Technology

Comcast-NBCU deal will cost pay-TV consumers dearly

MUMBAI: American consumers over the next nine years will pay at least $2.4 billion more for pay-television service as a result of unrestrained pricing power that will flow from the combination of Comcast and NBC Universal, according to a new economic study released by the American Cable Association (ACA). 
 
ACA‘s study was conducted by Dr. William Rogerson, professor of economics at Northwestern University, who served as the FCC‘s Chief Economist for the 1998-99 academic year.


Rogerson‘s study concluded that the transaction will allow Comcast-NBCU to raise programming fees way above levels the two would be able to command as separate and independent companies, and that these fee increases will largely be passed through to subscribers in the form of higher subscription prices.


The media transaction is awaiting regulatory approval from the Federal Communications Commission and the Department of Justice. 
 
According to Rogerson, the quantifiable consumer harm of the transaction ($2.566 billion) is more than 10 times greater than the quantifiable consumer benefit ($204 million) claimed by Comcast-NBCU.


In his detailed analysis, Rogerson found that the consumer harm will manifest itself in two ways. The first is vertical harm arising from the combination of NBCU national cable programming networks and NBC owned-and-operated broadcast television stations with Comcast’s cable distribution assets. This alignment will permit Comcast-NBCU to raise the fees it charges for NBCU programming to Comcast’s cable and satellite rivals, including nearly 40 ACA member companies, such as RCN, WOW!, Wave Broadband, Broadstripe, and SureWest.


The second harm is horizontal, or control over key programming assets which will permit Comcast-NBCU to raise prices from the market power derived by jointly negotiating NBCU’s suite of highly rated NBCU national cable programming networks and/or NBC O&O TV stations with Comcast’s key programming asset: Regional sports networks (RSNs). This combination would allow Comcast-NBCU to demand higher fees from all pay TV providers operating in markets served by a Comcast RSN.


In breaking down the harms by category, Rogerson calculated the vertical harm at $1.43 billion and the horizontal harm at $1.14 billion over the next nine years. Of note, both types of harm are relatively equal in magnitude.


In breaking down the harms by programming, Rogerson shows that the transaction will cause $1.6 billion of harm through its effect on the fees charged for NBCU national cable networks, $651.2 million of harm through its effect on the fees charged for Comcast RSNs and $355.6 million of harm through its effect on the retransmission consent fees charged for NBC O&Os. Professor Rogerson’s analysis shows that by not imposing conditions on NBCU’s national cable networks, the government would leave nearly two-thirds of the transaction’s harms unaddressed.


Although the quantifiable consumer harms of the transaction will be felt by consumers across the country, locations hit the hardest will be those markets where Comcast has a significant cable presence and owns the RSN in addition to the NBC O&O. Markets matching that profile include Philadelphia, Chicago, San Francisco, Washington, D.C., and Hartford, Conn.


Professor Rogerson says that Comcast has vastly overestimated the savings that it will realise through joint ownership of NBCU programming assets. Even taking into account savings from the reduction of double marginalisation highlighted by Comcast’s economic experts, the truth is that any potential consumer cost reductions are swamped by the quantifiable vertical and horizontal consumer harms from the transaction that ACA has identified.


Unveiled last December, the $30 billion Comcast-NBCU transaction is a union of key programming and cable assets, providing Comcast-NBCU with the incentive and ability to use its control of "must have" content -- which includes 10 NBC TV stations, nine Comcast RSNs and about 20 Comcast-NBCU national cable networks - to reap windfall profits by manipulating and overcharging pay television providers, including small and medium-sized operators who make up ACA’s membership.


In August, ACA unveiled an array of conditions designed to ameliorate the transaction’s vertical and horizontal harms, especially for small and medium-sized operators who have found baseball-style commercial arbitration unaffordable.


ACA conditions state that:


- All pay television providers, including bargaining agents, that cannot reach a mutual agreement with Comcast-NBCU for any of its programming may submit a dispute to binding baseball-style commercial arbitration. This arbitration remedy shall apply not only to Comcast-NBCU‘s NBC stations and RSNs, but also to its national cable networks.


