Senator Herb Kohl calls for conditions on Comcast/NBCU merger


Herb Kohl (D-WI), Chairman of the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights, sees three problem areas in the proposed merger of Comcast and NBC Universal, and has fired off a letter to the FCC and the DOJ suggesting 11 conditions, including divestiture of NBCU’s stake in internet video site Hulu.

The letter went to FCC Chair Julius Genachowski and DOJ Antitrust Division Assistant AG Christine Varney.
Kohl said, “I believe this proposed acquisition presents important competition and communications policy concerns which should be carefully scrutinized by the Antitrust Division and FCC, and should your agencies decide to approve this transaction, you should adopt conditions necessary to avoid the risk of injury to competition and consumers.”

His first area of concern involves access by competing MVPD services to programming assets of the merged entity; the second involves access by unaffiliated and independent programmers to the merged entity’s distribution platforms; and the third involves access and competition in the still-developing universe of internet video distribution.

“In sum, Comcast’s proposed acquisition of NBC has the potential for profound and far-reaching effects in many markets, including competition in the MVPD market, the access of non-affiliated programmers to a quarter of the nation’s homes through the Comcast cable system, and the ability of a nascent and potentially promising new form of competition – video over the Internet – to thrive. Particular care should be taken by your agencies to ensure that existing MVPD competition is not seriously injured, nor promising new forms of competition on the Internet stifled. The stakes for American consumers and competition in the media industry arising out of this transaction, as well the implications for diversity of information and entertainment, are very high and thus this acquisition is worthy of the most serious review at your agencies.”

He had a number of reasons for objecting to even the 32% of Hulu currently owned by NBCU coming under Comcast’s enlarged umbrella. For one thing, it competes with Comcast to an extent. Kohl sees the possibility of Comcast moving to eliminate that competition. He said, “After the acquisition, Comcast will have the incentive to exercise its influence as a part owner of Hulu to ensure it does not become a competitive threat to Comcast’s cable television services.”

Here are Kohl’s 11 conditions:

1. A requirement that Comcast make any programming or programming channel in which it has a financial interest (including the NBC broadcasting and cable networks to be acquired by this transaction) available to any MVPD on reasonable and nondiscriminatory terms. This requirement would be independent of the existing FCC program access rules, and apply regardless of whether the current FCC program access rules are in force, and regardless if they would apply. Among other things, this would preclude Comcast from using the terrestrial loophole in the program access rules, or expiration of the rules in 2012, from denying MVPD competitors the opportunity to purchase such programming on reasonable and nondiscriminatory terms.

2. A requirement that Comcast/NBC agree to enter into binding commercial arbitration for disputes over retransmission consent of NBC owned-and-operated broadcast television stations on MVPDs. Further, Comcast should be required to allow these channel(s) to be carried on the MPVD while the dispute is being arbitrated under the same terms and conditions as the expired retransmission consent agreement.

3. A requirement that Comcast/NBC will implement appropriate safeguards and procedures, including firewalls, to prevent information sharing between Comcast and NBC regarding pricing or other contract terms regarding pricing or contract terms offered by Comcast’s MVPD competitors to purchase programming.

4. A requirement that Comcast agree not to discriminate against programmers seeking carriage on Comcast in favor of any Comcast-owned programming, including the NBC broadcast and cable programming to be acquired in this transaction. This requirement would be independent of the existing FCC program carriage rules, and apply regardless of whether or not those rules are in force. This merger condition should specifically ensure that, even if offered carriage, a non-affiliated programmer should not face discrimination with respect to channel placement or tiering (such as, for example, being placed on an expensive digital tier while the comparable Comcast-owned channel is shown on a basic tier).

5. A requirement that Comcast not seek to prevent or coerce programmers from keeping their content off Internet web sites or Internet distributors as a condition of carriage on Comcast. Such a condition may allow reasonable “windows” of programming (for example, that first run video programming be exclusive to Comcast for a reasonable time limited period) or for reductions in the payments to programmers in reasonable proportion to the percentage of the subscribers estimated to be lost to viewing of content on the Internet, but should be designed to prevent Comcast from leveraging its power as a distributor to block competitive Internet web sites from gaining access to video programming shown on Comcast.

6. A requirement that Comcast make any programming or programming channel in which it has a financial interest (including the NBC broadcasting and cable networks to be acquired by this transaction) available via Internet distribution to its competitors on reasonable and nondiscriminatory terms, in the same manner as if the program access rules applied.

7. A requirement that NBC content to be viewed on the Internet not be tied to an MVPD subscription – that is, an MVPD subscription not be required to view NBC content on the Internet.

8. A requirement that Comcast divest NBC’s interest in Hulu within a year of this acquisition.

9. A requirement that Comcast not migrate the principal programming of the NBC broadcast network to any cable network in which Comcast has a financial interest for ten years.

10. A requirement that Comcast and NBC maintain a firewall between advertising in markets where NBC owns and operates a broadcast station(s) with respect to the sales of advertising on NBC owned broadcast stations.

11. A requirement that Comcast not discriminate against or degrade in quality on its broadband network any Internet distribution of programming which competes or seeks to compete with Comcast or TV Everywhere.