The hearings just wrapped up on the hill. Mr. Roberts and Mr. Zucker, for the most part, did a good job presenting their case, despite the flogging Al Franken (D, MN) give Brian on Comcast's seemingly contradictory behavoir on program access and program carriage in the afternoon session.
Kudos to Colleen Abdullah of WOW for patiently, calmly and without hyperbole, explaining the position of the small cable operator/competitor. It took a fair amount of guts for her to sit at the same table with Mr. Roberts and Zucker and point out the issues that the entire industry is dealing with: program carriage demands (including tiering restrictions); retransmission consent; smaller operators paying “up to 20% more” for the same channels as larger operators; the squeezing of margins as a result of programming costs increasing faster than they can raise rates to consumers; and the lack of pricing transparency.
Although he was not a witness at the morning House Communications and Internet Subcommittee hearing, Andy Schartzman from the Media Access Project was on top of the facts and presented his arguments cogently in the afternoon before the Senate Judiciary Antitrust hearing. As usual, Mark Cooper from the Consumer Federation of America was big on sweeping generalities without presenting many numbers to back up his case - kind of scary for a guy with the word “Research” in his title. Additionally, he does not seem to grasp what TV Everywhere is all about – a value-add for video subscribers and not a product designed for cable operators to get into the OTT video business. Cooper even brought up a la carte!
Unfortunately a two to two and a half hour hearing in front of each group with each legislator getting only 5-7 minutes to question the witnesses does not provide the opportunity for the depth of discussion needed to really dig into all of the issues in the matter, while only a few of the legislators seemed to have a really good grasp on the issues. House and Congressional staffers will be working hard to sort though all of the testimony and written follow-ups that were requested. There will definitely be more hearings, and I’ll be staying tuned to see what conditions get placed on the merger.
BTW – For all of you folks at Turner, Senator Arlen Specter (D, PA) loves TCM!
Thursday, February 4, 2010
Wednesday, February 3, 2010
Comcast/GE Head to the Hill
Tomorrow is a big day for Brian Roberts and Jeff Zucker as they head back to Washington to appear at two back-to-back hearings. In the morning they are slated for the House Communications and Internet Subcommittee, while the afternoon is the Senate Judiciary Antitrust Subcommittee. Also slated to testify at both hearings is Colleen Abdoulah President and CEO of WOW (Wide Open West) and Mark Cooper of the Consumer Federation of America. It will be interesting to see if those opposed to the merger get beyond the standard “big is bad” rhetoric that is the standard backbone of their opposition to explain exactly what their issues are.
In a world where the big keep getting bigger in order to “gain scale”, there is no question that it has become increasingly difficult for the small guys to compete. Comcast has been quite public in stating that the reason they are doing the merger is to gain scale in the programming realm. Content is still king, and those who own the content and access to it are in a position to reap the greatest profits.
Perhaps of greatest concern to WOW and other competitors like RCN and Knology, not to mention Dish Network and DirecTV, is how Comcast sets the rates for its own content in terms of the rates that their programming arm charges their cable arm. It is no secret that MFNs for the largest players in the distribution game often dictate higher rates for smaller operators, including competitors. This often leaves smaller companies feeling like they are subsidizing the larger players. A scenario where a programming entity setting their rates based on what their affiliated distribution company (which, by the way, is the largest in the market) agrees pays for that content justifiably raises concerns about the unfairness of an “out of one pocket in into another” arrangement. There is sure to be even more concern now that retransmission consent is involved.
Curiously absent from list of witnesses at tomorrow’s hearings is anyone from the satellite or telephone company community. The NBC broadcast affiliate group has already suggested strings, and there is no doubt that other parties will be joining in as the regulatory approval process proceeds. There may be little doubt that the merger will ultimately be approved. However, the larger question may well be what strings will be attached and, if one is to look at the merged Comcast/GE as Jonathon Swift’s Gulliver, whether the strings will be strong enough to hold the new media giant down for long.
In a world where the big keep getting bigger in order to “gain scale”, there is no question that it has become increasingly difficult for the small guys to compete. Comcast has been quite public in stating that the reason they are doing the merger is to gain scale in the programming realm. Content is still king, and those who own the content and access to it are in a position to reap the greatest profits.
Perhaps of greatest concern to WOW and other competitors like RCN and Knology, not to mention Dish Network and DirecTV, is how Comcast sets the rates for its own content in terms of the rates that their programming arm charges their cable arm. It is no secret that MFNs for the largest players in the distribution game often dictate higher rates for smaller operators, including competitors. This often leaves smaller companies feeling like they are subsidizing the larger players. A scenario where a programming entity setting their rates based on what their affiliated distribution company (which, by the way, is the largest in the market) agrees pays for that content justifiably raises concerns about the unfairness of an “out of one pocket in into another” arrangement. There is sure to be even more concern now that retransmission consent is involved.
Curiously absent from list of witnesses at tomorrow’s hearings is anyone from the satellite or telephone company community. The NBC broadcast affiliate group has already suggested strings, and there is no doubt that other parties will be joining in as the regulatory approval process proceeds. There may be little doubt that the merger will ultimately be approved. However, the larger question may well be what strings will be attached and, if one is to look at the merged Comcast/GE as Jonathon Swift’s Gulliver, whether the strings will be strong enough to hold the new media giant down for long.
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