NBCU-Comcast Merger Kills Internet Video, 'Cable Cartel's Ugly Business Model' Will Win, Researcher Says

broken television

During the congressional hearings on the NBC Universal-Comcast merger hearings this morning, Mark Cooper, Consumer Federation of America’s research director, blasted against creating the media giant.

The merger will “increase the likelihood that the ugly business model of the cable cartel will be strengthened and extended to the Internet,” he said.

In his research for Consumer Federation of America, which publicly opposed the merger before the hearings, Cooper said the companies directly compete in online video. GE’s NBC Universal has Hulu and Comcast has TV Everywhere. In broadcast, they compete in direct markets. Three quarters of Comcast’s regional sport networks directly compete with NBC in their markets, he said.

“If that ain’t competition, there is no such thing as competition,” Cooper said.

“By combining its distribution market power, that 50% market share that 24% national share of cable viewers, with a huge portfolio of content, the merger would dramatically increase the incentive and ability of Comcast to raise prices, discriminate in carriage, foreclose and block competitive entry and force larger programming bundles onto other systems.”

“Those strategies raise prices and reduce choices,” he said.

“The merger has so many anti-competitive and anti-consumer effects that they just can’t be fixed, they can’t be unravelled,” Cooper said.

In response to questions about online video competition, Comcast CEO Brian Roberts said video internet is a “friend not a foe” and the merger will help get broadcast video content online faster.

According to Roberts, there were about 30 billion views on the internet last month, NBC was less than 1% and Hulu was 4% and Comcast was less than a half of per cent of those video views on the Internet, he said.

Comcast’s Roberts also gave assurance that the programs that are delivered over the air that are NBC.com for online viewings will not migrate into the TV Everywhere format so only people with cable subscriptions will have it.

Boxee was also mentioned during the hearing. NBC Universal president Jeff Zucker responded to questions about Hulu blocking the internet-to-TV software service, “We have always said that we are open to negotiations,” about getting Hulu content on Boxee, Zucker said.

Consumer advocate Cooper said as for FCC regulating the merger and making sure Comcast and NBCU keep their promises, that’s “absurd,” he said. Government policies have made grave mistakes in the past, Cooper said, and allowed major cable companies to take more control of the video market.

“The FCC rules have failed to undermine, eliminate, prevent the stranglehold of the cable operators to date and there is no reason to believe that they will be better able to tame the video giant that will result from this merger,” he said.

“This is the first big policy test for the Internet as the alternative video platform that can compete with cable,” Cooper said. “If policy makers allow this merger to go forward the prospect for more come to a multi-channel video market will be dealt a setback.”

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