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Zucker, Roberts Defend Comcast/NBCU Deal At House Subcommittee Hearing

2/04/2010 3:11 PM Eastern

Comcast chairman Brian Roberts and NBCU president Jeff Zucker ran the first half of their legislative gauntlet Thursday in the House Communications and Internet Subcommittee hearing, sandwiched in between floor votes that forced an hour recess, then a rush to the door with questions left unasked and awaiting written responses at a later date.
The second half of the executives exam comes later today in a Senate hearing on the deal.

The pair pitched the $30 billion Comcast/NBCU deal as a gamble taken for the benefit of both their companies and consumers. Roberts said the new company would be more creative, innovative and meet customer needs, while protecting its competitors access to programming in the air and online.

Roberts redoubled, or by now retripled, his pledge to keep the NBC and Telemundo broadcast networks on air, and to search for a new model for a vibrant broadcast business going forward.

Addressing concerns by unions, he said the company was committed to fair bargaining. He got a shout-out from Rep. Mike Doyle (D-Pa.), who noted that the company was unionized in Pittsburgh and was a good corporate citizen.

NBCU chief Jeff Zucker at House hearing on Comcast mergerZucker said that one of the reasons he thought the deal would be good for consumers as well as the companies was Comcast's commitment to over- air broadcasting, citing his concerns about the future of that business. He said Comcast's pledge to that side of the business has been "widely underappreciated."

Zucker also lauded GE for the $22 billion it had invested in NBC in the past eight years, but said Comcast would help the company compete in the new media world. He also praised Comcast's pledge to take a "constructive role" in retransmission consent negotiations in an effort to help find the right business model.

Roberts argued that the deal was a risk, that it was not clear what would be happening in the broadcast and online spaces. He pointed to some analysts who were not high on the deal because of its vertical nature and the lack of overlapping businesses. He said that lack of horizontal concentration, the very thing that made it less attractive to Wall Street, should make it more attractive inside the Beltway.

The issue of access to online content loomed large in the hearing, fueled by numerous comments on how that was likely to be the new home of TV content, including by House Energy & Commerce Committee Chairman Henry Waxman.

Ed Markey (D-Mass.), a big backer of network neutrality, said the combination of the top residential broadband provider and a studio/content company raised major concerns, citing the well-traveled "kid in the garage" example.

Roberts said he was not sure network neutrality regs were necessary, but if they were they should be applied to everybody-including wireless carriers and application providers.

And he said he shared the desire for Internet openness, while not necessarily agreeing on the right vehicle to get to that destination.

Colleen Abdoulah, president of cable/ISP Wow! said that Comcast had denied it access to online content. Roberts said he was not familiar with the particulars, but that the company should have nondiscriminatory access to online content.

Abdoulah was looking for more than assurances by Comcast, telling legislators they needed a raft of strong conditions on the deal.

Mark Cooper of the Consumer Federation of America, was the strongest critic of the deal, characterizing it as a colossus (Markey's term as well) straddling the old world of cable and the new world of Internet, with too many vertical and horizontal issues to be a workable deal no matter how many conditions had been offered up or suggested--he said he had tallied 16 so far. Cooper also took a shot at the FCC, saying it was unable to enforce the conditions it already has.

While Comcast and Republicans on the panel pitched the deal as a vertical one with almost no horizontal overlap, Cooper said cable and broadcast are competitors for eyeballs and ads, particularly in the dozen markets where NBC has stations, and in markets where Comcast regional sports and news networks compete with NBC. "If that aint competition, there is no such thing," he said.

Abdoulah also pointed to the lack of a timeline for adjudication of complaints as a problem with the current system. That was in response to Comcast/NBCU arguments that there are already mechanisms in place to deal with complaints about access to or carriage of programming.

Among the promises secured by legislators during the questioning: Roberts committed to "no massive layoffs," to not migrating NBC.com content to the TV Everywhere service available only to cable subs; to fair bargaining with unions and, possibly, to outside arbitration in the case of an impasse.

Zucker and NBC Affiliate Board Chair Michael Fiorile had a bit of a disagreement over the need of separation between retransmission consent and affiliation discussions.

Fiorile said structural separations needed to be in place, enforced by the FCC, between those negotiations. He said Comcast/NBCU would have the ability to withhold affiliation or bypass the stations if they could not agree on retrans.

Zucker said he did not think such structural regs were necessary.

Never has a major cable operator controlled one of the Big Four cable nets, said Fiorile, which is why there need to be clear, specific and enforceable conditions.

At one point, Henry Waxman (D-Calif.) chairman of the House Energy & Commerce Committee, tried to get Roberts to commit to not favoring Comcast-owned networks, citing a comment by Comcast top exec Steve Burke that its own networks were treated as siblings as opposed to strangers.

Roberts said he was not familiar with the context, but that the company sought the best content, wherever it came from. Waxman said he thought the FCC would need to look at how the potential to play favorites with owned content could affect independent programmers and consumer choice.

September