Media watchdog groups launched a new front in their offensive against cable companies today, accusing Comcast Corporation, Time Warner Cable and others of colluding to divvy up the market for online television.
The new accusations comes after consumer groups last month criticized a proposed merger between Comcast Corporation and NBC Universal and said the deal would hurt competition and raise prices for television viewers.
The consumer groups today asked Assistant Attorney General Christine Varney to investigate TV Everywhere, a new initiative by cable, satellite and phone providers that would require users to prove they already subscribe to cable or satellite service before watching the same content online.
An agreement between television providers about the TV Everywhere service, the groups argue, would limit choices for consumers. Subscribers would only be able to access online content through the cable provider that services their physical area.
TV Everywhere is an “effort that appears to be designed to foreclose the disruption of old business models,” Ben Scott, a policy director at media watchdog group Free Press, said in a conference call with reporters today. “We believe it ought to be reviewed.”
Free Press, a media reform group that focuses on media consolidation, worked with Consumers Union, Media Access Project, and others on the report. Free Press takes no money from corporate ventures, a spokesman said, and is funded by charitable organizations and individuals. The organization, however, has not released a list of its individual funders.
In a letter sent today, the watchdog groups argued that companies involved with the TV Everywhere initiative have discussed prices and markets with competitors in ways that violate federal antitrust laws.
“While it is advertised as having consumer benefits,” the letter states, “recent reports suggest that TV Everywhere rests on an illegal agreement among competitors specifically designed to undermine emerging Internet-based competition and consumer choice in video programming delivery.”
The plan is illegal, the report’s authors argue, because cable and satellite providers will only offer the service within their geographic regions, and have essentially agreed not to compete with each other online.
Comcast’s new service for television online which launched in December, for example, should have to compete with other cable providers and other online video services. Instead the online service is only available to existing subscribers, in regions where Comcast is already the dominant cable provider.
Other distributors, the report says, will follow Comcast’s lead. A Comcast spokeswoman did not immediately respond to a request for comment.
“This is a textbook antitrust violation,” said the report’s author, Marvin Ammori, in a news release.
While other media companies have sought antitrust immunity in order to coordinate with competitors, as newspapers did last year, the companies involved in TV Everywhere didn’t, said Ammori, who is a law professor at the University of Nebraska.
Ammori’s report relies heavily on stories in the media, including a Wall Street Journal report from April that detailed off-the-record conversations between providers about combating the threat of free online television.
Any review of the TV Everywhere service by either the Justice Department or the Federal Trade Commission is likely to come within a review of the proposed merger between Comcast and NBC Universal.
Critics of the Comcast-NBC deal, including Free Press, have raised concerns about access both for Comcast’s rival cable providers to content owner by NBC, and for rival television channels to be included in Comcast’s programming packages.
Free Press’s report has prompted some to argue the industry is evolving too quickly to warrant government intervention, and the television equivalent of bloggers will keep the online video market competitive.
“To make the assumption that the big content programmers – such as Viacom and NBC Universal – are the only ones who produce quality content is off-base,” writes Sam Diaz at ZDNet. “We should be giving the traditional players a chance to stay in the game and experiment with a model that just might work.”