Business and Deals

ACA: Comcast/NBCU Could Cost Consumers Billions

ACA quantifies what it claims are consumer harms in merger; Comcast says ACA study is flawed and an attempt to delay deal. 11/08/2010 10:52:38 AM Eastern

The American Cable Association says that if the Comcast/NBCU deal is approved without the program access and negotiation conditions it has recommended, it could mean consumers could be paying an additional $2.4 billion.

That is over the nine-year life of its proposed conditions on the deal, which include requiring stand-alone carriage agreements for TV stations and regional sports networks and outside arbitration for impasses.

Comcast responded that the study was flawed and that ACA was just trying to delay approval of the deal based on "

"assumptions and calculations that are unsupported, directly contradicted by available data, and contrary to previous FCC rulings."

ACA, representing smaller cable operators, released a new economic study Monday it says demonstrates the "unrestrained pricing power" that will result from the combination.

"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 Matt Polka in announcing the study, conducted by former FCC f Economist William Rogerson.

Rogerson claims that the consumer harm from the deal, both in terms of vertical and horizontal elements, is more than ten times the claimed consumer benefit of a little over $200 million.

ACA says the deal would allow Comcast/NBCU to raise its prices for programming to rival cable and satellite operators, including almost 40 ACA members, and would allow it to control "key programming assets" that it can negotiate in packages that will also raise prices due to the market power of those joint negotiations in markets where, say, Comcast owns a regional sports network. Sports is considered must-have, nonsubstitutable program.

Rogerson breaks down the potential increases in costs to consumers--since all those operators will be passing along their higher costs--at $1.6 billion in fees for NBCU cable nets (USA, Scif Fi, Bravo, MSNBC, etc.), $651.2 million "of harm" through fees for Comcast RSNs and another $355.6 million in retransmission consent fees for NBC O&O TV stations.

"Once again, ACA has submitted flawed economic analysis," said Comcast in a statemen. "It relies on assumptions and calculations that are unsupported, directly contradicted by available data, and contrary to previous FCC rulings. After having more than 9 months to make its case, and after two prior attempts that we thoroughly rebutted, ACA is making an obvious attempt to further delay the approval of the Comcast NBCU transaction. ACA's efforts should be rejected by the FCC on both substantive and procedural grounds."

"The issues raised in the report have been examined by the Commission in three previous transactions and in each case rejected imposition of a condition on national cable networks," said Comcast. "There is no reason for the FCC to treat Comcast and NBCU worse than it treated Fox, DirecTV and Liberty in those recent deals."

ACA has been pushing hard for conditions, saying the deal should not be approved without them.

Giving a shout-out to the ACA study was the Coalition for Competition In Media."The American Cable Association's report shows clearly that consumers will bear the cost of the Comcast-NBCU merger, with $2.4 billion in net consumer harms over nine years," said the group. "The Coalition for Competition in Media echoes the call of the ACA and countless other public interest and media groups for the FCC to protect consumers from a deal that will bolster profits for Comcast at a cost of billions to customers across the country."
Actually the coalition includes some of those countless public interest groups. Its members include Free Press, Media Access project. Common Cause, and Public knowledge, as well as Bloomberg, The Writers Guild of America West and more than a dozen others.

The FCC and Justice are currently vetting the deal, with Comcast/NBCU looking for a decision by the end of the year.

The FCC's informal 180-day shot clock expires Nov. 24.

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