ACA Chairman: Comcast/NBCU Would Have More Power Than Any Company Deserves

Argues proposed joint venture would reinforce discrimination against smaller operators

By John Eggerton -- Broadcasting & Cable, 7/26/2010 5:18:24 PM

Talking to a roomful of small and medium-sized cable operators, American Cable Association Chairman Steve Friedman said it was time for the discrimination against smaller operators to stop, including arguing that a Comcast/NBCU merger has more clout "than any one company deserves."

In a speech at a Washington policy update session at the Independent Show in Baltimore, Friedman said that whether the issue is network neutrality, retransmission consent reform, broadband reclassification or the Comcast-NBCU merger, the problem boils down to big vs. small.

"Our members -- and your customers -- routinely pay a disproportionate amount in the cost and impact of regulation and in the direct cost of broadcast and cable programming. And it's just because we are smaller," he said.

The Independent Show combines the American Cable Association and the National Cable Television Cooperative, the latter which acts as a collective programming buying consortium.

"It's time for the discrimination to stop," he said, taking aim at local marketing agreements (LMA's) and shared services agreements (SSA's), as ACA has done in comments to the FCC on retransmission consent reform. "The intent here is clear: Broadcasters are using LMAs and SSAs to exercise even market power over ACA members in a manner that the duopoly rule was established to prevent. And by doing so, they are charging ACA members and your customers discriminatory retransmission consent rates," he said.

ACA President Matt Polka told the crowd that the American Television Alliance (ATVA) has been helping drum up the "dear colleague" letters calling on the FCC to open a rulemaking on retrans reform, and urged ACA and NCTC members to contact their legislators as well. ACA joined with Time Warner Cable, telcos, satellite companies and others to form ATVA to push for FCC action.

On the 800-pound Peacock in the room, Friedman said a combined Comcast and NBCU would just increase the disparity in size and power between big and small. "I'm sure every operator in this room wishes it had the size, leverage and clout of each of these companies," he said. "But when you put these two companies together, that's more clout than any one company deserves, particularly when dealing with smaller companies like ours and our customers who have to pay for the disparity in our size and leverage.

He said that just as Comcast and NBCU have pledged to NBC stations to maintain a barrier between broadcast affiliation contracts and retrans deals, and not to discriminate against affiliates of the other Big Four nets, it must "take the step further" to commit "ending discrimination" against ACA members in retrans and programming deals.

ACA has yet to spell out exactly what conditions would make the deal acceptable, but they will have to go beyond adhering to program access rules and/or agreeing to independent arbitration.

In a policy session following Friedman's speech, ACA VP of Public Affairs Ross Lieberman said those rules do not keep broadcast signals on the air during disputes and it is not clear whether they would apply to online video distribution. He also said that outside arbitration can cost hundreds of thousands or even millions of dollars that smaller operators simply cannot afford.

Saying nothing gets done in Washington without crisis and consensus, Rhod Shaw of Alpine Group, a member of ACA's lobbying team, suggested that the Comcast/NBCU merger's upside was that it gave ACA and NCTC members a vehicle for articulating a host of problems, and that the highly-publicized retrans battles at the end of last year could be the crisis that a new consensus (like the eclectic ATVA) forms around.

The advice of the lobbyist panel assembled included that Congress' telecom policy role through the end of the year will be more likely in how it influences the FCC rather than any legislation, given the dwindling days to get anything done legislatively before the elections.