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ACA: Comcast-NBCU Deal Could Cost Subs $2.4B

Study claims pricing power of Comcast-NBCU would boost cable bills, but MSO counters that the economic analysis is flawed

November 8, 2010

2 Min Read
ACA: Comcast-NBCU Deal Could Cost Subs $2.4B

Urging the Federal Communications Commission (FCC) to place conditions on Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s pending acquisition of NBC Universal , the American Cable Association (ACA) released a study today claiming that consumers could pay an additional $2.4 billion for programming over nine years due to pricing power resulting from the merger.

"There are about 2.4 billion reasons why conditions are necessary to protect consumers and competition," asserted ACA president Matt Polka today on a conference call with reporters. (See Study: Comcast-NBCU Union Will Boost Cable Bills .)

While ACA hasn't opposed the merger, the lobbying group representing small and independent cable operators has asked that regulators place several conditions on the merger, including a request that pay-TV providers that can't come to terms on programming deals with Comcast-NBCU be allowed to submit disputes to binding arbitration. (See Policy Watch: Critics Pound Comcast-NBCU Deal .)

ACA also wants Comcast and NBCU to sell programming from NBC broadcast stations and Comcast regional sports networks on a standalone basis.

The study was conducted by Northwestern University professor of economics William Rogerson, who is a consultant for ACA. Rogerson said he believes the estimate of $2.4 billion in additional programming fees that would result from the merger is conservative.

Rogerson makes assumptions in the study that could be debated by Comcast and other proponents of the merger, including an estimate that pay-TV providers will have to pay 50 cents per month per subscriber for retransmission consent fees from stations owned and operated by NBC and other major broadcast networks, and that programming fees from NBCU's networks stable will increase 22 percent per year.

Rogerson said he came up with that estimate based on a filing Suddenlink Communications made with the FCC, noting that ACA members have relayed that they've been subject to programming fee increases for NBCU-owned networks of more than 22 percent.

"Based on my own calculations, it seems that 22 percent is a somewhat conservative estimate. I agree it would be better to have even more data," Rogerson added.

Comcast VP of government communications Sena Fitzmaurice said ACA's study is based on flawed economic analysis.

"It relies on assumptions and calculations that are unsupported, directly contradicted by available data, and contrary to previous FCC rulings. After having more than 9 months to make its case, and after two prior attempts that we thoroughly rebutted, ACA is making an obvious attempt to further delay the approval of the Comcast NBCU transaction,” Fitzmaurice said in a statement, adding that the FCC should reject ACA's study on substantive and procedural grounds.

Based on recent comments, Comcast remains hopeful the deal closes by the end of this year.

— Steve Donohue, Special to Light Reading Cable

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