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WTF, WSJ? does the DOJ have the Shermanator targeted on TV Everywhere?

August 31, 2010

I'm a sophisticated sex robot sent back through time, to change the future for one lucky corporation.

According to the WSJ, “[t]he Justice Department is focusing in on how Comcast Corp.’s bid to purchase control of General Electric Co.’s NBC Universal television and movie unit could affect the emerging Internet video market.” Anybody following this story knew that much already, so it’s no surprise to read that:

During its eight-month review of the roughly $13.75 billion deal, the agency’s antitrust division has become interested in finding out whether Comcast and other cable and satellite giants are trying to lock up distribution rights to television programming on the Internet, which would block potential competition, according to people familiar with the matter.

My first reaction was: “Sure, they’re diligently investigating, and when they’re done they’ll approve the merger with some stern words about not discriminating against competitors.” What surprised me – and changed my perspective – was the ominous tone struck in the story’s final paragraphs, which puts the quote above into a whole new light:

Even if the deal is approved, as many expect, it has served to focus the Justice Department’s attention on Internet video distribution.

The people familiar with the matter have suggested that the agency will continue to investigate whether cable operators are acting to thwart emerging competition from the Web. If so, they could file a suit under Section 2 of the Sherman Antitrust Act, which targets anticompetitive behavior by dominant companies.

Am I reading too much into things, or is this meant to suggest that the DOJ is less concerned about the Comcast/NBCU merger than it is the whole concept of TV Everywhere? As of now, TV Everywhere represents the cable industry’s only hope for maintaining their territory in the face of over the top (OTT) content providers. If TV Everywhere is Sherman-ated, the cable companies lose their lucrative middle-person position and become “dumb pipes”. That’s a less profitable lot for them, but a better outcome for consumers. Not to mention Google and Apple, which may carry more weight at the DOJ.

UPDATE: Most of the online reactions to this article (see ars technica and Fierce) focus on the expected interpretation – that the DoJ is worried about Hulu and will impose restrictions on the deal before approving it. Susan Crawford, as one might expect, had a more insightful read. Then she followed up with a case example that does a good job of breaking down what’s at stake.

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