NBC Affils Seek Clear, Enforceable Conditions On Comcast/NBCU

Fiorile says Comcast support of network-affiliate model is "welcome start"

By John Eggerton -- Broadcasting & Cable, 2/2/2010 5:03:54 PM

NBC affiliates say they are cautiously optimistic that the merger of Comcast and NBCU can "strengthen and extend" their ability to serve up free services to the public, but not without clear and enforceable conditions that define and enforce Comcast's stated commitment to them.

One of those, they said, needs to be strong, structural separation between affiliate relations and retransmission consent negotiations, so that the combined company would not be able to force the affiliates to "accept unfavorable affiliation agreement provisions to obtain market-based retransmission consent payments."

That is according to the prepared testimony of Michael Fiorile, chair of the NBC TV Affiliates Board for a House hearing Thursday (Feb. 4) on the $30 billion joint venture/merger.

Fiorile did not suggest that there was any evidence the combined company would produce any of the concerns raised, but also suggested there needed to be safeguards in place to make sure they didn't, given that the deal is an "unprecedented combination involving two companies that create and distribute much of the best television programming in the United States."

Fiorile called the statements from Comcast in support of the network-affiliate model, echoed in talks between Comcast and the board, a "welcome start" to the process. He also said he welcomed Comcast ownership of the 10 NBC-owned stations, though that alone did not insure Comcast's continued investment in the network-station model.

He said that by the time the process was done, Comcast's general statements of support will have to be backed up with "clear, specific, documented and enforceable conditions defining what it means in practice for the new Comcast-controlled NBC to be "committed" to the network-affiliate model and the free, over-the-air television platform that has served the public so well for so long."

But while Fiorile said he was cautiously optimistic a set of appropriate conditions could be arrived at, he made it clear that there was no guarantee of support from the affiliates. "At such an early stage in the discussion," his testimony reads, "I cannot yet know with certainty whether these discussions will even result in a common understanding as to appropriate conditions, which, to state the obvious, will be a prerequisite to our support for this transaction."

Among the affiliate concerns that need to be addressed, he said, were: 1) the migration of NBC network content to cable properties or the under-nourishing of NBC network programming in favor of investments in cable channel fare: "The disappearance of popular news, sports, and entertainment programming from the NBC network would be unacceptably harmful," he said. 2) that Comcast could bypass the affiliates via a cable or Internet VOD model. "A cable operator with a television network...has unique incentives to undercut its affiliates to benefit its cable and Internet distribution outlets," he said; 3) that the combined company could use their leverage to "undermine affiliates' ability to negotiate fair retransmission consent agreements." On that score, Fiorile had a condition to propose: "We tentatively believe that a strong set of structural separation requirements for the subsidiaries of Comcast that will negotiate retransmission consent agreements and those that will administer the network's relations with affiliates can permit the combination to go forward."