Earlier today General Electric and Comcast announced a deal for the sale of NBC Universal that makes Comcast the majority owner and lessens the ownership share of GE. The central issue with this deal is whether or not this will create an unfair advantage for Comcast and violate anti trust law since they will be in control of NBC and all the other networks they own. The problem that most people see is Comcast is the largest cable provider in the United States and will be gaining control of one of the largest media comglomerates.
The opponents of this deal believe Comcast will have an unfair advantage over all other cable and satellite providers since they will control how much is charged to air the NBC stations such as USA, Bravo and SyFy. While Comcast and GE state this will not happen and is just a readjustment of their businesses since GE is mainly involved in manufacturing and industrial creation as opposed to media groups. With one industry experting putting it best, 'How can they screw their competitors?'" said Briggs. "That's their job, after all." speaking the truth about true capitalism that the goal of every company is to screw those they are competing against so they will come out on top. Most consumer groups agree with this statement that this sale will end up being a bad deal for the public while most industry experts and legal experts believe the deal will pass with no major problems.
The experts believe the process may be a long process taking probably more than a year to pass through all the regulatory processes. The FCC, Department of Justice, and the FTC all will get a say as to whether or not it will be approved. I do not see a reason for this deal to not be passed, especially since this new company will not even reach the size of Disney Corp. who has their hands in a lot of different areas, the only difference is Comcast actually has the way to distribute it. This story will be very interesting to see whether or not the government will follow the ideals and beliefs of the current adminstration and their wish to be more stringent with anti-trust enforcement or if they will follow the presedence already set with the creation and size of Disney Corp.
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Good points. I agree with you. It is doubtful that the Comcast deal with NBC Universal to merge assets into a new entity will raise the hackles of regulators enough to be denied though there may be stipulations (such as selling off NBC affiliates in certain markets). While Comcast will have a controlling interest the new venture, its controlling interest will only be 51% with GE retaining the remainder. Media acquisitions in recent years should also serve as a bellwether to regulatory temperature of mergers (approval could take 12-18 months). What is interesting about this merger is that it is reverse of other recent ones. More recently, we have seen content producers/providers purchase the content distributors. Rupert Murdoch’s Fox (content producer) purchased DirecTV from Hughes (GM). Fox then turned around and sold DirecTV to John Malone’s Liberty Media (which owns channels such as Discovery, USA, Encore, Starz, and QVC). Both of these transactions were approved by regulators (FTC, FCC, and Justice Department).
ReplyDeleteIn the end, this deal will need to be blessed by the FCC and its new chairman Julius Genachowski. Though past precedence suggests approval, with a new administration and, this as one of its first big decisions, outcomes can sometimes be difficult to predict.
Comcast and NBC Universal also have court cases decided against the FCC on media ownership caps on their side (courts rejected FCC’s 30% media ownership cap). Additionally, the fact that Disney and Fox would still be larger than the new Comcast/NBC Universal company should help Comcast’s efforts to gain approval.