immediately dubbed #comcastrophe, with good reason

So, anyone recall the Times Warner/AOL merger of a decade ago and what a debacle that turned out to be? Here’s an even larger merger, with even more at stake, successfully getting past the FCC, and, sadly, past the Obama administration. Obama the candidate promised strong support for Net Neutrality, a protected Internet with privacy and freedom of speech online. The reality in the intervening two years has been quite different.

In Doubters abound over Comcast-NBC deal, Bill Cromwell points out

Media people, buyers and planners, are never happy to see a consolidation among media providers; fewer, larger sellers typically means higher prices for the media they buy, and fewer choices.

There’s no reason to believe they’ll find this merger to be any different, regardless of the restrictions put on it by the FCC and Justice, such as the condition that Comcast end NBC’s management role in Hulu, the online site offering content from TV networks.

Disturbingly, Comcast says they “can live with” those restrictions. When you see that, you know it’s not good. And further down, we see that those restrictions, such as they are, are temporary!

Josh Silver, of stated in Comcastrophe: Comcast/NBC Merger Approved that:

The new Comcast will control an obscene number of media outlets, including the NBC broadcast network, numerous cable channels, two dozen local NBC and Telemundo stations, movie studios, online video portals, and the physical network that distributes that media content to millions of Americans through Internet and cable connections.

Culmination of the deal, combined with the FCC’s recent, loophole-ridden “Net Neutrality” rules, sets the table for Comcast to turn the Internet into cable television, where it has the ability to speed up its content, slow down or block its competitors such as Netflix, and hike the rates for its programming and services. We’ll all end up paying more — whether you’re a Comcast subscriber or not.

Not only that, but the “restrictive” provisions are apparently voluntary and/or temporary:

Comcast and the FCC Chairman argue that there are “conditions” applied to the merger that protect the public, (details about the conditions are not out yet) but they fail to mention that the key provisions are either voluntary (no, that’s not a typo), or expire after a few years. Then, all bets are off, as the merger squeezes out what’s left of independent, diverse voices from television dials, and forever changes the Internet as we know it.

Here’s that critical part of the merger: “[T]he Final Judgment will expire seven years from the date of entry unless extended by the Court. The FCC Order also lasts for seven years. The Department believes this time period is long enough to ensure that the JV cannot deny access to Comcast’s OVD competitors at a crucial point in their development but otherwise short enough to account for the rapidly evolving nature of the video distribution market.” So what happens after seven years? Good question.

Susan Crawford has an extensive analysis of the DoJ’s role in the merger here: DOJ – Building a platform and in noting that sunset provision, asks:

Do these moves by DOJ actually create daylight for online video competition to arise?

How will DOJ’s role with respect to net neutrality/open Internet elements of its own decree work out? They’re not doing this because of the Communications Act – they’re doing this based on their own economic and market concerns. That could be good in the long run.

There are details in the Final Judgment about contractual provisions that will be frowned on – tricks of the trade – but will they actually work?

How will all of this benchmarking work, tying the relief to OVDs to whatever one peer media conglomerate does?

She is more optimistic that the DoJ tried to carve out breathing room for the Internet with its restrictions — but I fail to see how that couldn’t have been better served by denying the merger to begin with. I can’t help but think that anti-trust legislation could be brought to bear on this. (I’d hate to wait for this to go on long enough that we discover RICO could apply :-/ ) How can this much control over both content and delivery of content be a good thing for any market? It’s a monopoly, is what it is.

Also, as if we hardly needed further proof of the sort of corruption our corporate lobbying has become, Lawmakers Backing Comcast-NBC Merger Were Paid By Comcast. Absolutely no surprise there.

Criticism has been uniform, from many different sources. The Writers Guild of America, East (WGAE) issued this statement today in response to the FCC’s approval of the Comcast-NBC U merger:

The Writers Guild of America, East is disappointed by the FCC’s approval of the joint venture between Comcast and NBC Universal. We consistently have opposed this action because entertainment and news media already are too consolidated; too few multinational mega-corporations control what people watch on television and in movie theaters. The Comcast/NBCU deal is particularly frightening because it brings together one of the largest internet service and cable TV providers with one of the largest content providers. Without strong and meaningful safeguards, the economics of the deal virtually mandate that Comcast/NBCU will discriminate in favor of its own content and leave writers and other independent members of the creative community out in the cold.

