The U.S. House Energy and Commerce Subcommittee on Communications, Technology, and the Internet conducted a field hearing July 8, asking “Who Benefits?” from the proposed Comcast-NBC Universal merger.
Critics say the merger is “poised to fundamentally alter the landscape of the U.S. media market.” That is true. It is also true that such an ever-changing landscape is an inevitable result of any dynamic market.
For that reason, to block a voluntary merger means forcibly keeping the market stagnant while showering corporate welfare upon competitors to the firms that want to merge—that is, those who otherwise would be forced to compete.
Evolving Marketplace
When a marketplace is not constantly being “fundamentally altered,” consumers are getting ripped off. The greatest hazard of blocking ventures like the proposed Comcast-NBC merger is that it makes competitive responses to them unnecessary.
The Comcast-NBC merger represents one element of an evolving communications marketplace that is increasingly magnifying consumer choice and the ability to customize information—not just consumed information such as movies on demand, but also that which individuals themselves create or assemble for distribution to others. This hyper-personalization coexists with giant media enterprises.
Here’s another way of looking at it: Most of the world’s videos and movies haven’t been shot yet, and most of tomorrow’s communications infrastructure is yet to be built.
Necessary Competitive Responses
Contrary to their monikers, Free Press and Consumers Union, two organizations opposing the merger, are acting against both freedom of choice and the interests of consumers. Their command-and-control regulatory approach toward the media marketplace undermines the very process of media wealth-creation, meaning the creation of things people want. The policies such groups advocate would deprive the marketplace and consumers of the necessary competitive responses to the so-called monopolist’s actions, which in the end produce the discipline the market needs.
Media companies, potentially Comcast-NBC among them, do not exist in a vacuum. They must constantly contend with upstream suppliers, downstream business customers, joint-venture partners, individual consumers, investors, the broader media sector, and domestic and global competitors—all of whom help to discipline any errant behavior. Antitrust regulation short-circuits this dynamic of competition, forestalls the opening of new creative avenues, and hurts consumers much more than a mere merger could ever do.
The irony in some so-called consumer advocates’ opposition to media mergers is that they want government to control the size and scope of media voices, which inevitably would be less than would otherwise emerge in a more media-saturated world. They call this outrage “diversity.” Yet Comcast-NBC would wield no power of censorship; that’s government’s domain, ironically cheered on by Free Press and the like.
Artificial Constraints, Interference
Both Comcast and NBC operate in intensely competitive markets for news and entertainment content and infrastructure. Policymakers cause incalculable damage and destabilize entire industries—not just particular firms—when they undermine network industries’ efforts to orient themselves to attain the scale appropriate to meeting tomorrow’s global communications challenges.
Antitrust action vetoes market decisions through artificial constraints and interference, placing productive firms on trajectories the market never intended and upending the process of “information wealth” creation.
In addition to a pro-First Amendment stance, the Federal Communications Commission’s primary focus should be on emphasizing the separation of state and communications, by aggressively liberalizing the electromagnetic spectrum for the communications entrepreneurs of the future.
Wayne Crews ([email protected]) is director of technology studies at the Competitive Enterprise Institute. An earlier version of this article appeared on the CEI Web site. Reprinted by permission.
