Seven years ago, Comcast made a deal with the U.S. government to win regulatory blessing for its $30 billion merger with NBCUniversal. At the time, Comcast agreed to various conditions, including fairly licensing NBCU cable programming to rivals. In February, many of those conditions expired.
As a result, the AT&T merger trial will begin March 19 just as everyone gets to see what happens when vertical integration is fully unleashed upon the media industry. There’s good reason to suspect that Comcast will be careful — at least at the outset — about using its newfound powers.
In December, Sen. Richard Blumenthal (D-Conn.) asked the Justice Department to conduct a new investigation of the Comcast-NBCU merger. In a letter to the DOJ’s antitrust chief Makan Delrahim, Blumenthal wrote that “if your investigation determines that the Comcast-NBCU acquisition will produce anticompetitive effects, even if the merger conditions are retained, you may need to consider separating Comcast and NBCU in order to fully restore competition.”
In other words, it might never be too late to unwind a vertical merger.
Some antitrust observers believe that breaking up an integrated company is much harder than blocking a merger before the honeymoon. Other antitrust experts conclude otherwise, given the difficulty of proving prospective harms and the Justice Department’s track record in cases like the breakup of the Bell System.
At the AT&T merger trial, expect to hear about what happened seven years earlier.
“The government’s lawsuit didn’t point to any specific problems that developed with Comcast-NBC,” says BTIG’s Rich Greenfield in noting a gap the Justice Department may be forced to confront. He adds, “Hopefully, they’ll be consistent in expressing what harms consumers.”
This story first appeared in the March 7 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.