WASHINGTON (Reuters) - Cable giant Comcast’s deal to take over NBC Universal will cost consumers $2.4 billion in higher television bills over nine years, according to a study commissioned by the American Cable Association, which represents small and medium-sized cable companies.
Comcast, the top U.S. cable provider, is seeking a controlling stake in General Electric Co’s NBC Universal. The proposed $30 billion joint venture has caused an uproar with consumer groups, which warn that the deal would result in higher prices for consumers.
William Rogerson, a former chief economist of the Federal Communications Commission, said the deal would lead to $2.4 billion in higher fees to consumers over the next nine years unless the commission and the Justice Department, which are assessing the merger, impose conditions.
Rogerson said he found additional costs to the consumer would total $2.6 billion, slightly offset by $200 million in benefits. “I view my calculation of the harms to be a relatively conservative figure,” he added.
Comcast spokeswoman Sena Fitzmaurice, however, dismissed the report as a “flawed economic analysis.”
“The issues raised in the report have been examined by the commission in three previous transactions and in each case (it) rejected imposition of a condition on national cable networks,” she said in an email.
One condition that the American Cable Association is pushing would require arbitration to settle disputes for programing deals if a large cable operator is involved. It gives a formula to resolve disputes involving smaller operators, since arbitration is extremely expensive and can take years.
Senator Herb Kohl, who chairs an antitrust, competition policy and consumer rights subcommittee, has pressed for approval of the deal only if Comcast’s competitors are assured access to NBC Universal’s content and if there is support for independent programing.
Kohl also wants Comcast to be required to divest the 32 percent stake in online video site Hulu.com if it wins approval.
Hulu is considered the digital jewel of the transaction. Having a stake in Hulu would help Comcast sidestep a big concern for cable companies, namely that users could start cutting subscriptions if they could see their favorite shows free online.
Reporting by Diane Bartz; Editing by Lisa Von Ahn