In dual hearings today on Capitol Hill, lawmakers expressed some concern about the proposed merger between Comcast Corporation and NBC Universal, arguing that the deal, unless the two parties agree to make some changes, could hurt competition and raise prices for consumers.
Chief executives from both companies appeared before a House Energy and Commerce panel in the morning and a Senate Judiciary subcommittee in the afternoon, responding to questions that grew tougher as the day wore on.
Sen. Al Franken (D-Minn.) said his former bosses at NBC couldn't be trusted. (photo by Ryan J. Reilly / Main Justice)
The most dramatic point of the afternoon hearing in the Senate — as dramatic as a Congressional antitrust panel can get — was when Sen. Al Franken (D-Minn.), who was a star on NBC’s Saturday Night Live for many years, said his former bosses at NBC couldn’t be trusted to keep their word.
In order to win public and regulatory approval of the joint venture when it was announced in early December, Comcast outlined a set of public commitments that, it said, would ameliorate any anti-competitive concerns the deal might raise. The combined firm might not take those commitments literally, Franken said, based on his prior experience with the network.
“It’s really hard to trust you guys, from my point of view,” Franken said, describing instances in which NBC would demand to take a stake in an independent producer’s show in order to run it, after previously pledging not to do that.
NBC’s Jeff Zucker did not respond directly to the allegations, simply noting that it was a long time ago.
The deal, which would give Comcast a 51 percent stake in NBC, would bring together one of the largest cable providers with one of the top media companies. Because the transaction would combine both the programming and the pipes that move that programming into homes, it has the potential to reshape the media landscape.
Comcast chief Brian Roberts, laid out a case similar to the one the company made in its public interest filing to the FCC last week. The transaction posed few so-called horizontal concerns, he said, because the combined firm would still rank only fourth in terms of national cable revenue. And the vertical concerns were overblown, he said, because neither company had enough market share to muscle out rivals.
NBC President Jeff Zucker (photo by Ryan J. Reilly / Main Justice).
Lawmakers in both houses expressed concerns the deal might pose on the future of television online, and extracted promises from Roberts to provide content to rival online video distributors.
Zucker said the deal was good for NBC because the combined firm would invest in and expand NBC programming, and provide technological expertise to find a sustainable business model for media in the new digital age.
House members took a more sympathetic view of the transaction, urging the Justice Department and the Federal Communications Commission to conduct quick reviews of the deal, and raising localized concerns about network affiliates in their districts, the interests of minority programmers, and intellectual property issues about online content.
“I’m not saying they shouldn’t impose conditions, but the companies deserve an answer in a timely manner” said Rep. Rick Boucher (D-Va.), who chairs the House Energy and Commerce Subcommittee on Communications, Technology and the Internet.
Senators, by contrast, took a tougher line. “Should the agencies decide to allow this merger,” said Sen. Herb Kohl (D-Wis.) who chairs the Judiciary panel’s Antitrust subcommittee, “we believe it is essential they insist on strong conditions to protect consumers.”
The panel’s ranking Republican, Orrin Hatch of Utah, also said that the deal could result in “a significant foreclosure of competition,” he said. And, Hatch warned, there was a possibility that Comcast could “use NBC’s content as a weapon” against rivals.
Critics of the deal, including media watchdog groups and smaller cable providers who were both represented at the hearing, argue that the combined firm would have an incentive to raise NBC prices or cut off access to “must have” NBC programming to rivals.
“When your competitor also is a major vendor, supplying video content essential or important for any competitive provider to access, problems currently arise,” said Colleen Abdoulah, president of a small cable provider called WOW! at the morning hearing. ”Comcast will have so much power that it can create its own economic reality and make one plus one equal five.”
Critics also expressed concern about the access independent programmers might have to Comcast distribution. ”Cable networks are not coming forward because they are afraid of retaliation,” said Andrew Jay Schwartzman, president of the Media Access Project, at the afternoon session.
The Justice Department is reviewing the deal for antitrust concerns, and The Federal Communications Commission, which needs to approve a license transfer for the transaction to go through, will determine if it is in the public interest.
While lawmakers play no direct role in the review process, their views can have some impact on regulators. If Congress takes a tough line on a merger, observers say, it can provide some political cover for Justice or the FCC to do so as well.
Two more congressional panels — Senate Commerce and House Judiciary — will likely hold hearings on the deal, and the review could take up to one year.
