Skeptical lawmakers led by Sen. Al Franken, a freshman Democrat from Minnesota, clashed with top executives at Comcast (CMCSA) and NBC Universal over their claim that the companies' proposed $30 billion mega-merger would benefit the public.During two Congressional hearings Thursday, Comcast CEO Brian Roberts and NBC Universal CEO Jeff Zucker repeatedly faced stiff questions over the merger's impact on NBC's free programming, the national cable TV market and the nascent Internet video market. But despite the grilling, no lawmaker came out in favor of blocking the deal.
Comcast wants to buy a controlling stake in NBC Universal from GE (GE), the industrial conglomerate, in a transaction that would value the new company at $30 billion. The deal would move Comcast, the nation's largest cable company, closer to its long-coveted goal of a rich content factory paired with a vast distribution network.
Echoing critics of the merger, Franken said the deal would place too much media power in one company's hands. "When the same company that produces the programs runs the pipes, we have reason to be nervous," Franken said, adding that he's "worried that this merger could set off another round of media consolidation."
Reject The Deal, Or Impose Conditions?
Mark Cooper, director of research at the Consumer Federation of America, testified that the deal would carry "a bevy of anti-competitive effects that will result in higher prices and fewer choices for consumers." If the deal goes through, Cooper said, the "ugly business of the cable cartel will be extended to the Internet."
Cooper joined Andrew Jay Schwartzman, president of Washington, D.C.-based Media Access Project, a public-interest law firm, in calling for Congress to block the deal. "The merger has so many anti-competitive effects that they just can't be fixed," Cooper said. "They can't be unraveled."
But the farthest lawmakers would go was to call for "strong conditions" on the deal, indicating that for now, it looks likely to pass. Sen. Herb Kohl, the Wisconsin Democrat, dismissed Comcast's voluntary "commitments" as insufficient. "Should the agencies decide to allow this merger, we believe it is essential they insist on strong conditions to protect consumers," Kohl said.
Kohl expressed concern that Comcast could move NBC's free programming to cable or withhold programming from rival cable companies. But both Roberts and Zucker repeatedly denied that was their plan.
Answers Not 'Good Enough' For Franken
In one of the most heated exchanges of the day, Franken accused Roberts of either dishonesty or incompetence during a discussion of whether the cable giant intends to follow the FCC's program access and carriage rules. The rules are designed to keep the cable market fair. Roberts visited Franken last week and pledged that the company would follow the rules, the senator said.
But then Franken cited a previous Comcast legal argument saying the FCC was not "equipped or constitutionally empowered" to enforce program access, carriage and pricing issues. He demanded Roberts reconcile the apparent inconsistency.
"You told me to my face that these rules would protect consumers," Franken said. "But your lawyers had just finished arguing in front of the commission that it would be unconstitutional to enforce those rules. How are the people of Minnesota to trust you when you come in and say to my face something you know is not true, or that you don't know -- I don't know which one is worse -- how are the people of Minnesota supposed to trust you?"
Turning to Zucker, Franken flashed a smile at the man who now runs NBC, where Franken spent many years as a comedy writer and performer. "Mr. Zucker, we're friends," Franken said. "I've worked for a number of years with your wife Karen, who is lovely, at Saturday Night Live. I loved my time at NBC. I want you to know that."
After that set-up, Franken denounced what he described as NBC's failure to live up to promises it made in the 1990's to ensure that independent shows remain on NBC after the FCC scrapped restrictions limiting how much programming broadcast networks could own. Referring to the "commitments" Comcast and NBC Universal have made regarding the merger, Franken said, "You'll have to excuse me if I don't trust these promises, and that is from experience in this business."
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