Few surprises in fourth Comcast hearing


The Senate Commerce Committee teed up the fourth dance party concerning the proposed merger of Comcast/NBCU, and at this point it seems there is little more that the Hill has to say. In general, Democrats were all about protecting consumers, and Republicans tended to worry about the merged entity having the power to innovate and compete.

NBCU’s Jeff Zucker got the day off, leaving it to Comcast’s Brian Roberts to defend the merger, which he did along the same lines he has been using in all the other hearings. He suggested that it was a risk his company was willing to take because it thinks the US economy is now at the bottom and that with steady general improvement, it can build the NBCU holdings up enough to enjoy a good return on investment.

Mark Cooper of the Consumer Federation of America joined Roberts for the fourth time and offered stiff resistance to the merger, saying it eliminated direct competitors in numerous ways, as well as providing vertical integration that would give Comcast too much market power.

Colleen Abdoulah of competing MVPD WOW said that it is critical that strong program access provisions are attached to the merger if it’s approved so that companies like her own can remain competitive.

John Wells of the Writers Guild of America, West echoed other union officials who testified earlier, finding that the merger would be bad for his membership. In particular, he predicted that further consolidation would be that more deleterious to independent production companies, drastically reducing employment opportunities for the creative community, as well as in other facets of the entertainment business.

Finally, Christopher S. Yoo of the University of Pennsylvania Law School argued that there are almost no areas of overlap between Comcast and NBCU, and since therefore no loss of competition, there is no need to do anything more than wave the merger through the applicable regulatory agencies. Yoo also suggested that a merger review should not be used as a vehicle to impose new backdoor regulation.

Yoo’s ideas found quite a bit of opposition, immediately from Sen. Byron Dorgan (D-ND) and later from Cooper, who argued that Comcast would have the ability to restrict access to its programming to competing platforms, and at the same time raise the rates – a combination of moves he said would be available numerous ways.

Abdoulah agreed that while there may be more programming available – from Comcast – there may not be more available overall, including competitors, in an unconditioned merger.

Here are witness testimony summaries:

* Brian L. Roberts, Chairman and CEO, Comcast Corporation: acquisition of NBC-Universal is the next step in our improbably journey. Two great media and entertainment companies join under one roof. Accelerate the development of anytime, anywhere video access. Will be good for consumers, competition and innovation. More diverse programming on more platforms. This is a vertical merger, not conducive to job loss, site mergers, or Wall Street approval. Will discuss being bound by program access rules even if they are struck down.

* John Wells, President, Writers Guild of America, West: Representing 8,000 writers. WGAW is concerned about impact of merger on creators, industry workers and consumers. Consolidation has damaged independent content creation; just a handful of international companies now control what viewers watch. Under fin-syn rules, 78% of content was independently produced. Channel bundling, tier placement add market power to consolidators. Do not want to see the Clear Channel effect spread any farther. Will be able to choose its own content at the expense of competitive content. NBC has just now restricted access to Olympic content. Hulu will give Comcast ability to require subscription to get access to programming on the internet. Comcast has a poor track record of respecting worker rights. Must agree to network neutrality rules, and not block distribution of material on new platforms. Musts allocate at least 25% of prime time programming to independent producers. Must go beyond simply providing more programming space for other conglomerates.

* Mark Cooper, Director of Research, Consumer Federation of America: Vertical integration can be bad for consumers and bad for the economy. This merger is uniquely anticompetitive across a number of markets. It will lead to reduced consumer choice and increased consumer cost. Comcast and NBCU are direct competitors in a number of areas; and the vertical leverage can be used against competitors in many ways, placing a very heavy thumb on the scale of competition. Entity will have the incentive and ability to raise prices. History of industry has been increased consolidation and increased prices. Operating cash has increased four times faster than inflation, giving Comcast the cash to even contemplate this merger in a bad economy. Comcast has already promised to extend the ugly cable business model to the internet. TV Everywhere means competition nowhere – adds cable anchor to otherwise open plafform.

* Colleen Abdoulah, President and CEO, WOW! Internet, Cable, and Phone: Representing 900 small and medium sized companies. Provide heightened customer service to gain competitive edge. Not asking for specialized help from government, but need to have access to program. This would give merged entity to much market power over programming. Comcast has 10 must-have regional sports networks. NBC has ten must carry networks. Comcast has must-have channels. They will use this when negotiating. We know this because we have to do it now. Operators like WOW are charged higher prices, will force it to carry channels its customers do not want, both of which harm consumers. Comcasts concessions are little more than what’s already on the books, and what’s on the books doesn’t work particularly well as it is. Rules are rife with loopholes. Arbitration is limited to certain types of programming, and is time consuming and expensive to the point of uselessness.

* Christopher S. Yoo, Professor of Law and Communication, University of Pennsylvania Law School, Philadelphia, PA: Analyzed likely consumer impact. Two basic points. FTC/DOJ precedent is starting point, and it suggests that this merger does not pose much danger. Merger conditions would constitute backdoor regulation along lines that haven’t held up in court on their own. Industry has actually undergone massive disintegration on a vertical basis. It is hard to make the case that vertical integration is a problem, so those that claim there is potential for consumer harm face a high hurdle of proof. Second, merger reviews should not be used for policy-making. That should be done specifically, not based on the individual characteristics of a particular proposed merger. FCC should operate responsibly, and using this merger as a regulatory opportunity would not be consistent with that.