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An Economic Overview of the Implications for Online Video of the Proposed Comcast-NBCU Transaction

An Economic Overview of the Implications for Online Video of the Proposed Comcast-NBCU Transaction

The net welfare effect of any vertical merger, such as the Comcast/NBCU transaction, is theoretically ambiguous. Empirical research of previous vertical transactions, however, tends to find positive outcomes. Pro-competitive effects of the Comcast-NBCU transaction include potentially increased incentives to invest in online content, experimentation with new content and new methods of distributing content, and investment in the delivery platform itself. The key antitrust question is whether the newly vertically integrated firm can leverage the vertical relationship to raise rivals’ costs anticompetitively and reduce output. Any merger review involves assumptions about the future, and the nascent nature of online video makes the effects of this transaction even more difficult to evaluate. Because it is impossible to say with any certainty how online video markets will develop, let alone how they should develop, it becomes extremely difficult to know how the merger will affect that trajectory.

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