Issues Dog VOD Merger Proposal

Among proposals under review by the Federal Trade Commission is LodgeNet's acquisition of On Command Corp., its chief competitor in video-on-demand for lodging. The proposal needs FTC blessing before the $332-million deal goes through. LodgeNet hopes it closes next quarter.

Among issues the FTC undoubtedly is probing in this case is restraint of trade. Will the merger decrease the choices available to the consumer? Will it jack up prices as it reduces workforce?

Similar questions attend a proposal roiling consumer entertainment: the merger of Sirius Satellite Radio and XM Satellite Radio Holdings. Like the LodgeNet-On Command case, this would apparently create a monopoly. Unlike it, however, it's consumer-based, where the former covers only lodging.

LodgeNet could not be reached for comment in March, but three months ago, LodgeNet President and CEO Scott Petersen said the goal is to merge the best practices, people and products of the two companies. He also said the merger could bring in content not previously available to the hotel industry and lead to improvement in high-definition and Internet protocol technologies.

Consumer pressure — and the rise of portable video in the form of iPods, streaming video and USB memory keys — may erode traditional hotel VOD delivery, however.

The consumer side may rear its head in the LodgeNet-On Command situation soon, says Chris Hartmann, managing director, HVS International technology strategies. He thinks the proposed merger “will definitely reduce competition,” despite other, newer players in VOD for lodging like NXTV, KoolConnect and Oxford Media.

The wild cards are telephone and cable companies including Verizon, AT&T, Comcast and Time Warner. In Hartmann's area of New Jersey, Verizon already offers residential TV service and VOD, and AT&T is starting to follow suit.

“My guess is once these get established in a particular market for homes, the next logical step, assuming the only work involved is integrating billing with the hotel's PMS, is lodging,” Hartmann says.

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