Comcast-NBCU Is An Even Bigger Threat To Competition Than In 2011 When DOJ and FCC Imposed Requirements To Control Its Anticompetitive Behavior
For Immediate Release
Contact: Ted Hearn
PITTSBURGH, Nov. 12, 2018 – To help secure the benefits of a competitive pay-TV and broadband market for millions of consumers, the American Cable Association has asked antitrust law enforcers at the Department of Justice (DOJ) to open an investigation into the business practices of the vertically integrated media giant Comcast-NBCU, focusing on harms stemming from the dominant communications firm’s control of cable systems, TV stations, and regional sports networks (RSNs) concentrated in some of the largest local markets in the country.
Until earlier this year, both the DOJ and the Federal Communications Commission (FCC) oversaw numerous requirements they had imposed on Comcast-NBCU in 2011 that were designed to rein in the firm’s anticompetitive activities. Now, with Comcast-NBCU “unleashed,” the firm can act with impunity, harming consumers and rivals.
ACA’s request came in a Nov. 6 letter to Makan Delrahim, DOJ’s Assistant Attorney General for Antitrust. In the letter (attached), ACA and its members pledged to cooperate fully to assist in the investigation, including by providing information about Comcast-NBCU’s practices.
“By opening a formal investigation, the DOJ, which has already put Comcast-NBCU on notice, can take the next step to gather facts about the company’s activities and ensure consumers and competition are protected. Given the enormity of Comcast-NBCU’s market presence and incentive to engage in anticompetitive harm, such an investigation is fully warranted,” ACA President and CEO Matthew M. Polka said.
ACA took this step to stress the competitive reality that Comcast-NBCU is now no longer subject to the 2011 DOJ and FCC requirements and poses a much greater threat to consumers and competition than AT&T’s acquisition of Time Warner (TW). Comcast-NBCU’s ability to raise programming prices in local markets is unmatched by any similar problem created by the AT&T-TW combination.
Unlike Time Warner, Comcast-NBCU owns significant must-have local programming, including 11 NBC local television stations and seven NBC RSNs; unlike AT&T, Comcast is the dominant multichannel video programming distributor in many of these local markets with market shares above 60 percent. With Comcast-NBCU adding Boston to its roster of markets where it owns-and operates an NBC station in 2017, its ability to cause market harm is greater today than when the government first sought to restrain the firm through conditions.
Comcast-NBCU also offers bundles of video/broadband/telephone throughout its entire footprint, while AT&T-TW is able to offer a complete bundle of services only where AT&T has a wireline presence. This means that Comcast-NBCU is likely to earn significantly higher average profit margins on switching customers than AT&T will, which in turn implies that Comcast-NBCU has dramatically increased leverage over programming prices compared to that of the AT&T-TW combination.
ACA’s concerns also are based on the fact that Comcast-NBCU took many opportunities to exercise its market power even when the DOJ’s and FCC’s merger conditions were in effect, supposedly limiting Comcast-NBCU’s behavior. For instance, Comcast-NBCU used its deep pockets to engage in delaying tactics that forestalled compliance with the condition that it carry Bloomberg TV in a news channel neighborhood with Comcast-NBCU’s CNBC. Comcast also refused to offer standalone broadband Internet access service as the FCC condition required.
Further, Comcast-NBCU may already be wielding a new weapon against its rivals – Hulu. ACA has heard from various members that they fear Comcast-NBCU may restrict, if it is not already restricting, their ability to access Hulu and make it available to their customers as an alternative to their cable offerings. This is especially troubling because their customers increasingly prefer over-the-top options to traditional video services.
ACA is far from alone in raising concerns that Comcast-NBCU will harm consumer welfare and asking the DOJ to initiate an investigation. Last December, Sen. Richard Blumenthal (D-Conn.) called the DOJ to open such an investigation and to petition the U.S. District Court to maintain the 2011 conditions. Former FCC Commissioner Mignon Clyburn later joined Sen. Blumenthal to again express these concerns.
The consumer organization Public Knowledge also wrote the DOJ, echoing Sen. Blumenthal’s concerns and his request for an investigation. More recently, groups from other parts of the political spectrum, such as Americans for Limited Government and the National Grange, have publicly announced their concerns about Comcast-NBCU’s anticompetitive conduct and have called for the DOJ to intervene. This wide-ranging concern attests to the grave harm that Comcast-NBCU can inflict.
About the American Cable Association: Based in Pittsburgh, the American Cable Association is a trade organization representing more than 700 smaller and medium-sized, independent companies that provide broadband, phone and video services to nearly 8 million customers primarily located in rural and smaller suburban markets across America. Through active participation in the regulatory and legislative process in Washington, D.C., ACA’s members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business. For more information, visit: https://www.americancable.org/