Dems Tee Up Comcast/NBCU Concerns

House subcommittee to look at implications of deal on evolution of web video

By John Eggerton -- Broadcasting & Cable, 2/2/2010 2:10:35 PM

In Thursday's (Feb. 4) hearing, the House Energy & Commerce Committee's Communications & Internet Subcommittee will be looking at a merged Comcast/NBCU's "unique and commanding" position in the media marketplace, including what could be its power to "fundamentally shape the way Web video evolves," according to language in the memo.

Look for access to online video and an "open Internet" to get some vetting during the proceedings eyeing the proposed $30 billion merger.

While Comcast/NBCU have argued that the Web space is extremely competitive, with their combined company still having only a small fraction of online video viewing, a briefing memo from Democratic staffers to members about the upcoming hearing cites a Bernstein Research Web video study that suggested the new company would control one of every five viewing hours in the country and that it "could - and presumably would - make decisions that would fundamentally shape the way Web video evolves."

The memo is in advance of a "bipartisan" staff briefing scheduled for Feb. 3, a day before the hearing.

"Some have expressed concerns that the new Comcast will be able to exert undue influence over the development of this market, to the detriment of consumers and independent video producers," the Democratic staffers say in teeing up some of the issues for discussion.

Under the "Open Internet" section, the memo cites the FCC's 2008 BitTorrent decision against Comcast--though not by name--and says "Some are concerned that the addition of NBC's content to the Comcast portfolio may provide additional incentive for Comcast to take steps to unfairly favor its own Internet traffic at the expense of unaffiliated content."

Comcast has argued that the transaction is almost entirely vertical--supplier marries distributor--rather than horizontal--competitors in either space joining up, and so does not raise a number of FCC concerns related to market ownership limits.

In the memo, the committee says that concerns up for discussion in the vertical meld are the potential to discriminate against independent programmers or denying other distributors access to, or charging them more for, NBC programming.

Comcast has said it would not discriminate, and pointed to the FCC's program access and carriage rules as already in place to deal with those issues. It has also agreed to voluntarily apply nondiscrimination rules to its retransmission consent negotiations. The committee says that some critics argue the FCC's access and carriage rules are insufficient to protect consumers and competition.

On the issue of retrans, the memo points to criticisms of bundling of channels by vertically integrated companies. On the issue of the affiliate relationships, the committee says the deal "raises several potential issues related to the relationship between Comcast and the affiliates, including the future of the NBC network, the relative balance of power in corporate negotiations, and the impact of this transaction on affiliate advertising sales."

Comcast has pledged its allegiance to the NBC network/affiliate model, and has made a host of public interest promises, which the memo acknowledges. "Comcast also released a list of public interest commitments that it will agree to," said the committee, "including carrying more independent channels, not interfering with NBC news' editorial content, and treating PEG channels fairly."

The deal will also get a vetting in the Senate Judiciary Committee Thursday afternoon and later this month in the House Judiciary Committee, whose chairman, John Conyers (D-Mich.), has praised Comcast/NBCU's public interest promises.