Video services

WOW: Comcast-NBCU Menaces Service Rollouts

Offering one of the more unique arguments against approving Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s acquisition of NBC Universal , WideOpenWest Holdings LLC (WOW) CEO Colleen Abdullah insists the deal would threaten her company’s ability to spend money on upgrades that would allow it to increase bandwidth and deploy advanced services. (See Comcast to Take Control of NBC Universal.)

A merged Comcast-NBCU would wield so much market power that smaller multichannel service providers like WOW would be forced to carry new programming services from the company if it wanted to distribute popular Comcast- or NBC-owned networks, Abdullah said at a Federal Communications Commission (FCC) hearing on the proposed merger Tuesday. That would limit their ability to spend on infrastructure upgrades, which in turn would impede everything from the performance of its high-speed Internet service to the rollout of new interactive TV services, Abdullah contended.

“People are constantly requiring more speed. That takes money. That takes bandwidth,” Abdullah said at the FCC hearing. [Ed. note: WOW, by the way, indicated earlier this year that Docsis 3.0 network upgrades are underway.]

“It’s financial, and you have to manage your bandwidth approach. That’s why many of us are going to an all-digital platform, or a hybrid platform -- you have to be constantly looking at ways to increase your bandwidth so you can increase speeds so you can put on [additional] HD services, you can provide advance two-way interactive services,” she noted.

Comcast, she claimed, is already using its market power to prevent WOW from striking deals with programming networks that would allow it to launch a TV Everywhere service similar to the MSO’s Fancast Xfinity TV, Abdullah said, reiterating a claim she made during a House hearing in February. Since then, however, WOW has made some progress on its own by making Hulu LLC content available on its customer portal. (See Comcast CEO: We Won’t Block Rivals and WOW Plugs In Hulu .)

A merged Comcast-NBC could also force rivals to pay exorbitant retransmission consent fees, since it would have the leverage that comes with controlling 20 cable networks, 10 NBC owned-and-operated stations in the biggest markets, and nine regional sports networks, Abdullah said.

That sentiment was echoed by American Cable Association (ACA) outside counsel Tom Cohen, who also noted that a merged Comcast-NBCU would control NBC-owned stations and Comcast regional sports networks in areas representing 12 percent of all TV households.

Harm up and down?
Combining Comcast and NBCU’s programming assets alone would create “horizontal harm,” Cohen said. “The combined owner of NBC and Comcast programming would increase market power and allow it to charge higher programming fees. Those increases would be substantially passed on to subscribers in the forms of higher subscription prices.”

Comcast-NBC, he said, would also cause “vertical harm” in its ability to use its ownership of local TV stations and regional sports networks to charge higher retransmission consent fees to rivals such as DirecTV Group Inc. (NYSE: DTV), Dish Network LLC (Nasdaq: DISH), AT&T Inc. (NYSE: T) U-verse TV, and Verizon Communications Inc. (NYSE: VZ)’s FiOS TV.

Northwestern University School of Law professor James Speta was the only witness that said he didn’t oppose the merger, noting that the deal is “an appropriate response to a marketplace in complete turmoil.”

Also worth noting from Tuesday afternoon's hearing:

  • NBC Television Affiliates president Brian Lawlor asked the FCC to place conditions on the merger that would prevent Comcast from moving popular NFL games to its cable networks, warning that in local markets like Chicago, Comcast could move Chicago Bears games to Versus, the MSO-owned sports net.

  • While Comcast has promised to launch two new independent networks each year over the next three years to help win approval for the merger, The Tennis Channel CEO Ken Solomon warned that it is a hollow promise, since Comcast could choose to offer minimal distribution to those new independent networks that it would launch. The MSO could also pay “reduced or no license fees” for those networks, and then charge subscribers a premium, Solomon suggested.

  • Abdullah complained that the current FCC program access rules allow Comcast to license networks from programmers at up to a 20 percent discount compared to smaller distributors. “It does not cost the programmer any more to provide [services] to a small or mid-sized entity than to a large entity,” she said.

  • Even if there were more big cable mergers, it would be difficult for rivals to approach the market power of a combined Comcast-NBCU, Media Access Project 's Tyrone Brown said: “A Verizon-Fox-DirecTV combination would be only half as strong as Comcast-NBC in terms of MVPD [multichannel video programming distributor] homes reached nationally, and it would be even less of a force in the largest markets.”

    — Steve Donohue, Special to Light Reading Cable

  • Jeff Baumgartner 12/5/2012 | 4:30:04 PM
    re: WOW: Comcast-NBCU Menaces Service Rollouts

    Granted, this deal has a long way to go state-side, but the European Union has given Comcast-NBCU its anti-trust blessing.

    “Contrary to the U.S., in the European Economic Area, the transaction does not lead to any vertical relationship between Comcast’s cable distribution platform and NBC Universal’s programming assets,” the European Commission said. JB

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