Q&A: Free Press' Ben Scott
EmptyAdvocacy group Free Press has been an outspoken critic of the planned acquisition of a 51% stake in NBC Universal by cable giant Comcast. The nonprofit says it wants to reform the media and promote diverse and independent media ownership. THR business editor Georg Szalai spoke with Ben Scott, policy director for Free Press, about the Comcast-NBC Uni deal.
The Hollywood Reporter: In its FCC public interest filing, Comcast argues the NBC Universal deal will provide various benefits. What is your reaction to this?
Ben Scott: It reads to me positively Orwellian. We are talking about the biggest merger in the history of American media, and they are arguing it will increase competition, focus on localism, (innovation) and diversity of programming?! That doesn't even pass the laugh test.
THR: In which area do you have the biggest concerns?
Scott: Let's go through them. Returning to my Econ 101 texbook, the purpose of mergers is to increase revenues -- by raising prices and reselling and repurposing your content as many times as possible -- and decrease costs -- by firing people and by reducing the amount of new content you are producing. So on the question of diversity, the idea behind concentrated power in the media system is to sell more stuff you already have, not produce new and interesting things. Furthermore, concentrated ownership by definition is a reduction in diversity.
THR: What about localism?
Scott: All of the research shows that local owners are more interested in serving those communities. ... To me this is simply a truism of business in general, not that Comcast is particularly evil or anti-local. For example, when GE bought Telemundo, they made the same promises that they would increase local programming, local news. And then the deal went through, and they reneged on all those commitments, fired a whole bunch of journalists and consolidated these operations into regional hubs. This why Wall Street invests in these kind of deals. They are cost-saving. Local programming costs money.
THR: The business community says groups like yours are anti-business and if they can't make a profit, they can't serve the public...
Scott: Free Press is not anti-business. These companies are extraordinarily profitable. Cry me a river if their claim for concentration is poverty! When you are in the media business, you are not selling tennis shoes or wheelbarrows. You are selling something that is directly related to the health of our democracy and our multi-cultural society. So, you have responsibilities that go beyond other kinds of businesses. And throughout the entire history of the country, we have used public policy to balance the interests of private enterprise against the importance of public service in the media industry. To claim that any criticism of this merger is anti-business ignores 200 years of history.
THR: What kind of conditions would you like to see regulators put on Comcast then?
Scott: At the moment, we are standing in firm opposition of the merger. We are not thinking about conditions, because we don't see a way how this could be conditioned in the public interest. We are veterans of the media consolidation wars of the past 10 years where we fought tooth and nail against much lower degrees of consolidation and had were successful and had lots of allies -- both Democrats and Republicans. This deal is totally unprecedented.
THR: Why not be happy with strict conditions on the merger partners?
Scott: Unfortunately, the history of merger conditions is a story of pathetic failure. Giant companies come in, promise the world and say whatever they need to say to get the deal done, and then they reneg on those commitments and then they sit in court and litigate and eventually a settlement emerges, and they deliver only in the most minimal way. Plus, merger conditions have a shelf life. They aren't permanent. I hope fervently that regulators take a very hard look at this merger. If they make the mistake of approving it, I hope they exact very strong conditions, but I'm skeptical those can be upheld, and I certainly don't expect them to be permanent.
THR: Any other concerns?
Scott: Another element of this merger is that it is not happening in a vacuum. Looking around at Comcast's direct competitors, which include AT&T and Verizon, which own no content at all, if their investors say you are not as competitive anymore, they are now in a position where they have to buy content. You have a domino effect. (Liberty Media chairman) John Malone pointed this out right at the beginning when the merger was announced it could trigger major consolidation between content distributors and creators. While you may hold your nose and say Comcast-NBC Universal is ok, what happens if you trigger a domino effect and you see the massive concentration of power in the hands of two or three companies. I think that gives a lot more people pause.
THR: Any final thoughts? Anything else people are missing?
Scott: Comcast is about as popular with its customers as Enron. It has a bad reputation for service. ... The idea of giving them more power and control over the industry is somehow magically going to benefit consumers, who is buying that!? I only see a lot of rhetoric.