By Kim Hart - 12/06/09 12:49 AM EST
Federal Communications Chairman Julius Genachowski, who was appointed by Obama and is a close personal friend of the president, said in his Senate confirmation hearing that he would pay attention to “excessive” media consolidation. The agency will begin a formal media ownership review next year.
Christine Varney, head of the Justice Department’s antitrust division, has said she believes the department should scrutinize vertical mergers, or deals between distributors and producers. A marriage of Comcast, one of the largest distributors of content, and NBC, a robust producer of it, would fall into that category.
The FCC will have to sign off on the merger. Justice will work with the Federal Trade Commission to determine which agency will review it. The deal could take as long as 18 months to close.
If they combine, the companies will form a media powerhouse whose programming would account for 20 percent of viewing hours in the country. One in every seven stations would be owned by Comcast, the company said.
Democrats in Congress have expressed concern over the deal, saying it will require an in-depth analysis. Key lawmakers who lead the committees with jurisdiction over the deal have called for hearings on the matter.
Sen. Herb Kohl (D-Wis.), chairman of the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights, said the “acquisition will create waves throughout the media and entertainment marketplace, and we don’t know where the ripples will end.”
Rep. Henry Waxman (D-Calif.), who is from Beverly Hills and chairs the House Energy and Commerce Committee, also said the merger “raises questions regarding diversity, competition and the future of the production and distribution of video content.”
In a meeting with reporters Friday, Comcast’s Cohen said he expected those reactions.
“We strongly believe that this transaction is pro-competition, pro-consumer and in the public interest,” he said. “We welcome public scrutiny and congressional hearings because it allows us to make our case.”
Media consolidation aside, Comcast has opposing positions on two other policies endorsed by Obama.
Comcast has historically not been a big supporter of labor unions. Obama, on the other hand, has strong union relationships and in the Senate co-sponsored the Employee Free Choice Act, pro-union legislation that would do away with secret ballots in union organizing elections.
Another priority of the Obama administration is network neutrality, which would prohibit Internet service providers from giving preferential treatment to any type of traffic or content on the Web. Comcast’s inference with some high-bandwidth traffic escalated the issue, and the FCC said the company was in violation of its open-Internet principles. Comcast challenged the FCC’s decision because the agency's principles are not codified rules. The company opposes net neutrality regulations, saying it needs the ability to manage traffic on its networks.
Comcast is the nation’s largest residential Internet service provider. By merging with NBC, public interest groups warn it could end up producing a wide array of online content, as well as controlling access to it.
“The Obama administration has made a commitment to reinvigorating the nation’s antitrust laws,” said Corie Wright, policy counsel at public interest group Free Press. “They can’t ignore the severe threat this merger poses and must take the necessary measures to prevent harm to competition and consumers.”
Cohen said competitors will have access to its television and online content, and that prices will not rise as a result of the merger.
“Prices are not going to go up for Comcast customers any more or less than they would have without this transaction,” he said.