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Comcast and NBC Universal executives went to Washington, D.C., on Thursday to answer lawmakers’ questions about the proposed deal for Comcast to buy a controlling stake in the media and network TV giant.
In separate subcommittee hearings, lawmakers in the House of Representatives and the Senate questioned Comcast CEO Brian Roberts and NBC Universal President and CEO Jeff Zucker. Specifically, they asked how the $37 billion proposed merger between the nation’s largest cable company and the TV network and movie studio would affect consumers’ cable prices, the budding online TV business, and the distribution of cable and broadcast TV content.
Sparks flew during the Senate subcommittee hearing on antitrust issues when Sen. Al Franken (D-Minn.) said he didn’t trust his former bosses at NBC to live up to their promises. Franken, a former comedian, worked for several years on NBC’s Saturday Night Live, and he even had a short-lived sitcom on NBC in the early 1990s called “Lateline.”
“I worked for NBC for many years,” he said. “And what I know from my previous career has given me reason to be concerned–let me rephrase that, very concerned–about the potential merger of Comcast and NBC Universal.”
Franken said he was most concerned about Comcast withholding NBC content from competitors, or prioritizing its TV shows and movies over those of other content providers.
He pointed to promises made and broken by NBC in the early 1990s, when it promised government regulators that allowing networks to own more of their own programming content would not hurt independent producers. What actually happened, Franken said, is that the networks came to own the majority of the programming they air, demanding ownership in any independently produced shows that come to them.
“Today, if an independent producer wants to get its show on a network’s schedule, it’s a routine practice for the network to demand at least part ownership of the show,” he said. “This is completely contrary to what NBC and the other networks said they would do when they were trying to get fin-syn (Financial Interest and Syndication Rules) rescinded. So while I commend NBCU and Comcast for making voluntary commitments as part of this merger, you’ll have to excuse me if I don’t just trust their promises.”
Comcast and NBC have proposed their own conditions on the merger to ensure that they protect the public interest and preserve competition. Executives from the companies say they don’t believe the FCC or other government regulators need to add more conditions to the merger.
But public-interest watchdogs say the merger should be rejected without more conditions to protect the public from higher prices and fewer choices.
During the House hearing, Rep. Ed Markey (D-Mass.) expressed fears that the deal would stifle competition and end up costing consumers.
Colleen Abdoulah, chief executive of small Midwest cable provider WideOpenWest, or WOW, offered the House subcommittee a few suggestions for conditions that could help prevent this. She suggested that regulators require Comcast and NBC to offer sports and entertainment programming to all of its competitors, including those online.
The Federal Communications Commission recently shut the “terrestrial loophole,” a special provision in regulation that required cable operators to share only programming that gets transmitted via satellite. The loophole had enabled the cable companies to prevent many competitors, such as phone companies and satellite providers, from offering programming of local sports events controlled by cable operators. Cable companies have said they will appeal the decision.
Also during the House hearing, NBC’s affiliate stations voiced concern that Comcast would move its most valuable sports and entertainment programming to its cable stations. They are concerned about Comcast putting NBC content on the Web and bypassing local transmission.
Comcast’s Roberts tried to allay fears that a combined Comcast and NBC would be anticompetitive by pointing out growing competition for TV content online. He said that together, Comcast and NBC would result in “a more creative and innovative company.”
NBC’s Zucker told the House subcommittee that the deal with Comcast would help save TV broadcasting, which he said is currently under a certain amount of duress.
The FCC and Department of Justice have just begun reviewing the merger and are expected to reach a final decision on the outcome in the fourth quarter of this year.
