Policy

Kohl, Franken Talk Tough To Comcast/NBCU

2/04/2010 3:31 PM Eastern

The Comcast/NBCU merger got a going-over early on in the Senate Antitrust Subcommitee, though Comcast has argued it is a primarily vertical merger without the kind of horizontal overlaps that tend to draw antitrust scrutiny from the Justice Department.

That Senate vetting follows a hearing earlier in the day in the House Communications & Internet Subcommittee. At press time, the hearing was recessed for several floor votes and the witnesses, including Comcast chairman Brian Roberts and NBCU president Jeff Zucker had yet to take the floor.

The opening statements were tougher than at the House hearing.

Sen. Herb Kohl (D-Wisc.)The hearing opened with Subcommittee chairman Herb Kohl (D-Wis.) taking aim, saying that Comcasts' voluntary conditions would not be sufficient and that they were only a starting point. He slammed the cable industry for price increases and what he said were existing obstacles to competitors access to programming, and said many fear that would be exacerbated by a combined Comcast and NBCU.

Kohl said his four major areas of concern were: 1. Comcast's ability to deny must-have programming or make rivals pay unreasonable prices; 2. the potential move of NBC programming to cable; 3. the ability of independent nets to get carriage on Comcast systems; and 4) the effect on video competition.

Former NBC employee and current Sen. Al Franken (D-Minn.) laid into his old bosses after conceding that he owed them a lot. He said he was very concerned about the merger. He cited NBC claims in the early 1990s when the financial interest and syndication rules were phased out that networks would not favor their own programming over independents (those rules prevented networks from taking a financial stake in the domestic syndication of prime time programming).

Franken pointed out that today NBC is the biggest producer of its own programming. He said that it is now "routine practice, and you know it," to demand at least part ownership in a show, and that independent status affects placement on the schedule.

He said he commended Comcast/NBCU for their voluntary conditions, which include promises of nondiscriminatory access to programming. "But you will excuse me if I don't trust those promises," he added. Sen. Al Franken (D-Minn.)

Wisconsin Democrat Russ Feingold added his criticism, saying he had concerns with both the vertical and horizontal nature of the deal.

But the concern was not limited to Democrats.

Utah Republican Orrin Hatch said that worries about the deal were, in the main, justified. He said it was the nature of the market for media companies to want to get "every advantage" over their competitors, but that the result could be harm to consumers.

He said he had issues with putting their respective content holdings under the same banner, but also the vertical issues of combining the leading distributor with one of the leading content providers. He said such vertical concentration also has the potential to foreclose competition and violate antitrust laws. "Will Comcast be able to use content as a weapon?," he asked.

But Comcast has a friend and ally in former ranking Republican (now a Democrat) and former full committee chairman Arlen Specter of Pennsylvania. He said, speaking from experience, that Comcast was a good corporate citizen and that it had brilliant management. He pointed out that Brian Roberts and his son had won a squash tournament as partners, and seemed to carry that good will over to the potential partnership of Comcast and NBCU.

He said he thought the reason NBCU parent General Electric agreed to take a 49% stake in the new company is that it trusted Comcast to run the new enterprise. (The deal gives Comcast the right to buy out GE over time.)

Specter said the horizontal and vertical concerns were justified, but that he was confident Roberts and Zucker had the answers.

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