The American Cable Association, a group of about 700 small cable providers, has requested the Justice Department’s Antitrust Division open an immediate investigation into Comcast’s competitive practices after restrictions on its 2011 merger deal with NBC recently expired. The group claims the telecom giant poses a greater threat than the newly merged AT&T/Time-Warner juggernaut.
In 2011, the vertical integration of Comcast and NBCUniversal was approved. As is common with mergers that raise significant anti-competitive risks, the DOJ imposed numerous restrictions on the combined company, but those rules expired in September. For example, Comcast was previously required to enter binding arbitration when settling carriage disputes. In a letter sent to the Justice Department on November 6 and published on Monday, the ACA requested that an investigation be opened as soon as possible to take active steps to ensure Comcast no longer needs training wheels to prevent its monopolistic instincts.
The letter claims that even under the previous restrictions, smaller providers that wanted to work out deals to carry Comcast’s content had to constantly push back against the company’s “willingness to harm rivals.” The letter reads in part:
Comcast-NBCU, in fact, took many opportunities to exercise its market power even though the DOJ and FCC conditions were in effect, supposedly limiting Comcast-NBCU’s behavior. For instance, Comcast-NBCU used its deep pockets to engage in delaying tactics that forestalled compliance with the condition that it carry Bloomberg TV. Comcast also refused to offer standalone broadband Internet access service as the FCC condition required. And, of course, we do not even know how many times Comcast’s rivals had to threaten to utilize the arbitration or some other condition to get Comcast-NBCU to limit to some degree its natural proclivity to harm rivals. At least, with conditions in place, some of these abuses could be addressed.
In August, a week before the Comcast conditions expired, the DOJ notified the telecom that it would be keeping a close watch on how the company handles its newfound freedom. The ACA applauded the Justice Department’s warnings but said it believes “such a passive approach is unlikely to be effective against a sophisticated, giant firm like Comcast-NBCU.” It believes that opening an investigation would “demonstrate seriousness of purpose” on the DOJ’s part and “give it the ability to collect sufficient information to determine whether Comcast-NBC is acting anticompetitively.”
The ACA’s request comes at a time when antitrust focus has been trained on AT&T’s merger with Time-Warner. AT&T won the right to go through with the merger in September. Since then, we’ve already seen the combined company announce a forthcoming Netflix competitor, its subsidiaries kill off the beloved FilmStruck streaming service, and use its newly acquired HBO muscle to bully Dish Network. In its letter, the ACA said that Comcast is currently “a much greater threat to competition” than AT&T. Part of the reason is the streaming elephant in the room: Hulu.
Hulu has come up in the recent big media mergers because all of the major media companies have a stake in it. AT&T owns 10 percent of Hulu through WarnerMedia, but Comcast holds a whopping 30 percent of the company. “We have heard from ACA members that they fear that ComcastNBCU may restrict, if it is not already restricting, their ability to access Hulu and make it available to their customers as an alternative to their cable offerings,” the ACA claimed.
There’s at least one reason to believe that the ACA’s warnings have a chance at prompting a real investigation. The DOJ’s top antitrust cop, Makan Delrahim, was widely expected to be friendly to new mergers before he took office, but he’s shown himself to be taking his official duties seriously. His office still hopes to reverse the court’s decision in favor of AT&T’s , and he needs a win. President Trump tweeting about the letter on Monday probably won’t hurt its chances of at least being considered. Trump appeared to be in favor of blocking the AT&T merger as a way to punish CNN, a news network that he considers an enemy. However, since Trump apparently believes that all but a handful of outlets are his enemy, sticking it to NBC can’t be far from his mind.
The DOJ did not immediately respond to Gizmodo’s request for comment.
A spokesperson from Comcast told us the ACA’s letter comes without merit and in Comcast’s eyes “constitutes an inappropriate attempt to gain leverage in the commercial marketplace.” The rest of its statement reads:
The video programming and distribution markets are incredibly competitive. New programmers and distribution platforms are offering consumers increasing choices on what and where to watch. At Comcast NBCUniversal, we are competing in this dynamic environment the way we always have – by continuing to innovate and conducting our business in compliance with antitrust laws and other legal requirements.
Among other things, Comcast Cable has brought Netflix and YouTube to our X1 platform. And NBCUniversal has provided content to Hulu, Netflix, and hundreds of other traditional and over-the-top providers.
Disney, announced last week that it will be investing in more Hulu original content in addition to launching its own Disney+ stand-alone streaming service. Following its merger with 21st Century Fox, Disney will soon own 60 percent of Hulu. With some of the biggest media companies holding a piece of the pie, Hulu is shaping up to be the most hotly-contested property in streaming. Disney seems willing to take any legal heat if its partners would like to give up their share. “It is premature, really, except to say that if Comcast is interested in divesting, or if Time Warner or AT&T Time Warner is interested in divesting, we certainly would be interested in buying their stake,” Disney CEO Bob Iger told CNBC, last Thursday. “But with 60 percent, which is what we will own, we’ll have enough control to manage Hulu in a way that is consistent with the strategy the company is deploying.”