< Comcast Gets the Okay to Buy NBC


Friday, January 21, 2011

BOB GARFIELD: This is On the Media. I'm Bob Garfield.

BROOKE GLADSTONE: And I'm Brooke Gladstone. Comcast got good news this week. Federal regulators gave it the go-ahead to buy NBC Universal. Comcast, already the nation’s largest cable TV provider and largest Internet service provider, will now become the first cable company to own a major broadcast TV network. NBC’s 30 Rock has been having a field day.


ALEC BALDWIN AS JACK DONAGHY: The only thing I will be discussing with the House Subcommittee on Baseball Quiz Shows, Terrorism and Media is vertical integration.

TINA FEY AS LIZ LEMON: What’s vertical integration?

ALEX BALDWIN AS JACK DONAGHY: Imagine that your favorite corn chip manufacturer also owned the number one diarrhea medicine.

TINA FEY AS LIZ LEMON: That’d be great ‘cause then they could put a little sample of the medicine in each bag.


TINA FEY AS LIZ LEMON: [GASPS] Except then they might be tempted to make the corn chips give you –

ALEC BALDWIN AS JACK DONAGHY: - vertical integration.


BROOKE GLADSTONE: Susan Crawford, who served as the President’s Special Assistant for Science, Technology and Innovation Policy in 2009, says the stakes of the Comcast deal are incredibly high, but it’s so complicated you might not realize it.

SUSAN CRAWFORD: This deal has more angles than a marathon trick billiards match.

[LAUGHTER] But the key thing to understand is that Comcast can use this very popular content to make it difficult for any competing pay-TV provider to show up. You mentioned in the lead-up that this is about Comcast buying a broadcast network. That’s not actually the core of the deal. The core of this deal is about the cable channels that NBC-U controls. USA is the number one cable channel the last four out of five years. CNBC is huge. The concern from people is that Comcast will use its power over that content to make it very difficult for competitors to emerge.

BROOKE GLADSTONE: How can they use the popular cable channels they now own a majority stake in to prevent these other competitors coming online?

SUSAN CRAWFORD: Well, it’s going to be very easy for Comcast to raise their rivals’ prices. It’s important to keep in mind that what’s going on here is one owner for one pipe in many metropolitan areas. That gives that single actor unparalleled control over media – over Internet access, over content, over our entire information ecosystem.

BROOKE GLADSTONE: Obviously the countervailing power is competition, and your argument is that there won't be any.

SUSAN CRAWFORD: That’s not only my argument, that’s the FCC’s argument. They said back in March that more than 75 percent of Americans will have only one choice for their high-speed Internet access provider. Cable is in the lead, and they're ready to reap the rewards.

BROOKE GLADSTONE: Where’s the phone companies, where’s Verizon?

SUSAN CRAWFORD: Verizon has to actually dig up the streets and put in fiber in order to compete with cable. The upgrade path for the phone company is much more expensive than it is for cable. Cable can just swap out electronics and upgrade its systems. Verizon announced back in March that it was backing off. So right now, 90 percent of people who are buying high-speed Internet access services from their local company are getting it from the cable guys, not from the phone companies.

BROOKE GLADSTONE: What about serving underserved communities with high-speed broadband access? This was something you said this deal would hobble, but actually FCC chairman Julius Genachowski said that the government’s approval of the deal was structured to increase broadband adoption in these underserved communities and also to increase local news coverage. These are two consistent problems confronting our new media world, so that’s a benefit, right?

SUSAN CRAWFORD: Absolutely, and I give the FCC credit for acknowledging that the cable industry had already made plans to expand its high-speed Internet access to poorer households. As part of the deal, Comcast has voluntarily undertaken to serve 2.5 million households with high-speed Internet at less than 10 dollars a month – for a limited period, not forever – and to make sure that devices that cost less than 150 dollars are available to those households. There’s also, as you say, a very interesting element of this deal that will pair up broadcast stations with nonprofit newsgathering associations in local communities to make sure that there’s somebody watching City Hall. That’s fascinating. We'll see how that plays out.

BROOKE GLADSTONE: But despite those clear benefits, you still feel that this is a net loss for the American people. You make that case that new communications technology have always had government regulation to help them get off the ground, to help nurture them in the early phase, and that online video is not getting the benefit of that kind of historical head start.

SUSAN CRAWFORD: This is a very old story. We had to help the cable industry along initially. We then had to help the satellite industry. It takes government intervention to create the kind of Darwinian competition that makes communications so interesting. Right now we're facing a grinding monopoly of a single pipe to many communities. These big pipes are so expensive to install that it really doesn't make sense to have more than one. And so in the history of communications policy, we've usually required that that kind of infrastructure be shared. That makes it possible for competition to emerge. We're not seeing that with the cable industry. Comcast has unmatched and unconstrained control. I'm hoping that Americans wake up, as they did with the railroad monopoly and Standard Oil in the beginning of the 20th century. This is the same kind of situation, except now it’s about news and information and entertainment and, in fact, our communications modality for everything we do.

BROOKE GLADSTONE: All right. Susan, thank you very much.

SUSAN CRAWFORD: Thanks for having me on.

BROOKE GLADSTONE: Susan Crawford is a law professor at Cardozo Law School. She blogs at Scrawford.net, and she’s working on a book about this very merger, called The Big Squeeze.