- Inquiry focused on ad partnership between pay-TV providers
- `We plan to cooperate fully' with the inquiry: Comcast
The Justice Department has opened an inquiry into whether Comcast Corp., the largest U.S. cable provider, holds too much sway over the local cable advertising market, according to a person with knowledge of the matter.
The probe is looking at Comcast’s influence in what are called “interconnects” -- when one pay-TV provider, such as Comcast, sells cable advertising to local businesses on behalf of other pay-TV operators in the market -- according to the person, who requested anonymity because the inquiry hasn’t been made public.
About two minutes of cable-TV commercial time each hour is typically set aside for local ad buyers, which spent $4.7 billion last year according to data from Magna Global. Comcast said its cable division sold $2.4 billion in local advertising in 2014 through a division called Comcast Spotlight.
“We plan to cooperate fully with the Department of Justice’s inquiry,” Philadelphia-based Comcast said in an e-mailed statement.
The Justice Department’s role is to ensure that companies aren’t violating antitrust law by hurting competition. Mark Abueg, a department spokesman, declined to comment.
Comcast says cable commercials compete with advertising on local broadcast TV, radio, newspapers, outdoor display and online outlets. Pay-TV providers account for about 7 percent of local ad sales, according to Comcast.
Comcast says its partnerships with other pay-TV companies make ad buying more efficient and keep costs down for buyers. “These long-standing industry practices are good for advertisers and consumers,” the company said. Comcast Spotlight provides “one-stop shopping” for advertisers and can “target customers geographically, demographically and by message,” according to its website.
The DOJ inquiry stems from complaints that federal regulators received last year while reviewing Comcast’s bid to buy Time Warner Cable Inc.
Viamedia Inc., a third-party company that inserts advertising onto cable networks, told the Federal Communications Commission in 2014 that Comcast had excluded it from some markets by controlling access to local pay-TV providers.
Comcast responded in a filing that Viamedia’s concerns were “nothing more than an attempt by a competitor” to “advance its own parochial business interests.” Comcast walked away from the Time Warner Cable deal earlier this year after concluding that regulators would reject it.
Comcast fell 0.8 percent to $61.66 at the close Tuesday in New York. The stock has gained 6.3 percent this year.
The Wall Street Journal reported on the inquiry earlier Tuesday.