GE (GE) and Comcast (CMCSA) have struck a deal for the cable company to take a controlling share in GE’s entertainment unit–NBCU. Opponents of the transaction claim that it will be anticompetitive for the largest cable company in America to own one of the largest collections of content assets.
Executives for the two firms went before Congress to support their transaction. According to The Wall Street Journal, “Comcast says that its deal, which marries content and distribution companies, doesn’t raise antitrust or other competitive concerns. It believes there are multiple competitors in each of its markets and the barrier to entry online is relatively low.”
But, are there a number of competitors and are the barriers to entry low? The online video premium content business is dominated by Hulu, which is owned by NBCU, News Corp (NWS) and Disney (DIS). It is hard to imagine that any other company or group of companies could amass a huge library of digital video content and then spend tens of millions of dollars on the technology to distribute it and market the product to consumers.
Comcast and NBCU does face competition, but it is limited to a relatively small group of firms including Time Warner (TWX), CBS (CBS), News Corp (NWS), and Viacom (VIA). Comcast competes with AT&T (T) and Verizon (VZ), which have been largely unsuccessful building businesses to bring TV to homes using fiber as a means of delivery.
It is easy to say that Comcast will not give NBCU special privileges to gain access to the cable company’s customers. Comcast may even agree to provisions to prevent such practices. But, it is a natural by-product of capitalism to take advantage of money-making opportunities. Comcast may not break any deals it enters into with the federal government, but it is almost certain to stretch the boundaries of those arrangements as much as possible.
The Comcast/NBCU transaction may be approved. It may benefit shareholders of the cable company and GE. But, any market with fewer competitive forces is not going to favor consumers.
Douglas A. McIntyre
Get Ready To Retire (Sponsored)
Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Get started right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
