A Retrospective Analysis of Vertical Mergers in Multichannel Video Programming Distribution Markets: The Comcast-NBCU Merger

Abstract

Using data on the prices paid by multichannel video programing distributors (“MVPDs”) for basic cable networks, I conduct a retrospective analysis of the price effects of the Comcast-NBCU merger. Estimates from both the difference-in-differences and lagged-dependent variable models indicate no systematic increase in the prices for Comcast’s networks following the merger, including general interest programming, news channels, and national and regional sports networks. Programming costs, however, exert a potent influence on affiliate prices, with full pass through in many cases. The evidence suggests either that there was no net positive effect on incentives to raise prices above competitive levels following the vertical merger, or else that the behavioral remedies placed on the Comcast-NBCU merger have been effective. Accordingly, excessive concern about the prices of programming following a vertical merger in the MVPD market appear unwarranted, at least when addressed by behavioral remedies.