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News Corp.: Comcast/NBCU Online Conditions Could Distort Market

News Corp. has problems with the Comcast/NBCU merger conditions, specifically those requiring Comcast to provide NBCU content to online video distribution services at similar terms and conditions if that service gets similar content from a rival like, say News Corp.'s Fox or Disney's ABC.

It warns that could set an artificial market price that competitors might have to meet whether or not they wanted to.

Disney also registered concerns about online program access conditions this week, but its FCC filing was not as clear about its reasons. News Corp. may have provided a clue.
News Corp. warned that those conditions could distort the marketplace, particularly if it is coupled with baseball-style arbitration.

In a filing posted on the FCC Web site Friday, News Corp. execs, including the head of affiliate sales and marketing, called various FCC staffers to argue of the potential "anti-competitive" implications of online conditions.

They said they could "distort" the marketplace by "forcing NBCU to provide content to an OTP at a time, and on
terms and conditions, that are not derived from what otherwise would be marketplace negotiations."

News Corp. is concerned that Comcast could be forced to provide the same price as, say Disney, which could artificially establish a "market price" that others would then have to meet.

"[I]f a single OTP distribution arrangement could force NBCU to accept the same terms and conditions, those deals could result in undue market pressure that compels other content providers to reach similar deals - regardless of whether they might not otherwise be interested in doing so."

Add baseball style arbitration, and the market could become even more distorted, they argued. "[T]erms imposed artificially as the result of arbitration, rather than generated organically via negotiation, could themselves skew the marketplace by affecting future business deals," they said.