Comcast-NBC Deal Raises Antitrust Concerns
MELISSA BLOCK, host:
Assuming the deal goes through. Well, to talk more about the potential hurdles, I'm joined by Professor Jim Speta. He specializes in telecommunications law at Northwestern University Law School. Professor Speta, welcome to the program.
Professor JIM SPETA (Telecommunications Law, Northwestern University Law School): Thank you.
BLOCK: You now have Comcast, the largest cable operator, one of the largest Internet service providers, who will, if this goes through, own one out of seven television channels. Is that a big threat to competition, do you think?
Prof. SPETA: Well, that will be the first question that the regulatory review will look at. The antitrust authorities will ask whether there's decreased competition in any market. The argument will be even if there's a consolidation of so many channels, where else do consumers look for to get entertainment and information?
BLOCK: What else would the regulators be looking at as potential obstacles here?
Prof. SPETA: Well, they'll be looking at both the content market and the distribution market. As your reported noted, the players are significant players in each of those two markets. And so they'll look at whether the combination reduces competition either in those markets or to competitors in those markets.
BLOCK: And what would be an example of how they might do that?
Prof. SPETA: Well, for example, Comcast's content properties include some very important regional sports networks. And historically regional sports networks have been very important to whether people take up particular kinds of cable subscriptions or direct satellite subscriptions. And so the question will be: If the content and the distribution are combined in this scale could the combined company disadvantage other cable companies or satellite companies or even telephone companies?
BLOCK: I guess another question here would be, could Comcast give its own content, say, an NBC program or a Universal movie priority if people are going to view it using Comcast Internet or cable service?
Prof. SPETA: That's exactly the flip side and both sides of that question will be examined. And, in fact, the antitrust authorities and the Federal Communications Commission has looked at just this question in previous combinations of content providers and distribution companies. For example, in the News Corp-Direct TV merger or in the AOL-Time Warner merger, which of course is in the process of being undone.
BLOCK: And what did they find when they looked at those?
Prof. SPETA: Well, in both of those situations, the Federal Communications Commission imposed some requirements on the companies that essentially they deal fairly with their competitors with respect to content and distribution. In fact, this morning, Comcast released four pages of conditions that they proposed to the regulators that follow basically the blueprint that the FCC set up in those earlier mergers.
BLOCK: Is this of an order of magnitude greater than the other examples that you mentioned? I mean, one critic of this talked about it being the most important merger since Lucy met Desi today.
Prof. SPETA: I do think this is the communications merger of the decade and it is on a scale different from and bigger than the previous mergers. The big question in media these days is not just traditional forms of channels, of cable programming or even of broadcast programming, but of also all of the content available outside of those distribution medias, like through Internet video. And so the marketplace is changing. This may be a bigger deal in traditional television and cable television. But whether it's a bigger deal in the media marketplace is sort of where all the action is for the regulators.
BLOCK: And in the end, do you assume the regulators will look at this, ask questions, but ultimately approve it?
Prof. SPETA: I believe that ultimately, and this is just my personal opinion, ultimately it will be approved with some conditions. Earlier today, one of the FCC commissioners, Michael Copps, who has had a very longstanding concern with media consolidation issued a statement in which he said that it would be, quote, "a very steep climb" for him to reach approval of the merger. So I think there will be an extended regulatory review process. My personal belief is that eventually it will be approved.
BLOCK: Professor Speta, thanks for talking with us.
Prof. SPETA: Thank you.
BLOCK: That's Professor Jim Speta. He teaches telecommunications law at Northwestern University Law School.
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