The proposed marriage of Comcast Corp., the nation's largest cable and broadband provider, with NBC Universal, a Hollywood powerhouse, presents the Obama administration with its first big chance to weigh in on the controversial issue of media consolidation.
The deal, announced with fanfare Thursday at NBC Universal's Rockefeller Center headquarters in midtown Manhattan, had politicians and consumer activists calling for an intense review in light of the perceived market domination the new entity would enjoy when it comes to ownership and distribution of movies, TV shows and cable networks that get piped into the home.
Comcast and NBC Universal are not head-to-head competitors, and their merger does not trigger significant antitrust issues. Nevertheless, the combined company represents complementary businesses joining forces to create a vertically integrated juggernaut that represents a formidable video gateway reaching consumers over the air, through cable and on the Internet.
"People are going to look at this as a litmus test for how aggressive the new administration is going to be in reviewing big deals," said Christopher Kelly, an antitrust specialist at the law firm of Mayer Brown and a former senior counsel at the Department of Justice. "You've got this major cable company acquiring this iconic content provider, and people's instinctive reaction to a deal like this is that the administration should look at it hard."
The $30-billion merger would create a leviathan rivaling media giants Walt Disney Co., News Corp., Time Warner Inc. and Viacom Inc. It would bring under one roof Comcast's cable systems, which reach almost 25% of homes in the country, with NBC Universal's broadcast networks NBC and Telemundo, the Universal movie studio, 26 television stations and more than 30 cable channels, including CNBC, USA, MSNBC and Bravo.
A recent analyst report sketched the effects of the merger in stark terms: Comcast-NBC programming would account for 20% of all viewing hours in the United States. Comcast itself says it would own one of every seven channels.
Before taking office, President Obama expressed concern about the concentration of media among a handful of companies and the need to strengthen antitrust enforcement. Federal Communications Commission Chairman Julius Genachowski, who was chosen by Obama, said during his Senate confirmation hearing in June that "excessive consolidation is still something that I think needs to be paid attention to."
