Comcast-NBC Deal: No Regulation Is Good Regulation?

Part of the point of Teddy Roosevelt and the Trust Busters was, of course, to prevent the kind of vertical integration which has become rampant in the last couple of decades.

Take the Comcast acquisition of NBC Universal: The cable giant will own NBC, and be able to distribute its content through its distribution network.

The FCC recently approved the deal with some unbelievably light caveats (NBC can no longer manage hulu.com, but can retain its stake in the online distributor; Comcast cannot exclude Bloomberg from its “channel neighborhoods” that it provides its customers)—these caveats were so light that they were more along the lines of cheerleading the deal, rather than true regulation.

If this deal had been cut in 1950, it would have been challenged by anti-trust crusaders. Hell, if it had been cut in 1960, 1970, 1980, even 1990—it would not have been approved.

Why? Simple:

The Comcast-NBC Universal deal goes directly against the spirit of the United States v. Paramount case, the 1948 Supreme Court decision that prohibited film studios from owning an exhibition network. Before, each studio owned its theaters—and only exhibited the parent studio’s products, squeezing out any independent producers. After the decision, independent producers were able to get their films on the screen.

The Paramount case gave the Federal Communications Commission the standing to demand that the nascent television networks limit their ownership of affiliates to a set percentage of the total market. That’s why NBC, CBS and ABC can only own and operate the local channels in New York and Los Angeles, while their affiliatated local stations in every other market are independently owned.

The whole rationale was so as to prevent a concentration of power, and thereby foster competition.

The Comcast-NBC Universal deal goes directly against this American precedent, as Comcast (the distributor) will now be one with the producer, in this case NBC Universal.

In other words, it will be a trust—a monopoly.

This is part and parcel of a wider problem in the United States: The oligopolization of America.

Consider the repeal of the Glass-Steagall Act, which separated investment banking from commercial banking: There was a reason for this division—it was not arbitrary. And the world found out about it in 2008, during the Global Financial Crisis: The repeal of Glass-Steagall created the Too Big To Fail banks, which are now an albatross around the American economy’s neck. 

Regardless of the mealy-mouthed FCC caveats in its approval, Comcast will now be able to squeeze out any competing programming—or else be able to demand of the other networks exorbitant fees to carry their channels.

Since cable service providers cannot be changed—if you have Comcast in your neighborhood, that’s it—viewers will be forced to watch what Comcast decides.

In other words, by acquiring NBC Universal, Comcast will be vertically integrated, and be able to squeeze out any competition directly for its benefit, at the cost of consumer choice as well as industry growth.

Or to say it in yet another way: With this deal, the FCC is allowing Comcast to purchase NBC Universal, and thereby stifle the marketplace, stunt the growth of the industry, and provide viewers with fewer choices.

What a great deal . . .