Monday, October 25, 2010;
COMCAST'S PLANS to acquire a majority share of NBC Universal from General Electric have drawn protests from unsurprising quarters. Some competitors argue that the $30 billion merger will put them at a disadvantage because Comcast will withhold popular NBC programs or charge exorbitant rates. Entities that compete with NBC-owned cable channels fear that Comcast will relegate them to hard-to-find channel locations. Consumer advocates warn that Comcast will use its newfound power to raise subscription rates and stifle new voices on television and the Internet.
The Justice Department and the Federal Communications Commission are expected to weigh in on the proposed deal before year's end. Regulators should scrutinize the proposed merger but should be skeptical of the critics' claims. (Disclosure: The Washington Post Co. has interests in broadcast and cable television, including NBC affiliates, and businesses that depend on the Internet.)
The FCC already requires cable operators to deal fairly with competitors. Its rules would require Comcast to give competitors access to NBC content on "reasonable" and "non-discriminatory" terms. The company would also be required to negotiate in good faith about carrying non-NBC channels. Competitors who believed that they were harmed by unfair dealing could have their complaints adjudicated by the agency. Critics of the Comcast-NBCU merger claim that these mechanisms are ineffective and slow. But the breakdown of the complaint system should not be used as an excuse to impose onerous conditions on one company. Instead, critics should push for an overhaul of the system.
To speed up adjudication of disputes involving "must have" programming such as local public affairs and regional sports programming, Comcast-NBCU could be forced as a condition of approval to agree to mandatory arbitration. This approach has been used prudently in prior mergers and allows disputes to be evaluated case by case without enshrining dubious policy mandates that could quickly prove outdated or counterproductive. FCC officials should resist calls by some merger opponents to impose "net neutrality" principles on Comcast's Internet component.
Advocacy groups have been poor prognosticators of the effects of large media mergers. Many of the same fears of domination and manipulation were raised with the 2001 merger of AOL and TimeWarner; that megadeal crumbled after a few years. Comcast and GE, which will retain a 49 percent stake in NBCU, should be allowed to proceed, and regulators should do their jobs and watch the newly formed company carefully.