Democratic lawmakers question Comcast and NBC executives about proposed merger
Friday, February 5, 2010
House and Senate Democrats grilled top executives of Comcast and NBC Universal in hearings Thursday on the companies' proposed $30 billion merger, with some lawmakers expressing concern that the deal could hurt consumers and stifle competition.
Comcast chief executive Brian Roberts and NBC Universal chief executive Jeff Zucker tried to assure lawmakers, during back-to-back hearings before House and Senate subcommittees, that the deal would not limit consumer choice and that the combined company would abide by rules requiring that cable and Internet competitors get access to programming.
"Together, Comcast-NBCU can help deliver the anytime, anywhere multi-video experience consumers want," Roberts said. "We will be more creative and innovative. . . . Our success will stimulate our competitors, too."
But some Democratic lawmakers argued that the combined company could use its bulk to jack up prices for competitors who want its content or give greater priority to its own shows and movies. They also questioned the merger's impact on the future of Internet television, given that the deal would combine the nation's biggest cable and Internet distributor with the fourth-largest media company.
"After additional review, I'm even more certain this joint venture, if approved, could trigger dramatic changes in the way consumers access video programming [and] independent programmers distribute their work," said Rep. Henry A. Waxman (D-Calif.), chairman of the House Commerce Committee. "Will competition be sustainable with the largest video and broadband provider controlling huge quantities of content?"
Thursday's hearings set the stage for an expected year-long regulatory review of the merger. The lawmakers won't ultimately rule on the union, but observers said the Justice Department and the Federal Communications Commission will take into consideration arguments for and against the merger as they conduct their reviews.
"They are in a position to pressure the administration and influence the amount of scrutiny the deal gets," said Andrew Gavel, a professor of law at Howard University.
The executives argued that the merger would benefit the troubled media industry, which is reeling from advertising losses and the wide amount of free content on the Web. Comcast has said it would put more money into NBC to develop new shows and movies, expanding the company into a new field beyond its core business of providing cable and Internet access.
Roberts called the merger a vertical merger without significant overlapping businesses. But consumer groups and competitors said regulators need to look at the large overlapping businesses. Both companies own broadcast stations and cable channels.
The companies have said they would make their content available to competitors online, but they didn't address specific concerns that the combined company could apply tough terms and conditions to such deals to hurt smaller competitors. Colleen Abdoulah, president of Wide Open West, or WOW, a cable and Internet service provider in the Midwest, told lawmakers that Comcast has already rejected her firm's request to purchase rights to its cable shows and other programs over the Internet.
"If I don't have access to content, where will my customers go? Comcast," Abdoulah said.