Celebrating Comcast Day on the Hill (updated)

The proposed merger of Comcast and NBC Universal got two Congressional hearings on Thursday. The House Commerce Subcommittee on Communications, Technology, and the Internet held a morning hearing. In general, Democrats talked about a careful and extensive review of potential anticompetitive harms, with a particular focus on access to online video, for which there are no program access regulations, the effects on broadband of combining the nation's top residential broadband provider with the fourth largest content provider and the effects on diversity and localism, among other topics. Republicans countered that the deal was between two companies with little overlap and presented few anticompetitive threats. They warned against turning the review into a referendum on criticisms of media in general or attempting to apply conditions in a game of "what ifs."

House Commerce Committee Chairman Henry Waxman (D-CA) said the deal would test the future of free, over-the-air television. "Many are concerned that this transaction could result in the best of NBC's programming being transitioned to a pay-TV service," he said. Lawmakers from both parties repeatedly questioned whether the venture would restrict consumer access to popular programming such as National Football League games and the Olympics. "Companies like people naturally have an interest in taking special care of family members," Chairman Waxman said. He said the Federal Communications Commission "needs to analyze carefully what such potential favoritism might mean for competition from independent programmers." Subcommittee Chairman Rick Boucher (D-VA) urged the FCC and Justice Department to move quickly on the deal. "I'm not saying that the agencies should not impose conditions on the transaction, but the companies deserve an answer in a timely manner," he said. In an interview after the hearing he predicted the deal would get approval from the regulatory agencies. Subcommittee Ranking Member Cliff Stearns (R-FL) said the merger should be approved. "There is little to suggest a Comcast-NBC combination would seriously threaten competition in the media and entertainment industries," he said in his opening remarks. "This is a highly competitive segment of the economy and consumers stand to benefit."

Comcast CEO Brian Roberts was asked about free online content by several lawmakers and answered saying NBC's content will continue to be available online for free after the companies merge. Roberts said Comcast has no incentive to put NBC's content behind a pay wall. He pledged to maintain the free programming available today. Roberts was also asked to assure members of the House Energy and Commerce subcommittee that Comcast would not withhold content from competing distributors, such as satellite companies and smaller cable providers around the country. "We want to stress the point, to underscore, that it is not the motivation for this deal to suddenly take CNBC off DirecTV or try to change those relationships, because those are our largest distributors," Roberts said.

Using words like "incestuous," "crippling" and "brute strength," DISH Network warned legislators in the House and Senate that the FCC and Justice Department need to put tough conditions on the Comcast/NBCU merger. The company said the merger should cause alarm and that it was a "perilous road" that "endangers" competition. At a minimum, says DISH, the companies should be prevented from discriminating against competitive services in broadband content, provide wholesale rates to competitors who want to provide their own bundled services, and be required to offer stand-alone broadband--as opposed to bundled--with "robust" bandwidth. Comcast Chairman Brian Roberts said that the company is willing to talk with the FCC about Comcast abiding by program access conditions on the proposed Comcast/NBCU deal, even if the program access rules are overturned by the courts. The companies said the joint venture will create jobs -- in part because they claim they are not direct competitors but rather complementary. NBCU CEO Jeff Zucker that the proposed deal would allow NBCU owner General Electric to use proceeds to expand its workforce. "With the deal, GE will have billions of dollars to invest in jobs in its core businesses," he said.

Rep Ed Markey (D-MA), the former chairman of the subcommittee, raised concerns about the deal's impact on Network Neutrality. He said he wants to ensure that the "combination of a major network operator and a large content owner does not enable the creation of discriminatory fast lanes and slow lanes on the Internet to the detriment of users. Control of both the content itself and the conduit through which it is delivered raises important issues with respect to competition, choice, diversity and innovation."

Rep Mike Doyle (D-PA) asked, "Will Comcast continue to commit not to cut off their customers from the Internet without some sort of due process procedure." Roberts would not. Instead, he said that Comcast believes it can "play a constructive role in figuring out" the best way to protect consumers while also protecting copyright. That answer should trouble anyone who's been keeping track of the growing number of reports about people who've been wrongly accused of piracy.

Reps Maurice Hinchey (D-NY), Donna Edwards (D-MD), John Olver (D-MA), Bob Filner (D-CA), Pete Stark (D-CA), Lynn Woolsey (D-CA), and Carolyn McCarthy (D-NY) sent a letter to the Department of Justice and the Federal Communications Commission calling on them to block the deal entirely. The Members of Congress said that the deal would be more consolidation, less choice, and higher cable bills.

During the afternoon Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights hearing, Sen Al Franken (D-MN) said he doesn't trust the promises made by the CEOs of Comcast and NBC Universal "from my experience in this business." Sen Franken, a member of the Senate Antitrust subcommittee, said his previous career "has given me reason to be very concerned about this potential merger." A former actor and comedian, Sen Franken worked for NBC for many years as a writer and performer on "Saturday Night Live." "It matters who runs our media companies," he said. "The media are our source of entertainment. They're also how we get information about the world. "So when the same company that produces those programs runs the pipes, we have reason to be nervous," he said. In the past, Sen Franken said, NBC made promises to allow programming it did not own to air on its stations. But instead, it is common practice for networks to demand ownership of independent programming before placing it in primetime lineups. "It's completely opposite of what NBC said they would do," he said. "You'll have to excuse me if I don't trust these promises."

Update:
Comcast and NBC Universal didn't get a whole lot of love at Thursday's emotional Senate hearing on their proposed merger. But company representatives did get plenty of questions. At the Senate Judiciary Committee hearing, Subcommittee Chairman Herb Kohl (D-WI) cracked no smiles as he ran through four "principal areas of concern" about the deal: potential programming price hikes, loss of free over-the-air TV content, hobbling independent programmers, and weakening Internet TV.

"It is essential that you explain to us and the American public how the creation of this media conglomerate will serve the interests of the American people, not just the interests of your companies," Chairman Kohl grimly demanded of Comcast CEO Brian Roberts and NBCU President Jeff Zucker as they prepared to make their case.

Even Sen Orin Hatch (R-UT) confessed some concern about the marriage. He called worries about the union "justified" in light of rising cable rates that are "difficult to understand." But it was the faux pas in his opening statement that suggested how nervous everyone is about this deal. "Both of these countries, er, companies are iconic in their industries," Sen Hatch began. And later: "While horizontal murders, uh, mergers, tend to receive more criticism and scrutiny, vertical mergers" can also result in "a significant foreclosure of competition," he warned.

Sen Al Franken (D-MN) disclosed that Comcast's Roberts had met with him days earlier, claiming that the FCC's program carriage rules would protect consumers. "You said that those rules will make sure that you always have a wide variety of programs because they forbid you [NBC] from discriminating against other company's programs." With that, Franken pointed to a large sign board behind him with a quote from Comcast in its recent battle with the NFL Network over which tier on Comcast would carry the sports channel.

"The Commission is simply not equipped or constitutionally empowered to make an independent assessment of the myriad, complex, and dynamic considerations that affect carriage, tiering, and pricing decisions," said the quote from Comcast attorneys. "Thus the First Amendment requires that the Commission exercise extreme caution before interfering with any carriage decision."

"In other words," Franken continued irately, "looking to get approval for this merger, you sat there in my office and told me to my face that these rules would protect consumers but your lawyers had just finished arguing in front of the Commission that it would be unconstitutional to apply these rules."