Analyst: DOJ Cable Probe Likely Going Nowhere

Netflix, online video providers may have no case

The Department of Justice is investigating whether or not the cable industry is adopting anti-competitive business activities to thwart the advancement of online video. The news, first reported by the Wall Street Journal, has been chewed over in several other reports, though the DOJ is declining to comment.

Netflix and other online video providers have been complaining loudly in the nation's capital that their distribution is squelched by cable companies that give preference to their own content online. Most recently, Netflix directed this ire at Comcast, charging that the cable giant violated the Federal Communications Commission's net neutrality order by exempting Xfinity on demand offerings for the Xbox360 from counting towards data caps, but not doing the same for Netflix's offerings. Comcast argues that Xfinity is not on the public Internet.

The DOJ is talking to a number of companies including Comcast, Time Warner Cable, Hulu, and of course, Netflix, which has been advocating for the DOJ and the FCC to launch probes.

Whether DOJ finds Comcast or any cable company violated antitrust or any other regulation is a long shot, according to Craig Moffett, a senior analyst with Bernstein Research. "We believe the DOJ will conclude that they [cable companies] are inarguably within their rights to charge for the use of their facilities for that distribution, regardless of whether they do so by delivering an MPEG 2 stream that is purchased (by them) from Viacom or an IP stream that is purchased (by the customer) from Netflix," Moffett wrote.

What hasn't figured (so far) in the DOJ's investigation is the real reason behind the controversy, Moffett said, is the programming companies that own the content. "The reasons we have the unwieldy content bundles that we have today are not because Comcast or DirecTV won't sell us individual channels, it's because Disney and Viacom won't sell them individual channels. We see little or no chance that the DOJ (or the FCC) will take on that issue. The Supreme Court has already made it clear that that is a losing battle."