"If the Comcast-Disney combination is consummated," said Jessica Reif Cohen, a media analyst at Merrill Lynch, in a report issued last week, "we firmly believe that the business of television and filmed entertainment would be radically altered. Comcast is likely to use television and movie production to drive penetration of television's new array of digital products, most notably video-on-demand, subscription video-on-demand and high-definition television, as well as to drive penetration of broadband Internet access."
The problem for some is that this new model smacks of monopolistic practices that could inhibit diversity in programming.
"If you have three giants, you get sameness in programming, worse me-too-ism and you get censorship," said Mark Cooper, director-research for the Consumer Federation of America, noting controversy over content of Fox News Channel and Comcast's refusal a year ago to run an anti-Iraq war spot. "Further, the whole reason [media companies] went for consolidation was to hold programming costs in check. Now there is no downward incentive to hold costs down."
The Federal Communications Commission is responsible for regulating such mergers, but in this case, Mr. Cooper believes that FCC Chairman Michael Powell has actually been encouraging them. "His policy made this inevitable. When he lets Rupert Murdoch buy Direct TV and Fox and [Viacom] get larger, then Disney is too small. You may have a tough time stopping it legally, but politically you may stop it," he said.
"People have made the argument that this deal is no different than the News Corp. and DirecTV deal, but [it is]," said Craig Moffett, a media analyst at Sanford C. Bernstein. "DirecTV is a non-dominant distributor in every market. Comcast is a dominant cable provider in all the markets that it is in. And a lot of those markets are the same markets where ABC owns local broadcast affiliates, such as Philadelphia, San Francisco, Chicago, New York, Los Angeles. So there are a whole range of markets where you would have, for the first time ever, a proposed combination of a dominant cable operator in that market with a broadcast owned and operated network."
That situation would raise significant questions for the advertising industry. Comcast sees its growth strategy tied to the development of ad sales. The company has been pouring money and manpower into developing the company's ad-sales unit, Spotlight.
"You grow your local cable sales by taking share away from broadcast local," Mr. Moffett said. "That's not a very good equation if you also own broadcast local."(See story above.)
Celia Wexler, director of research for Common Cause, noted the proposal was made on the same day two congressional committees were holding hearings touching on CBS's Super Bowl controversial halftime show with Janet Jackson. "You only have to look at the halftime show to see that Americans feel they have lost control of the media. The deal doesn't look like a good deal for diversity, for assuring consumers see more voices or a good deal for democracy."
She said as a result of reaction to Ms. Jackson and to the deal, people are getting "a sense of what is possible" and "it's waking people again."
Senate Commerce Committee Chairman John McCain, R-Ariz., told reporters the "growing trend toward content and distribution and what that means for the consumer concerns me," but offered no immediate plans for action.