WASHINGTON — The American Cable Association, which represents small cable and broadband operators, is asking the Justice Department to investigate Comcast-NBCUniversal for antitrust violations, specifically citing whether Hulu was being used as a “new weapon against its rivals.”
In a Nov. 6 letter to DOJ’s antitrust chief Makan Delrahim, ACA’s Matthew Polka wrote that “Comcast-NBCU’s incentive to cause harm is not just based on economic theory — Comcast has engaged in specific behavior that has undermined competition while it’s been subjected to the now-expired conditions.”
The ACA’s case was then amplified by President Trump, who tweeted on Monday afternoon, “American Cable Association has big problems with Comcast. They say that Comcast routinely violates Antitrust Laws. ‘These guys are acting much worse, and have much more potential for damage to consumers, than anything AT&T-Time Warner would do.’ Charlie Gasparino”
Gasparino is a Fox Business personality. Trump has previously called out Comcast and NBC Universal, as well as AT&T and Time Warner, for antitrust enforcement. The Justice Department sued to block the AT&T-Time Warner transaction, but a judge ruled in favor of the companies. That decision is now on appeal.
ACA argues that Comcast-NBCU pose a greater threat to competition than the AT&T-Time Warner merger.
The conditions placed on 2011 Comcast-NBCUniversal transaction expired this year. One of the conditions required Comcast to enter into binding arbitration to settle program carriage disputes, but that provision has now expired. Polka wrote that “we do not even know how many times Comcast’s rivals had to threaten to utilize the arbitration or some other condition to get Comcast-NBCU to limit to some degree its natural proclivity to harm rivals.”
ACA argued that without any conditions placed on the transaction, Comcast-NBCU “can act with impunity, and DOJ should expect this to happen.”
Comcast holds a 30% stake in Hulu. The merger conditions allowed it to continue to hold a stake in the streaming service, but with restrictions on its influence.
“We have heard from ACA members that they fear that Comcast- NBCU may restrict, if it is not already restricting, their ability to access Hulu and make it available to their customers as an alternative to their cable offerings.” Polka wrote. “This is especially troubling because their customers increasingly seek over-the-top options to prime offerings.”
Comcast and NBCUniversal agreed to a set of conditions as conditions for the approval of their merger by the Justice Department and the FCC in 2011, but the provisions had an expiration date. According to Bloomberg, Delrahim informed Comcast-NBCUniversal in August that the Justice Department would continue to monitor the merger even after the set of conditions expired on Sept. 1.
Polka, however, argued that “while monitoring by DOJ is certainly a step in the right direction, such a passive approach is unlikely to be effective against a sophisticated, giant firm like Comcast-NBCU.”
Comcast had no comment on Trump’s tweet. Its stock price fell immediately after it was posted, then began to recover in afternoon trading.
In response to the ACA’s letter, a Comcast spokeswoman said that “the video programming and distribution markets are incredibly competitive. New programmers and distribution platforms are offering consumers increasing choices on what and where to watch. At Comcast NBCUniversal, we are competing in this dynamic environment the way we always have — by continuing to innovate and conducting our business in compliance with antitrust laws and other legal requirements.”
She added, “Among other things, Comcast Cable has brought Netflix and YouTube to our X1 platform. And NBCUniversal has provided content to Hulu, Netflix, and hundreds of other traditional and over-the-top providers. We believe that ACA’s letter is without merit and constitutes an inappropriate attempt to gain leverage in the commercial marketplace.”
The company has long defended its adherence to the merger conditions, outlined in regular reports, and has pointed out that the Justice Department never took any action for non-compliance.
Polka, however, pointed to complaints that Comcast was not offering consumers the option of standalone broadband internet service, as was required by a condition imposed by the FCC, and instead marketing its bundling of cable, voice and internet services. In 2012, Comcast agreed to pay the FCC a $800,000 fine after the agency concluded that it was not adequately marketing the availability of a $49.95-per-month standalone service.
The ACA’s letter was released on Monday. A spokesman for the Antitrust Division said they had no comment.
Delrahim has been critical of the types of behavioral conditions that were placed on the Comcast-NBCU transaction, arguing that it puts the Justice Department in the position of acting like a federal regulator that oversees compliance with the provisions. Instead, he favors structural conditions, in which companies are forced to divest assets before a transaction can move forward.
He has, however, denied that the decision to challenge the AT&T-Time Warner merger was made in consultation with the White House.
During the presidential campaign, Trump railed against media consolidation, and he has attacked not just AT&T-Time Warner and Comcast-NBCUniversal, but Amazon, whose founder, Jeff Bezos, owns The Washington Post as a separate entity. The White House, though, signaled that the president supported the merger of The Walt Disney Co. with many of the 21st Century Fox assets. The Justice Department approved that merger in June after the companies agreed to sell off Fox’s regional sports networks as a condition.