Dems Tee Up Comcast/NBCU Concerns

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

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