Pros and Cons of Comcast's proposed joint venture
By a key deadline on Monday, thousands of politicians, public interest groups, labor unions and others had weighed in on Comcast’s proposed joint venture with NBC Universal, but some of the most intriguing comments came from the network’s own affiliates.
In a 22-page filing with the FCC, the stations said they could support the joint venture if certain conditions are met, most of them designed to maintain the balance of power between the network and its affiliates. NBC Universal and Comcast have been anxious to win the support of the broadcast stations, and the intricate language of the conditions reflects months of negotiations with the affiliate board.
One of the central concerns has to do with fears that major events like the Super Bowl and the Olympics would migrate to cable, which “would diminish the ability of affiliates to invest in and thus provide quality local news, weather, and other programming relied upon by local communities,” the affiliates wrote in their statement. Although they are by no means proposing that Comcast be blocked from access to major sports rights, the affiliates are calling for restrictions on how and when broadcast-only sports events could shift to cable.
Although the guilds have sizable overlapping memberships, their divergent views are not a complete surprise given past frictions.
In a letter to the FCC, the DGA’s national executive director Jay Roth wrote that some criticism of the deal has ignored positive effects of the transaction.
“Too little focus has been placed on the issue of jobs maintenance and creation,” he wrote. “In a time when the industry is facing financial pressure from all sides, we expect that Comcast’s commitment to grow the industry, infuse new capital into the entertainment business and invest additional resources into programming will represent a change from the uncertainty caused by many of the current owner’s past decisions concerning commitment to our industry, programming and jobs.”
While the DGA also expressed satisfaction over Comcast’s commitment to support independent programming, including a vow to add non-Comcast channels to its cable line-up, the WGA dismissed the pledge as a “negligible concession.”
The WGA, which submitted its own comments in addition to those made as part of the 13-member coalition, put the joint venture in the context of consolidation and the decline in independent production over the past two decades. This reflects many of the concerns expressed by its president, John Wells, when he testified before the Senate Commerce Committee in March. The guild calls for the FCC to require that Comcast-NBCU air a “meaningful amount” of programming from independent producers. Among other things, it also asks that measures be put in place to ensure that internal content deals are of fair market value, that NBC video be made available at fair rates to unaffiliated websites and that Comcast be neutral in how content is distributed on its Internet service.
The affiliates also fear the combined entity’s leverage in renegotiations of affiliation agreements and in negotiating “retransmission consent” agreements, payments that cable operators pay to local stations to carry their signals. The affiliates want guarantees that such negotiations remain separate. Otherwise, “a combined NBC-Comcast could retaliate against an affiliate in affiliation negotiations based on its retransmission consent negotiations with Comcast, or force affiliates to accept unfavorable affiliation agreement provisions as a penalty for obtaining market-based retransmission consent payments,” they wrote.
The affiliates also are calling for conditions that would prevent Comcast from “effectively turning NBC into a cable network,” by putting network programming on its cable channels. Of particular concern is that Comcast could provide a network feed to its cable systems in the midst of contentious retransmission consent negotiations.
The affiliates also said they supported the inclusion of NBC’s 10 owned-and-operated stations in the transaction, noting that Comcast would have an incentive for “continued support of free, over-the-air network affiliate model and local television.”
Monday was the deadline to file comments to the FCC on the transaction, but it is by no means the final word. July 21 is the deadline for filing responses to the comments, and responses to those filings are due on Aug. 5. A final decision on the transaction is not expected until later this year.
Throughout the day, Comcast highlighted some of the labor groups and politicians who have voiced support for the transaction, such as the Teamsters’ Hollywood local and Los Angeles Mayor Antonio Villaraigosa. The NFL also was supportive, even though the cable operator was engaged in a protracted dispute over the carriage of the NFL Network that was resolved only last year.
Among the opponents was Bloomberg LP, which operates a financial news network that competes with NBC Universal’s CNBC. Bloomberg was among 13 organizations, including Free Press, the Communication Workers of America and the Writers Guild of America West, to sign a letter opposing the joint venture as it now exists. The letter claims the new entity “will exert a degree of market power unrivaled in our nation’s media history” and cites its impact on everything from news programming to labor negotiations.
In a blog post, Comcast’s executive vice president, David L. Cohen, dismissed those concerns as an “inaccurate exaggeration” and wrote that “some commenters, including certain competitors and programmers, appear to be attempting to use the transaction review process as an opportunity to seek advantages and concessions outside of marketplace negotiations.”
Other responses reflected divisions in the industry.
For example, the Directors Guild of America is for the joint venture; the WGA is against it in its current form.
Another org also concerned with independent content, the Caucus for Producers, Writers & Directors, called for 25% of the domestic cable and broadcast primetime schedule be guaranteed as a “carve out” for independent programming.
The FCC is planning a field hearing in Chicago on July 13. Meanwhile, a House subcommittee has scheduled a field hearing, also in Chicago, on July 8.