I asked Andrew Jay Schwartzman, the SVP and Policy Director of the Media Access Project in Washington DC (http://www.mediaaccess.org) to write up his thoughts on the proposed merger:

Why Hollywood Should Care About  the Comcast/NBCU Deal

By Andrew Jay Schwartzman

ComcastNBCComcast’s proposed acquisition of NBCU is bad for Hollywood.

It is bad for America, too.  There are lots of reasons why.  Here are just a few:

– It will raise cable prices.

– It will reduce diversity in news and other programming, especially in the markets where Comcast would own TV stations and cable systems.  (In Los Angeles, Comcast would own some cable systems and three TV stations.)

– It will make it much harder for telephone and satellite companies trying to compete with video offerings of their own.

Even if you don’t care about the future of democratic discourse in the age of the internet, if you’re reading this, you will probably care about the industry.  And this transaction would have lasting and dangerous effect on Hollywood.  It will further solidify cable’s bottleneck on the video distribution of TV and features and enable cable to pay less for such content.  And, perhaps most importantly, it will kill off the emerging market for “over the top” distribution via the Internet, depriving producers of the opportunity to develop direct relationships with competing distributors and even with individual consumers.

Simply put, cable owns the customers, and it wants to keep it that way.

The Internet is making it possible to distribute programming directly to the customers without having to obtain carriage on a network or getting carriage for your own network.  Such “over the top” distribution will permit Netflix, Roku and similar services to bid for programming.  The technology can even eliminate middlemen (like cable) and allow direct sale sales to online customers.

The cable industry’s answer is “TV Everywhere.”  While this scheme was originally cooked up by Time Warner, Comcast’s acquisition of NBCU would take it to a new level.  If NBC programming (like The Office and SNL) and the Universal film library are withheld from Internet distribution except via TV Everywhere, or made exclusive to TV Everywhere (and perhaps to Hulu, which is one-third owned by NBC), Comcast can prevent these competitive services from ever getting off the ground.

Adding NBC’s cable nets to Comcast’s stable would also hurt the video programming markets.  Here is what Jean Prewit of the Independent Film and Televison Alliance told the House Judiciary Committee:

“We know what is good for Comcast and NBC in this merger: the ‘cost savings’ and ‘synergies’, which they define clearly as the ability to self-source programming across their many platforms from free television to cable to video on demand to the internet, avoiding the ‘transaction costs’ involved in acquiring independent content and extending the reach of these channels and the self-sourced content to a wider audience.”

In other words, if this deal goes through, you’ll need to give Comcast a piece of the action to get carriage on its systems and Comcast may prohibit you from selling your product to other distributors.  And, by “bundling” its cable nets with the NBC network, Comcast will make it harder for competing networks to get carriage there will be less room for competiting networks on all cable.

The FCC and the Department of Justice have been reviewing the Comcast deal over recent months.  Small cable an satellite companies along with independent programmers oppose it.  And the rest of Hollywood should be joining them.

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