Top Issues at Comcast-NBCU Hearings: Jobs, Competition, Broadcast TV and Online Video

At yesterday’s two Congressional hearings on Comcast and GE’s proposed joint venture for NBC Universal, we heard a diversity of perspectives and viewpoints. While most members had questions, the tone was almost always respectful. We were grateful for the opportunity to answer those questions and address the concerns raised. A number of members didn’t see many issues with the proposed transaction. Overall, we think that Brian and Jeff were able to articulate why this transaction is pro-consumer and strongly in the public interest and we feel that we took an important step forward in the review process of this transaction in Washington.

There were many issues addressed at the hearings, so I’d like to take a moment to cover some of the most discussed topics.

• Jobs: A number of Representatives and Senators asked how the proposed joint venture would impact jobs as our nation continues to suffer high unemployment. As Brian and Jeff responded, there is very little overlap between our two companies. The goal of bringing the companies together is not to cut costs by eliminating jobs, but to grow the company by investing, innovating, and competing. And, not incidentally, the new NBCU will be a 100 percent American-owned company.

• Competition: There was a lot of discussion of a variety of competition-related issues, as well as how this transaction will affect consumers. Brian and Jeff reminded the Congressional committees that this is primarily a vertical combination, bringing together NBCU’s content with Comcast’s multiple distribution platforms. Generally speaking, there is less antitrust concern with a vertical transaction. And that’s the case here.

  The new company won’t have enough economic power at either end of the distribution chain to affect competition, meaning we won’t have the incentive or the capacity to engage in exclusionary or discriminatory conduct. Adam Thierer of the Progress and Freedom Foundation also did a very nice job of rebutting the “creative” antitrust theories espoused by Mark Cooper of the Consumer Federation of America who, recognizing the lack of serious antitrust risks of our joint venture when viewed from a vertical perspective, tried to argue that it really was a horizontal combination. Rep. Stearns, the Ranking Member of the House Telecommunications Subcommittee, also sharply cross examined Dr. Cooper.

  In addition to traditional antitrust and fair competition principles, a combination like this one is also governed by the FCC’s program access and program carriage rules. Over the last week (and at the hearings) some people asked whether we’re being consistent in saying the program access rules will help ensure competition, while at the same time we have filed a court appeal of certain portions of those rules. The short answer is that there is no inconsistency in our position. We have argued and believe that today’s marketplace is sufficiently competitive to do away with those rules, but we have strong reasons to compete fairly whether the rules are in effect or not. We don’t intend to behave any differently than we have under the rules and we’re willing to accept a condition that we abide by those rules, even if the court declares them invalid.

• Broadcast Television: There was a great deal of discussion about the future of the broadcast industry, which faces serious challenges in terms of changing audiences and changing technologies. While we don’t have all of the answers for how we can help solve the broadcast industry’s problems, Brian did reiterate our commitment to free, over-the-air broadcast television. He said that Comcast wants to work with the local broadcast affiliates to help revitalize the broadcast business. And he reinforced our commitment to invest in critical broadcast programming – news, local programming, etc. — and promised that Comcast would be a reliable steward of NBC News, which — we can all agree – is a national treasure. Jeff noted that, in his opinion, Comcast’s commitments to broadcast television and to investing in NBC News were under-appreciated and represented a strong public interest benefit of the transaction.

• Online Video: A number of Representatives and Senators asked how this deal would impact the future of video over the Internet, and some expressed concerns that Comcast and NBCU would try to limit its availability. As Brian has said for several years, video over the Internet is our friend, not our foe, and he explained how we intend to bring more video to the Internet, not less. Brian and Jeff gave some context for the wide-open, highly competitive online video marketplace where Google is by far the leader, with nearly 55 percent of all online viewing – well ahead of Hulu which is in the low single-digits and Comcast’s Fancast which has less than one percent. Overall, Brian and Jeff made the point that it’s our joint vision to help lead the experimentation and innovation that is taking place in the nascent and fast-moving video over the Internet marketplace.

Overall, we thought the hearings went very well. They gave us another opportunity to make our case that this transaction is pro-consumer, pro-competitive, and strongly in the public interest. We also noted the bipartisan calls for an expeditious review by the Justice Department and the FCC. And we were gratified that the committee members not only recognized the extensive voluntary commitments that we have already made, but also how this combination will benefit consumers and drive innovation in the competitive marketplace.