Media and Money

Archive for November 2010

by Georg Szalai from The Hollywood Reporter

Study: Comcast-NBC Universal Merger Will Cost Consumers $2.4 Billion
The American Cable Association unveiled an economic study Monday that argues that consumers over the next nine years will pay at least $2.4 billion more for pay TV services if regulators don’t place conditions on the planned Comcast-NBC Universal deal to curb the combined entertainment giant’s pricing power.

The organization, which represents small cable operators and has opposed the proposed merger – at least without conditions, said Monday that $204 million in estimated financial benefits from the deal claimed by the merger partners will be outweighed by “consumer harm” of the transaction of $2.566 billion.

Comcast in a statement called the analysis flawed and said the issues raised in the report have been examined by the FCC inĀ  previous transactions. The commission “in each case rejected imposition of a condition on national cable networks,” it said. “There is no reason for the FCC to treat Comcast and NBCU worse than it treated Fox, DirecTV and Liberty [Media] in those recent deals.”

The ACA study, conducted by Dr. William Rogerson, professor of economics at Northwestern University, who served as the FCC’s chief economist 1998-1999, estimates vertical harm of the deal at $1.43 billion and the horizontal harm at $1.14 billion over the next nine years.

Vertical harm stems from the combination of programming assets and distribution, which will permit Comcast-NBC Uni to raise the fees it charges for programming to other distributors, including ACA members, such as RCN and WOW!

The horizontal effect stems from the merged firm’s control of key programming assets from both companies, which will allow it to negotiate prices for a broader portfolio, the group said.

“It is clear that the Comcast-NBCU deal will send monthly cable bills higher by billions of dollars over the next decade, underscoring ACA’s view that regulators must protect consumers and competition from a transaction whose benefits are vastly outweighed by its harms,” said ACA president and CEO Matthew Polka. “Without meaningful and cost effective conditions on the Comcast-NBCU transaction, regulators also run the risk of crippling effective competition in the pay-TV distribution market.”

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