Analysis: Why the WGA Opposes Comcast-NBC Universal Deal

In an exclusive interview with THR, WGA East executive director Lowell Peterson says the guild is “very concerned.”

In the past couple of days, both the WGA West and WGA East have weighed in against the Comcast-NBC Universal deal, which was greenlit earlier this week by the FCC on a 4-to-1 vote, albeit with a variety of conditions. In an exclusive interview with WGA East executive director Lowell Peterson, The Hollywood Reporter explored the reason for that union’s opposition.

THR also asked WGA West to elaborate, but the Los Angeles-based union declined. (The WGA is actually two separate unions, WGA West and WGA East. They negotiate some contracts together -- notably, the AMPTP agreement.)

Both unions, however, issued statements. The WGA East’s was extensive:

The Writers Guild of America, East is disappointed by the FCC’s approval of the joint venture between Comcast and NBC Universal. We consistently have opposed this action because entertainment and news media already are too consolidated; too few multinational mega-corporations control what people watch on television and in movie theaters. The Comcast/NBCU deal is particularly frightening because it brings together one of the largest internet service and cable TV providers with one of the largest content providers. Without strong and meaningful safeguards, the economics of the deal virtually mandate that Comcast/NBCU will discriminate in favor of its own content and leave writers and other independent members of the creative community out in the cold. This will impact not only entertainment programming but the diversity of news and public affairs voices so vital to a democracy.

We applaud Commissioner Copps for his opposition to the deal as approved. While we also appreciate that the FCC has conditioned its approval on a number of commitments made by Comcast and NBCU, with all due respect, we think these conditions simply make the venture a little less disastrous. Time will tell if writers and other creators will be squeezed out of the internet, and if a small handful of powerful entities continue to control what people watch.

The WGA West statement was shorter but also quite clear:

After a thorough review of yesterday’s announcements by the FCC and DOJ, the WGAW disagrees with their decisions approving the Comcast-NBCU merger. Even with the conditions placed on the merger by the FCC and the DOJ, we believe this merger is anti-competitive and is not in the public interest or the interests of our members. The WGAW remains committed to joining with other organizations and individuals to continue the fight for an open Internet, independent production, and diversity of voices in all media.

At the core of these statements is the WGA East’s concern that “Comcast/NBCU will ... leave writers and other independent members of the creative community out in the cold” and WGA West’s similar note that “this merger is ... is not in ... the interests of our members.”

In an interview, Peterson offered several explanations for the union’s criticism. With regard to writers who are also independent producers, he argued that “the net neutrality rules don’t prohibit paid prioritization” – a practice in which, for instance, an end user’s ISP might deliver faster video streams from some sites in exchange for a fee from the favored sites.

That potential practice makes the guild uneasy because it means that sites with deeper pockets – think YouTube, Netflix or Hulu – would be able to provide higher quality video to its users than would a startup company or independent producer. In other words, paid prioritization would tilt the playing field.

But is Peterson correct that the net neutrality rules – which the FCC adopted last month (and which Verizon challenged in a lawsuit filed Thursday) – don’t prohibit this approach to Internet bandwidth? The answer is murky. The key portion of the rules is one that provides that a broadband ISP (typically a telephone company or cable provider) “shall not unreasonably discriminate in transmitting lawful network traffic over a consumer’s broadband Internet access service.”

So does that rule prohibit paid prioritization? That’s where things get unclear. An FCC press release (PDF download), quoting from the rules, says “Pay for Priority Unlikely to Satisfy ‘No Unreasonable Discrimination’ Rule.” That has a surprisingly tentative ring to it.

In any case, the FCC notes that “pay for priority would represent a significant departure from historical and current practice . . . (that) could cause great harm to innovation and investment (and) . . . may particularly harm non-commercial end users.” One could add to that, of course, a concern for small commercial users as well – independent producers and startup websites.

The FCC adds that “broadband providers that sought to offer pay-for-priority services would have an incentive to limit the quality of service provided to non-prioritized traffic.” That gets to the crux of Peterson’s opposition to the Comcast deal: Comcast-NBC Universal, as both a content owner and broadband provider, could prioritize its own content. Even if the company’s content divisions have to pay a prioritization fee, that money would simply be paid to another Comcast division, which keeps the cash -- and the profits -- in-house.

In fact, the FCC rules address precisely those concerns: “The practice of a broadband Internet access service provider prioritizing its own content, applications, or services, or those of its affiliates, would raise the same significant concerns and would be subject to the same standards and considerations in evaluating reasonableness as third-party pay-for-priority arrangements.”

That cuts against Peterson’s declaration that “the net neutrality rules don’t prohibit paid prioritization.” Still, the FCC’s equivocal language – “In light of each of these concerns, as a general matter, it is unlikely that pay for priority would satisfy the ‘no unreasonable discrimination’ standard” – make the guild objections unsurprising.

FCC officials were not available for comment.

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