Comcast-NBC Deal Could Harm Workers, Lawmakers Say

The Comcast-NBC show returned to Capitol Hill Thursday as legislators pressed executives over the companies' plans to create a $30 billion media juggernaut. During a lengthy round of questioning, Comcast (CMCSA) CEO Brian Roberts and NBC Universal chieftain Jeff Zucker denied that the merger would be anti-competitive and would lead to layoffs. But critics were unswayed, including one who went as far as to say the deal would "undermine American democracy."

It was largely political theater, however, because the deal is almost certain to be approved, despite the concerns of critics.

Comcast, the nation's largest cable company, aims to buy a controlling stake in NBC Universal from GE (GE) in a deal that would move the cable giant toward its goal of becoming a unified content and distribution behemoth. But critics have warned that the deal would give the new company too much power.

Too Much Power?

"This merger is a competitive nightmare," said Mark Cooper, director of research at the Consumer Federation of America. He added that "promises made by Comcast that it will behave are worthless."

Comcast and NBC say that because they currently operate in different parts of the media industry, the deal doesn't pose typical "horizontal" antitrust issues. "We are in different businesses," Zucker said. "The deal is complementary."

Critics aren't buying it. Andrew Schwartzman, president of the Media Access Project, declared that "this deal will undermine American democracy."

"Consumers across the country are tired of rubber-stamped media mergers," Corie Wright, policy counsel of advocacy group Free Press, said in a statement released Thursday morning. "They want their elected officials to protect the public and ask tough questions of Comcast and NBC: How will consumers benefit from this deal? Will cable rates go up? Will Americans lose jobs? Can these companies be trusted to follow through on their promises?"

Layoff Concerns

Rep. John Conyers, a Michigan Democrat, warned that the deal could raise issues of so-called "vertical foreclosure," because Comcast could use its control of NBC content to deny that programming to others. "There are cases where vertical mergers can be more dangerous than horizontal mergers," Conyers said.

As they did at a previous round of hearings, lawmakers stopped short of calling for the deal to be blocked. But some members expressed concern over the fate of employees. Typically, mergers lead to layoffs, but the Comcast and NBC executives have insisted that won't be the cases.

Larry Cohen, president of the Communications Workers of America, which represents employees of both Comcast and NBC Universal, said the deal would result in "the loss of good jobs, the erosion of employee rights, and would undermine living standards in the communications and media industries."

But Roberts said the companies' goal "is not to come in and have job reductions. It is to restore some of the greatness to NBCU, to continue to invest."

Deal Likely To Be Approved

Earlier this week, a confidential report by the Congressional Research Service was cited by Multichannel News suggesting that the deal will be approved.

"There is consensus that the Department of Justice (DOJ) and the Federal Communications Commission (FCC) are likely to approve the combination subject to merger conditions and/or license conditions -- intended to protect competition, diversity of voices, and localism -- that may significantly affect the impact of the combination," wrote the CRS, which supplies data to members of Congress.

Both the Federal Communications Commission and the Dept. of Justice need to sign off on the deal. Their decisions are expected later this year. Realistically, this deal will be approved. The only question is what conditions regulators will impose on the companies, if any.