Political Interference Distorting Comcast-NBC Deal

Political Interference Distorting Comcast-NBC Deal

Restraining Market Dynamics Hurts Consumers, Investors
February 25, 2010

Washington, D.C., February 25, 2010 - Statements by Competitive Enterprise
Institute media policy analysts Ryan Radia and Wayne Crews on the proposed
merger of Comcast and NBC-Universal:

Associate Director of Technology
Studies
Competitive Enterprise Institute

Politicians’ skepticism toward integration between the content and
infrastructure industries is misplaced. Instead, we should be worried about
distorting the rapidly evolving media market through short-sighted government
intervention.

The questions posed today by Rep. John Conyers (D-MI) and his House Judiciary
Committee colleagues are indicative of a fundamental misunderstanding of today’s
media marketplace. Broadcast television networks and cable channels represent an
ever-diminishing share of the overall media pie, with consumers increasingly
turning to Internet-based news and entertainment sources. At the same time,
competition among Internet providers is intensifying, particularly on the
wireless front, where cutting edge technologies promise to bring new high-speed
broadband options to hundreds of millions of Americans over the next few years.
Any attempt by Comcast-NBC to raise prices or reduce content diversity would
garner swift opposition from consumers and trigger a sharp competitive response
from rivals.

Vice President for Policy
Competitive Enterprise Institute

Any government intervention that shields Comcast-NBC’s competitors from
critical market pressures – and thus of the need to respond to potentially
superior new products and services – will hurt consumers. These seemingly
endless proceedings and political delays all directly harm consumer interests
and the broader communications marketplace. There is too much tolerance both for
interference by Congress and the Federal Communications Commission in today’s
media-saturated world, and for challenges from media competitors who should have
no say whatsoever in whether or not mergers among rival firms go through.

The prospect of new competitive alternatives on the media horizon will be
damaged by the destruction of wealth entailed in halting a productive merger.
The merger, if it goes through, may or may not prove successful for the
companies themselves. Regardless, it is precisely the market’s task to respond
to this deal and future ones competitively, not to leverage Washington’s
influence to avoid having to engineer around and sweat over such a
response.

CEI is a non-profit, non-partisan public interest group that studies the
intersection of regulation, risk, and markets. For more about CEI, visit www.cei.org.