Comcast’s proposed takeover of NBC Universal came under renewed scrutiny Thursday for its possible impact on independent programming even as lawmakers expressed consternation about the heated wrangling between broadcasters and cable operators over retransmission consent negotiations.
At a congressional hearing Thursday, John Wells, president of the Writers Guild of America West, sounded the alarm on the joint venture’s potential impact on the creative community. But lawmakers were eager to raise the issue of the battling over carriage agreements with FCC chairman Julius Genachowski, who was among those called to testify about the Comcast-NBC U merger.
With Disney pulling its New York ABC O&O off Cablevision’s system Sunday, in a standoff settled 13 minutes into the Oscarcast, there is a greater sense of urgency to do something about the retransmission rules, which mandate that cable operators negotiate with broadcasters for the right to carry local broadcast stations on their channel lineups. Tuesday, a group of other cable operators, sat providers and telcos petitioned the FCC for a review of the law.
At the hearing before the Senate Commerce Committee, Sen. John Kerry (D-Mass.), who has called for a mandate that stations not be allowed to pull their signals when negotiations are ongoing, pressed Genachowski on what should be done.
But Genachowski said only that the situation has been a “topic of active consideration” since Christmas and New Year’s Day, when Time Warner and Fox engaged in a highly public showdown over retrans fees, and that “a lot of consumers wonder why their lives should be affected by a business dispute between two media companies.”
He added that they are “in the process of reviewing whether there are improvements in the framework (of current retrans rules) that make sense.” He acknowledged concerns that “the framework that has been in place may have lost pace with changes” in the marketplace.
Comcast was not among the cablers calling for changes in the retrans rules, but the company has said that, as a prospective broadcaster and cable operator, it hopes to play a “constructive role” in resolving the disputes.
A coalition of cable operators, sat TV providers DirecTV and Dish Network and telco Verizon filed a petition with the FCC on Tuesday seeking changes to retrans rules, which broadcasters are sure to fight (Daily Variety, March 10). Biz insiders predict that given the political heat behind the issue, FCC will soon seek public comments on the petition as a precursor to a launching a review of the retrans law established in 1992.
The three-hour Comcast/NBC U hearing — chaired by Sen. Jay Rockefeller (D-W. Va.) — also was marked by the presence of Wells, the highest-profile member of Hollywood’s creative community yet to trek to Capitol Hill to express serious reservations. In addition to leading the Writers Guild of America, West, he is exec producer of “ER” and “The West Wing.”
“The combined entity being discussed today will control 20% of television viewing hours,” Wells told the committee. “Control of both content and distribution provide ample opportunity for abuses of power in the pursuit of corporate self-interest. In this case, we are concerned that bigger won’t be better.”
He expressed worries that the merger would diminish opportunities for independent producers, and even called for requirements that the combined company allocate 25% of its primetime cable and broadcast programming to such content creators.
But he said the “greatest danger” of the merger was in its possible impact on the growing online video market, which the guild sees as a new avenue for its members pinched by the consolidation of media over the past generation. He cited concerns that Comcast could favor its own content on its Internet service, or even take steps that would reduce residual payments for writers. He pointed to Hulu, the vid service in which NBC U has a 30% stake, and charged that it would “likely put it behind an authentication wall.”
“Consumers will no longer be able to watch TV episodes online without a cable subscription, which will reduce viewing of this content and, potentially, residual payments for writers and other talent,” he said.
Comcast chairman Brian Roberts, however, frequently pointed out the extent to which Comcast will continue to face a highly competitive landscape, and suggested that they wouldn’t have bought NBC if their intent was to diminish the network. Rather, he said they will want to invest and “restore its grandeur.” He also said six of every seven channels on its systems will come from other suppliers. And while Hulu has been a frequent example cited by the merger’s foes, he noted that they will not have a controlling interest in Hulu, and that he had not personally met with the Hulu team.
NBC Universal CEO Jeff Zucker did not attend the hearing, as he has done in the previous three sessions before lawmakers.
The Thursday hearing was free of some of the dramatic moments that have marked previous encounters, most notably criticism of the merger from Sen. Al Franken (D-Minn.) and Rep. Maxine Waters (D-Calif.).
But Sen. Maria Cantwell (D-Wash.) did say that “at this point I cannot support the merger” and, like Wells, cited fears the new company would restrict access to online video. Her case in point was the frustration that Seattle residents expressed in getting some online access to coverage of the Winter Olympics in Vancouver without paying for a subscription to a certain cable, satellite or telco services. She even broached revisiting the idea of pushing subscription TV providers to offer “a la carte” services, in which subscribers could pick and choose which channels they want. Such a concept has long been opposed by cable operators and programmers.
Joining Genachowski in the hearings was another figure who will play a central role in the approval of the NBC U merger: Christine Varney, chief of the Department of Justice’s Antitrust Division. Both outlined the process for studying the proposed $30 billion pact, but said that they could not say anything specific because it was an ongoing review.
Genachowski in particular proved skillful at speaking, but saying little, earning him a backhanded compliment from Kerry. “Mr. Chairman, thank you for coming and not commenting on any of the specifics,” Kerry said.