In other words, it will eliminate a good deal of diversity.

Michael Copps, the lone FCC commissioner who voted against approval, has an amazing, detailed, three page statement about this merger (Michael Copps’ statement about the Comcast-NBC transaction):

Comcast’s acquisition of NBC Universal is a transaction like no other that has come before this Commission—ever. It reaches into virtually every corner of our media and digital landscapes and will affect every citizen in the land. It is new media as well as old; it is news and information as well as sports and entertainment; it is distribution as well as content. And it confers too much power in one company’s hands.

[…]As for the future of America’s news and journalism, I see nothing in this deal to address the fundamental damage that has been inflicted by years of outrageous consolidation and newsroom cuts. Investigative journalism is not even a shell of its former self. All of this means it’s more difficult for citizens to hold the powerful accountable. It means thousands of stories go unwritten. It means we never hear about untold instances of business corruption, political graft and other chicanery; it also means we don’t hear enough about all the good things taking place in our country every day.

[…]It puts new media on a road traditional media should never have taken. It further erodes diversity, localism and competition—the three essential pillars of the public interest standard mandated by law. I would be true to neither the statute nor to everything I have fought for here at the Commission over the past decade if I did not dissent from what I consider to be a damaging and potentially dangerous deal.

Go read his whole statement: there’s a lot of background information on how the FCC looked at the initial proposed merger and what changes and restrictions were put in place to try to reduce its impact. It also strikes me, while reading through his statement, as further evidence of why Wikileaks is at once so important to the average netizen, and so threatening to nations and corporations. Our “usual” media channels have abandoned their former role as distributors of information and instead have become selective and self interested purveyors of same.

In What Does the NBC-Comcast Merger Do to Black Media Ownership?, Boyce Watkins says:

While this merger might be celebrated by some, it is incredibly dangerous. Media is one of the most powerful forces in our society, for it shapes the minds of millions, gets political leaders elected and ultimately changes how the public sees the world. By giving so much power to one company, the federal government may be making a huge mistake.

He goes on to point out the very real problems of lack of diversity in media images of minorities and how such mergers create even flatter and more distorted such images.

To take a quick peek back into history, see Time Warner

In 2000, a new company called AOL Time Warner, with Steve Case as chairman, was created when AOL purchased Time Warner for US$164 billion. The deal, announced on January 10, 2000 and officially filed on February 11, 2000, employed a merger structure in which each original company merged into a newly created entity. The Federal Trade Commission cleared the deal on December 14, 2000, and gave final approval on January 11, 2001; the company completed the merger later that day. The deal was approved on the same day by the Federal Communications Commission, and had already been cleared by the European Commission on October 11, 2000. The shareholders of AOL owned 55% of the new company while Time Warner shareholders owned only 45%, thus the smaller AOL bought out the far larger Time Warner.

After the merger, the profitability of the ISP division (America Online) decreased. Meanwhile, the market valuation of similar independent internet companies drastically fell. As a result, the value of the America Online division dropped significantly. This forced a goodwill write-off, causing AOL Time Warner to report a loss of $99 billion in 2002 — at the time, the largest loss ever reported by a company. In 2003, the company dropped the “AOL” from its name, and removed Steve Case as executive chairman in favor of Richard Parsons, with AOL remaining a part of the company. That same year, Time Warner spun off Time-Life’s ownership under the legal name Direct Holdings Americas, Inc. Case resigned from the Time Warner board on October 31, 2005.


There’s a couple of online petitions out there now: This one from Comcastrophe; and this one from Al Franken: AN IMPORTANT MESSAGE FROM AL (I apologize for the lack of transcript or captioning of his video clip; I’ve emailed a complaint about that, and I’d like to note the auto captioning available on the clip is actually pretty good aside from flubbing a handful or so of words).

The graphic above comes from Why the Comcast-NBC merger is no reason to fear for Hulu’s future which discussed last month about the possible implications for Hulu in this merger deal.

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