- For smaller operators who cannot afford binding baseball-style commercial arbitration, Comcast-NBCU shall be prohibited from requiring any pay-TV provider with 125,000 video subscribers or fewer locally to pay a fee for an NBC station or RSN that is 5% greater than the lowest fee paid by any other local pay-TV distributor for that market‘s NBC station or the area‘s RSN.


- The general conditions applicable to all pay-television providers and the special conditions for smaller ones shall be available to all providers that negotiate for programming with Comcast-NBCU, not just those operators that compete head-to-head with Comcast’s cable distribution systems.


- Comcast-NBCU must sell its NBC broadcast stations and RSNs on a stand-alone basis to all pay-TV distributors, meaning each NBC station and RSN cannot be bundled with carriage of any other video programming network.

Latest Reads

http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2017/11/07/Arnab-Goswami.jpg?itok=VUCIzU8A
Republic TV launches Android app

MUMBAI: Republic TV is on a roll. From rocking the ratings chart in launch week itself to going international, the channel has added one more accomplishment to its kitty. The Republic TV Android app is now live.

Technology Software Applications
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2017/10/11/STB.jpg?itok=WsiaUBr8
STB cos in India, China enhancing features, providing customised solutions, Technavio enlists top vendors

MUMBAI: The global STB market is characterised by intense competition as the market is saturated in developed countries. The market share of these players is declining because of the entry of new players. The STB companies are enhancing the features of STBs and providing customised solutions to...

Technology Hardware Set-top Boxes
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2017/10/09/PFT.jpg?itok=VJugic3c
India's PFT Clear Media ERP suite to help US' PBS content delivery

MUMBAI: Prime Focus Technologies (PFT), the technology arm of Prime Focus, announced that its CLEAR™ Media ERP Suite has been selected by Public Broadcasting Service (PBS) to enhance their Network Operations Center (NOC) ecosystem efficiencies and sustainability, with the objective of reducing...

Technology Software Applications
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2017/10/09/JosephSiino.jpg?itok=doyka7Tg
Broadcasters, OTTs to gain as Via adds xHE-AAC at special rate

MUMBAI: Via Licensing Corporation, a intellectual property solutions provider, has announced the upcoming availability of Extended High Efficiency AAC (xHE-AAC) as part of the Advanced Audio Coding (AAC) patent pool. The expanded patent pool licence will be available at no additional cost to...

Technology Software Applications
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2017/10/06/Brian_Morris-Colin_Smith.jpg?itok=xVBB0KbV
Tata Comm to deliver Motorsport videos on global devices

MUMBAI: Tata Communications will now deliver video content for Motorsport.tv viewers' all devices over its global network. The two have partnered to power the growth of the network’s internet television platforms.

Technology Software Applications
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2017/10/06/ChyronHego_0.jpg?itok=qWRkJ4jh
How to create live video content sans pros, convert radio broadcast into visual show

MUMBAI: ChyronHego will be showcasing its live production, automation solutions at Broadcast India show in Mumbai in mid-October.

Technology Software Applications
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2017/10/03/Arvin%20patel%20tivo.jpg?itok=Ieo7eXfw
Sony renews IP licence deal with TiVo

MUMBAI: TiVo Corporation, a leader in entertainment technology and audience insights, has announced that Sony Corporation, a leader in consumer electronics, has renewed its multi-year intellectual property (IP) licence agreement. The license to TiVo’s patent portfolios covers all of Sony’s...

Technology Software Applications
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2017/09/30/cable-wire.jpg?itok=vJM4lI00
Digital TV, growing telecom major drivers of coaxial cable growth in A-Pac: Study

MUMBAI: The global coaxial cables market is mature owing to the use of coaxial cables in industries for a long time and the slow or stagnant product innovation.

Technology Hardware Components
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2017/09/29/Aruna_Sundararajan.jpg?itok=sLiHZik7
Cable variant with 50x capacity launched, good for BharatNet, says telecom panel secy

MUMBAI: Sterlite Tech, an end-to-end global technology leader in smarter digital networks, has bolstered its all-new FlashFWD 5G Solution with the launch of 1152F variant cables at India Mobile Congress (#IMC2017).

Technology Hardware Set-top Boxes

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories