[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
COMPETITION IN THE MEDIA AND ENTERTAINMENT DISTRIBUTION MARKET
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 25, 2010
__________
Serial No. 111-121
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
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COMMITTEE ON THE JUDICIARY
JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California LAMAR SMITH, Texas
RICK BOUCHER, Virginia F. JAMES SENSENBRENNER, Jr.,
JERROLD NADLER, New York Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina ELTON GALLEGLY, California
ZOE LOFGREN, California BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas DANIEL E. LUNGREN, California
MAXINE WATERS, California DARRELL E. ISSA, California
WILLIAM D. DELAHUNT, Massachusetts J. RANDY FORBES, Virginia
STEVE COHEN, Tennessee STEVE KING, Iowa
HENRY C. ``HANK'' JOHNSON, Jr., TRENT FRANKS, Arizona
Georgia LOUIE GOHMERT, Texas
PEDRO PIERLUISI, Puerto Rico JIM JORDAN, Ohio
MIKE QUIGLEY, Illinois TED POE, Texas
JUDY CHU, California JASON CHAFFETZ, Utah
LUIS V. GUTIERREZ, Illinois TOM ROONEY, Florida
TAMMY BALDWIN, Wisconsin GREGG HARPER, Mississippi
CHARLES A. GONZALEZ, Texas
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SANCHEZ, California
DEBBIE WASSERMAN SCHULTZ, Florida
DANIEL MAFFEI, New York
[Vacant]
Perry Apelbaum, Majority Staff Director and Chief Counsel
Sean McLaughlin, Minority Chief of Staff and General Counsel
C O N T E N T S
----------
FEBRUARY 25, 2010
Page
OPENING STATEMENTS
The Honorable John Conyers, Jr., a Representative in Congress
from the State of Michigan, and Chairman, Committee on the
Judiciary...................................................... 1
The Honorable Lamar Smith, a Representative in Congress from the
State of Texas, and Ranking Member, Committee on the Judiciary. 5
The Honorable Zoe Lofgren, a Representative in Congress from the
State of California, and Member, Committee on the Judiciary.... 7
The Honorable Gregg Harper, a Representative in Congress from the
State of Mississippi, and Member, Committee on the Judiciary... 7
The Honorable Henry C. ``Hank'' Johnson, Jr., a Representative in
Congress from the State of Georgia, and Member, Committee on
the Judiciary.................................................. 7
The Honorable Adam B. Schiff, a Representative in Congress from
the State of California, and Member, Committee on the Judiciary 8
WITNESSES
Mr. Brian L. Roberts, Chairman and CEO, Comcast Corporation,
Philadelphia, PA
Oral Testimony................................................. 9
Joint Prepared Statement....................................... 13
Mr. Jeff Zucker, President and CEO, NBC Universal, New York, NY
Oral Testimony................................................. 10
Joint Prepared Statement....................................... 13
Ms. Jean Prewitt, President and CEO, Independent Film and
Television Alliance, Los Angeles, CA
Oral Testimony................................................. 29
Prepared Statement............................................. 31
Mr. Thomas W. Hazlett, Professor of Law and Economics, George
Mason University School of Law, Arlington, VA
Oral Testimony................................................. 38
Prepared Statement............................................. 40
Dr. Mark Cooper, Ph.D., Director of Research, Consumer Federation
of America, Washington, DC
Oral Testimony................................................. 43
Prepared Statement............................................. 45
Mr. Larry Cohen, President, Communications Workers of America,
Washington, DC
Oral Testimony................................................. 58
Prepared Statement............................................. 59
Mr. Andrew Jay Schwartzman, President and CEO, Media Access
Project, Washington, DC
Oral Testimony................................................. 72
Prepared Statement............................................. 74
Mr. Marc H. Morial, President and CEO, National Urban League, New
York, NY
Oral Testimony................................................. 82
Prepared Statement............................................. 84
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Prepared Statement of the Honorable John Conyers, Jr., a
Representative in Congress from the State of Michigan, and
Chairman, Committee on the Judiciary........................... 3
APPENDIX
Material Submitted for the Hearing Record........................ 151
COMPETITION IN THE MEDIA AND ENTERTAINMENT DISTRIBUTION MARKET
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THURSDAY, FEBRUARY 25, 2010
House of Representatives,
Committee on the Judiciary,
Washington, DC.
The Committee met, pursuant to notice, at 10:04 a.m., in
room 2141, Rayburn House Office Building, the Honorable John
Conyers, Jr. (Chairman of the Committee) presiding.
Present: Representatives Conyers, Berman, Nadler, Lofgren,
Jackson Lee, Waters, Cohen, Johnson, Pierluisi, Quigley, Chu,
Gutierrez, Gonzalez, Wiener, Schiff, Sanchez, Maffei, Smith,
Sensenbrenner, Coble, Goodlatte, Lungren, Issa, Forbes, Franks,
Gohmert, Poe, Chaffetz, Rooney, and Harper.
Staff present: (Majority) Perry Apelbaum, Staff Director
and Chief Counsel; Christel Sheppard, Counsel; (Minority) Sean
McLaughlin, Chief of Staff and General Counsel; and Stewart
Jeffries, Counsel.
Mr. Conyers. The Committee will come to order.
We are in a difficult situation in terms of our economy. We
are coming out of a financial crisis that was triggered by the
prime mortgage--subprime mortgage meltdown. We have invested
over $1.5 trillion in the economy, finally turning toward
creation of jobs.
I remember that since the Clinton administration, there has
been consolidation, takeover and mergers unparalleled in
American economic history, only slightly down-turned in number
and scope over the last several years. And I must say that I
have always been alarmed about these combinations that have
developed in our economy. I have never thought that the
antitrust division had operated with any real effectiveness.
And I start off this discussion this morning with the
suspicion that there are cases in which vertical mergers can be
more dangerous than horizontal mergers and that the role of the
Internet and--versus the role of cable is something we have got
to begin to look at on a far larger basis than the one proposed
merger before this Committee this morning.
And, of course, I have never yet entertained a merger
discussion in which there was complete assurance that there
would be no diminution of jobs, never. And never has that ever
happened. There was always job loss.
There are now places in Michigan in which 30 percent of its
population is unemployed. There are places that would meet the
definition of a depression before the crisis that caused so
much angst. And now we have a proposal before us that I am
approaching very carefully.
And I will put my statement in the record, make it
available, and I would like our Ranking Member, who has worked
with me more closely and in a way without compromising his own
point of view, but where he and I and this Committee could
reach agreement as we did with the considerations that were on
the floor just last night.
I wanted to thank him and the Committee for the close
scrutiny that we gave each other's approach to these very
important problems. And I recognize Mr. Smith of Texas, the
Ranking Member.
[The prepared statement of Mr. Conyers follows:]
__________
Mr. Smith. Thank you, Mr. Chairman. And I appreciate those
very generous words.
I think you were surprised that I supported you last night
on the House floor, but as you just mentioned, there are times
and often times when we do work together, and that is a source
of real satisfaction to me, and I think it is good for the
Committee, as well. And I thank you for all the courtesies you
have extended us on this side.
Mr. Chairman, vigorous unimpeded competition sustains our
economy and keeps it strong. It leads to innovative products
that keep prices low and better our lives. Today's hearing
gives us the opportunity to examine the proposed merger of
Comcast and NBC Universal, a combination that would create one
of the world's largest entertainment companies.
The combined company would own significant assets in video
distribution, video production, movie production, and the
emerging world of Internet video programming. However, this
proposed merger is not completely typical of the mergers that
this Committee and the Department of Justice usually review.
Normally, we look at mergers between head-to-head
competitors, such as Delta-Northwest Airlines and XM and
Sirius. This hearing is more akin to the Live Nation and
Ticketmaster deal that this Committee reviewed almost exactly a
year ago.
Both Comcast and NBC Universal own some video production
assets. However, the more compelling question is whether a
vertically integrated company that has a significant hand in
video production and distribution can use its leverage in one
area to raise prices in another. In other words, can a combined
company use Comcast's significant presence in cable
distribution to limit its rival's access to NBC's programming?
Comcast argues--and argues forcefully--that the Federal
Communications Commission's carriage rules does prevent it from
discriminating against its rivals in such a way. And that, I
might add, Mr. Chairman, is a persuasive argument.
Finally, the combined company will still control one of the
preeminent news reporting industries in the world, NBC News. I
raised this concern in other circumstances, and I continue to
worry that media consolidation contributes to the persistent
problem of media bias.
All that said, though, Comcast and NBC Universal have made
significant commitments in their public interest filing with
the SEC and in earlier hearings on Capitol Hill. Those
commitments lead me to believe that this merger could, in fact,
help consumers.
In addition, past experience, such as the ownership of Time
Warner Cable by Time Warner has not led to the dire
consequences that some opponents suggested. The fact that Time
Warner has now separated itself from Time Warner Cable might
cause one to consider whether this is a wise business venture.
However, that is less an issue of antitrust law and public
policy than it is a question for Comcast shareholders.
Mr. Chairman, I would like to thank our witnesses for being
here today. And of course, I look forward to hearing their
testimony momentarily. Yield back.
Mr. Conyers. Thank you very much.
Did any Members on this side of the dais wish to make any
opening comments?
Ms. Lofgren. Mr. Chairman? Mr. Chairman?
Mr. Conyers. Zoe Lofgren?
Ms. Lofgren. I will be very quick. First, I want to thank
you for holding this hearing. I think it is very important. And
there are a multitude of issues presented in the merger. I
think we will learn a lot by the discussion today, but a very
particular interest to me is the potential or questions or
issue, perhaps, is a better, more neutral way to pose it of
whether this merger will affect the growth of TV delivery over
the Internet and whatever impact this merger could have on the
whole net neutrality challenge that faces the country.
And I am hoping that the witnesses will address these
issues. And in the interest of hearing from them soon, I will
stop now and yield back with great thanks.
Mr. Conyers. Gregg Harper?
Mr. Harper. Thank you, Mr. Chairman. I move to strike the
last word.
Mr. Conyers. Gentleman is recognized.
Mr. Harper. Mr. Ralph Roberts, who is with us today,
started the Comcast family in my home state of Mississippi. Mr.
Roberts founded American Cable Systems, now Comcast, in 1963 in
Tupelo, Mississippi, in an effort to provide content to
consumers in a small valley town that could not receive a
decent signal from antennas in Memphis, Tennessee.
Mr. Roberts and others involved in launching American Cable
Systems took a risk to provide consumers with a much wanted
source of entertainment. Comcast is now taking another risk to
provide their customers with an even better product.
Over the years, the Roberts family has built their company
into a very successful business. Now Comcast is making an
effort to expand on the American dream of building a successful
company from the ground up by merging with NBC Universal.
My hope is that the merger will receive a thorough and
speedy examination and that the Comcast family is successful in
their future endeavors to provide quality service to their
customers.
With that, Mr. Chairman, I yield back.
Mr. Conyers. Subcommittee Chairman Hank Johnson?
Mr. Johnson. Thank you, Mr. Chairman, for holding this very
important hearing today.
The media and entertainment distribution market is
continually evolving to meet consumer demand and new
technology. Neither Congress nor the Department of Justice
should stop progress, but as Chair of the Subcommittee on
Courts and Competition Policy, I believe we must ensure that
mergers and consolidation in this market do not harm
competition.
The specific merger between Comcast and NBC raises
important questions about what kind of control the combined
entity would have over distribution and programming and whether
the new entity could leverage the acquisition to restrict
access to NBC programming on the Internet.
I am also concerned about the possibilities that jobs will
be lost in the transaction. I understand that Comcast has
stated that no jobs will be lost in the merger, but I find it
hard to believe that any merger can occur without some job
loss.
In addition, with any media consolidation--excuse me--there
is also a risk that local voices will be lost. I understand
that Comcast has made a commitment in its public interest
filing that it intends to preserve and enrich the output of
local news, local public affairs, and other public programming
on NBC owned by owned and operated stations.
I hope to hear the witnesses today specifically discuss
what steps they plan to take to ensure that there will be no
impact on journalistic independence of the information that
consumers receive. Very important that our airwaves--our public
airwaves be filled with factual data for people to make their
own conclusions about situations that are occurring, as opposed
to just simply a lot of editorial entertainers posing as news
people.
I also want to hear the parties to the merger discuss how
consumers will have increased access to diverse and independent
programming, including sports programming, a matter that is
close to the heart of my compatriot, Mr. Cohen.
In particular, I am concerned that Comcast will be able to
bundle its regional sports network in Atlanta with NBCU's
popular programming to drive up costs for other pay television
providers. Such an action would limit access to local sports
teams and hurt consumers who will ultimately bear the increased
costs.
And with that, Mr. Chairman, I will yield back.
Mr. Conyers. Thank you.
Adam Schiff?
Mr. Schiff. Thank you, Mr. Chairman. And I very much
appreciate your scheduling this hearing. I have a great
interest in the subject matter, not the least of which between
NBC and Universal have been either headquartered in or adjacent
to my district ever since I have been to Congress and long
before I got there.
So it will greatly affect my constituents. I will be very
interested to hear the panel's thoughts in terms of the impact
on jobs, and I appreciate the time I have had to discuss the
issue with Mr. Zucker, and I understand the vertical nature of
the proposed merger and was very pleased to hear that there are
no intended job cuts as a result of the merger.
I think that one of the issues I will be interested in
exploring--and I don't know that it has been as much on the
table as some of the others--is the impact on intellectual
property and the protection of intellectual property, another
issue of key concern to my constituents and people all around
the country.
I think there may be a synergy here that could be very
constructive in the sense that NBC has always been concerned
about intellectual property, being content creators. The
pipeline companies have often had different perspectives, and
at times, the content makers and the content deliverers have
not always seen the issue eye to eye.
One potential benefit from the merger may be that it brings
the pipeline much more into the business of protecting
intellectual property because it will have an interest in
making sure it protects the content of NBC to a greater degree
than perhaps it did as a separate entity. So I will be
interested to hear the panel's thoughts of whether that
conjecture is right or whether I am completely off the mark.
And so I greatly look forward to the testimony today and
appreciate, Mr. Chairman, your putting this distinguished panel
together, and yield back the balance of my time.
Mr. Conyers. We welcome witnesses Andrew Jay Schwartzman,
president of Media Access Project, Larry Cohen, president of
Communications Workers of America, Dr. Mark Cooper, director of
research, Consumer Federation of America, Ms. Jean Prewitt,
Independent Film and Television Alliance, Mr. Jeff Zucker,
president, CEO, NBC Universal, and our first witness, Mr. Brian
Roberts, chairman and CEO of Comcast.
He brings his father with him today. And from the time his
father started the company that was referred to by our
colleague from Mississippi, it is now a Fortune 100 company, 23
million customers, 100,000 employees, and in addition, our
first witness serves as a member of the board of directors of
the National Cable and Telecommunications Association.
All statements will be entered into the record.
And, Mr. Roberts, we welcome you this morning.
TESTIMONY OF BRIAN L. ROBERTS, CHAIRMAN AND CEO, COMCAST
CORPORATION, PHILADELPHIA, PA
Mr. Roberts. Thank you, Mr. Chairman and Members of the
Committee. It really is a privilege to come here today to talk
about Comcast's planned joint venture with GE regarding NBC
Universal.
As Congressman Harper nicely stated, my father, Ralph,
indeed started Comcast almost a half of a century ago with a
single small cable system. Together we have been able to build
Comcast into a national cable, broadband, and communications
company employing over 100,000 people today.
In proposing to combine with NBC Universal, we are taking
the next step in our improbable journey. This is indeed an
important moment in Comcast's history.
So let me first briefly summarize the transaction. Under
our agreement, Comcast will become the majority owner of NBC
Universal; and will create a new venture that combines NBCU's
broadcast TV, cable programming, movie studio, and theme park
businesses with Comcast's limited video programming channels.
Comcast will hold 51 percent of the venture and manage it,
while 49 percent will remain with GE.
The transaction puts two great American media and
entertainment companies under one roof. It will help to deliver
more diverse programming to millions of households, and it will
also help to accelerate a truly amazing digital future for
consumers.
Together, Comcast and NBCU can help deliver the anytime,
anywhere, multiplatform video experience Americans want. In
combination, we will be a more creative and innovative company.
And our success will stimulate our competitors to be more
innovative, too. So this joint venture will be good for
consumers, innovation and competition.
To leave no doubt about the benefits of the new NBCU, we
have made a series of public interest commitments in writing
detailing how we will bring more local programming, more
children's programming, and more diverse programming on more
platforms.
We have also made commitments to reassure our competitors
that we will compete fairly in the marketplace. Let me offer
two examples.
First, we volunteer to have the key components of the
program access rules apply to our retransmission negotiations
for NBC stations, even though those rules have never applied to
retransmission consent negotiations.
Second, we want independent programmers with quality and
diverse content to know we are committed to help them reach an
audience, so we have committed to add at least two new
independently owned cable channels to our systems every year,
beginning in 2011.
Bringing NBCU and Comcast together is a primarily vertical
combination. There is no significant overlap between the two
companies. A vertical combination generally poses fewer
competitive concerns. This means no massive layoffs, no closure
of facilities, nothing to produce hundreds of millions of
dollars of synergies.
That is why, as has been noted, some on Wall Street did not
initially fall in love with this deal right away. But it is
also why we believe Washington can--because we will grow these
great American businesses over the long term and make them more
successful, not cut them.
Congress has recognized the benefits of vertical
integration before and adopted rules in 1992 to address the
potential risks. At that time, there was almost no competition
to cable, and more than half of all the channels were owned by
cable companies, so Congress created program access and program
carriage rules to ensure that a company which owns both cable
content and distribution cannot treat competitors unfairly.
