The heads of Comcast and NBC Universal made their case before the House Judiciary Committee today that their $30 billion merger will be "good for consumers, innovation and competition."
The most skeptical reaction came not from members of Congress, who seemed most concerned about potential job losses in their districts and the impact on local sports programming. Instead, it was left to panelists from media watchdogs and labor unions to gnash their teeth against the proposed combination.
“This merger is a competitive nightmare, and promises made by Comcast that it will behave are worthless,” said Mark Cooper, director of research at the Consumer Federation of America. “It’s a horrible merger.”
“The consequences of the deal will undermine American democracy,” added Andrew Schwartzman, president of the Media Access Project.
Larry Cohen, president of the Communications Workers of America, criticized Comcast’s record on dealing with organized labor and said the deal was “not in the public interest,” given its “potential to limit growth, investment and jobs.”
The proposed deal between Comcast, the nation’s largest cable operator with 23 million customers, and media and entertainment giant NBC Universal was announced in December 2009. The Justice Department’s Antitrust Division is reviewing the deal.
Comcast CEO Brian Roberts told the committee that the combined company will be “more creative and innovative,” and highlighted a series of public interest pledges the company has made in writing about local, children’s and public interest programming. He also promised “no massive layoffs, no closing of facilities.”
Rep. Jerrold Nadler (D-N.Y.) was one of the few members to probe the antitrust issues raised by the merger. “We’re told this is essentially a vertical integration, not a horizontal combination....To what extent are the companies horizontal competitors?” he asked.
Cooper of the Consumer Federation argued that the two companies compete “head to head” for local advertising dollars in 12 markets where NBC owns an affiliate. He noted the deal will also give NBC an advantage when it negotiates for carriage on other cable networks, and will allow Comcast to bundle more content together.
But NBC CEO Jeff Zucker said that competition would remain “vibrant and healthy” and that there were seven other broadcast stations in each of the markets where NBC and Comcast do compete.
Jobs were a top concern for Rep. Hank Johnson (D-Ga.). “I find it hard to believe any merger could occur without jobs lost,” he said. He noted that Comcast said it “intends to preserve and enrich the output of local news...It’s very important that the public airwaves be filled with factual data”—including, he added, local sports.
That was an issue for Rep. Gregg Harper (R-Miss.) as well. “I’ve heard some concerns from organizations representing small cable companies...concerns that the proposed merger gives Comcast market power in negotiations, especially with regional sports networks,” he said.
Comcast’s Roberts assured him the merger would “not somehow change the dynamic between regional sports networks....For example, Comcast Sports South will remain the same.”
Rep. Sheila Jackson Lee (D-Texas) had one of the less favorable reactions to the merger. “I don’t know why I should be supportive,” she said, citing concerns about diversity, organized labor and the joint venture structure, which calls for Comcast to own 51% of the company, with General Electric, the current owner of NBC, retaining 49%.
“Diversity is an incredibly important part of what we’re trying to do,” said Zucker.
Rep. Howard Berman (D–Calif.) said the intellectual property aspect of the deal appealed to him. He hoped that the merger would help Comcast,a content distributor, better "understand the needs of content providers to protect their creativity.” And he noted that NBC’s Universal Studios is a major employer in his district.
As the hearing entered its fourth hour, Rep. Ted Poe (R-Texas) summed up many concerns. Poe told of a constituent who has had 77 visits from Comcast over the last 18 months to try to fix his cable. “Comcast is the only folks in town in part of my district. If you want to watch TV, it’s with Comcast,” he said. “I’m a believer in competition. It makes for better products, and consumers generally win.”
Poe continued, “I haven’t made up my mind [about the merger], but the concept of being able to deliver services and have content controlled by the same folks disturbs me.”
Roberts responded that he personally would look into the 77 visits and apologized. As for the merger, he said, “I believe it is pro-competitive because we’ll innovate as a company and make better programming.”