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McSlarrow: Free Press Crying 'Collusion' In Crowded, Competitive Marketplace - Broadcasting & Cable

McSlarrow: Free Press Crying 'Collusion' In Crowded, Competitive Marketplace

NCTA president defends TV Everywhere, says it would increase content online
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National Cable & Telecommunications Association
President Kyle McSlarrow issued an
extensive statement
Monday branding Free Press' suggesting that TV
Everywhere is collusion "strange" at best, and vigorously defending what he
called an effort to come up with a business model for compensating programmers
for online content.

In a conference call with reporters Monday, Free Press and other advocacy groups said they were not opposed to pay models for content, just not ones that included companies getting together to create an anticompetitive model of exclusive delivery of Internet content.

Free Press wants Congress and the Justice Department to
investigate TV Everywhere for possible collusion among its cable, satellite and
telecommunications participants.

"The call for an 'investigation' of TV Everywhere has
no factual or legal basis no matter how many times Free Press and its allies
repeat the words 'collusion,' 'cartel' and 'illegal.'  In the name of
protecting competition, they would actually reduce the amount of online content
available to consumers," he said.

McSlarrow suggested that TV Everywhere would increase the
content available online "at no extra charge," thus promoting the
broadband adoption the FCC is so keen on. "Free Press' theory seems to be
that TV Everywhere poses a threat Ëœto kill' online video competition because it
would only be available to cable and other pay TV subscribers.  But they
get it exactly backwards:  it is an effort to ensure more content than
ever is distributed over the Internet at no extra charge to consumers,"
said McSlarrow.   

"As much as Free Press would like to suggest that
something is radically different in this case, the TV Everywhere model would be
nothing more than content owners extending their copyright licenses to allow
multichannel video providers to make their programming available online."

He also suggested TV Everywhere was a work in progress.

"The fact that market participants are experimenting
with models in addition to fee or advertiser-supported models is not a sign of
anti-competitive conduct," he said. "It is a sign of a dynamic and
rapidly-changing market in which no one knows the ultimate outcome."

Responding to some of that cable industry rebuttal, Marvin
Ammori, author of a study released Monday alleging possible collusion in TV
Everywhere, said that what he and others were concerned about was that the
cable industry, by which he meant cable and satellite and telephone companies,
were colluding to transfer their multichannel model to cable in an effort to
foreclose "disruptive" competition from other online video delivery
models.

Free Press Policy Director Ben Scott said that his group was
not opposed to content companies charging for online content, though he had
some troubles with the ESPN 360 models. Instead, he said, it was the bundling
of content and making it only available to cable subscribers.

The groups cited news reports of incumbent phone
conversations and face-to-face meetings about TV everywhere that avoided paper
trails.

And on the topic of papers, Ammori said that they were not necessarily
against new business models, even ones that required getting together. But he
said that if that was necessary to save the cable industry, it should seek an
antitrust exemption from the government, as the newspaper industry did in proposing
to get together and put its content behind a pay wall. "The cable industry
should come to Congress or to the FTC and argue for an exemption to try to
preserve their business models," he said.

Comcast's name came up repeatedly in the Free Press press
conference Monday.

Ben Scott said their concern about TV Everywhere predated
the proposed merger of Comcast and NBCU, but that the deal put an exclamation
point on TV Everywhere that Scott says wasn't there before.

"We have been working on TV Everywhere since before we
knew there was going to be a merger," says Scott. "From our
perspective the two are separate issues, however in the context of the merger
review, the TV Everywhere question becomes all the more urgent because with
Comcast/NBC you have the combination that would have maximum incentive to
preserve the traditional distribution model of cable TV by leveraging its new
content assets."

McSlarrow in his rebuttal said the TV Everywhere model is
essentially independent, one-on-one negotiations between content owners and
distributors, the sort of vertical deals he says are like "any arrangement
between a content company and a distributor."

Ammori countered that even that one-on-one dealing could be
worth investigating given the market power of cable operators. But he said that
was not nearly as problematic as horizontal agreements. He said it would be
"very difficult" for Comcast to offer its Xfinity service
exclusively in its regions and not compete in other regions "unless it
also knows that other cable operators won't compete in the Comcast
region."

He said it would be tough to set pricing terms unless others
were walking in lockstep.

In essence, he was saying that for the interlocking vertical
agreements to work, there would de facto have to be some horizontal agreements
not to compete.

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