Those rules have worked in the past and will continue to
work. And we are willing to discuss with the FCC having the
program access rules bind us even if they were to be overturned
by the courts.
In the past decade, Comcast has come to Washington twice to
seek merger approvals, when we acquired cable systems from AT&T
and Adelphia. Each time, we explained how consumers would
benefit, and in each case, I believe we have delivered.
We have spent billions of dollars upgrading cable systems
to make them state-of-the-art. We created Video On Demand,
which our customers have used 14 billion times. And from a
standing start 4 years ago, we now give millions of Americans
their first real competitive choice of phone provider.
We have also created thousands of jobs and promoted
diversity in our workforce.
Once again, we have described how consumers will benefit,
and I want to assure you that we plan to deliver.
Mr. Chairman, we are asking for the opportunity to make one
of the great icons of American broadcast and communications
part of the Comcast family. We promise to be reliable stewards
for the national treasures of NBC and NBC News. It is a
breathtaking and humbling moment in our history, and we hope to
have your support.
Thank you.
__________
Mr. Conyers. Thank you.
I want to make sure that everyone knows that Professor
Thomas Hazlett is here from George Mason University. He was the
chief economist at the FCC in 1991.
Welcome, sir.
We now call on Jeffrey Zucker, president, chief executive
officer of NBC, at one time the youngest executive producer of
``The Today Show'' and ultimately became president of NBC
Entertainment and was promoted to his current position in 2007.
Welcome to the hearing, sir.
TESTIMONY OF JEFF ZUCKER, PRESIDENT AND CEO,
NBC UNIVERSAL, NEW YORK, NY
Mr. Zucker. Thank you, Mr. Chairman.
Mr. Chairman, Members of the Committee, thank you for the
opportunity to testify today. As the president and CEO of NBC
Universal, I am proud to lead an iconic media company shaped by
two great American brands, NBC and Universal, and I am grateful
for the opportunity to tell you how the proposed venture
between Comcast and General Electric will help NBC Universal
thrive and also benefit our employees, the creative community,
the goals of diversity, and our ability to meet the demands of
21st century American consumers.
In today's intensely competitive and dynamic media markets,
this deal is critical to realizing these benefits. That is what
makes me so excited about this deal with Comcast. At a time of
tremendous change and fierce competition in the media
marketplace, Comcast is committed to invest at NBC Universal
and to share its delivery expertise and innovative vision. We
need to take advantage of new digital distribution
capabilities, On Demand, online, mobile, and beyond, to be a
leader in delivering content to consumers where they want it,
when they want it, and how they want it.
Comcast's investment in NBCU, married with its history of
delivery innovation and technological vision, will help us meet
the demands of the 21st-century consumer. In short, two words--
investment and innovation--capture the benefits that Comcast
will bring to NBCU.
Let me also say a few words about key issues that I know
are important to Members of this Committee, first, competition.
This is not your father's media market. Less than 40 years ago,
three companies enjoyed 90 percent of all television viewing.
Today, the world could not be more different.
Each of the five largest media companies in America now
only account for between 5 percent and 10 percent of all
viewing. And a multitude of smaller competitors actually
account for approximately half of all television viewing.
The new NBCU's cable channel business, where we will add
Comcast networks, will be ranked fourth by revenue among owners
of national cable networks. But that is only part of the
picture.
People today choose not only between broadcast and cable
television, but also increasing look to the Internet, Xbox,
iPhone, PlayStation, and so many other new platforms and
technologies for their media choices. There will be more change
in our space in the next 5 years than there has been in the
last 50.
This deal will not change this fundamental competitive
dynamic or the extraordinary rate of technological change, but
it will help NBC Universal compete in the new media world.
Second, diversity. I have made diversity one of my top five
strategic priorities as CEO, and I am proud of our record at
NBC Universal. We have an extraordinarily diverse employee
population and a diverse executive team, and I see the benefits
of this diversity every day.
Third, jobs. Comcast's investment in NBCU means that our
workforce will not face the layoffs typical of so many mergers.
Moreover, Comcast is committed to our existing labor-management
relationships and will honor all of our collective bargaining
agreements. I see a brighter future not just for the talented
employees at NBCU who produce our high-quality content such as
the Olympics we have been so proud to air over the last 2
weeks, but also for other creators, as NBCU invests in more and
better programming and spurs our competition to do the same.
Fourth, intellectual property protection. This deal
provides an important opportunity to address critical concerns
about piracy and digital theft, an issue that this Committee
knows all too well.
Fifth, over-the-air broadcasting. Comcast's investment also
means that we can reinvigorate the broadcast side of the
business. Comcast's commitment to over-the-air broadcasting has
been widely underappreciated, but is great news for the
American public that we serve. Comcast's commitment to over-
the-air broadcasts leads to a more vibrant NBC and Telemundo,
for the benefit of our viewers nationwide.
Let me close by saying how grateful I am for GE's excellent
stewardship of NBC Universal. GE has invested more than $22
billion since 2000 and built NBCU into the diversified and
vibrant broadcast, film, cable programming, and media company
that we are today. With this deal, GE will now have billions of
dollars to invest in new technologies and jobs in its core
businesses.
I could not be more excited about the future of this
company for the NBCU family, including our employees, as well
as our audience. The investments in innovation this deal will
bring are essential if we are to remain a vigorous competitor
in the 21st-century media market and a growing source of high-
wage jobs in an economy starved for employment.
Thank you for the opportunity to testify, and I look
forward to any questions that this Committee may have.
[The joint prepared statement of Mr. Roberts and Mr. Zucker
follows:]
Joint Prepared Statement of Brian L. Roberts
and Jeff Zucker
__________
Mr. Conyers. Our next witness is Jean Prewitt, who has been
a lawyer, senior vice president, general counsel, United
International Pictures, foreign distribution affiliate of
Paramount, Universal and MGM Studios, and since 2000 has been
president and CEO of Independent Film and Television Alliance.
Welcome.
TESTIMONY OF JEAN PREWITT, PRESIDENT AND CEO, INDEPENDENT FILM
AND TELEVISION ALLIANCE, LOS ANGELES, CA
Ms. Prewitt. Thank you, Mr. Chairman and Members of the
Committee.
In an era of media giants, I am here to speak for the
independents. The independents are the workhorses of this
industry. They produce 70 percent of the feature films. They
account for the vast majority of jobs in that sector. They
introduce new talent to the industry, and they are
distinguished by the fact that they finance their product from
outside the five major studios.
Since 1982, IFTA and its members have produced, distributed
and financed more than 63 percent of the Academy Award best
pictures. This season's--this year's award season has already
honored ``The Hurt Locker,'' ``Precious,'' and ``The Last
Station,'' and we expect those honors to continue over the next
week.
The issue before us today is whether America will continue
to be informed, entertained, and challenged by varied voices.
The answer matters. Independent TV series and films have
changed how Americans think, how we live, and how we structure
our society.
``The Cosby Show'' was produced by an independent, and it
changed racial attitudes. ``Gandhi,'' ``Crash,'' and ``Million
Dollar Baby'' prompted public discussion of important issues,
and they were produced by independents.
This merger must not deny the public access to new
messengers and new messages. We know why Comcast and NBC want
this merger. Comcast is buying NBC so that it can own more TV
shows and more feature films. They look forward to cost
savings. They look forward to synergies as they fuel new
platforms.
But this will come from the capacity to leverage their own
programming across many platforms, from free TV to cable to
Video On Demand to the Internet. They avoid the transaction
costs, they say, of having to deal with third parties or
independents in acquiring that programming.
For the past 15 years, investment decisions and regulatory
rulings have thwarted independents' diversity and creativity.
Vertical integration has combined studios, broadcast and cable
networks into a few conglomerates. A handful of executives now
decide how, when and whether programs will reach the public.
They are closing the door on diversity, and we must do whatever
we can to pry that door open today.
Make no mistake: What is good for Comcast and NBC in this
merger isn't good for the American public. The proposed merger
will simply create more consolidation. It must not go forward
without clear commitments and conditions to protect the public
interest in diverse programming and varied voices.
Five major conglomerates now own the national broadcast
networks and 24 out of 29 of the top cable channels that
feature entertainment programming. These five companies produce
over 80 percent of all entertainment programming on primetime
and, importantly, on the three major children's networks.
Meanwhile, the percentage of independently produced series
on the networks has declined from 50 percent in 1989 to 5
percent in 2008. What has happened? Since 2002, the major
outlets for independent programming have been confined to a
handful of basic cable channels which buy limited numbers of
movies of the week, feature films, and scattered other
programming. Many of those channels, from G4 to Syfy to USA,
will become part of this new combined company, and that is just
today's media.
This merger can also exclude independent programming from
Comcast's valuable Video On Demand space and its new proposed
Internet offerings. History will repeat itself, and the
independents will be shut out of the new emerging platforms in
exactly the same way they have now been shut out of broadcast
television and cable television.
At this crucial moment, the Committee has the power to
raise the questions that will advance American values of
diversity, creativity, and freedom of expression. Will
Americans enjoy greater diversity of choices and voices? Will
the public have access to the next ``Cosby'' or the next ``Mad
Men''? Or will our choices be narrowed at a time when new
technology should be liberating, not limiting, our sources of
information and entertainment?
The answer must be strong conditions placed on this merger
to preserve the diversity of voices that we would expect in the
American entertainment sector.
Thank you for allowing me to speak for the independents
today.
[The prepared statement of Ms. Prewitt follows:]
Prepared Statement of Jean Prewitt
__________
Mr. Conyers. Professor Thomas Hazlett, professor of law and
economics, George Mason University, chief economist of the
Federal Communications Commission, author of the book ``Public
Policy Toward Cable Television,'' director of Information
Economy Project, an expert on government regulation of the
media, and a person of a vast combination of experiences and
law and education.
I am pleased that you are here today.
TESTIMONY OF THOMAS W. HAZLETT, PROFESSOR OF LAW AND ECONOMICS,
GEORGE MASON UNIVERSITY SCHOOL OF LAW, ARLINGTON, VA
Mr. Hazlett. Thank you very much, Mr. Chairman, also,
somebody who was late to the hearing. And for that, I
apologize.
Quickly on the competitive analysis, the merger before the
Committee today is primarily a vertical combination where
Comcast, a cable operator distributing video programming to
millions of household subscribers, is acquiring ownership of
additional programming assets. This does not lessen competition
in any market, but allows the content distributor to achieve
efficiencies by producing complementary products.
There are special cases in which vertical integration can
lead to anti-competitive foreclosure, but the evidence
indicates that these special circumstances do not apply.
Studies of vertical integration in cable generally confirm the
baseline analysis. Efficiencies typically result when firms
elect to combine programming and distribution.
As an empirical matter, the trend in the sector is away
from vertical integration, meaning that operators do not
believe they can increase profits via vertical foreclosure. The
ownership of cable program networks has sharply declined over
the past 2 decades by operators. The spin-off of cable TV
systems by Viacom in 1996 and Time Warner in 2008 are key
components of this trend.
In video programming, there is a horizontal aspect to the
combination. Comcast currently owns some cable network assets,
and these will merge with direct rivals owned by General
Electric. But the Comcast share is meek combined with NBC
Universal program assets that will account for only about 12
percent of total U.S. cable program network revenues.
The good news for consumers and programmers in recent years
is that local market competition has, at long last, taken off.
Twenty years ago, one local cable TV system dominated multi-
channel video program distribution in each franchise area.
Today, there are over three competitors per market on average:
the local cable operator, two satellite TV rivals, each with a
national footprint, and coming up on almost half the country
now, a telco TV provider. Nothing in the Comcast-GE deal
threatens to disturb this trend.
Finally, a word on just the business strategy. In acquiring
additional programming assets, Comcast is actually swimming
against the tide. The company is wagering that it can make more
productive use of GE's cable and broadcast networks. It does so
knowing that its markets are in tumult.
Video products are jumping from platform to platform, not
just from cable to satellite, but from television to broadband,
from linear channels to On Demand networks, from pay to
premium, from TV screens to mobile devices. Some financial
analysts appraise Comcast for its bold new enterprise. Many
have condemned it. ``Didn't they learn anything from the failed
AOL-Time Warner merger?'' is a fairly popular reaction.
The simple fact is that no one fully understands where
today's tide is headed. Cable operators do not know if they
need fear Verizon or EchoStar, Google or Apple. Time Warner
believes that splitting its cable operations from its program
ownership is the best way to prepare for the coming storm.
Comcast has come to a much different conclusion. Marks allow
these rival strategies to be tested and winning strategies
rewarded. I wish Comcast and General Electric shareholders well
in their educated guesses.
Thank you.
[The prepared statement of Mr. Hazlett follows:]
Prepared Statement of Thomas W. Hazlett
__________
Mr. Conyers. Dr. Mark Cooper, director of research at the
Consumer Federation of America. He has testified before
numerous Committees, has written about this, is a fellow at
Stanford Law School Center for Internet Society.
We welcome you here.
TESTIMONY OF MARK COOPER, Ph.D., DIRECTOR OF RESEARCH, CONSUMER
FEDERATION OF AMERICA, WASHINGTON, DC
Mr. Cooper. Thank you, Mr. Chairman.
In today's written testimony and previous testimony before
the House and the Senate, we have demonstrated that this merger
is not in the public interest, because it eliminates the
competitive rivalry and head-to-head competition between two of
the most important participants in a distinct market, the
multi-channel video programming market.
Comcast and NBC compete head to head in local distribution
of video content in a dozen of the Nation's largest and most
important local markets. They compete head to head in the
production of video content for multi-channel distribution,
with Comcast doing sports and regional news, lined up against
NBC Sports and regional news.
They compete head to head in the distribution of video
content online. Indeed, NBC is a major partner in Hulu, an
Internet-based multi-channel video distribution platform.
In addition to the elimination of this head to head
competition, NBC and Comcast, by marrying their content and
distribution, pose a threat while vertical leverage that is
used to gain advantage in horizontal competition, favoring its
own content with access to cable systems that reach one quarter
of the market and denying competitive programming access to
those cable systems places a very heavy thumb on the scale of
competition in the video content market.
Withholding must-have programming from competing
distributors undermines competition for eyeballs in local
distribution.
The merged entity has an incentive to increase prices and
increase the size of the bundle that NBC sells to cable
operators, raising consumers' costs. And above all, the
marriage of the Nation's largest broadband service provider
with one of the Nation's premier video content producers also
poses a direct threat to the Internet as a platform for
disruptive competition in multi-channel video, a distinct
market.
The threat is real, and the danger is imminent. Comcast has
already signaled its intention to extend the ugly cable model
to the Internet by proposing a market division scheme with the
second-largest cable operator, Time Warner. Comcast is seeking
to prevent local sports teams from making their content
available online. NBC has moved its Olympic coverage behind an
Internet pay wall tied to cable subscription.
Geography does not matter on the Internet. There are no
franchises, no rights of way, or regulatory impediments, and
few, if any, construction costs. The proposal that each cable
operator restrict Internet access to cable customers is a
blatantly anti-competitive market division scheme that must be
stopped. In the cable lexicon, TV everywhere means competition
nowhere.
This merger is a competitive nightmare, and the promises
made by Comcast that it will behave are useless for two
reasons. They do not begin to address the competitive problems
across the industry, and they are promises that cannot be
trusted.
Any serious discussion of conditions must address all of
the major areas of competitive concern, in addition to the
localism and diversity areas that Comcast has admitted are a
problem, local markets, affiliate relations, cable program
access, cable carriage, Internet distribution, and independent
programming, and broadcasts in primetime.
To ensure that conditions are enforceable, the Federal
authorities with the oversight over these areas should complete
industry-wide proceedings that address the underlying problems
before this merger is approved. Many of these proceedings have
been pending before the FCC for years. Once the industry-wide
mechanisms are in place, the agencies should then consider
whether additional conditions are necessary to meet the unique
threat to competition and the public interest that is embodied
in this merger.
Comcast should also agree not to challenge the legality of
conditions or render aid and comfort to those who do. The irony
is that when they say they will obey the law, they are seeking
to overturn those at the FCC and the courts.
Federal authorities must do more than just preserve the
current industry structure, which is riddled with anti-
competitive and anti-consumer institutions and practices. They
should seize this moment to implement the long-overdue reform
that will improve the plight of the American video consumer.
If policymakers allow this merger to go forward without
fundamental reform of the underlying industry structure, the
prospects for a more competition-friendly, consumer-friendly,
multi-channel video market will be dealt a severe setback.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Cooper follows:]
Prepared Statement of Mark Cooper
__________
Mr. Conyers. Larry Cohen, president of the Communication
Workers of America, has been working in the collective
bargaining movement most of his life, started out in
Pennsylvania, rose through the ranks of the communication
workers, and has been president since 2005.
TESTIMONY OF LARRY COHEN, PRESIDENT, COMMUNICATIONS WORKERS OF
AMERICA, WASHINGTON, DC
Mr. Cohen. Thank you, Mr. Chairman.
CWA represents more than 700,000 members, most of whom are
network and content providers, including members at Comcast and
NBC Universal. So I believe we have a unique perspective on the
impact of this transaction on workers and the industry.
My remarks will focus in three areas: first, the impact on
jobs; second, how the merger will aggravate, not encourage,
current anti-competitive behavior in the television industry;
and third, the problems that will result in the emerging
Internet video marketplace.
The bottom line? The public must be protected from the
significant harms created by a combination of such
unprecedented scale. A Comcast-NBC combination will, in fact,
lead to the loss of good jobs. In any of these restructurings,
there is never a warranty on employment, only promises.
With official unemployment, as the Chairman said, at more
than 10 percent nationally, we must evaluate all corporate
transactions by assessing the impact on jobs. Comcast-NBC debt
will increase by approximately $8 billion after this
transaction. And to pay for the debt, the company has two
choices: cut jobs or raise cable prices. Either way, consumers
and workers lose.
In addition to job loss, the combination will depress labor
standards. Unfortunately, Comcast has a terrible track record
of aggressive action to eliminate collective bargaining at the
companies that it acquires. In 2002, Comcast acquired AT&T
Broadband. At the time, CWA represented 5,000 cable employees
there. After the transaction was announced, I met with Comcast
executives. They told me they would respect the employees'
rights to a union voice. And then let's see what a Comcast
commitment means.
Soon after they took control of AT&T Broadband, a senior
vice president in Oregon announced, ``We will wage war to
decertify the CWA,'' and that is what Comcast did. Comcast
delayed bargaining for years, denied workers wage and benefit
improvements provided to non-union employees, and supported
decertification elections. Comcast refused to reach agreement
on a first contract in 16 bargaining units that it acquired
from AT&T.
In Pittsburgh, Comcast workers were forced to go through
four union decertification elections, all supported by
management, in 5 years before they finally negotiated a union
contract. CWA also represents Comcast employees in Oakland,
California, and Detroit. In both locations, Comcast has shifted
half the work to non-union, lower-wage, so-called self-employed
contractors, reducing secure jobs and benefits in areas hard-
hit by unemployment. And where workers try to form a union,
Comcast has fired and retaliated against union members.
In contrast, collective bargaining at NBC Universal dates
back to the 1930's. Our NABET affiliate represents broadcast
technicians at NBC. Although we are currently in difficult
negotiations with NBC, the bottom line is NBC workers have a
collective voice through their union, a right that Comcast has
consistently every time opposed.
Let me now turn to the anti-competitive issues associated
with this transaction. There is already too little competition
in the video marketplace. As the chart on the screen shows,
cable rates have grown at three times the rate of inflation.
This merger would provide Comcast-NBC with added incentive and
ability to engage in anti-competitive practices that would
increase cable rates.
Comcast after the merger would have the ability to bundle
its less-desirable channels with must-have NBC programming.
Forced bundling will raise other video providers' costs, which
translates into higher rates for consumers.
Today, some companies are trying to compete with incumbent
cable operators. They are investing significant resources to
build their networks. This merger would provide Comcast-NBC
with the incentive and ability to raise the prices it charges
new entrants for must-have NBC and sports programming,
effectively blocking or limiting competition, cutting
investment and jobs that accompany those efforts.
In summary, the Comcast-NBC merger's potential to limit
growth, investment and jobs is not in the public interest.
Federal regulators cannot pass this merger without carefully
considering the significant impact the merging companies will
have on video competition, choice, and jobs.
Thank you for the opportunity to testify today. I look
forward to answering any questions. I ask that my written
comments be entered into the record, along with this chart, and
we welcome, finally, some dialogue.
[The prepared statement of Mr. Cohen follows:]
Prepared Statement of Larry Cohen
__________
Mr. Conyers. Andrew Schwartzman, president of Media Access
Project, since 1978, he has become a national expert on media
issues, is a faculty member at Johns Hopkins University School
of Arts and Science, and he has taught courses dealing with
media and communications issues for a number of years.
TESTIMONY OF ANDREW JAY SCHWARTZMAN, PRESIDENT AND CEO, MEDIA
ACCESS PROJECT, WASHINGTON, DC
Mr. Schwartzman. Thank you, Mr. Chairman.
This is the most important media merger since Lucy met
Desi. Comcast seeks to combine its huge cable and Internet
footprint with NBC's content assets.
Even though I have problems with Mr. Roberts' labor
management practices and his corporate governance structure, I
recognize that he is motivated by business considerations and
not some sort of design to undermine American democracy. But
the consequences of this deal, nonetheless, could have
precisely that effect.
Concentration and control of the mass media poses unique
questions for policymakers and regulators. As Judge Green said
when he considered the AT&T consent decree, the values
underlying the First Amendment coincide with the policy of
antitrust laws.
Approval of this merger would increase Comcast's power to
squeeze out independent programmers with diverse editorial
perspectives. There are scores of cable networks which have
been unable to obtain carriage on Comcast and other cable
systems.
I am here and they are not because some of these companies
have told me that they are afraid of retaliation. And
acquisition of NBC's stable of cable networks will greatly
exacerbate the existing imbalance of power.
If Comcast is permitted to purchase the NBC TV stations and
its highly viewed cable networks, Comcast will be able to
bundle unwanted programming when it seeks carriage deals with
other MVPDs. The problem is even greater with respect to
carriage on Comcast-owner cable systems. After the acquisition,
Comcast would have many more cable networks to favor. This
means higher prices for all Americans, not just Comcast
customers.
There ought to be a law against such abuse. And, in fact,
there is. Section 616 of the Communications Act is supposed to
prohibit cable companies from discriminating in favor of their
own programming. While Comcast argues that existing law is
sufficient to protect independent programmers, Comcast has
suggested, but not quite promised, that it will not renew its
efforts to challenge the constitutionality of Section 616 in
the future.
However, this does not change a more fundamental fact,
which is that the existing statute does not work. Program
carriage litigation is prohibitively expensive, and the FCC has
adopted almost insuperable legal hurdles for complainants.
Combining NBC Universal content with Comcast cable and
Internet distribution systems will also give the merged company
vastly increased power over content distribution markets.
Depending on the circumstance, Comcast could choose to withhold
its programming or force it on competitors at inflated prices.
This, in turn, will increase cable bills and deprive customers
of access to programming from diverse sources. The FCC has
program access rules which are supposed to stop such practices.
Although Mr. Roberts has said that Comcast may agree to be
bound by program access rules voluntarily, so far he has
refused to withdraw Comcast's legal challenge to continuing the
rules in effect. That aside, there are many reasons why even
the existing rules are insufficient.
First, they expire in 2 years, and there is no assurance
they will be extended. In any event, the program access regime
does not preclude bundling. Although the law prohibits
discrimination against competitors, in this instance, it simply
means that as long as Comcast overcharges itself, it can
overcharge everyone else.
Re-transmission consent rules are even less reliable as a
tool to protect video competitors. Among other things, the
statutory mandate for good-faith negotiation does not prohibit
price or packaging discrimination. It simply requires a
commercially feasible offer.
I note that Mr. Roberts has indicated that Comcast may
increase retransmission consent payments for Comcast
affiliates. Now, this may or may not be a good thing for the
future of broadcast TV, but no one should doubt that the impact
of this would be to raise cable rates for everyone.
Representative Lungren, the good news is that Internet
technology offers the prospect of creating vibrant and highly
competitive distribution channels for video programming.
Members of the public can or soon will be able to receive high-
definition video on the Internet, but Comcast has already taken
steps to kill off such competition, and acquisition of NBC's
content will greatly enhance that campaign.
The prospect of consumers canceling their cable
subscriptions and relying on the Internet poses an existential
threat to the cable industry. Comcast's answer is Xfinity,
which allows Comcast customers to view video over the Internet
without extra charge. The catch, which is a very big catch,
indeed, is that you must keep your cable TV subscription.
Xfinity permits Comcast to cut off the flow of programming
to potential new competitors while preserving the cable TV
revenue stream indefinitely. Stripped of slick marketing,
Xfinity consists of agreements among competitors to divide
markets, raise prices, exclude new competitors, and tie
products.
Comcast's ownership interest in Hulu is especially
important here. Comcast can cripple Hulu by withdrawing NBC
content or it may choose to make the NBC content exclusive to
Hulu and withhold it from new Internet-delivered video
competitors. Either way, it is bad for the public.
There is more, but no more time. I urge you to oppose
approval of this merger.
[The prepared statement of Mr. Schwartzman follows:]
Prepared Statement of Andrew Jay Schwartzman
__________
Mr. Conyers. Marc Morial was a state senator in Louisiana.
He then became mayor of the city of New Orleans. He has taught
constitutional law as a professor at Xavier University. He is
now the president and CEO of the National Urban League. And we
welcome him to this hearing.
TESTIMONY OF MARC H. MORIAL, PRESIDENT AND CEO, NATIONAL URBAN
LEAGUE, NEW YORK, NY
Mr. Morial. Thank you. Thank you very much, Chairman
Conyers and Members of the Committee. It is indeed an honor,
Chairman Conyers, to be before your Committee. Thank you for
your leadership.
I represent the National Urban League. We are this year
celebrating 100 years of continuous existence. We serve 2
million people a year through 100 affiliate chapters from coast
to coast. That includes operations in 36 states and the
District of Columbia, from Anchorage, Alaska, all the way to
Miami, Florida, and I am proud to be here today, and thank you
very much.
A couple of points that I would like to make at the outset.
First, GE is selling its interest in NBC Universal so that it
can devote its investments and energies to its core business,
period. That being the case, I would like to see NBC Universal
in a joint venture with, one, an American company, two, a
company with a proven track record in an understanding of the
television business, and, three, a company that has
demonstrated a track record on diversity issues and in working
with diversity organizations, like the one I lead.
That being the case, the National Urban League has not
taken a formal position on this transaction. And we are
withholding any formal position pending discussions with senior
management relating to diversity programming, employment
issues, and other very important things related to our mission.
But I do believe that Comcast should be entitled to great
respect in this process based on its past actions with respect
to the diversity community. They have a demonstrated commitment
to measures relating to diversity. That includes in the areas
of employment and programming, and I would cite its proactive
investment in TV One.
Also, Comcast has made commitments about new and
independent programming opportunities for its new joint
venture. We will urge that this new joint venture include new
opportunities in the area of diversity programming.
For the record, Comcast has been an important corporate
partner to the Urban League. They have forged local
partnerships with many of our chapters. They work with us in
Philadelphia on a job-training program for cable installers.
They have a national partnership with us designed to raise the
awareness of us, including supporting our State of Black
America report, which is our annual report to the President,
this Congress, and the people of this Nation.
NBC Universal has also made important strides in its
commitment to diversity and inclusion. We have worked with the
senior leaders to increase the voices of color in commentary
roles on NBC, MSNBC, CNBC--now, in all of these areas, a
foundation has been laid, but there is much, much more in the
area of diversity that needs to be done.
So we look forward to our discussions regarding how this
new joint venture will continue and strengthen its commitment
to diversity. And when we talk about diversity today, Mr.
Chairman, we are talking about diversity in the areas of
employment, including the most senior levels of the new joint
venture. Diversity in procurement, the opportunity for
businesses of color to do business with the new venture.
Diversity in governance, which are those boards, those
management committees that oversee the operation of the joint
venture. Diversity in philanthropy, which involves the
community engagement that the joint venture would have with all
communities that represent the great tapestry of the United
States of America. And diversity in programming, because
diversity in programming is enhanced not simply by access, but
also access to capital, and a commitment to finance the kind of
programming that we need to give communities that have been
left out an opportunity for their great contributions to this
Nation to be seen, to be heard, and to be artistically
expressed.
We also believe that in the event that any local broadcast
licenses are spun off as a result of this merger--this
transaction, I should say, that minority businesses should have
a fair and equal opportunity to acquire these assets.
We believe--and it is our goal in the discussions that we
will have with NBC Universal and Comcast--to set a standard for
this new venture to be a first-class company when it comes to
diversity. That is our aim. That is our goal. That is what our
conversations will be all about. And we will be engaging in
discussions with their senior leadership on these areas of
concern.
So I want to thank the Committee, certainly, for its
consideration. I appreciate the opportunity to testify today.
Thank you so much.
[The prepared statement of Mr. Morial follows:]
Prepared Statement of Marc H. Morial
__________
Mr. Conyers. Howard Berman, senior Member of Judiciary
Committee, Chairman of Foreign Affairs?
Mr. Berman. Thank you very much, Mr. Chairman, and I
apologize to you and to the witnesses because we are chairing a
hearing now with the Secretary of State, and I did not get a
chance to hear your testimony, but I have copies of it, and I
intend to read it, other than Mr. Morial, who I did get to hear
now.
This proposed--this possible joint venture has two appeals
to me. One, a more general proposition that things which get
the distribution side of content to understand the needs of
content providers to protect their creativity would be a
welcomed outcome. So as a general proposition, I am--that
intrigues me, and I think it is an important consideration.
Secondly, Universal Studios, a key part of this process, is
located in my district. It is on the board with Adam's
district, but it is--at least for another year-and-a-half--
still in my district. And it is a major source of--it is a
major employer.
And not only Universal Studios, there are all kinds of
other companies whose existence and well-being is related to
the strength of Universal Studios as a--in other words, for
this, this is a jobs issue for me in a very real sense.
So my first question is, there are labor agreements and
jobs at Universal Studios. I am curious if Mr. Roberts or Mr.
Zucker could address that issue.
I would also--let me ask my question now, as well.
Commitment number 12 in this proposal, which promises that once
the NBC Universal completes its company-wide digital migration,
it will add two independently owned and operated channels to
its digital line-up each year for the next 3 years on customary
terms and conditions.
I have seen what has happened since the repeal of the
financial interest syndication rules. While I want a thriving
Universal Studios, I want it based on the investment and the
creativity of their work. I don't want situations which further
add limitations to the ability of independent productions to
have access to distributors.
And I am wondering, with the addition of these new
channels, how is this going to affect the opportunity
independent producers may not have had? How do they--how do
independent film and television fit into this joint venture
beyond commitment number 12?
Mr. Roberts. Okay, thank you. Let me start and attempt to
address both those issues and then pass to Mr. Zucker, if I
may.
It goes to the main motive of, why do we want to do this
transaction as Comcast? It is to build and to reinvest into
Universal, NBC, and the great entertainment properties they
have, in some cases what they have been in the past and what we
hope they can be in the future.
And I think General Electric will take the proceeds, as we
mentioned, and more likely than not, invest in their core
business, which is, as they have said publicly, infrastructure
and things all over the world.
For Comcast, this is a once-in-a-lifetime opportunity, I
believe, to help transform our company. So the motive is not to
come in and have significant--or any-- job reductions, but
rather to really try to figure out where the consumer's going;
and how to restore some of the greatness to NBC and Universal,
to continue to invest in the cable channels and the creativity
that has been there and is there today with networks like USA,
CNBC, Syfy, and Bravo.
And I think our channels are not of the same stature. The
Entertainment and Style networks are terrific channels not
ranked currently, as of 2009, in the top 30. And a number of
NBC-Universal's are ranked. So we really think this is an
opportunity to become one of the better content producers all
over the world and to really take from your district the great
creativity and extend it to new platforms and new innovation.
So our commitment absolutely is to invest in local
television, broadcast television, cable television, filmed
entertainment, the theme parks. None of those businesses is
Comcast really a major provider today. There is not the overlap
that a number of--in the statements that some mergers would
have, if GE was selling to another one of the major media
companies, they would have a movie studio, they would have a
broadcast network, they might have a theme park or another
entertainment channel like USA or a news channel. Comcast does
not have any of those types of assets on a national basis.
So I would feel very comfortable saying that the goal here
and the motivations are to build and to innovate.
Jeff?
Mr. Zucker. Congressman, I would add that the last couple
of years have been difficult, especially on the broadcasting
side, for everybody. I look at what is going on at some of our
peers, unfortunately, just this week announcing significant job
reductions in their news divisions. And we take no glee in any
of that.
The fact is, with this commitment to broadcasting, with
this commitment to investment, I actually feel better about the
future of NBC and NBC Universal than I have in a long time and
am gratified by the fact that this is not about synergies and
anything of that sort. And so I--I take comfort in that and
hope you see that, as well.
Broadcasting has been under tremendous duress in recent
years, as other forms of media, like newspapers and radio have,
and our peers are going through it right now. This commitment
to--this commitment to broadcasting and the jobs that come with
that is something that gives me good comfort.
Mr. Berman. Talk for a moment about the access of
independent productions to the programming networks.
Mr. Roberts. So there are two sides, I believe, of that
question. First is, as a cable company, six out of every seven
channels that Comcast carries in our cable systems after the
merger or the joint venture will be non-owned by Comcast. We
have made a commitment that we would add two independent
channels each year for the next 3 years starting next year.
And as to how we relate to the independent production
community, today we don't make movies, so we have no preference
between a movie we would make or a movie that is independently
made that we might want to distribute. We do carry the Sundance
Channel and the Independent Film Channel.
The philosophy of Comcast, just since my dad's founding of
the company, to go back to 1963 in Tupelo, Mississippi, Comcast
couldn't get the television signal from Memphis, which was CBS.
And the philosophy has been to give consumers more choice.
Choice sells.
And ever since we rebuilt our systems from 10 channels to
30 channels, the question was, how are you going to fill the 30
channels? When you go to 100 channels? To 500 channels. Now we
have in some markets 15,000 choices On Demand any time you want
them, and last year, we laid out a vision for where I would
like to see the company go. We call it Project Infinity.
Any piece of content that a consumer wants to get, they
should be able to access and leave it to the content company to
figure out what the business model is, whether that is
advertising-supported, subscription, or Pay-Per-View, and what
device it is on.
And so our technological vision is to continue to give more
and more choices, which absolutely will include as many--
whoever and wherever that content wants to be made by.
Jeff?
Mr. Zucker. I would add, on the independent programming
side, on--as far as our cable networks go already, I think we
have demonstrated our willingness to show that third parties
own 67 percent of the programming on the USA cable network in
primetime and 83 percent of the programming on the Syfy
primetime line-up.
With regard to NBC and the NBC television network, the fact
is, we need the best programming wherever it comes from,
certainly today more than ever, and the fact is, we have
dramatically increased our commitment to try to find new
programs from non-NBC affiliated sources. This year, we are
developing somewhere close to 20 new programs for NBC, and we
have doubled the number this year that have come from non-NBC-
related sources.
So the fact is, with regard to NBC, I don't think this has
any impact on our willingness to find programs from--the best
programs from wherever they come from.
Mr. Berman. Thank you, Mr. Chairman.
Mr. Conyers. Chairman Prewitt, your comments?
Ms. Prewitt. The fact that this will have no impact on the
current business dealings with the independents actually fills
me with fear. With all due respect, the statistics we have just
heard about unaffiliated programming does not distinguish
between programming provided by independents and provided by
other conglomerates.
And I would draw your attention and happy to provide you
with a copy of an L.A. Times article from May citing the
decline in truly independent series that were picked up this
year. I believe the NBC statistics were of five new series.
Four were from NBC, and one was from Sony. That is not, from
our perspective, independent programming, although Sony is in a
funny posture here, since they don't own a network.
You know, our experience in general is that the broadcast
networks are now wholly unavailable to truly independent
programming, unless you are producing reality series, some of
which will make their way through.
These high statistics, even stripped of the other
conglomerates on cable, are because cable has become where you
push the independents. And that has had two results. In
addition to limiting access overall, it also shifts what people
produce.
And in 2002 and 2003, when our member companies were told
by every major children's outlet, both on broadcast and cable,
that they would no longer buy independent, they ceased to
produce that programming. Common sense says you don't invest if
there is no marketplace.
And so what you do is programming not only being limited in
terms of access, it shifts in terms of subject matter, it
shifts away from the type of programming, in many cases, that
we would all like to encourage.
Two new channels on a cable system out of 500 sounds to me
like slim pickings. And it is particularly slim pickings in a
marketplace where, as we have heard, it is very difficult for
anyone to support those channels. It is very difficult to
acquire the acquisition budget to bring onboard quality
product.
Ultimately, what happens with many of those channels is
they just recycle, and what we are now seeing across the board
is consistent recycling from the five major conglomerates. And
I think what the true independents are looking for is a chance
to compete in the same arena as the conglomerate programming,
not to be told over and over again--and this has happened
consistently since 2000--that channel after channel will no
longer look at programming that comes from outside the system.
And this merger can only aggravate that situation. There is
a history here which sets the stage and a merger which then
threatens to carry it to the next level. And I would certainly
call people's attention specifically to the plans for how TV
Everywhere will be built, which are--you know, at least in the
FCC filing, are very clear that that will be NBC Universal
content, that dealing with third parties is very pesky and
creates a lot of overhead.
And what you can see over and over again is the same
economic pressures driving toward a preference for content,
which you control across multiple platforms, and that does not
create opportunity. And I think this Committee should speak out
very strongly both to the regulatory agencies and to the
merging parties that, out of all these commitments,
interestingly enough, not one addresses this problem.
Thank you.
Mr. Conyers. Dr. Cooper?
Mr. Cooper. Mr. Berman, yes, let me address the historical
point. And you have raised it. Jean has referred to it.
You simply cannot replace the dynamic of an independent
sector to produce diverse programming--we have heard a great
deal about it--with a commitment to a couple channels buried
someplace in 500. And Jean mentioned ``The Cosby Show,'' but
that is only the tip of the iceberg. ``All in the Family,''
``Chico and the Man,'' ``Sanford and Son,'' ``Cagney and
Lacey,'' ``Roseanne,'' ``The Golden Girls,'' all of those were
independent shows during a period when the networks were
required to buy independent shows.
It was those shows that ended the ``Ozzie and Harriet''
view of America. It showed if it is black and brown, old and
young, rich and poor. That is the kind of dynamic diversity you
get when you have independent programmers who can gain access.
And it was clearly--and I did a study of this several years
ago. It was the loss of that diversity, the decline in quality
that came with vertical integration, that undermined broadcast
TV. The decline in quality came first.
And so the notion that a couple of commitments to do some
programming, a little bit, a teeny bit, will solve the problem
of the production that meets the diverse needs of America is
simply contrary to historical fact. Vertical integration
undermines diversity and quality.
Mr. Berman. But that was a totally foreseeable consequence
of repeal of the regulations in place.
Mr. Cooper. If you look back at the history, there were
promises made to Congress that, oh, we won't eliminate the
independents. They were gone instantaneously, because you make
more money buying internally, rerunning lower quality shows,
because you have already incurred the production cost, than
buying higher quality shows.
But what happens when you rerun that stuff and repurpose it
is you lose your audience. You miss the notion that you have to
produce high-quality content and buy it from the best
independent you can. For 15 years, that hasn't worked.
Now, you hear some suggestions that the industry is
discovering the error of its ways. It is convenient at the
moment of a massive vertical merger that they suddenly discover
that the integration model is wrong. It failed, and you should
not allow it to rear its ugly head again.
Mr. Conyers. Andrew Schwartzman?
Mr. Schwartzman. I don't have a lot to add to that, Mr.
Chairman. I would just point out that the question before the
Committee is the acquisition of NBC Universal by Comcast. And
whatever kinds of commitments that Mr. Zucker is making with
respect to increasing his use of independent programming will
be unchanged by that acquisition.
And, second, as Dr. Cooper said, the commitment to add a
few independent channels is of no significant consequence.
First of all, it is very specifically limited to digital
systems, and not all Comcast systems are yet digital. But,
second, two channels in a year without any commitments with
respect to tiering make that a very questionable--simply of
questionable utility.
Mr. Conyers. Larry Cohen?
Mr. Cohen. I would just comment on the jobs question two
ways. We look at jobs internally, and I actually talk quite a
bit about that within the combined company. We often get--
always get in these mergers and restructurings commitments that
there is no warranty and then jobs are cut. How do you pay for
the $8 billion in debt? They cut jobs, and they continue to
raise rates. We already have rates raising three times the rate
of inflation.
But externally is even more important. As a participant in
a jobs summit, I was cheered to see management, labor,
academics, governments saying we are going to put a jobs filter
on every key governmental decision, and there is no question
that this merger goes through. There is a disadvantage to the
other types of companies, and it will shrink investment, and
that will cut jobs.
Because of what they call bulk pricing, any new entrants
and communities have to pay much more for content than they do.
And that bulk pricing shrinks up investment, because the pipe
companies--it is incredibly expensive to bring fiber to the
home, although it is happening in all the rest of the world,
and so what happens is--TV product to sell at a decent price,
they don't invest, it is already shrinking.
It is absolutely not true that we are going to have robust
competition. It is shrinking now. They are cutting down on that
investment in this country. And so it has a disastrous effect
on jobs, particularly externally. And internally, to be honest,
we are going to say again: Where's the warranty? Where's the
warranty against using freelancers instead of employees and
contractors instead of employees?
And, you know, there isn't any warranty. We get one story
before the merger and a different one after.
Mr. Conyers. Ranking Member Larry Smith?
Mr. Smith. Thank you, Mr. Chairman.
Mr. Conyers. Lamar Smith.
Mr. Smith. First of all, Mr. Roberts and Mr. Zucker, if I
were you, I would take Mr. Schwartzman's concession that at
least you are not trying to undermine America's democracy and
run with it. That may be the most you are going to get.
Mr. Roberts, let me direct my first question to you. NBC
Universal, of course, is primarily a programming and content
company. Your Comcast is primarily cable. Would you speak a
little further on where you see the overlap of the two
companies and how this proposed merger would impact that
overlap?
Mr. Roberts. Thank you. In Ms. Prewitt's testimony, she
mentioned that there are five companies that have 24 of the top
29--I am not sure if those stats are right or not--of the
channels, 80 percent of the entertainment content. I don't
believe Comcast owns a broadcast network. I don't believe
Comcast owns any of those assets.
So the conversation that we were just listening to about
independent voice or whatever, the fact is, that is
broadcasters talking with the folks who make the programming
for the NBC network, which Mr. Zucker is obviously expert on.
Comcast does not have a relationship with some of her members,
like Lions Gate or the Weinstein company. We have had other
partnerships and distributed their content outside of that on
our cable system, on our On Demand platform.
So I believe what this merger is about is a big risk on our
part. Broadcast television has changed tremendously in the last
20 years. And so has the technology by which consumers consume
entertainment, information, and news, not just television.
And so are we. As we heard, other companies have chosen to
not want to be in one company, because there aren't significant
obvious synergies. We are making a bet that we can accelerate
this transformation for the consumer, so we touch together
places like On Demand.
When I talk to my customers, their number-one complaint
with our On Demand service, which has been wildly popular--13
billion orders of On Demand shows just in Comcast in the last
few years, more than all of iTunes in the United States put
together, half-an-hour average--their main complaint is, why
can't I get more movie choices on that On Demand?
Well, Universal has 4,000 movies in its library. And they
have 3,000 shows from television in their library. Now, I can't
promise sitting here today--how to bring that together to get
it to On Demand faster, but we are certainly going to try real
hard.
Mr. Smith. Thank you, Mr. Roberts. Mr. Roberts, you
mentioned that television has been changing dramatically.
And, Mr. Zucker, I wanted to ask you what you thought about
the future of television. Do you see it being the more
traditional television? Do you see television being more
online? And where do you see the proposed new entity fitting
into that vision of the future of television?
Mr. Zucker. Well, as I mentioned before, I think there is
going to continue to be more change in our space in the next 5
years than we have had in the last 50. I think that the digital
revolution, the technological revolution that Mr. Roberts was
just talking about is going to continue to change the way we
all consume television, the way we all consume information, the
way we learn about things, the way we watch everything that we
have been used to.
So I think that, over the next 5 years, we will all
continue to watch TV. We will gather around a television and,
you know, learn news, watch sporting events, watch
entertainment programs, but we will also have the ability to do
that in many other ways.
So I think television will still be there, but I think
that--I think the innovation that we have all come to see will
also allow us to enjoy all of those things in other ways.
I think that what is great about this merger is that there
will be investment from Comcast that will produce even more
content. And at the end of the day, that television that we are
talking about or however we consume it, it all comes back to
great content and great news-gathering and great sporting
events. And without investment, none of that is possible.
I also would add that this commitment to broadcasting and
to the NBC television network and to Telemundo on the Hispanic
side cannot be underappreciated. We don't live in a world that
was 15 years ago, when three networks had 90 percent of all
viewing. We live in a very different world where there were
very different rules back then.
The choices and the explosion of outlets is so different.
And so the commitment to actually keep NBC and Telemundo strong
is incredibly important today.
Mr. Smith. Okay. Thank you, Mr. Zucker.
Mr. Roberts, let me address my last question to you again,
and that is that, as you know better than I, the protection of
intellectual property is essential not only to a lot of
American companies, but, quite frankly, to a prosperous economy
in our country, as well.
We have a real problem today with the theft of copyrighted
programming. And we oftentimes look at ISPs and others to
educate their consumers and to try to crack down on that kind
of theft and that kind of piracy. What has Comcast done and
what do you propose to do to try to reduce that type of
intellectual property threat?
Mr. Roberts. I think this--the entire ecosystem--that is
the creative community in this country--depends on that
question. And while we have seen an explosion in the
connectivity side, which has principally been our business--
originally television, now broadband--having license-secured,
not pirated content is the essence of that ecosystem for both
sides of the business.
By now making--on our way toward a $30 billion investment
in content, which is what has been reported the potential value
of this transaction is--that kind of order of magnitude. It is
only 51 percent in the first stage, but over time, we intend to
try to buy GE out 100 percent.
We have redoubled our commitment to figuring out how to
work between the two parts, the delivery, and what consumers
want with their broadband connections. So we will be--through
NBC Universal--involved with MPAA, and we will be involved with
all the other organizations, not just the NCTA.
So I sit here today--I don't have the answer, but I think
we have a huge motivation and one of the benefits, as was
stated, in this transaction is that we have that motivation by
Mr. Berman to help figure this out. And I pledge to you to
personally engage and try to not just educate our consumers,
but use whatever technology gets developed to help make sure it
remains not pirated.
Mr. Smith. I appreciate that commitment. Now, Mr. Chairman,
I know you like to treat both sides equally, so I would like to
yield my remaining 10 minutes to--2 minutes, if I may, to Mr.
Harper, the gentleman from Mississippi, who I know has to leave
for another commitment and is already late in doing so, but I
would like to give him at least a couple of minutes if we
could.
Mr. Harper. Thank you, Mr. Chairman and Mr. Smith.
Mr. Roberts, I would like to ask you a couple of questions,
if I could. I have heard some concerns, worries from an
organization representing some local, you know, small cable
companies that are in my district in Mississippi. And, of
course, they are concerned that this proposed merger will give
Comcast significantly more market power in negotiations,
particularly with regard to the regional sports networks.
And I would like to know what your thoughts are on how that
merger will affect those small cable companies that have those
concerns.
Mr. Roberts. I think there are--on a number of issues that
we have heard previously discussed and on that specific issue--
I don't believe this transaction affects that issue. We are not
doing this transaction to go and somehow change the dynamic
between a regional sports network or anyone else--any of the
other properties that NBC may have and small, rural operators,
whether they are broadcasters or cablers.
There are teams that we carry on our regional sports
channels that don't get affected by--I don't believe by any--
NBC is not in the regional sports business. So if there is a
property in the South, Comcast Sports South, that property will
remain the same as it is before the deal.
Mr. Harper. Okay. And if we look at the role--and I know
Comcast is taking it serious--on protecting parental concerns
on content as it might affect children, this new entity that is
proposed, will there be any changes there? Or how should we
look for that to be dealt with?
Mr. Roberts. Well, we have made a number of commitments.
One is for children--more children's programming, both on
television and On Demand. An issue that I feel good about where
cable has taken the technology and where we will take it in the
future is to make it easier for parental controls in your
living room to work and to have more sophistication in those
parental controls so parents are able to filter those shows,
those channels, and with more granularity and more choices of
ways to do that.
And, you know, a huge opportunity and one that we take very
responsibly, as well as the news area, is independence and
trying to take the wonderful brand credibility that NBC has,
both with children and with news, and extend that throughout
the company.
Mr. Harper. Thank you, Mr. Roberts.
And with that, Mr. Chairman, I yield back my time.
Mr. Smith. I will yield back. Thanks, Mr. Chairman.
Mr. Conyers. Jerry Nadler?
Mr. Nadler. Thank you, Mr. Chairman.
Dr. Cooper, first, I must correct the record. You quote the
eminent Professor Epstein, who is, of course, one of the great
professors in the Chicago School of Economics, but you say he
is at the University of Chicago. He is no longer there. He is
now at NYU in my district, so I just wanted to mention that.
This is a great----
Mr. Cooper. And he hasn't changed his beliefs, as far as I
know.
Mr. Nadler. He has not changed his beliefs. And, in fact,
my son is one of his research assistants now. But I am not of
the Chicago School of Economics, nor is my son.
In any event, let me ask you the following. You say that
Professor Epstein ignores the mountains of evidence that there
are numerous clearly defined markets in which Comcast and NBC
compete head to head. Now, we have been told that this is
essentially a vertical integration and the problem is whatever
problems there may be associated with that. This is not
essentially a horizontal combination. And you are saying that
this is completely not true.
Could you elaborate on that for a moment? What is the
extent, if at all--what is the extent of horizontal competition
that would be eliminated by this merger?
Mr. Cooper. Well, as I identify in my testimony, there are
a dozen local markets in which they compete. Comcast is a
distributor, and NBC owns a TV station. They see themselves as
competitors. NBC has filed testimony at the FCC which outlined
the head-to-head competition in local advertising, for
instance. Absolutely.
They gave me two examples where if you do the math of the
concentration ratios that the antitrust people do, it is a
horrible merger. There are a dozen markets where they compete
head to head. They clearly compete for sports eyeballs. Comcast
is the regional sports giant; NBC is an icon of sports
programming. They compete in news. Comcast is a regional news
giant; NBC is an icon of news. That is in the content space.
They now compete vigorously on the Internet. They both have
portals. NBC invested in a multi-channel video programming
alternative. So they clearly compete there. That is undeniable.
The vertical element that affects the horizontal market is
also important, because now you give NBC programming guaranteed
access to a quarter of the eyeballs in the country. That is the
distribution married to content. NBC no longer has to negotiate
for carriage across 100 percent of the cable eyeballs. They
only have to negotiate for 25 percent. They are in a much
stronger bargaining position.
Mr. Nadler. Twenty-five or for seventy-five?
Mr. Cooper. Seventy-five, that is right. They have
guaranteed 25 percent, so they only have to negotiate for 75
percent. That improves their bargaining position.
They have a bigger bundle. Now NBC content is married to
Comcast content, so the bundle gets bigger. So all those--that
is vertical leverage that can be used to beat the other guys.
Mr. Nadler. Thank you. Does Mr. Zucker or Mr. Roberts want
to comment on this?
Mr. Zucker. I would just point out a few things, which is
that, even if there is competition in certain local markets
between the NBC stations and the Comcast cable affiliates,
there are still seven non-NBCU-related broadcast stations in
each one of those markets. The fact is that----
Mr. Nadler. Seven each or seven combined?
Mr. Zucker. Seven, in each of those markets. So the
competitive nature that exists in each one of those markets
remains incredibly vibrant and healthy. And given--you know,
given the competitive nature of each one of those stations, it
will continue to be very strong.
Mr. Nadler. Dr. Cooper?
Mr. Cooper. If you do the math on the local advertising
revenues that NBC put in the record at the FCC, the merger
violates the Department of Justice and Federal Trade Commission
guidelines by a mile.
Mr. Nadler. On that horizontal competition?
Mr. Cooper. On that horizontal competition. The standard is
that, if the post-merger market is above 1,800--again, these
are numbers----
Mr. Nadler. Eighteen hundred what?
Mr. Cooper. Eighteen hundred in the HHI. This is an index
that they use. If the merger raises by 50 points in a highly
concentrated market, it is supposed to be considered a severe
threat to competition. This merger raises it by 800 points, 16
times the threshold.
Mr. Nadler. Thank you.
Ms. Prewitt--did I get that right? Yes. Ms. Prewitt, you
testified that industry trends have promoted consolidation in
uniformity and that it is going to become impossible for
independents to get their programming placed. And you also
testified that, in fact, many of the major distributors have
already said they don't want to use independent programming at
all.
Can you tell us how this merger specifically will worsen
that situation?
Ms. Prewitt. Well, we are looking at two aspects, one of
which are the traditional platforms and then the new platforms
that will either be developed or at a nascent level today. With
respect to the traditional platforms, quite frankly, there
simply is no commitment to even maintain the marginal level of
independent acquisitions that exist today.
Most independent product is on this handful of basic cable
channels. We see nothing in the 16 or 17 commitments that say
that that will remain untampered once the acquisition goes
forward. And there is new revenue to fuel more production.
Mr. Nadler. But you are saying that it doesn't if that does
not change, since they have already ruled it out?
Ms. Prewitt. We don't know if it changes or not.
Mr. Nadler. No, no, but if it doesn't change, it doesn't
matter, because they have already taken you, is what you are
saying.
Ms. Prewitt. Yes, that----
Mr. Nadler. So what you are really saying is that this
merger might make it worse at the margins, but the major damage
has already been done?
Ms. Prewitt. Exactly. There are some limited outlets today.
We would like those preserved. There is no promise here to
preserve them.
But the other issue, I think, is the new and emerging
outlets. Video On Demand is a vibrant marketplace or developing
into a vibrant marketplace that begins to take up some of the
slack of the former DVD revenue stream. When you can't get on
television, you go to DVD.
You would like to be able to go to video On Demand. Again,
no real commitments here to open the doors to that system to a
wide range of independent programming. TV Everywhere, Hulu,
things of that nature, as our members go to those platforms,
what they are increasingly told is, until the revenue model is
at least clear, we are not interested in taking programming
that hasn't been previously seen on nationwide TV, that has not
been supported by a worldwide marketing campaign. We can't
support anything with marketing. We really only want
programming that comes with its own audience.
And so that, combined with the statements at least in the
FCC filing that TV Everywhere--one of the big advantages now is
going to be that you can use only Universal content.
Mr. Nadler. One of the advantages now or one of the
advantages to be of TV Everywhere?
Ms. Prewitt. With the merger. One of the advantages of the
merger is touted as not having to go outside and fight with
third parties to get content commitments because we can build--
they can build TV Everywhere up to a substantial level, really
relying only on the NBC Universal vault, and that becomes a red
flag as to where does that go and how does this impact all of
the new platforms?
Mr. Nadler. So, in other words--and I am going to ask Mr.
Roberts to comment on all this in a moment--so in other words,
just to distill or summarize what you are saying, is that
already the major distribution networks simply won't look at
independent products, and there are some marginal that will.
This merger won't make that worse in that respect, because it
is already done, but it is not going to improve it in any way.
And, second, the ability to go to DVD and other new things
will be worsened by this merger, because one of the points of
the merger is that NBC will be--not NBC--Comcast will be able
to use the existing internal archives and, therefore, won't
need independent programming. Is that what you are saying?
Ms. Prewitt. I am saying that we hope the existing
situation won't get worse, have no promise it won't be.
Mr. Nadler. Right.
Ms. Prewitt. And----
Mr. Nadler. But I have got the second half right?
Ms. Prewitt [continuing]. The new platforms will be. Yes.
Mr. Nadler. Okay. Mr. Roberts?
Mr. Roberts. Okay, thank you. As I think you have been
pointing out, some of this doesn't relate to the merger. Some
are industry issues. And I think to the extent that folks think
the industry doesn't have lots of diversity of voices, you
know, then it is an industry conversation not related to the
merger.
Mr. Nadler. Well, let me ask you this. I mean, do you think
it is accurate what we have heard this morning, that the major
distribution companies such as Comcast and others essentially
have shut their doors to independents?
Mr. Roberts. No, definitely not the case. In fact, in one
of the examples of On Demand, you know, that is where so many
people have been watching movies. We have had an easier time
with some of the independents getting the movies, because they
are smaller movies, they don't have as many box office issues,
and issues with DVD sales, and so they are quicker to put it On
Demand and have a direct relationship with the consumer. So
some of the----
Mr. Nadler. Is that true just of movies or of documentaries
and----
Mr. Roberts. Documentary channels. Quite to the contrary of
that least for Comcast cable. We are looking, and part of
Project Infinity is to have as many relationships as we can.
When we first launched On Demand, we weren't able to get
broadcast television or really near-first-run movies. I think
the Wall Street Journal wrote a piece about why On Demand isn't
worth all the billions of dollars that are being invested in it
because it is interactive television and it does not
necessarily have the best content.
And, in fact, it was Discovery Channel's content and many
others that really got it going, and then eventually HBO and
smaller studios, larger studios, MGM--now we have 15,000 shows
On Demand. We hope to go to 50,000, 100,000----
Mr. Nadler. And the second statement, the second
contention, which is that--I am trying to remember what the
second one was now----
Mr. Roberts. About shows on the actual network itself, what
is--well, TV Everywhere, we are trying to say if--to make a
relationship for the consumer that they can get--we know
consumers want to get many products--many shows on the Internet
or on their computer and on the wireless devices and everywhere
else--and we are trying to create a licensed, secured, you
know, not pirated model with the content companies. And we
would be happy to sit down and figure out how to get more
content on our On Demand and on our online platform, and that
is by no means not in our business interest.
And I think that is the overarching question where I
strongly disagree with what Dr. Cooper said. And just for the
record, if you want us to submit the economic theory, and
perhaps the other economists on the panel may have a differing
opinion, we would be glad to do so. We don't agree with some of
the statements he made.
We are driven because it is such a competitive business. We
need the best shows or people switch to DirecTV or Dish Network
or Verizon FiOS or AT&T U-verse or RCN. This business is so
different than it has ever been before, and each one of these
negotiations involve lots of money. They are not simple. But at
the end of the day, we are trying to give the consumer access
to as much content on as many different tiers as possible.
We now have 15 different levels of service here in the
Washington market, so different consumers can pick what
products they do and don't want. And I think that policy will
continue as we operate this new company.
Mr. Issa. Mr. Chairman, point of parliamentary inquiry? Mr.
Chairman, so for planning purposes for the Members, will we
continue to have a 15-minute per side or longer? I would just
like to know how long it is going to be. It has been far beyond
10 minutes so far.
Mr. Conyers. Yes, but this is of such significance that I
have extended the 5-minute rule.
Mr. Issa. I have no problem, Mr. Chairman. For planning
purposes, I just wanted to know if there would be a predictable
time per side so that I could plan my day and all of us could.
Mr. Conyers. I only wish I could give you assurances that
would meet your demanding requirements.
Mr. Issa. Thank you, Mr. Chairman. All of ours. Thank you,
Chairman.
Mr. Nadler. Mr. Chairman, in the interest of brevity, then,
let me ask Mr. Roberts two questions at once and that will be
it. One, which you got into sort of by mentioning the
competitiveness, if the business is so competitive, why are
cable prices increasing at three times the rate of inflation?
And, secondly, how would you respond to someone who said,
``Well, given what we have heard from others, we should not
approve the merger because we don't want to subject the workers
at NBC to the less than tender mercies of the labor relations
pattern that we have seen at Comcast.''
Mr. Roberts. Well, the first question is, I think the value
and the quality of the delivery of what is cable TV has changed
over the last 20 years. We have many more channels, better
quality channels, high-definition channels. We are----
Mr. Nadler. So you are saying that the value--that it is
not a fair--it is not fair to look at--you are getting more for
the price, and therefore, you have to do a different
calculation?
Mr. Roberts. And we do have more competitors. In fact,
DirecTV has a higher charge than Comcast cable.
Mr. Nadler. So you have to do a different calculation. That
is too simplistic.
Mr. Roberts. That is correct.
Mr. Nadler. Has anybody been able to come up with a proper
calculation that would show us?
Mr. Roberts. You know, you can do it per channel. You can
do it different levels of service. I will be happy to submit
some responses to that, if you would like.
Mr. Nadler. Okay.
Mr. Roberts. The second question on labor, you know, again,
I am very proud of Comcast's record, disappointed with the
testimony, but I would, you know, understand that at times
there may be different points of views from different
constituencies. But we have built a company from scratch with
over 100,000 employees. We have one of the highest employee
satisfaction rates. We are pro-employee----
Mr. Nadler. Let me just ask you this. I wouldn't be at all
surprised to hear a labor leader come in and say, ``Oh, the
employer's terrible.'' But to hear an employee come in and say,
``You have got two employers, one is great and the other's
terrible.'' Why?
Mr. Roberts. Well, cable distribution, cable operations,
the industry has traditionally not had very many union
employees, less than, I think, 2 percent industry-wide, and
Comcast is not an outlier one way or the other. We are kind of
in the norm.
The programmed television production part of the company's
cable channel, Comcast has 13 percent to 14 percent unions in
our cable programming business and, I think, enjoys good
relations there. And so one of our commitments upfront is we
hope to continue the good relations with the guilds and with
the unions that NBC Universal has. We reached out to a number
of those organizations.
I think that deep at its essence there is a view that
Comcast is genuine in investing and improving NBC Universal's
quality and quantity of content and that that is going to be
good for those guilds and those unions, better than the
predecessor/owner which has many other alternatives to put the
capital to use all over the world. We are only in the
entertainment, distribution, and telecommunications businesses,
and I think our intention is not to buy it to slow it down, but
to try to expand it and grow it.
Mr. Nadler. Thank you. I yield back.
Mr. Conyers. Just before I recognize Bob Goodlatte, Dr.
Cooper?
Mr. Cooper. Well, I just want to point out that, until
Comcast sells programming on a per-channel basis, the per-
channel number is baloney. He sells bundles, and that is what
the bundle has been doing. The per-channel stuff is meaningless
because he won't sell it to the public on a per-channel basis.
Mr. Conyers. Bob Goodlatte?
Mr. Goodlatte. Well, thank you, Mr. Chairman. And I want to
follow up on some of the comments of Mr. Berman and Mr. Smith
regarding copyright protection. I have long said that the ISP
and distribution community and the content community need each
other to work to resolve their differences in the private
sector. And so, as Mr. Berman said, this is going to be a good
test of that.
This proposed merger would be an interesting combination of
these two interests and would add rich content to Comcast's
portfolio. If this merger is approved, I expect that Comcast
will begin to appreciate even more the benefits of copyright
protection.
In 1998, I was charged by your predecessor, Chairman Hyde,
with conducting the negotiations that ultimately drafted the--
and ultimately drafted the ISP provisions of the Digital
Millennium Copyright Act. One important provision requires
that, in order to receive the immunity of the law, Internet
service providers must adopt and reasonably implement a policy
that provides for termination in appropriate circumstances of
subscribers who are repeat infringers.
This has been in the news in some countries and some
locales of late, and I am wondering, Mr. Roberts, does Comcast
have such a plan in place? And what other specific steps can we
expect Comcast to do to combat copyright infringement post this
merger?
Mr. Roberts. I would like to get it exactly right on the
specifics. And if I may, I would like to say that I would like
to submit something on what our policy is on repeat infringers.
I know that we absolutely contact repeat infringers and notify
them.
On your general point, as I said earlier, before this deal,
but this deal absolutely accelerates, because the technology is
enabling more piracy. So even when that act was passed, you
couldn't download a movie or a television show in less than 10
hours. And now technology has sped that up, or whatever the
specific would have been.
So the issue is becoming more urgent, and it is becoming
more real and more threatening. And we have seen in other
industries on how disruptive piracy can be, like music and
others, and so we have engaged all over the country locally and
nationally with different organizations to be addressing that.
And I, again, say that I think you are right that one of the
benefits of this union is it puts us squarely in an opportunity
role to get to those specifics and improve where we are today
to make them more binding on the party that is trying to pirate
that content.
Mr. Goodlatte. Well, this is a fast-moving area of
technology, as you know even better than I do, both in terms of
the efforts that you and Mr. Zucker and others take to protect
content, but also the technology to pirate that content. And so
when the Digital Millennium Copyright Act was adopted by the
Congress, I think there was the expectation on a lot of people,
including myself, that there would be the use of technology,
the use of business arrangements and so on to promote the
protection and expansion of content.
And it is worked out somewhat, but those industries that
have not stayed ahead of the curve have suffered more than
others who have attempted to do so, so it is a--your answer is
a very important one to me and to many others.
Mr. Roberts. If I might, I think you are totally right that
it is critical, and so many parts of the supply chain depend on
staying ahead with that technology. I think we are on the----
Mr. Goodlatte. And offering business plans that consumers
will respect. I mean, now, who would have thought when we wrote
the DMCA that Apple would be the world's largest purveyor of
music? But, indeed, they are, because they came up with a
business model that worked very well for consumers.
Mr. Roberts. They made it consumer friendly and many other
great things. And one of--that brings up a critical point. And
some of the conversations we have been having is to make this--
whatever the next technological solution is, to have it apply
to as many platforms as possible so that it doesn't become a
competitive differentiator between providers so that you can
pirate more easily over here and you can't over there. And that
is why it is so critical, your involvement and others, to keep
these industry-wide organizations there.
I think we, again, look forward now to being able to be a
significant member of the content community's voice in those
matters, not just the ISP's voice.
Mr. Goodlatte. Do you think that the future of television
is online or will traditional television continue to be the
primary way that viewers receive content?
Mr. Roberts. I wish I had a perfect crystal ball. So what
I--my answer and how I believe we should operate Comcast is to
not try to guess and guess wrong to that question. So I have
been saying for years, well before this merger, that I think
video over the Internet is more friend than anything else.
There is an opportunity if you start with the consumer and work
backwards, I think you run a good company.
And if there is change that has to happen, so be it. Try to
do the best you can to make it legal change, and come up with
business models that can work to make that change work for
consumers, as well as your stakeholders.
I think that history would suggest--radio is a vibrant
business in this country all these years later, but it has had
many changes. What has made the cable industry such an exciting
industry and why we have been able to add as many jobs as we
have had and make the tens of billions of dollars of capital
spending--we spent $5 billion in capital in 2009 alone is
making these big, large bets.
So we are betting right now on a technology called
wideband. We are already beyond broadband, in a 50 to 100
megabits per second service, so that if that is where the
consumer wants to consume, we will be the best provider, just
as we believe we have been the best provider of the last 40
years in changing television.
Mr. Goodlatte. Thank you. Let me ask Mr. Zucker,
representing a rural and small city district that relies more
on over-the-air broadcast television than most districts, I am
very concerned about fostering local broadcast programming,
especially local news and information.
And I have heard that network affiliates have some concerns
about the merger, including the fear that NBC will move its
most popular programming from broadcast television to cable,
which would decrease viewers and revenues and thus could
severely impact the ability of these local stations to deliver
local news and information. Fully a third of my constituents--
probably more than that--are not able to connect to a cable
system.
So what assurances can you give me that local programming,
including that of NBC affiliates, will remain robust if this
merger's approved?
Mr. Zucker. Well, the fact is that what--the best thing for
our programs on the NBC television network is to reach the
widest audience. That is how we can recoup the greatest
advertising revenue that is required for investments in
programs like ``Nightly News'' and ``The Today Show'' and
``Saturday Night Live'' and those kinds of programs. So it is
in our interest to make sure that they remain strong and
vibrant on the NBC television network.
Mr. Goodlatte. And I have heard some of Mr. Roberts'
comments in response to Ms. Prewitt's concerns, which I think
are very interesting and they are important, with regard to
independent production of television content. What is your view
of that? Where do you think that is going? How do you respond
to her? And what kind of assurances can you give us that that
kind of independent production, which provides a competitive
environment in the industry, is going to continue?
Mr. Zucker. I think you have to take a step back and
realize that, as I think about NBC, we are looking for the best
programming wherever it comes from. We need the best
programming. We need to do better at NBC.
What much of this is about is the financial investment that
is required in bringing that programming to air. And when you
consider that 80 percent of all programs fail, there is a
tremendous financial burden that we take on by investing in
those programs. So we want the best programs wherever they come
from, whoever they come from.
With regard to the financial investment, you know, we have
shouldered much of that responsibility. And to the degree that
others are able to shoulder some of that responsibility, we
continue to be open to that, as well.
As I pointed out, at NBC, we are now producing 20 new
programs for next year. More than a third of those come from
programmers who are not affiliated with NBC or NBC Universal.
Mr. Goodlatte. Thank you.
Thank you, Mr. Chairman.
Mr. Conyers. You are welcome.
Feeling better, Ms. Prewitt?
Ms. Prewitt. Well, not exactly, but I am fascinated. I
mean, I think that it is important to understand in some of
these conversations that independent programs may well find
their way on some of these outlets.
They do not find their way because independents are able to
go through the door and negotiate to get them placed. They find
their way because they have separately been picked up by a
studio and they come into a studio output deal. In the case of
TV Everywhere and some of the online offerings, in general, our
members have been told that their libraries are simply not big
enough for it to be worth the transaction cost to negotiate
with them.
