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Policy

The Empire Strikes Back

7/26/2010 11:33 AM Eastern

Washington — Comcast and
NBC Universal have been taking
it on the chin as critics and commenters
threw shot after shot in
the Federal Communications
Communications docket at their
proposed joint venture, not only
at the perceived anticompetitive
threats from the combo, but even
at the operator’s public-interest
pledges and diversity deals with
various organizations.

From some vantage points, in
fact, media mergers look like the
quickest route to boosting diversity,
given Comcast and NBCU’s
pledges to Hispanic and African-
American groups, including
new minority-owned channels,
investments in advertising and
millions in seed money for entrepreneurs.
Even those efforts have
not gone unassailed.

Last week, it was the merger
partners’ turn to respond. They
came out swinging in a 327-plus
page opus (the redacted version)
dismissing some critics as character
assassins and others as
heavy on rhetorical brickbats and
light on facts and logic.

Comcast, NBCU and General
Electric — NBCU’s parent and
Comcast’s future joint-venture
partner — say that rather than
invoking various extraneous issues,
critics of the proposed $30-
billion joint venture should have
off ered up “facts, logic, and rational
argument” to support claims
of transition-specific harms, not
“the hyperbole, speculation, and
even character assassination that
several opponents employ.”

That came in the filing at the
FCC last week responding to those
who petitioned the FCC to deny or
otherwise criticized the deal.

The bottom line from Comcast-
NBCU is that the deal is a
primarily vertical meld between
companies that will not “possess
market power in any relevant
market,” a pro-consumer, procompetition
deal that deserves a
thumbs up.

The companies submitted economic
studies they say show that
the combined company would
not profit from withholding content
to or denying distribution of
competitors. They also say the
deal does not threaten online
video distribution, which it says
is already competitive and will
only get more competitive.

As for issues like network neutrality,
media consolidation, and
program access, Comcast calls
them extraneous, preexisting
and industrywide and says they
are properly addressed, and are
already being addressed, in other
proceedings. “To the extent
that the commenters allege that
Comcast or NBCU has violated
any rule, the commission’s existing
complaint processes are the
proper place for such allegations
to be considered,” they said.

Andrew Schwartzman, senior
vice president and policy director
of Media Access Project, which
opposes the merger, says those
issues are right on point.

“The matters we and others
have raised in this proceeding all
relate to whether it is in the public
interest to allow the merger to
take place,” he told Multichannel
News
. “If Comcast or NBCU is in
violation of an FCC rule, it certainly
affects a judgment as to whether
the combined companies will be
able to do greater damage.

Comcast and NBCU have said
that they are not in violation. “In
any event, any allegations of rule
violations in the instant record
are without merit,” they said in
the filing.

As to the so-called extraneous
issues: “If existing provisions,
such as the program access and
program carriage rules, are insufficient to protect against harm
to the public, it is not in the public
interest to allow a larger, horizontally
and vertically integrated
company to be in a position to exploit
them even more efficiently,”
Schwartzman said.

Comcast said the deal has significant public-interest benefits,
including from the “marrying of
content and distribution,” which
it said will spur innovation and
competition, and from the “tangible
and verifiable voluntary
commitments” the company has
made to diversity, localism and
other public-interest goals.

Not surprisingly, the companies
also cited the hundreds of
endorsement letters the FCC received
for the deal, or what they
called “an outpouring that has
no precedent in any prior transaction
review.” At press time, new
additions to that parade included
the governor of Utah, Big Brothers
and Big Sisters of Bucks County,
Pa., and the Booker T. Washington
Business Association (see
box).

Comcast argues that the three
economic reports and hundreds
of thousands of pages of documents
it has submitted, the more
than 150 questions it has answered,
and the reams of supportive
comments from fans of
the companies should be enough
to tip the scales. “The overwhelming
weight of the factual, legal,
and economic evidence shows
that the transaction is pro-competitive,
pro-consumer, and in
the public interest. Accordingly,
the commission should approve
it expeditiously,” they conclude.

Comcast won’t have long to
wait for the next official volley
from the other side. Replies to
Comcast are due Aug. 5.

September