Shyam-Research Paper Presentation (2)

THE COMCAST - NBC MERGER :

THE COMCAST - NBC MERGER TLEN 5210 RESEARCH PAPER PRESENTATION APRIL 18 TH 2011 SHYAM RAMESH CHANDRASEKAR

PARTIES INVOLVED:

PARTIES INVOLVED 1. Comcast Corporation USA’s largest cable and internet service provider 24 million cable subscribers, 16 million internet customers and 11 national programming networks 2. GE – General Electric Company Multinational Conglomerate 80% stake in NBC Universal ( 20% owned by Vivendi) 3. NBC Universal, Inc. Media and Entertainment Company 2 broadcast networks and 26 broadcast TV channels 36% stake in Hulu.com

PROPOSED TRANSACTION:

PROPOSED TRANSACTION January 18 th 2011 : DOJ and FCC jointly approved the Joint Venture between Comcast , NBC and GE under certain behavioural conditions Ownership: Comcast - 51% and GE - 49% $9.1 b : Loaned to GE by NBC as dividend $6.5 b: Paid as cash by Comcast GE can sell 20% stake ( bought from Vivendi) after 4 years

:

CONTENT PRODUCERS PRODUCTION STUDIOS CONTENT AGGREGATORS – BROADCAST NETWORKS ( FOX, CBS, NBC AND ABC) + CABLE NETWORKS VIDEO PROGRAMMING DISTRIBUTORS DBS - DISH, DirectTV CABLE - COMCAST TELCOS – AT&T , VERIZON OVDS - NETFLIX, HULU, APPLE INDUSTRY LANDSCAPE

HOW DOES THIS RELATE TO TELECOM POLICY?:

HOW DOES THIS RELATE TO TELECOM POLICY? VERTICAL INTEGRATION – ANTICOMPETETIVE EFFECTS ANTIRUST LAW – SECTION 7 OF CLAYTON ACT EXAMPLES OF ANTICOMPETETIVE EFFECTS Raise prices above levels that would prevail in a competitive market Harm Competition Stifle Innovation

ANTICOMPETITIVE EFFECTS :

ANTICOMPETITIVE EFFECTS Withholding content or raising the prices of NBC shows Raising licensing fees Increase bargaining leverage of Comcast in the industry Reduction in Competition Reduced Incentive to invest and therefore innovate Higher price for consumers Fewer choices for consumers

:

V Entry of new firms unlikely to reverse anti-competitive effects Efficiencies achieved by Comcast are negligible and are not merger specific Merging parties post judgment achieve their goals! Benefits of merger outweigh potential harms caused by the merger In my opinion the merger should not have been approved! WAS THE DOJ RIGHT?

POINTS TO PONDER UPON:

POINTS TO PONDER UPON Role of FCC and DOJ in approving such transactions! DOJ- Competition, Innovation, Quality and Choice FCC - Public Interest, Necessity, Comparing harms and benefits Impact of the transaction on Journalism! Does US require a coherent media ownership policy? Lobbying in the industry

Slide 9:

THANK YOU!