Congressional hearing explores NBC Uni deal

Proposed merger pushing for regulatory approval

NEW YORK -- Will the Comcast-NBC Universal deal benefit consumers and competition or hurt them?

A first Congressional hearing on the deal Thursday started with some serious thoughts on such topics, but also puns, a call-out to Tina Fey and even a job offer for Conan O'Brien.

The House Commerce subcommittee on communications started to explore the proposed deal at 9:30 a.m. EST as Comcast chairman and CEO Brian Roberts and NBC Uni CEO Jeff Zucker kicked their push for regulatory approval into high gear.

Rep. Mike Rogers (R-Mich) was among the early speakers Thursday, raising questions about the timeliness of current retransmission consent rules before causing laughs.

"To my friends at NBC: I have an opening for a constituent humorist specialist. If Conan would call my office, we could probably arrange to help you all out," he quipped, causing smiles on Roberts' and Zucker's faces captured by the cameras of C-Span, which carried the testimony live.

Rep. Jay Inslee (D-Wash.) used the early part of the hearing to show off his pop culture know-how, opening his comments with the words: "we are here to talk about control of America's most precious asset, and that of course is Tina Fey."

Rep. Edward Markey (D-Mass.) used a pun to explain what the House subcommittee discussions should focus on, namely 7 Cs: "Will the Combination of Communications Colossi Curtail Competition and Cost Consumers?"

Rep. Doris Matsui (D-Calif.) raised such concerns as whether local NBC affiliates will be at a competitive disadvantage on the programming front after a merger and whether it will lead to higher cable rates.

Rep. Rick Boucher (D-Va.), the chairman of the communications subcommittee, kicked off the hearing saying the hearing must explore the public interest benefits and risks of the planned deal and whether conditions are needed to limit harm.

Cliff Stearns (R-Fla), a ranking member of the subcommittee, followed him, arguing "there is little to suggest" a merger would hurt competition or consumers. Rather than being real consolidation, the deal is about vertical integration, he argued, echoing arguments previously presented by Comcast and NBC Uni.

"Such vertical integration will lead to greater innovation and drive more competition in this already competitive market," he said.

If the merged entity withheld content from others, it would "likely just lose programming revenue as distributors and viewers turn to other alternatives," such as other distributors, over the air TV or the Internet, Stearns argued, earning nods from Roberts and Zucker.

Rep. Henry Waxman (D-Calif.), meanwhile, repeated his concerns for diversity, competition and the future of video distribution that he had raised when the deal was announced in December.

"I am now even more certain...that (the deal) could trigger dramatic changes in the way consumers access video programming, in the way independent programmers distribute their works and also in the way all video distributors compete for customers."

Roberts on Thursday argued that Comcast provided consumer and innovation benefits in its previous big acquisitions of AT&T Broadband and parts of Adelphia.

"We promise to be reliable stewards of the national treasures of NBC and NBC News," he also said, among various other promises.

Zucker said the Comcast deal would help NBC Uni thrive in an industry that has increasingly become "a media free-for-all."

He had two words for those concerned about the deal in explaining just why it will benefit the company and consumers: investment and innovation.

Colleen Abdoulah, CEO of small cable, Internet and phone provider WOW!, said she is concerned that a Comcast-NBC Uni joint venture would boost prices and competitive hurdles for her company.

She asked that Washington consider "specific conditions that may be imposed, so that we can continue to preserve and promote the competitive choice that we provide."

She specifically mentioned access to content for smaller competitors like WOW! under the same terms and conditions that Comcast gets and a faster complaint process with less burden of proof than the current program access rules provide in case market power is seen as being exerted inappropriately by Comcast.

Meanwhile, Mark Cooper, research director at the Consumer Federation of America, argued against the Comcast-NBC Uni deal, saying not even conditions on it would ensure fair competition and protections for consumers. He particularly raised concerns about "higher prices and fewer choices for consumers." He also warned that the cable giant's market power would be extended to the Internet.

Boucher started the debate portion of the House subcommittee hearing by raising the concern that Comcast could "inhibit" the access of consumers who aren't Comcast customers to TV content.

Roberts responded by promising that programs available on NBC over-the-air and online at will not be moved exclusively to a forum like TV Everywhere where they would be available only to cable subscribers.

Boucher also brought up concerns that the new Comcast-NBC Uni team could block smaller competitors from content in the online space. He mentioned that social-viewing platform Boxee last year was blocked from carrying Hulu content, for example. Zucker replied that Boxee had tried to use content illegally without a proper business arrangement and that Hulu and its owners were open to striking content deals with firms like Boxee.

Addressing concerns about the future of NBC affiliates, Roberts said broadcast is "a troubled business" and talks with the NBC affiliate board have started off well. "Sitting here today, I don't have the perfect answer," the Comcast boss said, but he promised to work through the business challenges.

Satellite TV giant Dish Network said in a letter to the House subcommittee that the Comcast-NBC Uni deal "should cause alarm" and be approved only with "meaningful, tough conditions." It said: "It will result in a giant with brute strength capable of crippling competition and causing injury to consumers."

Later in the day, Roberts and Zucker faced questioning in front of the Senate Judiciary antitrust subcommittee.

"I used to be in showbusiness," opened Al Franken (D-Minn.) as one of the first speakers there, mentioning that he used to work at NBC and owes the network a lot. But he also said his previous career leads him to be concerned when the same company controls distribution of the content it produces and he doesn't trust the companies' promises to not abuse their market power.

Since the abolishment of the Financial Interest and Syndication Rules (Fin-Syn) in the 1990s, independent producers face a "routine practice, and you guys know it," he said to Zucker, Roberts and their teams. That practice sees networks request at least partial ownership of a program pitched by indies in return for picking up a show and giving it a good time slot, he said.

Franken also expressed concern that an NBC Uni-Comcast marriage would lead to a new wave of mega-mergers between content and distribution companies.

Meanwhile, Arlen Specter (D-Pa.) said he knows Comcast and the Roberts family that controls it well. He mentioned the rising importance of Comcast as a leading business in his home state and called it and its owners a good corporate citizen. He also mentioned that his son won a gold medal in squash with the Comcast CEO at the Maccabiah Games in the past.

Franken provided some of the most intense moments of the afternoon.

First, he put Roberts on the spot, saying the Comcast CEO saw him at his office last week, promising that current program carriage rules would protect consumers in Franken's home state of Minnesota -- only for a Comcast lawyer to then confirm to Franken that Comcast had in a legal case challenged the rules and their effectiveness.

Roberts, visibly shaken, replied that maybe he had misunderstood whether Franken had asked about program access or carriage rules, but the senator cut him off and concluded that his constituency may not be able to trust Comcast's proclamations and the current rules to protect them.

Franken then called Zucker a friend before asking him to confirm what he suggested was the detrimental effect of the end to the fin-syn rules. Zucker replied that various changes in the industry have led to a shift in where network programs come from, to which Franken simply replied: "Come on!"

Zucker then said that NBC ordered 18 pilots for primetime this year, with seven, or 39%, coming from firms unaffiliated with NBC Uni and having no investment from the conglomerate. Franken suggested that was a low figure, while Zucker called it "substantial."
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