Consumer 10.0: Comcast-NBCU merger to change communications, entertainment landscape

Posted: January 19, 2011

Philadelphia-area fans of the Phillies, Flyers, and 76ers should finally be able to get Comcast SportsNet via satellite TV. About 2.5 million poor households around the country will be able to buy broadband service for less than $10 a month. And the new breed of online-video distributors won at least some assurance that they won't be frozen out of access to NBC Universal's content.

It's far too soon to know how Comcast's takeover of NBC Universal will affect the rapidly changing marketplace for consumers who love their TV, movies, and online video any way they can get them.

But this much is clear: The deal marrying the nation's largest cable and Internet provider with one of the biggest names in broadcasting, cable TV, and movies will change the entertainment and communications landscape for years to come.

And its potential effect was nowhere more clear than in the extraordinary list of conditions imposed by the Federal Communications Commission and the Department of Justice, both of which blessed the deal Tuesday after yearlong reviews.

Comcast was already the 800-pound gorilla in the cable and Internet markets. With a controlling stake in a joint venture that will keep the name "NBC Universal," it will now be a gorilla wielding nunchakus.

Will consumers pay more for cable as a result? That was the prediction last fall of Northwestern University economist William P. Rogerson, who estimated that Comcast's increased pricing power would boost bills $2.4 billion over the next nine years - about 3 percent, or an extra $2 a month on a $70-a-month cable bill.

Comcast hotly disputed Rogerson's numbers, much as it countered warnings from other quarters. But there is scant reason to expect that the merger, even with its long list of conditions, will do anything to stem the tide of rising prices for cable and Internet access.

The lone dissenter on the FCC, Commissioner Michael J. Copps, echoed many of those warnings Tuesday about a deal he believes simply puts "too much power in one company's hands."

Copps warned about the "cable-ization of the open Internet" - a phrase that sums up widespread fears that a few dominant network owners could turn the Internet into a set of cable-style channels. If that happens, the Internet's enormous power as an engine of economic growth and creativity could be undermined.

With the conditions they imposed, FCC regulators went a long way toward addressing Copps' and other critics' concerns - enough to win some of them over.

One was Mark Cooper, director of research at the Consumer Federation of America, who praised Comcast's agreement to low-cost broadband for 2.5 million households otherwise stuck on the wrong side of the digital divide.

And Cooper said the protections for online-video distributors seeking access to NBC Universal's programming were "critical to promoting a more competitive, consumer-friendly video market."

Of course, the devil is always in the details - especially when it comes to regulating powerful and wily companies like Comcast.

Last June, the FCC finally closed the so-called terrestrial loophole - the provision that has long enabled Comcast to withhold Philadelphia's SportsNet channel from DirecTV and Dish Network, giving Comcast an extra competitive edge in its hometown market.

Its ruling then was supposed to allow the satellite companies to seek access to SportsNet, and to eventually force Comcast to arbitration if it refused. So far, it hasn't worked. Satellite customers missed another Phillies pennant run, and the Sixers and Flyers are halfway through their seasons without any movement.

DirecTV wouldn't comment Tuesday, and Comcast's Sena Fitzmaurice didn't give any ground. "It is not a condition in the transaction. We continue discussions with the satellite providers," she said via e-mail.

But Comcast did agree to provide program access to competitors, and also to a new "shot clock" provision for accelerated arbitration that in theory should take less than four months to accomplish - in contrast to proceedings that now seem to be managed by Comcast's own ad characters, "the Slowskys."

"The programming has to be made available under this provision," said a senior FCC official who briefed reporters on the condition that he not be identified. "The new cognitions provide a more direct path to access."

It's a small element of a huge transaction whose biggest effects won't be visible for years. But for Philadelphia sports fans, it would be welcome - and long-belated - news.


Contact columnist Jeff Gelles

at 215-854-2776 or jgelles@phillynews.com.

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