“Monopoly” in a Media-Saturated World

by on February 8, 2010 · 4 comments

So the proposed Comcast/NBC merger was met with “skepticism” by Washington politicians. Will Comcast charge for content that was once free? Will it ensure that emergency programming gets through? These services and decisions about them are normal offerings that a concerned public expects; a merged entity ignores them at its peril.

The two firms’ CEOs respectively made assurances to lawmakers like 18-term term Chairman Henry Waxman. (Speaking of the lack of choice, this gentleman’s own constituents get to vote for him, but none of the rest of us have any say whatsoever–decade after decade–even though his laws impact us all).

But those assurances about programming aren’t what politicians care about, not really. This proceeding serves to help re-energize the old political campaign against what politicians laughably call “media consolidation.” (Here’s one of my defenses of so-called “media monopoly” in Communications Lawyer so no need to repeat it here now; I’m not an attorney but I play one at a think tank.)

Any antitrust intervention that relieves Comcast/NBC’s competitors of critical market impulses, of the driving need to respond to any potentially new superior service or slate of services, hurts the interests of consumers. These endless proceedings and delays–and before this one, those of Echostar/DirecTV, Sirius/XM and others–all directly harm consumer interests and the communications marketplace. There is too much tolerance of pointless FCC and Congressional interference in today’s media-saturated world, and too much tolerance of media competitors who properly should have no say whatsoever in whether or not a rival’s merger goes forward.

Basically, antitrust is about dismantling what others have created or hope to create, undermining large scale voluntarism and enterprise, and replacing it with even larger scale compulsion or prohibition. The (not “unintended,” as often claimed) result of this is to send the “free” market careening off into a direction it never would have taken, a direction in defiance of shareholder capitalism and market pressures. I wrote about this very problem in a letter in the Wall Street Journal last week.

The emergence of ever-greater competitive alternatives on the media horizon will be damaged by the destruction of wealth entailed in halting a productive merger. The merger, if it goes through, may or may not prove successful for the companies themselves. Regardless, it is precisely the market’s task to respond to this and future deals competitively, not leverage Washington to avoid having to engineer and sweat over such a response. To those rivals that might feel satisfaction at the barriers and future conditions put on this merger if it’s even “approved” (how is that even a term appropriate to free enterprise?): Political disapproval of Comcast/NBC makes it even easier to put others in the crosshairs next time.

  • dre

    With all due respect, nothing about Comcast or NBC would have existed in the first place without positive government regulation.

    The very idea of “corporations,” where the owners of an enterprise are shielded from having to pay for the damage they cause, or cover the debts contracting in their name, is, though a good idea, an example of the government stepping in and changing the rules of the marketplace. (It's arguable that private contracting can also achieve limited liability for large corporations, given than banks and others usually require personal guarantees by the owners of smaller enterprises. But no such argument can be made about torts.)

    Similarly, NBC and Comcast owe their success to a series of rent-seeking laws passed on their behalf. Why does NBC continue to waste spectrum?

    I agree with your policy conclusion that the merger should be allowed. But it's odd to point to antitrust as an example of government meddling without taking passing notice of all the meddling that sets the basic ground rules for entities like NBC and Comcast to exist in the first place.

  • mwendy

    Perhaps there's a distinctino to be made in this gvernment “meddlin” business. No doubt, corporations, in a general sense, receive “protections” granted by state action. The way corporations get formed deals with fundamental building blocks – i.e., how entities can take risk while also being in line with the public interest (consumer protections, etc.). Then they're on their own, with a minimum of government meddling, to serve the public.

    The FCC's meddling deals at a level far more specific – it wants “X-1, X-2, X-3…” for merger approval. The resulting consent decree allows them to achieve policy objectives that they otherwise may not / could not in law, well beyond simple fundamentals of company formation (sort of like the Bell South / AT&T merger agreement and its Net Neutrality provisions).

    Sure – state-granted scarcity helped both entities, but that type of state-connivance shouldn't create an open season for regulators / politicians to demand the sky.

  • dre

    With all due respect, nothing about Comcast or NBC would have existed in the first place without positive government regulation.

    The very idea of “corporations,” where the owners of an enterprise are shielded from having to pay for the damage they cause, or cover the debts contracting in their name, is, though a good idea, an example of the government stepping in and changing the rules of the marketplace. (It's arguable that private contracting can also achieve limited liability for large corporations, given than banks and others usually require personal guarantees by the owners of smaller enterprises. But no such argument can be made about torts.)

    Similarly, NBC and Comcast owe their success to a series of rent-seeking laws passed on their behalf. Why does NBC continue to waste spectrum?

    I agree with your policy conclusion that the merger should be allowed. But it's odd to point to antitrust as an example of government meddling without taking passing notice of all the meddling that sets the basic ground rules for entities like NBC and Comcast to exist in the first place.

  • mwendy

    Perhaps there's a distinctino to be made in this gvernment “meddlin” business. No doubt, corporations, in a general sense, receive “protections” granted by state action. The way corporations get formed deals with fundamental building blocks – i.e., how entities can take risk while also being in line with the public interest (consumer protections, etc.). Then they're on their own, with a minimum of government meddling, to serve the public.

    The FCC's meddling deals at a level far more specific – it wants “X-1, X-2, X-3…” for merger approval. The resulting consent decree allows them to achieve policy objectives that they otherwise may not / could not in law, well beyond simple fundamentals of company formation (sort of like the Bell South / AT&T merger agreement and its Net Neutrality provisions).

    Sure – state-granted scarcity helped both entities, but that type of state-connivance shouldn't create an open season for regulators / politicians to demand the sky.

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