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Cable Technology Feature Article

February 05, 2010

Comcast/NBC Universal Defend Merger in Congressional Hearings

By Susan J. Campbell, TMCnet Contributing Editor

While some lawmakers may be concerned over the market consequences of the Comcast/NBC Universal (News - Alert) deal, Comcast was quick to assure lawmakers on Thursday that no large-scale job cuts are part of the plan in the proposed $30 billion joint venture. The company also promised that it would remain committed to free over-the-air television programming.

A post in CNBC cited Comcast (News - Alert) Chief Executive Brain Roberts as saying, “There’s not going to be massive job cuts as part of this coming together.” Roberts shared these comments at the first of two congressional hearings examining the proposed transaction, stating that 33,000 NBCU employees would be added as part of the transaction.

Roberts partnered with NBC President Jeff Zucker in reassuring members of the House Energy and Commerce Subcommittee on Communications, Technology and the Internet on their plans to continue to deliver free broadcasts and enhance local news and other forms of local programming.

“Comcast is committed to free over-the-air television and the future of broadcasting,” Zucker said in CNBC. “Before this joint venture I was concerned about the future of broadcasting. It’s been under tremendous amount of duress.”

A number of public interest groups have heavily criticized the proposed deal, claiming that consumers would ultimately be hurt if Comcast controls a substantial amount of entertainment content in addition to being the biggest U.S. cable and broadband provider.

Reuters (News - Alert) reported earlier this week that sports programming could wind up as the center of the battle between the two organizations as smaller cable companies fear Comcast will jack up its fees for its sports channels.

“The future of free, over-the-air broadcast television is also tested by this transaction,” said Henry Waxman, chair of the full House committee. Waxman cited concerns that the most popular NBC programs could be transitioned to a pay-TV service, hurting consumers in an effort to push greater profits for Comcast.

While a number of lawmakers appeared to be open to the deal and acknowledged there could be benefits from the transaction, many were still leery of granting approval for a deal that could hurt competition and innovation.

Throughout the hearing lawmakers appeared open to the deal but remained cautious about drawing any conclusions as to how the deal would affect consumers and still allow competing cable providers access to NBC content at reasonable rates.

Competitors are certainly up in arms over the deal, claiming approval would certainly hurt their ability to effectively compete. WOW!, a competitor in the Chicago and Detroit area, said the proposed combination would greatly enhance Comcast’s market power and harm local providers and even consumers.

The consumer group Consumer Federation of America said that cable prices are likely to rise.
“Comcast will be in a stronger position to demand bigger bundles at higher prices from your local cable operator who is not Comcast,” Mark Cooper, CFA director of research, told lawmakers.

In a Yahoo! news report, Congressional concerns were more apparent. Democrats challenged executives from both companies to show their plans won’t hurt consumers or rivals. It seems unlikely the transaction could protect both.

“The issue before us really boils down to the seven C’s,” said Rep. Edward Markey, D-Mass., a senior member of the House Commerce subcommittee on communications and technology. “Will this combination of communications colossi curtail competition and cost consumers?”

According to Roberts, the combination would produce a more creative and innovative company aimed at meeting consumer demands and driving more innovation among competitors. Zucker believes the investment would result in a rapidly evolving entertainment business that has become a “media free-for-all”.
Sen. Al Franken, D-Minn., said he is worried about the dangers of granting the nation’s largest cable and broadband provider permission to take control of NBC Universal’s vast media empire. “When the same company produces the programs and runs the pipes that bring us those programs, we have a reason to be nervous,” said Franken.

Comcast has promised that if the deal is approved, they would not move NBC’s free, over-the-air-network to cable and would ensure rival providers can get access to Comcast-owned programming at fair rates.

But promising the world in order to get approval is nothing new in the world of mergers and acquisitions. Even current laws in place do not guarantee protection for the consumer. One does have to question how such a move can possibly benefit the consumer in the long run.

Susan J. Campbell is a contributing editor for TMCnet and has also written for eastbiz.com. To read more of Susan’s articles, please visit her columnist page.

Edited by Marisa Torrieri