The Empire Strikes Back

Comcast Returns Fire at Critics of its NBC Universal Merger Plan

By John Eggerton -- Multichannel News, 7/26/2010 12:01:00 AM

Washington — Comcast and NBC Universal have been taking it on the chin as critics and commenters threw shot after shot in the Federal Communications Communications docket at their proposed joint venture, not only at the perceived anticompetitive threats from the combo, but even at the operator’s public-interest pledges and diversity deals with various organizations.

From some vantage points, in fact, media mergers look like the quickest route to boosting diversity, given Comcast and NBCU’s pledges to Hispanic and African- American groups, including new minority-owned channels, investments in advertising and millions in seed money for entrepreneurs. Even those efforts have not gone unassailed.

Last week, it was the merger partners’ turn to respond. They came out swinging in a 327-plus page opus (the redacted version) dismissing some critics as character assassins and others as heavy on rhetorical brickbats and light on facts and logic.

Comcast, NBCU and General Electric — NBCU’s parent and Comcast’s future joint-venture partner — say that rather than invoking various extraneous issues, critics of the proposed $30- billion joint venture should have off ered up “facts, logic, and rational argument” to support claims of transition-specific harms, not “the hyperbole, speculation, and even character assassination that several opponents employ.”

That came in the filing at the FCC last week responding to those who petitioned the FCC to deny or otherwise criticized the deal.

The bottom line from Comcast- NBCU is that the deal is a primarily vertical meld between companies that will not “possess market power in any relevant market,” a pro-consumer, procompetition deal that deserves a thumbs up.

The companies submitted economic studies they say show that the combined company would not profit from withholding content to or denying distribution of competitors. They also say the deal does not threaten online video distribution, which it says is already competitive and will only get more competitive.

As for issues like network neutrality, media consolidation, and program access, Comcast calls them extraneous, preexisting and industrywide and says they are properly addressed, and are already being addressed, in other proceedings. “To the extent that the commenters allege that Comcast or NBCU has violated any rule, the commission’s existing complaint processes are the proper place for such allegations to be considered,” they said.

Andrew Schwartzman, senior vice president and policy director of Media Access Project, which opposes the merger, says those issues are right on point.

“The matters we and others have raised in this proceeding all relate to whether it is in the public interest to allow the merger to take place,” he told Multichannel News. “If Comcast or NBCU is in violation of an FCC rule, it certainly affects a judgment as to whether the combined companies will be able to do greater damage.

Comcast and NBCU have said that they are not in violation. “In any event, any allegations of rule violations in the instant record are without merit,” they said in the filing.

As to the so-called extraneous issues: “If existing provisions, such as the program access and program carriage rules, are insufficient to protect against harm to the public, it is not in the public interest to allow a larger, horizontally and vertically integrated company to be in a position to exploit them even more efficiently,” Schwartzman said.

Comcast said the deal has significant public-interest benefits, including from the “marrying of content and distribution,” which it said will spur innovation and competition, and from the “tangible and verifiable voluntary commitments” the company has made to diversity, localism and other public-interest goals.

Not surprisingly, the companies also cited the hundreds of endorsement letters the FCC received for the deal, or what they called “an outpouring that has no precedent in any prior transaction review.” At press time, new additions to that parade included the governor of Utah, Big Brothers and Big Sisters of Bucks County, Pa., and the Booker T. Washington Business Association (see box).

Comcast argues that the three economic reports and hundreds of thousands of pages of documents it has submitted, the more than 150 questions it has answered, and the reams of supportive comments from fans of the companies should be enough to tip the scales. “The overwhelming weight of the factual, legal, and economic evidence shows that the transaction is pro-competitive, pro-consumer, and in the public interest. Accordingly, the commission should approve it expeditiously,” they conclude.

Comcast won’t have long to wait for the next official volley from the other side. Replies to Comcast are due Aug. 5.