In December 2009 Comcast purchased 51% controlling interest in NBC Universal, which raised eyebrows in the cable subscription business and in the emerging Internet TV business. Specifically, the concern was based on NBCU’s 30% interest in Hulu, the leading Internet TV site. In late August, the story has re-appeared as reports surfaced that the Justice Department is “seriously investigating” a debate raging throughout the media business.
According to the Wall Street Journal, the Justice Department is focusing on how Comcast Corp.’s bid to purchase control of General Electric Co.’s NBC Universal television and movie unit as competitors have complained that the combined powerhouse could stunt the Internet industry’s quote.
Here is what some of Comcast’s competitors are reported to have stated to the FCC on August 19…
“[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.” – Direct TV
“[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 les of a threat to its incumbent acquirer, Comcast.” – DISH
Industry experts predicted the controversy to thicken back in December when the deal went in to effect. In fact, Bloomberg reported at that time that the planned takeover would draw scrutiny from Obama administration regulators who said consolidation of media companies may thwart competition.
Comcast’s response to the FCC regarding the matter is that “the combined entity will lack the market power required to pursue a foreclosure strategy by withholding online content from other distributors.”
Clearly Comcast is downplaying the matter while its competitors are feeling a bit vulnerable with their backs against the wall. Regardless, the story pushes the envelop to points in the media business that have not been breached yet but that were inevitably bound to occur. With the FCC now getting involved, new regulation is expected.
