Critics slam NBC-Comcast deal despite dismal track record of media mergers

Amanda Carey Contributor
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The Federal Communications Commission (FCC), Department of Justice (DOJ), and five state attorneys general have given the green light for media provider Comcast to buy a 51 percent share of NBC Universal. The nod came with plenty of regulatory requirements aimed at safeguarding Comcast’s competitors and monitoring the burgeoning online video market.

Those regulations were based on concerns that a merger between Comcast and NBC will stifle free speech and competition. The only problem is that there is little evidence supporting those fears. History shows media mergers of this scale, or media consolidation, have a dismal track record of success.

When the media companies Time Warner and AOL announced their merger in early 2000, the deal was met with similar doomsday cries. Media reform advocates watched in horror as two of the largest media companies joined forces.

What happened next shocked almost everyone. Two years later, the corporation, AOL-Time Warner was hemorrhaging money, reporting a $54 billion loss. A year later, those losses grew to $99 billion and the deal unraveled, with Time Warner shedding AOL completely.

Even Rupert Murdoch could not pull off a successful takeover of DirectTV by his News Corp. When Murdoch announced he was pursuing the satellite television company, activists responded by warning of skyrocketing prices for consumers and unprecedented control over national and local media. But the deal turned out to be not as profitable as Murdoch hoped, and News Corp. divested itself of DirectTV after three short years.

And in 2007, when Sirius was looking to merge with XM Radio, a group of six coalitions, including Free Press and The Consumer Federation of America, said in a joint statement to Congress that the merger “is antithetical to the competition laws, perhaps the worst offense against the basic principle that competition is the consumer’s best friend.”

The deal took more than 500 days for the FCC to approve. Shortly after, however, the company’s stock fell to below 10 cents a share and in early 2009, it flirted with bankruptcy.

In light of these previous unsuccessful media merges, one wonders why critics are once again sounding the alarm over the Comcast-NBC deal.

“This deal will give Comcast unprecedented control over both media content and the physical network that delivers it,” Josh Silver, president and CEO of Free Press, said in a statement responding to the FCC vote approving Comcast’s deal with NBC. “While the FCC has adopted conditions, they are insufficient short-term or voluntary fixes that will fail to prevent permanent harm to competition, consumer choice and the future of the Internet.”

Andrew Jay Schwartzman, senior vice president and policy director of the Media Access Project, responded to the FCC’s decision by saying the deal will only make free expression in media “worse off.”

“Perhaps the worst thing about today’s announcement is that it sends a message to other phone and cable companies that they, too, can buy up content providers,” said Schwartzman. “We may be about to see a new wave of media consolidation as a result.”

Among other things, the DOJ and the FCC will require Comcast to provide service to 2.5 million low-income families for less than $10, and withhold from exercising any control over online TV and movie site Hulu. Comcast will also have to comply with net neutrality-like regulations and not discriminate against independent online video distributors, increase local news coverage and expand children’s and Spanish-speaking programming.