Systems. In light of the significant additional programming Comcast will control—programming that may compete with third-party programming Comcast carries on its MVPD service—we require that Comcast not discriminate in video programming distribution on the basis of affiliation or non-affiliation with Comcast-NBCU. Moreover, we require that, if Comcast “neighborhoods” its news (including business news) channels, it must include all unaffiliated news (or business news) channels in that neighborhood. We also adopt as a condition of the transaction Comcast’s voluntary commitment to provide 10 new independent channels within eight years on its digital tier.”
I don’t see Comcast not distributing programming to itself. This will probably be the easiest of conditions the company will be able to meet.
The real issue facing Comcast and Time Warner Cable will involve anti-trust and while this transaction does not involve the elimination of a competitor, I expect Free Press and the U.S. Department of Justice to ask Comcast why they simply don’t follow the examples of AT&T and Verizon and build competing systems in Time Warner Cable’s territories. That would be the other avenue to protecting competition while providing consumers with additional choice. Comcast could still hold on to its economies of scale argument; that it needs to be bigger in order to negotiate more reasonable costs for acquiring programming.
The only issue would be how expensive would a truly competitive approach be and would the benefits outweigh the cost of that approach to expansion.