But if they will go sell their programming to someone else,
thereby losing a big percentage of the transaction value, that
programming can then migrate and come in with a larger package.
So I think that it is--you know, no one is saying that some
program doesn't--some programming doesn't make it, like the
salmon swimming downstream. But the terms on which they are
able to do that are disadvantageous. They are disadvantageous
to further investment in production.
And it is not an open environment in which you negotiate
what is best. You negotiate essentially what is best four or
five levels downstream and then take your chances as
programming moves forward in a package.
But actually, I am very gratified by Mr. Roberts' comments
that they are more than happy to talk to us about TV
Everywhere. But overall, to quote Ronald Reagan, trust, but
verify. We would like to see something coming out of this that
is actually, if not bankable, at least independently
verifiable. Thank you.
Mr. Conyers. Zoe Lofgren? Oh, she is not here.
Sheila Jackson Lee?
Ms. Jackson Lee. Thank you very much, Mr. Chairman.
Let me, first of all, acknowledge, some friends from
Houston wanted me to ensure that their constituent, Comcast,
was aware of their interests in their, if you will, viewing of
this proceeding. And so I wanted to put their names on the
record, Representative Sylvester Turner, chairman of the Texas
Black Legislators, who engages with Comcast locally, and the
Greater Houston Partnership's Jeff Moseley.
So I just want you to know that individuals that you work
with in Houston are well aware of your good civic works, and we
thank you.
I believe the quote that I think will go down in history of
Mr. Schwartzman should probably be noted as one of the good
ones. This is the greatest media merger since Lucy and Desi,
certainly speaks volumes to how much of a magnitude this is.
And I am going to try and pose questions with the idea that
I think it is crucially important that all of the oversight
entities, including this Committee, stay intimately involved.
I, frankly, believe this should not be the last hearing. I
think Ms. Prewitt has made a point about trust and verify, and
the opportunity for discussion here, Mr. Zuckerman and Mr.
Roberts, I think has been very good. It has been good for you,
and it has certainly been good for us, to be educated about
this process.
But I would like to be able to see, as the negotiations go
forward, as the Department of Justice has its review, that this
Committee, Mr. Chairman, have the opportunity to have maybe one
or two more hearings, because I think the oversight is going to
be key.
I would like to start with Mr. Cohen. And as I do that, I
would like all of you to be thinking about the opportunities
that we have and the elements that have been mentioned, I
think, in Mr. Morial's comments. Where is the diversity in
programming, contracts, and jobs? Where's the diversity?
Clearly, in my office, I made it very clear that we have a
phrase in our community that one of the more segregated places
in America on Sunday are sometimes the places of faith. But the
next is the Sunday morning talk shows. It is almost like there
is a dearth of expertise and relevance to Members of Congress
who have a perspective, who happen to be Hispanic or African-
American or other, and certainly in the anchoring, it is the
same perspective. And we certainly welcome that, but there is
an absence of diversity broadly speaking.
Let me pointedly go to Mr. Cohen, if he can capture the
passion--and thank you for all the work that your workers and
members do--but tell us what you would need for a fix. What do
you believe you will be seeing across the board? And what would
be the necessary fix for trust and verify on this proposed
merger?
Mr. Cohen. Thank you for that opportunity and for all you
do.
Well, I mean, we really have three concerns. On the jobs
front internally and the rights of employees internally, the
problem is that one thing can be said before, and then the
realities are different after. And there are no warranties in
this system.
And I don't want to take up minutes here on the list of
these restructurings, but particularly the one that we talked
about in 2002--and in my testimony, I mentioned the difference
between before and after and the horrible results from
employees' point of view--the difference between the tolerance
at AT&T broadband and the realities at Comcast that continue to
this day.
And I don't think it is true at all that the labor
relations practices are the same or similar to others in this
industry. I beg to differ. I would welcome dialogue. We have
had no dialogue to this point on this merger, none.
But the norm in this industry is far different. Seventy-
five percent of workers actually have bargaining rights in this
industry. And if we are going to define the industry by the old
standard, the sort of cowboy period of cable, that is fine. But
this merger is supposed to be about the new world.
And in the new world, the labor relations here are
dragging, dragging, dragging standards down, turning people
into contractors and freelancers, eliminating benefits, health
care and pension benefits, and they have an effect on all the
millions of workers in the industry. And, again, we would
welcome dialogue. There has been none.
I think that the other is the external. And as I try to
point out, so what happens is that the bigger consequences of
this merger, the bundling vertically of content and pipes or
network, disadvantage investment. So whether it is Houston or
anywhere else, it lessens the likelihood that the so-called
competitors, be they telecom or satellite, continue to invest,
because they must pay more based on the pricing system for the
content. And without the content, they can't recoup their
investment.
And so this is known in the industry as bulk pricing. They
have fewer eyeballs. Therefore, they got a higher price per
eyeball. That can be true of a small operator in a rural place.
It is particularly true of even large operators who have been
investing billions of dollars, and we now see it drying up,
whether that is FiOS or whether that is Verizon FiOS or U-
verse.
And part of that is the way in which they have to purchase
video and then, secondly, the wall that is up on the Internet,
try to watch the Olympics, if you are not a cable subscriber.
You are getting a preview of what the new world is. We don't
think that is a good world.
We think the Internet world and the cable world or the
television world should be separate. And the wall that is built
shouldn't be a wall between. Here is the deal if you are a
cable subscriber, and here is the wall if you are not.
Ms. Jackson Lee. Thank you very much.
Let me just go directly to Mr. Roberts and to Mr.
Zuckerman. And if they would--Mr. Zucker, excuse me--if they
would ask questions, sort of respond. Mr. Cohen has made a
point. He happens to be representing a large constituent and
has the responsibility of protection of those individuals.
I think that, when we talk about growing America, the idea
that there would be some quality and value to this merger is
not one that we should ignore. I would extend an invitation to
both Mr. Roberts and Mr. Zucker to meet with all of us. We need
to engage over a period of time on the details of this.
So let me ask both of you, would you engage with Mr.
Cohen--Mr. Roberts, can you meet with Mr. Cohen?
Mr. Roberts. Well, I am happy to myself, if you think that
is best, or our company, whose experts----
Ms. Jackson Lee. Yes, I think it is best if you would meet
with Mr. Cohen. Would you do that?
Mr. Roberts. Yes.
Ms. Jackson Lee. Can you do that in the very near future?
Mr. Roberts. Absolutely.
Ms. Jackson Lee. Thank you.
Mr. Zucker, can you meet with Mr. Cohen?
Mr. Zucker. Yes. Yes.
Ms. Jackson Lee. All right. Mr. Cohen, you can establish
outreach, and hopefully we will create that opportunity.
Mr. Cohen. Thank you.
Ms. Jackson Lee. Let me go straight to this idea that Ms.
Prewitt has made a point about, that if you come together right
now, for example, Comcast is a gate-keeper of sorts, and we
enjoy listening and looking at cable, the excitement that it
provides, but it is a gatekeeper on programs that will be
carried on its cable systems.
It appears that virtually no program service was added to
any cable system in recent years unless a cable system operator
had a financial interest in the service. For example, you have
some minority cable stations that you own a large interest in.
So the question happens to be, is that the only way that
you can access now this new entity that will have Comcast
operating and NBC Universal merged in? Will the only way that
you access is that you own it? Will there be no opportunity--
which goes back to my broad point--diversity in programming,
diversity in contracts, and diversity in employment?
Would you both answer that question? Because, Mr. Zucker,
you will be merged in. Your programming content will come in,
but what happens to access for others?
Mr. Roberts. If I might begin--and then Mr. Zucker--that
would be against the law if we made our decisions based on
ownership, and we do not do that. We have had many independent
channels that we have added to our carriage line-up, and I will
be happy to get you a list of those in Houston and elsewhere
over the last several years.
Six out of every seven channels that we carry--and I think
the vast majority of the new ones that we have launched we do
not have any economic interest in, so hopefully that answers
the question.
Jeff?
Ms. Jackson Lee. Mr. Zucker?
Mr. Zucker. I would tell you that I believe this actually--
this deal will enhance the commitment to diversity in
programming, specifically Comcast is committed to expanding
over-the-air programming to the Hispanic community in
particular, using Telemundo's digital spectrum, and committed
to launching a new channel to expanding programming on
Telemundo's cable network, mun2, On Demand programming with
regard to that. So I actually think this will enhance diverse
programming.
Ms. Jackson Lee. I am glad you brought that up. And, again,
this is trust and verify. We can't have all this confirmed just
by this testimony that you are giving.
But you will be holding--Mr. Roberts, Comcast will be
holding Telemundo and NBC. It is to your advantage that if
others wanted to carry portions of NBC Universal and Telemundo
that you could block them by charging exorbitant fees. Do you
intend to do that?
Mr. Roberts. No, we do not.
Ms. Jackson Lee. And how is that going to be characterized,
by contract, by policy, by affirmation, or----
Mr. Roberts. There are a number of ways. Start with the
fact that we have an existing business, so whether it is one of
their cable channels or Telemundo or NBC, there is, in my
opinion, the second-largest customer is satellite company, the
third-largest customer is a satellite company. It is in our
interest to have their support.
If they choose not to carry these channels, the channels
radically are less valuable to the advertiser, to the content
producer. The entire system depends on that and with so many
channels, I don't think it changes that incentive.
As has been pointed out, we are about 24 percent of
distribution. We have gone backwards the last 2 years,
continued--lost 200,000 customers because of all this
heightened competition. We need to carry the best programming,
and we think, as a content company, we need to get that
programming carried.
Now, the FCC has a next level. Any company can go and bring
a carriage dispute or an access dispute to the FCC, as has been
mentioned previously in the hearing. So there are 20 years of
experience, and there is also the existing business that we
would be buying, and they already have contracts. And then in
addition to that, any new dealings, there is this overall FCC,
where folks have been able to bring a complaint.
Ms. Jackson Lee. Let me put these two questions to you and
close up. I would like to know whether you would commit to
adding two independent mergers per year.
I want Ms. Prewitt to tell this Committee what she wants us
to do with respect to our vital--most vital role with respect
to the independents.
And Mr. Zucker and Mr. Roberts, you have yet not commented
on my diversity question in programming, in contracts, and
employment. And so I need you to answer that. And you might
pointedly look to your most famous Sunday morning talk show on
its, if you will, guest list for the past decade, and you might
reflect on that.
Mr. Roberts?
Mr. Roberts. I will begin by saying, diversity of----
Ms. Jackson Lee. Employment.
Mr. Roberts [continuing]. Of employment and in
programming----
Ms. Jackson Lee. Contracts and programming, sir.
Mr. Roberts. And as well as our minority supplier
diversity----
Ms. Jackson Lee. Yes, and if we can get that coming back to
us in the Committee in writing--you are going to say it now,
but if you can give us that in writing, that would be helpful.
Mr. Roberts. I will do so. I will just say that they have
been externally recognized repeatedly, our diversity efforts,
top 50 organizations for multicultural business opportunities
by diversitybusiness.com for 5 consecutive years, 50 out front
of diversity leadership by Diversity MBA magazine 4 years in a
row, Diversity Elite 60, and top 60 companies for Hispanics.
So I think we have a good record. I appreciate the
opportunity to submit that to you.
Secondly, we have committed, will commit that for--starting
in 2011, for 3 years, we would add two independent channels per
year.
Mr. Zucker?
Ms. Jackson Lee. We appreciate that. And we will talk
further about that. I know you can't go into more details.
Thank you.
Mr. Zucker?
Mr. Zucker. Yes, with regard to diversity, I would just
like to let you know that I have been in my role for 3 years. I
made diversity one of my key five strategic goals. One of the
first things that I did was appoint a chief diversity officer
reporting directly to me. Paula Madison is here with us today.
The numbers which we will send to you, I have them today,
but we will put them in writing, have increased in almost every
way that you can judge them, and I am proud of that.
With regard to your specific--I know that you are
specifically interested in the guest list on ``Meet the Press''
over the last decade, and I would suggest to you that you are
correct and that we need to do a better job there.
One of the moves that we have made in the last year is that
the person who now has responsibility for ``Meet the Press'' in
an executive oversight is Mark Whitaker, who is an African-
American who I would like to make sure that----
Ms. Jackson Lee. I would be delighted.
Mr. Zucker [continuing]. Make sure that you see soon. His
responsibility as the Washington bureau chief of NBC News
includes ``Meet the Press,'' so it is obviously an area of
focus for him and for us, and I would tell you that I agree
with your premise.
Ms. Jackson Lee. Ms. Prewitt, quickly?
Ms. Prewitt. Thank you. First of all, I would like to
comment on the two-channel commitment, that I see diversity as
a two-sided issue. There is the issue of bringing diverse
programming that appeals to different cultures and different
constituencies to the air, but there is also the question of--
which can be done through an isolated channel, and that lets
people cut their teeth. It gets that programming forward.
But there is also the question of bringing those messages
to the wider community. And my argument has always been that
you want people to see programming made by individuals not like
themselves. That is where debate happens, and that is what we
are trying to accomplish.
And so we would look at a commitment that was not just to
two channels, but to a minimum number of slots across all the
platforms, or a percentage of overall acquisition budgets,
which I gather will grow as a result of this merger, to fuel
programming which can compete and find a place across network
television, the more prestigious cable channels, as well as to
help bring new talent into any new channels that are created.
Ms. Jackson Lee. And have you met with Mr. Roberts and Mr.
Zucker?
Ms. Prewitt. No, we had previously written to studio heads
to request meetings but received no answer from their offices.
Ms. Jackson Lee. Well, they are sitting right next to you,
and I know they have been very gracious----
Ms. Prewitt. And we will follow up. Thank you.
Ms. Jackson Lee. And, Mr. Roberts and Mr. Zucker, can we
have that meeting go forward, as well?
Mr. Roberts. I am not aware of any communication to us. Did
you write to Comcast?
Ms. Jackson Lee. I am sorry. Would you be willing to have a
meeting go forward?
Mr. Roberts. I offered that before the panel started and am
happy to do so.
Ms. Jackson Lee. Mr. Zucker?
Mr. Zucker. Yes, ma'am.
Ms. Jackson Lee. I think, Mr. Chairman, you have been very
kind. I do restate that I think that we need to--there are
gentleman that I was not able to inquire, but I heard their
testimony, will be reading it closely, but I believe this is so
important and so massive that we should have the opportunity to
address this question again as it moves forward to the various
executive agencies.
I thank the Chairman, and I yield back.
Mr. Conyers. Howard Coble?
Mr. Coble. Thank you, Mr. Chairman.
I apologize to you and the panel. I have been bouncing
between two different hearings today. And, folks, I promised
the Chairman I would be 5 minutes, so you all help me along
with that.
Today's testimony, when I have been here, has questioned
current laws and regulations regarding program carriage and
access. Let me address that with a question. Mr. Roberts and to
Mr. Zucker, what is Comcast and NBC's experience been with
these regulations at FCC?
Mr. Roberts. It has, I think, been an environment that has
allowed us as a distributor to also invest in content. It has
allowed other third-parties, when they are concerned about
their own business dealings, to go to a third party. And I
think generally the rules have fostered an environment where we
have seen an explosion of channels, explosion of choices, and
allowed us to make investments at the same time.
Mr. Coble. Mr. Zucker, do you concur?
Mr. Zucker. Yes, sir.
Mr. Coble. Thank you. Gentlemen, how has this merger--
strike that. How would this merger affect third parties, such
as small rural providers that seek to carry this content? And
how do you envision negotiating with these providers?
Now, I am told that the gentleman from Mississippi asked
that question. Do you or Mr. Zucker want to extend on your
answer? If not, I will examine your questions.
Mr. Roberts. I would stay with the answers given.
Basically, I don't think the merger has any direct implications
to that, because the relationships that existed will continue
to exist. Part of why it is a vertical deal is our two
companies are in different parts of this business. And I think
it doesn't change anything.
Mr. Coble. I thank you, sir.
Now, Dr. Cooper, I would be interested in your thoughts to
that same question, because you seem to contend that this
transaction would probably reduce choice and competition in
local markets. Now, specifically, Dr. Cooper, do you believe
this will be a problem in all areas or only in those areas
where NBC owns and controls a station?
Mr. Cooper. In my testimony, I make it clear that joining a
dominant distributor to a major content producer provides
vertical leverage that will affect all markets, both the
content market and the distribution markets in which one or the
other of the entities owns properties.
Mr. Coble. Thank you, sir. And in conclusion, Professor
Hazlett, let me put this question to you, if I may. Do you have
a position on whether this deal may present antitrust concerns,
in particular geographic markets, A?
And, B, in particular, I am thinking of circumstances where
Comcast owns a regional sports network and NBC owns and
operates a broadcast station. Does this present, in your
opinion, any competition problems from your perspective?
Mr. Hazlett. No, I don't think it does. There are issues
about access to programming that predate the merger and are
ongoing, will be of interest after the merger, but the merger
itself does not increase market power in any given market where
that is an issue.
Mr. Coble. Thank you all again for being here. Mr.
Chairman, thank you. And do I get credit for 5 minutes?
Mr. Conyers. As always.
Mr. Coble. With your cooperation. Thank you, Mr. Chairman.
Mr. Conyers. Maxine Waters?
Ms. Waters. Thank you very much, Mr. Chairman. This hearing
has certainly been informational and educational, and I have
learned a lot just listening to the questions and the answers
over the last half-hour so that I have been sitting here. And I
think I understand very well what has been stated about the
desire to go forward with this merger and what does it mean to
each of the companies.
But I also understand from those who are opposed to this
merger, who have questions about this merger why they have
those questions.
