By:  Alexander Cain

With the recent announcement of NBC-Universal and Comcast’s merger, many people including those at the Department of Justice and some U.S. Senators are worried this is a preview of things to come. With Comcast’s large market share of the cable distribution industry, and soon to be dominant state in local television market, one must wonder if having a dominant stake ever produces benefits for consumers.
The NBC-Universal and Comcast merger was approved, by the Department of Justice, Jan. 18, 2011, offering several implications for the mass media landscape. These include distribution of local media outlets and especially Internet distribution with Comcast’s Ever Play and NBC’s Hulu.com, which formerly competed for the same audience for watching television online.

NBC Universal is currently far from its dominant days of the 90’s when NBC was the most watched basic television channel. Today, NBC is lagging behind its basic television competitors, finishing fourth in prime time ratings behind ABC, FOX, and CBS. Universal has also struggled to produce blockbuster movies and maintaining continued interest in their theme parks.

With the relative downturn of NBC, Comcast sought this as an opportunity to gain a former juggernaut of basic television and film studios in order to “(the merger) create a leading media and entertainment company with the proven capability to provide some of the world’s most popular entertainment, news and sports content, movies and film libraries to consumers anytime, anywhere,” according to sources. With Comcast’s large stake in cable distribution, there are no signs Comcast will lower prices or make an innovation to make the customer experience worthwhile.
One of the most common supporting arguments of mergers is that mergers create more efficient, more effective entities producing a better end product for its consumers. This argument defies basic logic when it comes to the motivation of a company. With a dominant market share of an industry, there is a seeming lack of external factors that would motivate firms to produce at their best.

If a company can make a significant profit without having to invest money, time, or energy to remain dominant, it simply doesn’t make sense for a company to strive for innovation. If anything, the only motivation of a company in this situation is to raise prices where they maximize profit and can block other competitors from entering the market.

The recent news of the Olympic coverage is an example the above premise. By providing a needed subscription to cable providers, NBC has eliminated a minority portion of people interested in Olympic coverage. NBC is simply reinforcing the idea that they aren’t providing the best experience for all end users, but instead providing a service for a group willing to pay their price.

The purpose of a company is to drive profits, often through greed and tactics to eliminate the competitive landscape. Without this competitive landscape, companies can feel free to ease their attitudes towards innovation and more towards new ways of capturing profit which leads to an expensive sacrifice for the end consumer.