Lawmakers grill Roberts and Zucker in merger hearings

Cable giant Comcast Corp. is looking to buy a majority stake in NBC Universal primarily to get its hands on the Peacock’s sterling cable brands: USA Network, Syfy, Bravo and CNBC among other channels. At least that’s been the conventional wisdom ever since the deal was announced in early December.

But as far as Washington is concerned, the most important asset NBC U brings to the table is its 32% interest in Internet vid giant Hulu. On Feb. 4, as Comcast chief Brian Roberts and NBC U CEO Jeff Zucker endured House and Senate subcommittee hearings on the proposed deal, lawmakers spent a good chunk of the time grilling the execs on the future plans for Hulu and Comcast’s fledgling Fancast Xfinity service. (Xfinity offers online viewing of a range of pay and basic cable shows to Comcast cable subscribers on a password-protected basis).

Sen. Amy Klobuchar (D.-Minn.) demanded a no-nonsense answer from Zucker to the burning question of whether she would still be able to watch “Saturday Night Live” on Sunday mornings for free via the Internet.

“Yes,” Zucker assured her.

The heart of the queries on Internet video was whether NBC U under Comcast ownership would move to impose a fee for online access to NBC broadcast network programs, which for the past few years have been widely available via NBC.com and Hulu, with advertising embedded. Consumer advocates, including some of those who testified at the Feb. 4 hearing, have taken a dim view of Fancast Xfinity because it restricts access to only paying cable customers. (Time Warner Cable is at work on its own version of an Xfinity-type password-protected service.)

Moreover, the question of Hulu’s future business model is a ticklish subject for NBC U execs because it’s no secret that Hulu — which is also part-owned by News Corp. and the Walt Disney Co. — is seriously considering rolling out some sort of subscription service. Hulu has done a boffo job of drawing viewers to the site, stocked with strong NBC, Fox and Disney-produced programs, but it hasn’t been able to translate all those viewers into big-time advertising dollars, so it can’t help but explore the possibility of beefing up its bottom line with some kind of subscription revenue.

Still, Zucker’s comment to the senior senator from Minnesota will undoubtedly remain true. Hulu and NBC.com are likely to offer free access to the most recent episode or two of NBC shows even if Hulu does build a paywall for viewers who want greater access to a bigger library of TV shows and movies.

During the hearings, Roberts and Zucker stressed that even a combined Comcast and NBC U could hardly dominate the market for Internet video, which is a wild west of dozens of providers ranging from Amazon and iTunes to Netflix to Xbox and YouTube. Roberts mentioned more than once that Google (which owns YouTube) still accounts for about 50% of all Internet vid viewing. He also noted more than once that Comcast’s core cable biz has lost about 1.5 million customers during the past two years to alternative subscription TV providers.

But Comcast is the nation’s single-largest provider of broadband service to consumers, with 15.9 million high-speed Internet customers, just as it is the nation’s largest cable provider with 23.6 million subs. And with the issue of “net neutrality” on the boil at the FCC, Internet access and pricing issues are sure to be an area of heavy focus for the feds as they review the $30 billion NBC U transaction between Comcast and General Electric.

Roberts sounded confident that Comcast’s vision will pass muster with regulators.

“As a broadband company we want to encourage as much (Internet) video as possible. It’s the fastest-growing part of our company,” Roberts told the solons during the hearing before the Senate Judiciary Committee’s subcommittee on Antitrust, Competition Policy and Consumer Rights. “We will do our very best to push the technology and the content to give the consumer that which we know they want.”

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