There are several areas of interest. The first for me has
to do with diversity. And I have been listening to the
commitments to diversity, but when I look at the boards of
directors of both Comcast and NBC, I have questions.
For example, is it possible, Mr. Roberts, that there are no
women on the board of directors of Comcast?
Mr. Roberts. No, that is not true. Dr. Judith Rodin of the
Rockefeller Foundation is on the board.
Ms. Waters. How many people do you--how many directors do
you have?
Mr. Roberts. Like 12, I believe.
Ms. Waters. I noted 11. That is on the Internet.
Mr. Roberts. Let me----
Ms. Waters. Did she just come on?
Mr. Roberts. No.
Ms. Waters. Is it a recent--why would her name not appear
on the Internet on your board of directors?
Mr. Roberts. I believe it does. If it doesn't, I will check
that today. She has been on the board for more than 5 years and
has been on the board ever since the AT&T broadband merger.
Ms. Waters. Okay. So you have 12 directors, you have one
woman, and one African-American, Mr. Bacon?
Mr. Roberts. We have Mr. Bacon on the board. That is
correct.
Ms. Waters. And any Latinos or Latinas?
Mr. Roberts. We do not, I think, at this time, but the
governance committee of the board has stated that increasing
the diversity on the board is one of its top priorities and
that is an area that we would like to improve, as well as
additional diversity on the board.
Ms. Waters. I think that is very important, because when
you are judged about your sincerity about diversity, it really
starts at the top. And when you look at the board of directors
of any organization, it tells you a lot about who they are and
what they are trying to do.
Let's take a look at NBC. We are very pleased about Paula
Madison. She is kind of a twofer. She is a woman, and she is
Black, and she is connected to the community, and we are very
appreciative for being able to talk openly and candidly with
her about our concerns.
And I guess you have one other woman, Lynn Calpeter. Is
that correct? Or do you have another woman?
Mr. Zucker. Within our executive--within the top executive
ranks at NBC Universal, other than Paula, our CFO, Lynn
Calpeter, is female.
Ms. Waters. I just want to deal with the board first before
we go to the other offices.
Mr. Zucker. On the board of NBC Universal.
Ms. Waters. With the board.
Mr. Zucker. Yes, ma'am.
Ms. Waters. So you have Paula Madison, one woman, one
Black. Any other women? Any other Blacks?
Mr. Zucker. Lynn Calpeter, Bonnie Hammer also--Bonnie
Hammer, who is the president of USA and Syfy, is also on the
board of NBC Universal. I believe there is----
Ms. Waters. Bonnie Hammer?
Mr. Zucker. Bonnie Hammer.
Ms. Waters. Not listed on the Internet. You have 19 members
on the board or 20?
Mr. Zucker. I don't think that is the board of NBC
Universal.
Ms. Waters. Oh, it is not?
Mr. Zucker. Yes, I think you may be looking--I am not sure
what you are looking at.
Ms. Waters. I am looking at the board where Jay Ireland,
Jeff Zucker, Michael Bass, Lynn Calpeter, Steve Capus, Marc
Chini, Rick Cotton, Dick Ebersol, John Eck, Jeff Gaspin,
Allison Gollust, Mark Hoffman, Paula Madison, Salil Mehta, Ron
Meyer, Richard Pilot, Cory Shields, Peter Smith and John
Wallace. Is that not the NBC Universal board?
Mr. Zucker. Those are the executive--I think that would be
the executives of NBC Universal, the top executives of NBC
Universal.
Ms. Waters. Paula Madison is on the board though, right?
Mr. Zucker. She is one of the top executives of NBC
Universal.
Ms. Waters. But she is on the board?
Voice. They don't have a board.
Ms. Waters. Is she on the board?
Mr. Zucker. That is the directors' board, yes, yes.
Ms. Waters. So is there something different than what I
just read that is the board of directors? Or is it one and the
same, your top executives make up the board, plus others? How
does it work?
Mr. Zucker. NBC Universal is not a public company, so we
have a--so we have a legal entity that lists all the top
executives, which I think is what you are reading from.
Ms. Waters. I see. Okay.
Mr. Zucker. So we are not a public board, and I think that
is----
Ms. Waters. So this basically is the make-up of the top
executives who kind of serve in a board capacity, but not
legally constructed as a board?
Mr. Zucker. That is an accurate way to look at it. Yes,
ma'am.
Ms. Waters. So you have two women, is that right, or three
women? How may in this 19 that I have counted? Or is it just
Paula by herself?
Mr. Zucker. Well, I think it is--Paula Madison is on there.
I think Lynn Calpeter is on there. I think Bonnie Hammer is on
there. I think Allison Gollust is on there.
Ms. Waters. I don't see Bonnie--what is her title?
Mr. Zucker. Bonnie Hammer is the president of USA and Syfy
networks.
Ms. Waters. And are there any more African-Americans on the
board, in this executive make-up?
Mr. Zucker. In that executive make-up, no.
Ms. Waters. Okay. Any Latinos?
Mr. Zucker. On that board, no.
Ms. Waters. Okay. So you have got some work to do, too,
right?
Mr. Zucker. As I said before, this has been one of my key
strategic priorities that I put in place when I came into this
role 3 years ago. I feel we have made progress. There is no
question that there is more progress to be made.
Ms. Waters. Let's talk a little bit about programming. And
I don't know what I am referring to in terms of this season or
next season, but I am told that there is no Black programming,
you have no more Black programming. Is that correct?
Mr. Zucker. Are you talking about NBC right now?
Ms. Waters. Yes.
Mr. Zucker. Yes, on NBC? There is not a program on NBC that
has an African-American-central theme to it, that is correct.
Ms. Waters. Why not?
Mr. Zucker. I think we are always looking to--you know,
diversity is incredibly important in all of our casting and in
all of our themes. We are looking for programming that covers
that--you know, that covers both the diverse casting and
diverse programming.
With regard to African-Americans, we haven't found that
program at this time. As was referenced, obviously, we have
been--we were at the forefront of that, when you go way back
into the history of NBC, when you go into the more recent
history of NBC.
Ms. Waters. That was then, and now is now.
Mr. Zucker. Yes, today we don't have that program on the
air.
Ms. Waters. So, Ms. Prewitt, do you think that they could
get some help from individual filmmakers to help them with a
little diversity so that they would not be sitting here in 2010
with no Black programming?
Ms. Prewitt. I think they could absolutely get some help.
And the day they say, ``Go,'' I will have members who are
prepared to start filling those slots.
Ms. Waters. But he just said, ``Go.'' He is looking. He
really wants to.
Ms. Prewitt. Indeed. Indeed. Well, I will pick up the phone
and call my board meeting, which is convening now, to tell them
to get started.
Thank you.
Ms. Waters. And so, Ms. Prewitt, are we talking about them
working with independent developers to--independent filmmakers
to help develop new shows? How do they get this done? He has
forgotten how to do it.
Ms. Prewitt. There are two issues.
Ms. Waters. They used to do it a long time ago----
Ms. Prewitt. Well, they used to do it. And one looming
issue here is, who at the end of the day owns that show? There
are a number of people who may well be prepared to come in and
work with the network and have been invited to work with the
network and then turn the ownership of that show over to the
network.
The independents with whom we work wish to retain the
rights to their shows. They want to be in control of where
those shows are exploited after the initial network or cable
run.
So on that basis, people are perfectly happy to work with
the network, but the network has to be prepared to sit on its
hands as they try to grab all worldwide Internet rights or
things of that nature.
And if you look back in the--you know, the early days, what
we think of as the great days, the Bill Cosby days, what you
will find there is that that programming traveled worldwide
because the back-end rights were left with the creator. And
that is part of what we think the process is of forcing the
creator to take risk, along with the network, to really define
programming that matters. And on that basis, there certainly is
a wide community that would be happy to work with them.
Thank you.
Ms. Waters. Let me ask what I guess is a business question.
Is there some assumption that Black programming is not
profitable? Is that why you don't have it?
Mr. Zucker. Not at all.
Ms. Waters. Well, if it is profitable, don't you want to
make money?
Mr. Zucker. Yes, we do.
Ms. Waters. Well, how could you not pursue those efforts
that would help to make you profitable, more profitable? Tyler
Perry does very well with Black stage, Black screen, and we
just love it. We love seeing ourselves on television and in the
movies.
And I think that it would be credible to argue that Black
viewers deserve the kind of content that they feel good about
and that they are watching television and should have access to
this kind of programming. I don't understand why you don't
pursue it and why you don't do it.
Mr. Zucker. When I mentioned before that diversity was one
of my key strategic priorities for the company, we didn't make
diversity a strategic priority for the company just because--
only because it was the right thing to do. We also made it a
strategic priority because it is good business, as well. And so
I agree with what you are saying.
The fact is, we need the best programs we can find, no
matter who is the lead characters in them. The fact is, we
haven't done a very good job of finding programs at NBC
recently, and so that is on us. We need the best programs
wherever they come from, whoever stars in them, whatever their
themes are, and we need to continue to do that.
Ms. Waters. Well, I know that you are pretty, you know,
important in this country--I mean, in this company, but do you
know Bill Duke and others who are producers of good Black
programming?
Mr. Zucker. Well, I have--I am not involved in taking those
pitches and, obviously, hearing those ideas, but I can assure
you that we have increased our funding for diverse scripts and
diverse ideas dramatically, especially with the help of Paula
in recent years, the amount of attention that is paid to this.
The amount of resources that are attendant to looking for
diverse themes, diverse programs and diverse scripts has
magnified dramatically in the last 2 years.
Ms. Waters. But it has not resulted in Black programming.
You don't have any.
Mr. Zucker. It doesn't necessarily happen immediately, and
I think what we have done and what I am proud of is the fact
that we are attuned to it, the fact that we are putting money
where our mouths are, and we are looking for that. Whether we
have had success yet or not, which we--as you have pointed out,
we don't have any of those programs on the air today. We are--
--
Ms. Waters. How long do you think it will take?
Mr. Zucker. I wouldn't want to put a timeline on it. We are
looking for the best programs no matter where they come from,
and we have added dramatic resources to help us find those.
Ms. Waters. How do you determine whether or not it is a
good program? Do you have a committee that reviews----
Mr. Zucker. Well, there is a team, obviously, that picks
the programs. And diversity, including diverse casting and
themes, is a significant part of what they are looking----
Ms. Waters. So you have a team of diverse people that
includes African-Americans and Latinos and women that review
these products that are submitted to you? Is that how it works?
Mr. Zucker. Yes, ma'am.
Ms. Waters. And what are the Blacks on your team saying
about the inability to find Black programming? What do they
say, if you have some who actually look at this stuff?
Mr. Zucker. Yes, we do.
Ms. Waters. What do they say, ``not good enough''?
Mr. Zucker. I think we haven't found that program yet.
Ms. Waters. Well, let me just say that it is very difficult
to accept that you cannot find the kind of program that I am
talking about. And it is unacceptable to say that you don't
know--you have no goals. You don't know when it could happen.
It may happen. It may not happen. I don't think that Black
viewers would like to hear that kind of an answer.
And I think you can do better. And it is not all on Paula
Madison. It is good to be able to, you know, deflect when you
are getting this kind of question, and I am not doing it to be
in a ``gotcha'' moment. I am doing it because I am trying to be
as open and honest as I can be about your Black viewers.
Many of us are searching, looking for Black programming and
having to enjoy shows that are very old, that is repeated,
because we can't find any new programming that reflects us. And
we think that is very important, if you are committed to
diversity.
And I think that all of the ethnic groups who are viewers
and who are watching television--otherwise, we don't have a dog
in this kind of fight. I don't know why we should care whether
or not you are successful if we are not represented. I just
don't know why we should be concerned.
First of all, you have got a diversity problem, you have
got a labor problem, and you have got an ownership problem.
There is no ownership in this merger by anybody of color, any
minorities. Labor's not happy with what you are doing. We think
we are going to lose jobs.
So I just don't--I just don't know why I should be
supportive of your merger. I don't know what it does for the
people, some of the people that I represent, et cetera, et
cetera.
So I want to kind of just make that--put that on your radar
screen so that you will actually realize some success in the
area that you are working so hard in. And if you need
additional help, I will just call all my friends that I know in
the industry. And I will get Bill Duke and all the producers
that I know, and I will set up a meeting with you to make sure
you have reviewed their products, that they have been
submitted, take a look at your review committee that is
supposed to be diverse, and see if we can't get this done.
Thank you very much, Mr. Chairman. I yield back the balance
of my time.
Mr. Conyers. We have a vote on. We will be in recess for
this one vote which has been on. That was the second bell that
rang. And we will resume shortly. Thank you.
[Recess.]
Mr. Conyers. The Committee will come to order. Chair
recognizes Dan Lungren.
Mr. Lungren. Thank you very much, Mr. Chairman.
And I thank the witnesses for being here. As you can see,
we split our duties in a day, and I have been on the floor and
other things, so I haven't heard all the testimony. I think I
have the gist of it, but I would like to ask a few questions.
I thought it was interesting, and I think it is a serious
discussion on diversity. I am almost tempted to ask about
diversity of opinion, but that would suggest that I think that
networks are biased, and I wouldn't suggest that at all.
I do want to make sure that, no matter what you do, I can
still watch Notre Dame football on NBC. That is my particular
parochial interest here.
Let me ask this. I come from the general Sacramento area.
It has been highly competitive. And one of the reasons I know
that is we have changed who we use. I have had AT&T. I have had
cable. I have had satellite. I have tried all of them.
And, frankly, my wife and I do it depending on what the
best offer is at the time. And whether--I mean, we do it on
service and we do it on content and we do it on price. I think
we are like everybody else.
We have AT&T. We have Frontier. We have SureWest. We have
Comcast, et cetera.
And I believe the competition has been healthy, as I have
seen it and we utilized it. Frankly, I have seen services
improved over time. And we try and figure out who has got the
best service at the particular time, and we go with them, so we
are not one of your loyal customers, I guess is what I would
say.
But I am undecided about the facts that are being presented
here, so I would like to ask a couple of questions, and this
would be both to Mr. Roberts and Mr. Zucker, and anybody else
could comment after they do. And I would like to know how we
would assure that the costs for programming that you now
control and own would not increase arbitrarily for yourselves
and contractually with your competitors.
Because when you merge, as you would merge, there could be
a human tendency to benefit yourself, your closest person. And
how do I know that it would not in turn increase the prices for
customers across the board?
Mr. Roberts. Well, thank you. And first of all, I am sorry
that we have lost your business and we will work to get it
back. But I think it demonstrates the dynamic nature of the
business and the ever-changing nature of the competitiveness.
And I think that is a real live example of what the marketplace
is all about. Every day, we have got to wake up and have a
better product than we had yesterday.
First of all, it is not crystal clear that in the past, as
this Committee and others have looked at whether it was News
Corp., Direct TV, or Time Warner and Time Warner Cable, that
other businesses didn't come to the conclusion that there is no
benefit to even being in the same company. And what has been
mentioned in previous testimony is that many investors are
skeptical that there are benefits.
So I don't think one of those theoretical benefits is to go
out and raise prices artificially for your own channels. The
market is just too competitive. There are too many choices. And
we need the distribution--since we are 24 percent of the
country, 76 percent you need. And there is a robust market.
There is also--NBC today is not under the program access
rules. But because we are vertically integrating, their content
would now fall under more rules than it has previously, so it
is hard to see what you are describing as a theoretical happen.
And other companies, whether it is News Corp. or Time
Warner, we didn't see that kind of behavior, either. In fact,
so much of it they ultimately didn't even think they wanted to
stay in both businesses.
Mr. Lungren. Let me follow up on that. Would Comcast-NBC
tie various content packages to their own cable or Internet
services, which could then thereby impact customer choice and
create higher costs and unfair competition for customers and
their competitors?
Mr. Roberts. I am not sure I follow all the strains of that
question. I just want to make sure I appropriately answer----
Mr. Lungren. Well, I am talking about, you know, kind of
bundling the services. I mean, you are sort of one--you are two
companies now. You are one company afterwards, essentially.
Would that have you--NBC give a better benefit in this
situation to others that might be viewing--seeking that
content?
Mr. Roberts. So there are two sides. There is Comcast the
cable company, six out of every channels, as I stated earlier,
we do not have any financial interest in after the merger. So
there is plenty of opportunity.
And, more importantly, as you pointed out, as a customer,
to decide based on whether you choose to subscribe to us,
whether or not we have the best channels available. So I think
there is three, four, five competitors per market and
increasing competition all the time from other forms of
entertainment.
As far as channels getting carriage, the other side of that
question, again, there are opportunities for us to carry their
content and content to get carried by NBC and others. We have
been discussing that all day. There are program access rules,
program carriage rules. There has been an explosion of choice
to the consumer.
And I don't believe this deal changes that because we are
really in different parts of the business----
Mr. Lungren. Okay, well, let me ask this. The customer, me,
my wife, what does it mean to me? I mean, what am I going to
see? Are you telling me there is going to be no difference
whatsoever or I am going to be so pleased with this merger that
I am going to say, ``Why didn't you do it before, because it
has given me so much more benefit''? I mean, what is going to
be in my district for my constituents--what difference are they
going to see?
Mr. Roberts. Great question. I think first thing is, we
hope to improve the quality of NBC's programming, okay? We will
make this--this is the signature piece of our content. And our
investment strategy and our management expertise will solely be
focused on improving the quality.
Mr. Lungren. Well, my alma mater is trying to help you,
because we have a new football coach, so we hope that----
Mr. Roberts. And we thank you for that. And----
Mr. Lungren [continuing]. The product on the field will be
better in the coming years.
