Markets
CTL

Comcast's Spot Ad Sales Market Practices Under the Scanner?

According to a recent report by the Wall Street Journal, the U.S Department of Justice (DoJ) now has its eye on Comcast Corp.CMCSA to determine whether the company violated the federal antitrust law with respect to its role in the U.S. spot advertising-sales market.

Earlier, the government had probed Comcast's role in this market during its ill-fated attempt to buy Time Warner Cable Inc. TWC . The current investigation comes only a couple of days after it was reported that Comcast may face FCC trials for its alleged violation of net neutrality rules through its Stream TV offering.

Comcast has assured full cooperation with the DoJ in the context of the latest inquiry.

What's a Spot Ad Market?

As part of carriage agreements, cable channels set some airtime aside for the cable operators to sell advertisements. These airtimes are generally seen as 'hot property' on sale to various national, regional and local advertisers. This platform to sell free airtime forms the spot ad sales market.

This market usually comprises two types of buyers. Small advertisers usually do not approach directly to find a footing in this market. They are represented by either pay-TV operator controlled firms like Comcast Spotlight or third party sales representation firms like Viamedia. This is commonly known as the 'interconnect' market, and is dominated by Comcast. On the other hand, larger national-level advertisers like General Motors Company GM buy valuable airtime through one-stop platforms like NCC Media LLC - also a majority-owned Comcast firm.

What's the Fuss About?

It now boils down to one question - whether Comcast is using undue influence when it comes to selling local TV advertising on cable. This is because Comcast, being a major cable operator, enjoys the lead in negotiating with advertisers in comparison with rival pay-TV providers in many interconnect markets, through Comcast Spotlight. Moreover, NCC Media, which allows national advertisers to purchase advertisement space, is also owned by Comcast. Comcast manages interconnects in 26 of the top 50 TV markets in the U.S.

Recently, Comcast started requiring pay-TV rivals like CenturyLink Inc. CTL , which wanted to be part of a Comcast-managed interconnect, to use Spotlight as opposed to a third-party firm like Viamedia. This has renewed concerns about the cable giant's monopolistic control over the spot cable ad market, hindering the ability of rival firms to compete and making it potentially difficult for small businesses to advertise as well.

Comcast currently carries a Zacks Rank #3 (Hold).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

CENTURYLINK INC (CTL): Free Stock Analysis Report

COMCAST CORP A (CMCSA): Free Stock Analysis Report

TIME WARNER CAB (TWC): Free Stock Analysis Report

GENERAL MOTORS (GM): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

CTL CMCSA GM

Other Topics

Stocks

Latest Markets Videos