A recent study has shown that consumers are likely to shoulder additional subscription fees of $2.4 billion if NBC Universal and Comcast should merge. The details of the study were released by Matthew Polka, the President of American Cable Association, who further said there was a need to for regulators in the industry to protect end users from deals and mergers with far more overall harm than benefits.
The proposed merger of the two organizations which will see Comcast having a 51 percent majority share, while General Electric will own the remaining 49 percent, has been under scrutiny by the FCC and Justice department right from December, 2009 when it was initially made public.
The study was conducted by William Rogerson, FCC’s former Chief Economist and there are indications that the merger will harmfully raise prices both vertically and horizontally.
Vertically, the study suggests that the merger would present an avenue to increase NBC’s network programming fees to other competitors in the cable industry. Horizontally, the control of major programming assets could see the merger demanding that pay TV providers pay higher fees. In the long run, the summation of these additional costs could amount to $1.43 billion vertically and $1.14 billion horizontally.
Comcast has however indicated that the analysis carried out in the report represents a flawed presentation of issues as they were largely based on unsupported calculations and assumptions which could be refuted empirically with present data from the two media organizations involved in the merger process. They believe that the ACA was merely trying to use this as a means of getting the FCC to delay the approval of the merger of Comcast and NBC.
The reality might however be that ACA is not actually interested in causing a delay but is rather interested in getting FCC to authorize the merger only if certain checks and balances were put in to place to forestall the possibility of the new union creating an unlevel playing ground for its competitors. For instance, ACA is recommending that pay TV providers who are unable to agree deal terms with the Comcast-NBCU should have a “baseball-style arbitration” medium available for appeal which should be supervised presumably by a government agency.
This refers to a situation where both parties involved in the deal impasse will have to submit their different proposals to a mediating third party, who would resolve the issue by picking up one of the two proposals submitted. In the alternative, ACA is also suggesting that smaller cable companies unable to afford this, should have the chance to pay a fee just five percent greater than the lowest deal figure to one of RSN or NBC stations offering the same type of content they wish to air.