Comcast’s deal with NBC Universal was barely announced before it became apparent that the agreement would be in for heavy Washington scrutiny that could take much of next year.
Consumer groups were quick to urge government agencies to either reject the deal outright or impose major conditions on a host of issues from net neutrality to distribution of programming to rivals.
They warned that unless the government acts, the deal could give too much power to a single media company. Labor unions also are expected to weigh in.
Besides facing scrutiny from regulators on antitrust grounds and from the Federal Communication Commission on “public interest” issues, the merger also will face congressional hearings.
“This acquisition will create waves throughout the media and entertainment marketplace, and we don’t know where the ripples will end,” said Sen. Herb Kohl, D-Wis., chairman of the Senate Judiciary Committee’s antitrust panel in a statement announcing plans for a hearing.
“Antitrust regulators must ensure that all content providers are treated fairly on the Comcast platform, and that Comcast does not get undue advantages in gaining access to programming.”
He said a hearing would give consumers "a better sense of how this deal could affect their access to diverse programming and information, especially as they more often look to the internet for such services. It’s critical that we preserve robust competition and promote innovative and emerging program delivery in this rapidly changing market.”
Senate Commerce Committee chairman Jay Rockefeller, D-W.Va., also expressed concerns.
“A joint venture of this magnitude would benefit from regulatory oversight," he said in a statement. "When major media companies swell to control both content and distribution, we need to make sure consumers are not left with lesser content and higher rates.”
In the House, Energy and Commerce Committee Chairman Henry Waxman, D-Calif., also announced plans for a hearing “at the earliest practical date.”
“This proposal raises questions regarding diversity, competition and the future of the production and distribution of video content across broadcasting, cable, online and mobile platforms," he said. "It is imperative that the FCC, the Justice Department and the FTC rigorously assess whether this transaction is in the public interest.”
A Comcast spokeswoman said company officials would begin meeting with regulators next week, and the FCC in a statement Thursday said the agency will "carefully examine the proposed merger and will be thorough, fair and fact-based in its review.”
There also were indications the FCC’s review of the deal could be extensive.
FCC Commissioner Michael Copps in a statement said the deal "raises a multitude of important questions."
“While I look at each proposed transaction on its individual merits, my longstanding skepticism about the harms imposed by so few controlling so much persists,” he said.
He said among his questions are: “What is its impact on the prices consumers will pay? Would the combination mean more newsrooms (but perhaps fewer reporters) controlled by one entity? How would the transaction affect minorities and diversity on the airwaves? Would this merger lead to fewer voices on both traditional and new media? Does the nature of the transaction make even more urgent the need for FCC network neutrality rules? What about the future of competition in the several markets these companies serve?”
Consumer groups were quick to question the merger.
“We have serious doubts whether this merger is in the public interest,” said Gigi B. Sohn, president and co-founder of Public Knowledge, a group that has been concerned about media issues. “It raises substantial and complex competition issues across multiple types of media.”
In a statement, she cited especially concerns that the combination would give Comcast too much power over the internet’s future.
Consumer groups have been concerned that internet service providers will favor “partners’” videos over rivals in allocating limited bandwidth for internet traffic, effectively making it far harder for any rivals to compete. They also have expressed concerns that consolidation could reduce the incentive for providing free video content over the web.
“The sheer size of the transaction makes a net neutrality rule that much more necessary," said Sohn. "Regulators will have to make certain that Comcast does not give advantage to NBC programs and films over others.”
Andrew Jay Schwartzman, president-CEO of the Media Access Project, a public interest law firm that has successfully fought media consolidation, warned that the steps Comcast is voluntarily agreeing to take as part of the deal don’t go far enough.
“There are only two or three things that are more than they are doing now," he said, adding that Comcast’s agreement to add six more independent channels by 2011 as part of the deal is “far from the kind of vibrant programming market we are looking for.”
He said the deal could give Comcast control of nearly a quarter of all local TV channels. He questioned whether competitors could successfully compete in markets where Comcast was the dominant local cable system and also had NBC-owned TV stations and could combine the two to sell advertising.
“We have a real concern about the advertising competition,” he said.
While consumer groups warned about the merger, Ken Ferree, a senior fellow at the Progress & Freedom Foundation, warned about the consumer groups.
“Like Carnac the Magnificent, I can confidently predict that various advocacy groups will hoot and holler that Comcast’s stake in NBC Universal is another sign that the sky is falling. It’s not. Simply put, the deal raises no general antitrust or diversity issue,” he said.
He said it is “far past time for Congress to pull the FCC’s nose out of these deals and to streamline the federal role in reviewing business transactions.”