Al Franken, others grill execs at Congressional hearing
Before CSPAN cameras, public interest advocates and a horde of executives and lobbyists, lawmakers on Capitol Hill cast a skeptical eye Thursday on aspects of the proposed union of Comcast and NBC Universal.
Consumer advocates sounded the alarm about what they see as dangerous and anti-competitive threats posed by the transaction, which calls for Comcast to acquire a 51% stake in NBC U from General Electric. But by and large, there was little sign of strident opposition among the pols to the merger.
The most vocal critic among the members of the two House and Senate subcommittees, which held separate hearings, was a former NBC personality: Sen. Al Franken (D-Minn.), who offered a blunt warning.
“What I know from my previous career gives me reason to be concerned about the potential merger,” Franken said in his opening remarks, as Comcast chairman and CEO Brian Roberts and NBC Universal CEO Jeff Zucker listened from the witness table. “When the same company that produces the programs runs the pipes, we have a reason to be nervous.”
The CEOs’ exchange with Franken was by far the testiest moment of the two hearings, as Franken, a former writer and actor on “Saturday Night Live,” put Roberts and Zucker on the defensive.
Franken challenged Roberts with a contradiction in a statement Roberts made about a conditions that Comcast said it would agree to in order to secure regulatory approval for the NBC U deal with a legal argument that the cable giant made in 2008 in a proceeding before the FCC, in which Comcast challenged the commission’s constitutional authority to enforce its rules governing aspects of cable operators’ business dealings with content providers. The substance of the matter was deep in the weeds of arcane telecom policy points, but Franken made a show of challenging the trustworthiness of Comcast — so much so that he had the contradictory quote from 2008 blown up onto posterboard that an aide brought out on cue. Roberts was then cut off by time restraints as he tried to respond by defending “our reputation and our practices.”
With Zucker, Franken reached back to the early 1990s, when the Big Four networks rallied on Capitol Hill to repeal the much hated financial interest in syndication (aka fin-syn) rules that tied their hands when it came to program ownership.
Franken asserted that the nets swore to lawmakers back then that they would not discriminate in favor of their own in-house productions if fin-syn went away, but then they proceeded to do just that.
“Today, it is routine practice — and you guys know it — for the networks to demand at least partial ownership of a (new) show. That is completely contrary to what NBC and the other networks said they’d do when they sought relaxation of fin-syn,” Franken said. “So you’ll have to excuse me if I don’t trust them. It’s based on experience.”
Franken noted that he was friendly with Zucker and that he had worked with Zucker’s wife, Caryn, at “SNL,” but before the NBC U chief could muster any answers, Franken said incredulously, “Come on … Since the promises of fin-syn weren’t kept, what conditions would you have the government put on” the Comcast-NBC U transaction to guard against potential abuses of market power, he asked. Zucker pointed to the proposals filed last month with the FCC.
Roberts and Zucker testified that the pact would bolster both companies’ ability to compete in an ever-changing media landscape. They offered assurances that Comcast would keep its commitment to retain NBC as a free over-the-air broadcaster and to increase the level of local news programming on its owned and operated stations.
Although the deal will give Comcast control over a wide array of TV and film content, “This deal will not change the competitive dynamic,” Zucker said.
The views of the merger seemed to differ roughly along party lines, with some Republican committee members giving their hearty endorsements, and even urging a quick regulatory review, while Democrats were more critical in their questioning. At several points, lawmakers from both parties made mention, in an almost reverential manner, to the presence of patriarch Ralph Roberts, the founder of Comcast and father of Brian Roberts, who sat in the row behind his son at both hearings.
Zucker and the younger Roberts were pressed hard on the issue of whether Comcast would use its market clout to charge higher prices for NBC U cablers and whether Comcast’s cable systems and broadband services would discriminate against services from outside providers.
Roberts and Zucker outlined to both panels the litany of self-imposed voluntary conditions proposed by Comcast to ease the transaction through the FCC.
For example, Roberts said Comcast would agree to make the FCC’s program access rules binding on Comcast even if they are overturned by the courts, where a challenge is pending in the D.C. federal appeals court.
The promise drew sharp rebuttal from two public interest advocates sharing the witness table — Andrew Schwartzman, president of the Media Access Project, and Mark Cooper, director of research at the Consumer Federation of America.
Schwartzman called the promise to abide by existing rules a meaningless gesture. “The program access provision does not apply to a large proportion of the content that Comcast is acquiring, such as feature films and other video on demand content. Moreover, it is a right without a remedy.”
The Senate hearing followed a more perfunctory gabfest earlier in the day before the House Subcommittee on Communications, Technology and the Internet. With an impending snow storm forecast for D.C. the next day and a lengthy interruption by House floor votes, panel chairman Rick Boucher (D-Va.) kept a tight rein on statements from panel members and witnesses.
The panel listened to competitive concerns expressed by the likes of broadcaster Michael Fiorile, chairman of the NBC Affiliates Board and the head of Columbus, Ohio-based Dispatch Broadcast Group, and cable operator Colleen Abdoulah, prez of WOW! Internet, Cable, and Phone. Abdoulah urged the panel to recognize the competitive issues facing smaller subscription telecom services such as her company. Smaller players face an uphill climb in dealing with media giants like Comcast and NBC U, who often foist higher prices and onerous “take it or leave it” conditions on small-fry players, she said.
Rep. Ed Markey (D-Mass.), a former chairman of the panel, said the issue for consumers boiled down to “the seven C’s: Will this Combination of Communications Collossi Curtail Competition and Cost Consumers?” Markey also pressed for attention in the Comcast-NBC U deal to the issue of “net neutrality,” an effort to require that Internet providers treat all content equally, to ensure that the transaction doesn’t unfavorably impact “that kid in the garage or the next ‘Avatar.'”
Cynthia Littleton contributed to this report.