AUGUST 29, 2010 Comcast Gets Static on Net TV
By JESSICA E. VASCELLARO And THOMAS CATAN Wall Street Journal http://online.wsj.com/article/SB10001424052748703418004575456092679817262.html?mod=WSJ_Tech_LEADTop What competitors say: "[T]his transaction would give Comcast the tools to exploit an 'online loophole' under which Comcast could migrate NBCU programming to the Internet or to mobile or on-demand platforms, where Comcast could then deny it to competitors or restrict access for consumers." – DirecTV, reply comments to the FCC, Aug. 19 "[O]nline video, an innovative, disruptive new distribution platform—which includes NBCU and its online properties, including its ownership interest in online video service Hulu—is being neutralized and rendered less of a threat to its incumbent acquirer, Comcast." – DISH, reply comments to the FCC, Aug. 19 What Comcast says: "[T]he combined entity will lack the market power required to pursue a foreclosure strategy by withholding online content from other" distributors. – Comcast's response to FCC, Aug. 19 The Justice Department is focusing in on how Comcast Corp.'s bid to purchase control of General Electric Co.'s NBC Universal television and movie unit could affect the emerging Internet video market, people familiar with the matter say. Competitors have complained that the combined powerhouse could stunt the Internet video industry's growth. During its eight-month review of the roughly $13.75 billion deal, the agency's antitrust division has become interested in finding out whether Comcast and other cable and satellite giants are trying to lock up distribution rights to television programming on the Internet, which would block potential competition, according to people familiar with the matter. The Justice Department's efforts, which are heating up, aren't likely to kill the deal, but they mark one of the first times that the government is seriously investigating—and could shape —a debate raging through the media business: Will online video providers emerge as direct competitors or complements to the $69.8 billion U.S. TV subscription market? The regulators are considering the issue as the video market is undergoing its biggest transformation in decades. A range of companies—Netflix Inc., TiVo Inc. and Apple Inc. among them—are racing to provide access to video over the Internet, and a growing number of them are serving up content to Web-connected televisions as well as computers. That is further encroaching on the turf of cable and satellite companies, which are trying to co-opt the threat by launching Web-video services of their own. Current federal rules require cable companies that own content like Comcast to make that programming available on reasonable terms to rivals. DISH and DirecTV want those rules extended to Comcast/NBCU content that's delivered over the Net. In Comcast's case, the Justice Department is investigating whether the company's control of NBC Universal's broadcast, cable and movie content would make it harder for online video companies to compete, the people familiar with the matter said. The agency is also examining Comcast's efforts to give its cable customers online access to some TV content that isn't widely available online now, and how that might affect access to those programs by other Internet providers. That might result in fewer competitors over time so that consumers would end up paying more for video in general, these people said. "The concern is: Will Comcast's incumbent systems give them an incentive to slow down online distribution?" said a person familiar with the matter. A spokeswoman for the Justice Department declined to comment. Since the deal was announced in December, Comcast competitors, including DISH Network Corp., have argued that online video could emerge as a serious competitor to cable and satellite companies and that Comcast shouldn't be allowed to withhold content from online video services. "The success of the online-video-business model depends critically on access to online content, and strict conditions on the transaction would be necessary to thwart" any attempts by Comcast-NBCU to block access, Dish wrote in a filing to the Federal Communications Commission earlier this month, detailing its support for broadening "program access" rules. Comcast, on the other hand, argues that Internet video won't be a direct competitor to cable any time soon, removing any incentive for it to cut off online competitors' access to NBC content. Even if it did cut off access, it argues, the combined company's share of the TV industry would be too small to injure a competitor. "Online video is not a substitute" for multichannel video programming, the company wrote in a filing to the FCC responding to complaints from competitors this month. "In addition, several impediments – technological, pricing related, and rights related – make it highly unlikely that online video will become a substitute" for such service "in the foreseeable future," it continued. Some critics of the Comcast deal have also expressed concern that Comcast might weaken Hulu LLC—a popular online video site—by ending or changing NBC's relationship with it. Walt Disney Co., News Corp., and NBC Universal own stakes in the service. (News Corp. also owns The Wall Street Journal.) In filings with the FCC, Comcast has called such criticism "misplaced" and said that it will remain a "supportive partner" to Hulu. The Internet-video-market issue is one of many that regulators are considering in relation to the transaction, which antitrust experts widely expect to be approved late this year or early in 2011. But the government does have some leverage, and it could impose conditions—all the more so because of the involvement of the FCC, which is also reviewing the deal and enjoys a broader authority to act to stop anything that it deems to be against the public interest. Officials at the FCC and the Justice Department are working together on some parts of the review, according to the people familiar with the matter, and they met jointly with Comcast officials earlier this month. Lawyers representing various parties with interests in the deal expect the Justice Department and the FCC to impose restrictions on the business practices of a combined Comcast/NBC. This might include a promise by Comcast not to discriminate against NBC's rivals on its cable network, for example, or limits on any exclusive deals to carry content. Even if the deal is approved, as many expect, it has served to focus the Justice Department's attention on Internet video distribution. The people familiar with the matter have suggested that the agency will continue to investigate whether cable operators are acting to thwart emerging competition from the Web. If so, they could file a suit under Section 2 of the Sherman Antitrust Act, which targets anticompetitive behavior by dominant companies. Read more: http://online.wsj.com/article/SB10001424052748703418004575456092679817262.html?mod=WSJ_Tech_LEADTop#ixzz0y7njDueh -- ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 Mail: antunes at uh dot edu _______________________________________________ Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
