Here in Washington, DC, TV viewers are treated to an unusual array of commercials: a fairly steady drumbeat of obscure issue-advocacy ads sponsored by industry-funded front groups aimed at influencing Congress by showing off the group’s lobbying muscle. Generally speaking, the more blandly benign-sounding the group’s name, the more mendacious the policy proposal. Groups calling themselves something like Americans For Opportunity, for instance, are a good bet to have something to do with strip mining, or promoting child labor in American Samoa.
Last night, The Media Wonk saw something new: a straight-up, undisguised plug from Comcastfor its dealto gain control of NBC Universal. Presumably, the intended audience was the small group of lawyers and civil servants at the FCC, FTC and the Department of Justice who will be reviewing the deal and have the power to change or block it. How’s that for targeted advertising?
I’m puzzled by why Comcast is trumpeting this thing, though, especially here. The message of the ad (I wasn’t taking notes so I can’t quote from it) concerned all the wonderful new things Comcast would be bringing viewers now that it controls one of the largest media companies on the planet. Given all the groups here peppering the FCC et. al. with concerns over all the new things Comcast will be able to do now that it controls one of the largest media companies on the planet, I’m not sure Comcastwouldn’t be better off laying low and not drawing any more attention to its size and reach (you can read my full analysis of the strategic implications of the deal at GigaOm Pro (very modest annual sub. req’d)).
On Monday, for instance, after promising a “thorough, fair and fact-based review” of the deal, the FCC issued a public notice asking for comment on why cable boxes aren’t generally capable of access IP-delivered video at the direction of the user, among other things.
As Saul Hansell of the New York Times boiled it down, the commission wants to know:
- Why can’t that box you get from your cable company also get programs over the Internet and from other sources?
- Would the availability of set-top boxes in retail stores encourage people to get broadband Internet service (something the commission wants to do) and create a competitive market in devices that hook up to cable systems?
- Should the commission mandate a technical standard that would let video flow freely around a home to any compatible device, just as the Wi-Fi standard allows any computer to hook up to your Internet connection?
- What has stopped the long-promised convergence between televisions and computers?
It seems pretty clear from the public notice that the future of over-the-top video is going to be a major focus of the FCC’s review of the deal. The antitrust folks at the FTC and Justice who will go next are also likely to focus heavily on that issue. 
Insofar as Comcast’s goal in gaining control of NBC Universal’s cable networks, as well as its TV Everywhere push (which for some reason it insists on calling Fancast Xfinity TV) was in fact to mitigate the threat of competition from over-the-top video delivery, if I were running the company I wouldn’t have it doing a touchdown dance just yet.
If, for instance, the FCC were to extend its program access rules to compel Comcast to make NBC Universal content available to competing OTT providers as a condition of approving the merger, as public interest groups are already encouraging it to do, it would take a big bite out of one of the key strategic rationales of the deal.
As a result of Comcast-NBC deal the relationship between incumbent service providers and over-the-top services is now firmly on the public policy agenda, right up there with net neutrality and the broadband buildout. and Comcast’s vertical integration of content, cable TV and broadband service is going to be Exhibit No. 1 for those concerned about consolidaton in those businesses and its impact on innovation.
Based on the public notice, in fact, it seems pretty clear the FCC sees all of those issues as related, and requiring an integrated regulatory response. That’s going to make for a very complex regulatory review, the outcome of which is difficult to predict at this point.
All the more reason to play it cool.