By Kim Hart - 12/08/09 01:03 PM EST
What does Comcast's proposed marriage with NBC Universal mean for small cable companies?
"Nothing good," said Matthew Polka, president and CEO of the American Cable Association.
Polka (pictured here) said the merger will consolidate major programming assets, presenting "a serious threat to the financial stability of smaller operators."
ACA represents about 900 small operators, some of which provide services to only a few hundred customers. Its members provide television, phone and Internet services, often in areas not served big firms like Comcast, Time Warner Cable or Cablevision. They don't have ties to content companies such as Disney, so they have to negotiate with the larger content providers access to cable programming, Polka said.
"Now they're negotiating with a company that is potentially their competitor," Polka said. "That broadcaster we're dealing with is in some cases our competitor."
He says smaller companies pay "significantly more" for programming than larger companies because they don't have large numbers of customers to leverage in the negotiations. They can only promise content providers that a smaller number of eyeballs will watch the programs, so they end up paying more to carry those programs. Polka estimates smaller operators pay 271 percent more per subscriber for broadcast programming.
And that could have an adverse impact on broadband networks.
"If they have to take capital and put it into higher and higher programming fees, broadband services won't be expanded," Polka said.
Polka also worries that Comcast's large market share of residential broadband lines could create a conflict of interest. Comcast would acquire NBC's stake in online-only content channels such as Hulu.com.
Now that Internet services are so much more robust, "content is delivered almost directly now via the Internet," he said. "You don't have to be a cable subscriber to get the same content. Comcast can come to our members and say 'you don't need cable, all you need is Internet.'"
He says Comcast's public interest commitments simply aren't enough. "There are big gaping holes through which you can run a Comcast bucket-truck," he said.
When asked about these concerns, Comcast says competitors will have access to its programming and content because it wants to reach as large an audience as possible. Details should be filed with the FCC, as well as the Justice Department or FTC, early next year.