FCC, Comcast, others testify before Congress: NBC Universal-Comcast merger

The U.S. Senate convened a hearing (Consumers, Competition, and Consolidation in the Video and Broadband Market) today regarding the NBC Universal - Comcast merger. It wasn't a free for all many expected. Comcast faced difficult questions. Net Neutrality suggested as a precondition to approval.
Written by Doug Hanchard, Contributor

The U.S. Senate held a hearing (Consumers, Competition, and Consolidation in the Video and Broadband Market) Thursday regarding the NBC Universal-Comcast merger. Several witnesses appeared including FCC Chairman Julius Genachowski, DOJ Assistant Attorney General Christine Varney and Comcast CEO Brian Roberts.

Different video markets are emerging. Senator Rockefeller (Chair of the Committee) asked what analysis has been done concerning the impact of internet video competing with traditional TV broadcast?  Genachowski replied that the video market is changing with both satellite and internet creating new competition.  The FCC is reviewing how the merger affects internet broadband (ISP) services and traditional (cable) broadcast industries. Senators indicated there is frustration about the amount of time the merger review is taking.

The merger has worried writers and content production companies about how the consolidation of the networks and media outlets is reducing television/broadcast media access. The arguments against the deal were heard by the 2nd set of panelists.

Many argue that the future trend is continued consolidation, John Wells (Producer of television shows such as The West Wing), Mark Cooper (Director of Research Consumer Federation of America), and Colleen Abdoulah (President and CEO WOW! Internet, Cable, and Phone) voiced concern that fundamental regulatory changes should be implemented to change current trends, believing rates for media will increase higher than rates of inflation. Program access rules are full of loopholes  gives broadcast cable companies excessive control of how media price structures are implemented.

Senator Hutchison asked how the review process is impacting the timing of the completion of the merger.  Genachowski and DOJ Assistant Attorney General Christine Varney noted that both agencies are investigating in parallel and not adding unnecessary delay to the completion of the merger.

Senator Kerry raised concerns on consumer rates for internet, cable and satellite services. Retransmission consent is a concern. Genachowski acknowledged the concern given the New Year's Eve pulling of some programming from cable companies. Varney responded that the DOJ is not sure how new multi-media services being delivered over the Internet will affect competition and rates.

Kerry raised the question if consumers should lose internet services if a cable provider loses broadcast cable content provided by the content provider. Genachowski said the matter is under review, including a review / appeal process.

Mr. Christopher S. Yoo, Professor of Law and Communication testified that FCC regulations need increased powers to regulate broadcasters when this type of merger occurs in the future.

Washington State Senator Maria Cantwell voiced concern with the merger and doesn't support it. An example of frustration was the lack of access to the Olympics which was blocked from Canada by host provider CTV and NBC didn't offer Washington State border-area consumers sufficient service by U.S. provider NBC (official U.S. broadcaster of the Olympic Winter Games). The winter games did have video segments on its NBC Olympics website, which were blocked from access from anywhere outside of the United States. Senator Cantwell didn't take into account that broadcast rights were negotiated broadcast rights with the International Olympic Commission.

Comcast chief Brian Roberts was asked by Senator Dorgan how this deal reduces competition. Dorgan raised the Time Warner-AOL merger that failed. Roberts testified that there's risk in this merger and that success is not slam dunk. Comcast is appealing in court the FCC's jurisdiction regarding broadcast oversight.

Roberts testified that local derived NBC programming (such as news) will be retained and not reduced. Dr. Cooper countered that post merger, Comcast would control access to that local content and cost of the access to that content forces wholesale rates (cost of carriage) up and forces out competition.

Roberts was quizzed how this Comcast-NBC merger is different than Time Warner-AOL. In response was the business model and timing of that deal had significant impacts to its failure, highlighting that the Time Warner-AOL deal was done at the height of the internet economy bubble - in stark contrast to this deal occurring at the bottom of the current business climate and economic recession.

Senator Dorgan suggested that like the AT&T-SBC merger, Net neutrality will be a condition.

Additional resources

FCC releases 'Connecting America: The National Broadband Plan'

C-SPAN Video Coverage of Hearing

FCC Genachowski Written Testimony.pdf

Cable and satellite providers want revised FCC rules and fees

Comcast CEO Brian Roberts Written Testimony.pdf

CNBC: GE, Comcast in final stages of NBC Universal deal

U.S. Department of Justice Assistant Attorney General for Antitrust  Christine Varney Written Testimony.pdf

Writers Guild of America, West Written testimony of President Mr. John Wells

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