Comcast/NBC's Bad Deal

When you work in the news industry, it’s not hard to find evidence of the negative impact of media consolidation. As media companies get bigger, local news and in-depth reporting take a hit. Employees get laid off. Important stories go uncovered.
 
Now there’s a new media merger on the horizon. And if approved by the government, it will make matters worse for Americans both inside and outside the news business. Newspapers could be especially hurt if the deal goes through.
 
Several months ago, cable giant Comcast announced it would buy NBC Universal. Comcast has agreed to pay roughly $30 billion for the company — but the cost to the public will be far greater.
 
If Comcast, the nation’s largest cable and Internet access provider, takes over NBC, it would be the largest media merger in a generation. The combined company would include the NBC broadcast network (which supplies programming to NBC-affiliated stations all over the country), 10 NBC owned-and-operated TV stations, the Telemundo broadcast network, 16 owned-and-operated Spanish language TV stations, Internet properties, exclusive rights to the Olympic games, regional sports networks, television and movie studios, as well as an ownership stake in a slew of cable channels, including MSNBC, the USA Network and E!.
 
In short, Comcast and NBC would control a sizeable chunk of the content you watch, as well as access to the platforms you use to watch it — namely, broadcast TV, cable TV and the Internet. Indeed, market analysts have estimated that a combined Comcast/NBC would control 1 in every 5 hours of television viewing. 
 
The proposed merger will hit the “overlap markets” the hardest — the 10 cities from Philadelphia to San Francisco in which NBC owns local TV stations that already have Comcast cable and Internet service. If this merger goes through, one company will control access to content online, via cable and over the airwaves in these communities.
 
In these markets, Comcast/NBC will become a monster advertising contender. In fact, Comcast is already the largest local advertising distributor in the cities where it plans to buy NBC broadcast stations.  With this combination of local broadcast and cable advertising, Comcast could easily distort ad rates — diverting advertising revenues not just from broadcast outlets in those cities, but also from newspapers and other print media. This would mean even less income to invest in local news.
 
The proposed merger also threatens competition and innovation as new forms of online video delivery, like Hulu.com, are emerging and gaining audiences. If the merger is approved, Comcast could prioritize its own online content — shoving newspapers’ digital properties to the back of the line — and stifle the free flow of Internet traffic.
 
If this seems like a raw deal for Comcast’s competitors and consumers alike, it is. But that hasn’t stopped Comcast from shelling out millions to convince Washington otherwise. Comcast spent $12.6 million on 100 lobbyists in 2009, and another $3.1 million in the first quarter of 2010. Most of this has gone toward hiring beltway insiders, including 78 former government officials, to join its lobbying arm. 
 
That may sound pricey, but Comcast can well afford it. In 2009, Comcast’s operating income was $7.2 billion, up 7% from the year before. Plus, spending $15 million on 100 lobbyists is chump change when you consider what Comcast pays its top brass. CNN Money ranked Comcast CEO Brian Roberts as one of the five “Highest-Paid Worst Performers” in America for 2008. Roberts’ 2008 compensation: $40.8 million.
 
If you’re a Comcast customer, you probably think that money would be better spent improving your service or lowering your bill rather than helping the cable giant get even bigger. Comcast consistently ranks among the worst companies in customer service, and was named “Worst Company in America” in 2010 by Consumerist.com. Even so, Comcast customers have already been subjected to price hikes of nearly 50% in some areas. So clearly, the company is not above padding its bottom line by raising cable rates.
 
That’s the bad news. The good news: The government gets to review the proposed merger. The Department of Justice and the Federal Communications Commission are supposed to carefully review the transaction and consider what’s best for the public. To see what you can do about this bad deal, visit www.freepress.net/comcast.
 
Corie Wright is Policy Counsel for Free Press, a non-profit advocate for media reform.


SIDEBAR:

Here are the stations that will become part of the Comcast empire if the merger goes through:

* Chicago - NBC Chicago (WMAQ) and Telemundo WSNS
* Philadelphia - NBC Philadelphia (WCAU)
* San Francisco - NBC Bay Area (KNTV) and Telemundo KSTS
* Boston - Telemundo WNEU
* Washington, D.C. - NBC Washington (WRC)
* Houston - Telemundo KTMD
* Miami - NBC Miami (WTVJ) and Telemundo WSCV
* Denver - Telemundo KDEN and KMAS
* Hartford - NBC Connecticut (WVIT)
* Fresno - Telemundo KNSO