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Government Should Give Comcast-NBC Deal a Chance

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Government Should Give Comcast-NBC Deal a Chance

Consumers Stand To Benefit From Media Integration

Washington, D.C., February 4, 2010

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—Today both the U.S. House of Representatives and the U.S. Senate are holding hearings on the proposed merger between NBC Universal and Comcast Corporation. Concurrently, regulators at the Federal Communications Commission and at the Justice Department are examining how the arrangement would impact consumer welfare and media competition.

However, communications policy analysts at the Competitive Enterprise Institute warned against government interference with the deal.

“Intervention by politicians or regulators in the Comcast-NBC deal will undermine the competitiveness of the media marketplace and thwart the evolution of both content and network industries,” said Ryan Radia, Associate Director of Technology Studies.

“Even if the Comcast-NBC deal is ultimately green-lighted, saddling the combined firm with draconian ‘public interest’ restrictions will hurt consumers, substituting political demands for actual consumer preferences. Firms in a competitive market are far better equipped than government to accurately gauge the interests of today’s diverse range of consumers,” Radia added.

“After teaming up, Comcast and NBC Universal will remain a relatively small player in the grand media market. The firm will control just 1% of online video viewing and 12% of cable affiliate revenues. Given the abundance of entertainment and information sources in today’s media landscape, the potential for Comcast-NBC to harm consumer welfare simply does not exist. And if the deal ultimately fails, like the AOL-Time Warner pact did a decade ago, the marketplace will adjust as needed, and resources will flow to more competitive content providers.”

“Vast resources are needed to build the broadband networks of tomorrow and to create the ‘narrowcasted’ content that consumers increasingly demand. Mergers, cross-ownership freedom, and integration between content and network firms are all instrumental parts of the market processes necessary to make this progress happen,” said Wayne Crews, Vice President for Policy.

“To rise above the media ownership squabble, we must let go of the regulatory folly of artificial media scarcity. The reality is that the media world is a cornucopia of possibilities, including the Internet, digital cable, and satellite television. The media avenues of tomorrow are yet to be created,” Crews added.

“Ideas can never truly be bottled up by big media in a free society, but we have plenty to fear from an overreaching government that believes it acceptable for politicians and bureaucrats to block or control media voices -- even if they happen to be the big ones.” 

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CEI is a nonprofit, nonpartisan public interest group that studies the intersection of regulation, risk, and markets. For more about CEI, visit http://www.cei.org.