About two weeks ago, The Department
of Justice announced that it had opened an investigation into Comcast’s spot ad
sales practices. Comcast Spotlight, a
subsidiary of Comcast, sells cable advertising to businesses who want to
advertise locally on channels distributed by both Comcast and rival MVPD
operators (like RCN, AT&T U-verse, Centurylink).*
In carriage agreements between
programmers and MVPDs, programmers allocate about 2-minutes of each hour to
local ad buyers. The “interconnect” business
model has the dominant MVPD in each market sell the inventory ad space, representing
all MVPDs in the negotiations. Because
of its national footprint, Comcast leads the interconnect negotiations in 26 of
the top 50 markets.
The DOJ is investigating whether Comcast’s
practices involve monopolizing or attempting to monopolize spot ad sales in local
markets. On the surface, the selling
cooperative matches buyers and sellers more efficiently than each MVPD
negotiating ad sales separately. The question,
however, is whether Comcast’s (dominant position and) actions creates an
unreasonable restraint of trade that is harming competition (and competitors like non-affiliated cable ad
representative, ViaMedia).
*RCN just announced that it was
switching from Viamedia to Comcast beginning on 1/1.
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