Mr. Roberts. Second is accelerating the technology that
your customers are going to be able to use to get more content
on more devices faster. We are convinced at Comcast that there
is a technological moment in time, explosion of choice with the
digitization of these industries, and they are changing all
over the world.
And our company for 40 years has just been a cable company.
We then invested in broadband, and that changed our company. We
invested in phone, and that changed our company. And we think
investing in content will continue to change our company and
make it a better company with innovating faster, more
creativity for our consumers than we are if we just stay doing
what we are doing.
Mr. Lungren. Mr. Zucker, if I am someone who enjoys NBC,
watches it, I get it through the system I get now, what is
going to be the impact on me from the standpoint of NBC?
Mr. Zucker. Yes, I think that I would echo some of the
comments that Mr. Roberts made. I think, first of all,
Comcast's willingness to invest in NBC is good for NBC and
should lead to greater opportunities for independent
programmers and for your consumers who hopefully will be able
to watch more and hopefully even better programming. So I think
that----
Mr. Lungren. Well, it is a capital infusion question.
Mr. Zucker. So that--well, the capital infusion I think
will be--will be very helpful to us. I think, as Mr. Roberts
said, the fact that the ability to provide that content
anytime, anywhere will also be a benefit to the consumers and
your constituents.
And I think--I would not underestimate this commitment to
the broadcast model so that the station in Sacramento, the NBC
affiliate there, KCRA, which is a fantastic affiliate--we are
very proud of our relationship with them. The fact that free,
over-the-air broadcasting will remain vibrant and strong, which
has been under a lot of duress in recent years, I think is a
very important thing to happen here.
Mr. Lungren. Well, that brings up another area of concern
that has been at least expressed to me by some of the
affiliates. Are they--are they in a weakened position now as a
result of this?
And the reason I say that is this. When I was in Congress
in the 1980's, we had the explosion from telephones, the
breakup of AT&T. No one could truly forecast what was going to
happen. And here we were in Congress trying to pass laws, and
technology outstripped us every single time.
So when I look at what we do, whether it is overseeing a
merger, whether it is new legislation, it is, can we anticipate
what the possibilities of technology are so that the laws that
we pass and the decisions we make will be appropriate not just
today, but 5 years down the line?
One of the things that I noted when we had the big
snowstorm here and when we had the big storms back home, you
know, you turn to your local television station or your radio
station--in most cases now television, because they have more
news--to learn about what the weather is, to learn about where
the problems are.
It is nice to get the national. It is nice to get other
kinds of things. But, man, they do serve a real public purpose
and public service. How do we make sure that they are not
disadvantaged by your larger market power, so to speak? I mean,
you are a bigger gorilla than after this merger than you are
now.
And how can I be assured that the--the affiliates are not
going to be disadvantaged by that, and to the extent that then
it would have negative economic effects on them such they may
be forced to cut back on their commitment to newsrooms, cut
back on their commitment to keep people apprised of what is
happening in their area?
Mr. Roberts. Well, I will weigh in, if I might, and then
Mr. Zucker may want to--he has the relationship today with the
affiliates. We have made several upfront commitments.
Probably the first, most important commitment is doing the
deal itself. This begins with GE deciding to sell NBC. And one
could think, where might that have gone? One answer is the 20
percent owner is Vivendi. Perhaps Vivendi would have bought the
other 100 percent. Perhaps it would have been another media
company that would have said, I already own a broadcast system
or I already own other things, a studio that NBC owns.
We are making a commitment that, as has been pointed out,
is not universally guaranteed success. This is a very, you
know, big gamble, I believe, hopefully wise, hopefully at the
right moment in time.
GE has, you know, said that they aren't happy that NBC's in
fourth place, but they have other investment opportunities to
invest in other businesses all over the world, in
infrastructure and other things. For Comcast, the opportunity
to try to restore NBC and its cable networks and to continue to
grow them and invest isn't lip service. It is the mission. Why
else would you buy it? Many other companies chose to pass, I am
sure, on wanting to get into some of these businesses today.
So we are making a bet on the U.S. economy turning around.
We are making a bet that advertisers and car companies are
going to come back to advertising, that the future is brighter
than the present. And I think we are--you know, we are
confident and excited about that, but it starts with the
essence of your question, which is, you wouldn't do that if you
weren't really willing to make an investment in growth and in
future and in job creation that we are coming out of this
cycle.
It doesn't have to be this month, but it has to be at some
point or probably the trend that has happened in the past,
where some of these businesses have declined will now turn
around.
Mr. Lungren. Yes, sir.
Mr. Schwartzman. Thank you, Mr. Lungren. I have three very
brief points I would like to make in response. First of all,
Mr. Roberts has introduced a red herring here, because
Vivendi--and Mr. Morial made the same point, that he was
concerned that NBC go to an American company. The suggestion
that Vivendi might buy NBC is just wrong, because as a matter
of law, the Communications Act prohibits the operation of
broadcast licensees by aliens, so that is just a complete red
herring and an effort to suggest a threat that doesn't really
exist.
Second, Mr. Roberts talks about program access and program
carriage rules in several occasions and saying, even suggesting
that they have been beneficial to Comcast operations. It has
challenged the legality of both the program access and program
carriage rules, and we have asked Comcast to withdraw its legal
challenge to the program access rules. And thus far, it has
refused to do so.
To the extent that he said they might comply anyway
voluntarily, that is not very reassuring, and that assumes that
those rules are sufficient in the first place. And as I said in
my prepared testimony, we think those rules aren't sufficient.
The third point is that the continuing legality of those
rules--of the program access rules, they only run for 2 more
years. And Mr. Roberts is not committing to comply with them
beyond then.
Mr. Lungren. Dr. Cooper?
Mr. Cooper. Mr. Lungren, so you are concerned about
predictions about what is going to happen to your constituents.
And I think when you allow a company that represents a quarter
of the market to give guaranteed access to programming--now NBC
and Comcast argue about the price of the programming, they
argue about the channel location, they argue about the bundle
size.
You take that argument away, and now they have a
commonality of interests, so they certainly have a commonality
of interest on bigger bundles. Comcast now has a proprietary
interest in pushing NBC programming in big bundles. They will
certainly continue their policy of not allowing you to buy
channels on a single basis, but now they own a bunch of
programming which they really want to keep in the bundle, and
they are going to put it in the bundle. So they will continue
their bundling activities.
Second of all, they will try to tie Internet distribution
to cable distribution. That is their TV Everywhere model. They
want to preserve that cable subscription and prevent other
cable operators and other people from selling Internet-only
service.
And those two things are a big deal to your constituents.
They really could use true choice on a channel-by-channel
basis. They really could use the Internet as a platform that
breaks their market power. And when you combine one of the top
four programmers and look at the popular programming--not the
500, look at the top 30--that is where NBC has specialized,
along with a handful of others.
You take that dominant programming, must-have programming,
marry it to regional must-have programming, add it to a quarter
of the market guarantee. Every company in America would love to
have a guaranteed quarter of the market. That gives them a lot
more bargaining power when they deal with everyone else. This
will raise your price and reduce your choices, especially if it
entails the Internet.
Mr. Schwartzman. I have one more thing. It is about Notre
Dame, so if I might get a second bite at the apple----
Mr. Lungren. Only if it is positive.
Mr. Schwartzman. Well, it is a concern. NBC is restricting
online availability of the Olympics to cable subscribers. If
you want to watch online--the Olympics online, you must
authenticate that you are already a cable subscriber. Once
Comcast acquires NBC, they may put the Notre Dame programming
so it is only available online to Comcast subscribers.
So that is the kind of concern that we have when you
migrate this stuff to the Internet.
Mr. Lungren. Dr. Cooper, you brought something up that has
been a question of mine. It comes out of my just individual
experience, and that is, the difficulty in buying a la carte. I
used to have one--I wanted the Western Channel. I happen to
love to watch old Westerns. And you could only get it bundled
with something else.
When I came to Congress and my salary went down, my wife
said, ``You are going to suffer along with the family, so we
are not going to have the Western Channel anymore.'' Came home
one day, tried to turn on one of those things, it wasn't there.
And that has bedeviled me, why it has been so difficult for
a la carte pricing?
Mr. Cooper. Well, the cable industry will give you all
manner of economic explanation about the recovery of costs, but
the interesting thing is that you don't have those costs on the
Internet. You don't have to build systems. You don't--there is
no geography on the Internet, and that is what really gets our
attention at this effort to require a cable subscription or an
MVPD subscription in order to view Internet content.
That means that the company that sells me my cable
subscription is, in fact, preserving its business relationship
to me. And if I cut that relationship, I don't have any way to
view this programming on the Internet.
So the key here is that their control over the market,
their bundling--they have been able to impose the bundle. And
we have tried for years to find a variety of ways to break that
bundle. I have testified before a variety of Committees in
Congress.
It is a question of the exercise of market power. And here
you have a moment where the Internet comes along. NBC has
invested in a competed alternative distribution system. They
need to kill that threat off, because on the Internet, you do
tend to buy individual channels.
Someone mentioned the iTunes model. You buy individual
songs on iTunes, a perfect model for selling digital content.
So this is the key moment, to stop the practice from physical
space. That you have noticed. They didn't give you true choice.
And prevent them from undermining choice in cyberspace.
Mr. Lungren. Thank you, Mr. Chairman.
Mr. Conyers. Steve Cohen?
Mr. Cohen of Tennessee. Thank you, Mr. Chairman, once
again, proving all things comes to those who wait.
First of all, this has been very enlightening. Mr. Zucker,
I have seen you on television, particularly with the Conan-Leno
world, which is, no, not your favorite moment, but now I know
who Bob Costas has been doing an impression of all these years.
You sound a lot like Bob Costas, or he sounds a lot like you.
Mr. Harper started his remarks talking about Mr. Roberts
and his father's company starting in Tupelo, Mississippi, and I
found it interesting to hear that the reason you started it is
because the folks there couldn't get their antennas to pick up
Memphis. I don't think that is why Elvis and his family left
Tupelo and went to Memphis, but there are lots of reasons to do
it, and I want you all always to remember that Memphis is
responsible for everything.
Elvis and Memphis. Before there was Elvis, there was
nothing. That is what John Lennon said. Before there was
Memphis, there wasn't any Comcast. Remember that.
I concur with some of the remarks made by my colleagues,
Sheila Jackson Lee and Maxine Waters, about diversity and
minority representation on the station. But I am correct, Mr.
Zucker, does not Harold Ford, Jr., who is a Tennessee Nine and
my predecessor in this position, appear quite frequently on
NBC?
Mr. Zucker. He does quite frequently.
Mr. Cohen of Tennessee. And is that kind of unique among
the networks for an African-American to be that frequent on the
networks?
Mr. Zucker. Well, I think we are actually quite proud of
our--the diversity that we have on our news and cable news
program. And I think Mr. Ford is the latest example of that,
and I think we have done quite a good job there.
Mr. Cohen of Tennessee. It is a good--the district brings
those type of people forward. Was Al Roker one of the first
African-American weather people on the networks?
Mr. Zucker. Yes, I----
Mr. Cohen of Tennessee. Or the first?
Mr. Zucker. If he wasn't the first, he was the first with
such a prominent role as he has played on ``The Today Show.'' I
think our history of diversity in our news programs has been
quite strong. My first job at NBC was actually as the writer-
researcher for Bob Costas, and I think that is where I may have
picked this up.
But after that, my next job was at ``The Today Show,''
where Bryant Gumbel played a huge role in turning ``The Today
Show'' into the most-watched morning show in America. And it
was joined by Al Roker not there long after. And today, Mr.
Roker continues to play a huge role. Lester Holt is the anchor
of weekend ``Nightly News'' on NBC News.
As you have pointed out, Mr. Ford plays a prominent role on
analysis on our news programs. So we are quite proud of the job
that we have done with regard to that.
Mr. Cohen of Tennessee. And I was going to bring up Bryant
Gumbel. I appreciate your mentioning, but I was really in
another vein with Al Roker. My next movement was to be the band
leaders.
And I remember Skitch Henderson and Doc Severinsen, and, of
course, we all know Paul Schaffer, who does so much Warren
Zevon to keep David Letterman entertained, and I appreciate
that.
Mr. Zucker. I am not familiar with that program.
Mr. Cohen of Tennessee. You should be.
Mr. Zucker. I am.
Mr. Cohen of Tennessee. But was Kevin Eubanks the first
band leader on a nighttime show that was African-American?
Mr. Zucker. Yes, sir. Yes, sir.
Mr. Cohen of Tennessee. And if you notice, there is a theme
there with Al Roker and Kevin Eubanks, follicly challenged
individuals. I support that.
Mr. Zucker. And I am supportive of that, as well. That is
their--that is their claim to fame, exactly.
I think that all of these things point out that obviously,
as I said before, diversity has been an incredibly important
part of what we have tried to do at NBC, NBC Universal, NBC
News, and I think we have done a good job.
It will never be perfect, but we have done a good job, and
I am quite proud of the record that we have shown both in news
and entertainment.
Mr. Cohen of Tennessee. If my memory is correct--and I am
not a student of broadcast journalism or executives and
networks--but I think David Sarnoff was known as being a pretty
good fellow and doing things to see that there was diversity
and being against discrimination.
I don't remember Mr. Paley so well. I think he was thought
of as a pretty nice fellow. And I don't know who ABC had, I
think, at Disney. I don't know who they had. But Mr. Sarnoff
was a leader. And he might have been the leader. So your
network does have some roots.
Mr. Zucker. We are very proud of the record that we have
had, especially with regard to African-Americans in prominent
roles, in first roles, dating back to the advent of television.
And I think that that is a position that we continue to believe
very strongly in. And I think you see that every day on the NBC
television network.
Mr. Cohen of Tennessee. Now, I know you have never heard of
that guy, Letterman, and he has got his Top Ten lists, and you
mentioned you got a top five list. You hadn't quite got the Top
Ten yet.
You have mentioned diversity. What are the other four
issues on your top five list?
Mr. Zucker. Yes, the strategic priorities that I have laid
out for the company are, first and foremost, great content,
whether that is in television, film, local, at our theme parks
having great rides, having great content, because this entire
conversation that we are having, none of it matters if you
don't have great content.
Digital and the transformation to digital in this new world
that we live in is another priority. International growth is
another priority for us. Making sure that we move from an
analog cost structure to one that anticipates the new digital
world and all the changes that that brings along is fourth. And
then diversity would be the fifth.
Mr. Cohen of Tennessee. Is there any reason for any of the
local folks to be concerned that you will take the local
stations off of broadcast?
Mr. Zucker. Comcast has made a clear commitment--I think it
is number one on their list of commitments that they have put
forward with regard to this merger--that there is a commitment
to free, over-the-air broadcasting.
That commitment should not be underappreciated in this day
and age when broadcasting models are the single source, ad-
supported model is under a lot of stress. And so keeping NBC
and Telemundo strong, vibrant and over-the-air should give
comfort to all of those local affiliates.
Mr. Cohen of Tennessee. Mr. Roberts, I asked you
yesterday--and I just want to understand the issue--the Comcast
is the provider in Memphis, Tennessee.
Mr. Roberts. That is correct.
Mr. Cohen of Tennessee. And many of my constituents of my
persuasion were upset that MSNBC was taken out of the free
tier. Is there a manner where constituents in my district can
get MSNBC in the free area now? Or would there be--will there
be one in the future?
Mr. Roberts. Yes to both. When you say free, I think you
mean the first level----
Mr. Cohen of Tennessee. Basic.
Mr. Roberts [continuing]. Expanded basic. And--we are going
through the same--we are going through the same kind of
transition that the whole broadcasting industry went through
with conversion to digital. And as Jeff just said, that is a
way for us to reclaim bandwidth and then have more high-
definition, faster Internet, more On Demand choices.
So we are taking certain analog channels and rebroadcasting
them in digital. Any customer that wants that service for no
additional charge can get the device to convert you to digital.
Eventually down the road, they will all be digital, and we are
just in that transition period, and we need to advertise that
better, and we want to work with your office to make that more
understood.
Mr. Cohen of Tennessee. Thank you very much, sir. I yield
the balance of my time.
Mr. Conyers. Darrell Issa?
Mr. Issa. Thank you, Mr. Chairman.
Mr. Zucker, just to finish off on a couple of questions
that my colleague from Tennessee began, NBC has led in a lot of
areas, but I have it on good authority that ``Make Room for
Daddy,'' featuring the first prominent Lebanese-American----
Mr. Cohen of Tennessee. Buried in Memphis.
Mr. Issa [continuing]. Who is buried in Memphis and for
whose hospital you had better take good care of there--began on
ABC. NBC did not avail itself. He had to go to CBS. ``MASH''
with Jamie Farr, CBS. It wasn't until ``Monk'' that you got
into the game.
Now, I am not going to ask you to explain why it took you
so long to outreach to Lebanese-Americans or why we still feel
that we are very underrepresented. We will move on to just a
few other questions.
Dr. Cooper, I have the honor of being a Member of Congress
on this Committee and not being an attorney and being just a
lowly businessman. So whenever I try to understand antitrust
and the considerations, I always try to say, okay, relevant
market, you know, what blocks entry, what are the barriers and
so on.
So maybe you can help me with a couple of items. If there
were unlimited content out there available either for free or
free when attached to some advertising, if there were unlimited
bandwidth--let's just say we discovered the terahertz bandwidth
and you could have all the broadcast in the world--if the cable
companies through breakthroughs in cable or fiber were able to
have 1,000-fold more bandwidth, and if any pricing scheme was
always a cost-plus, a pass-through with some minimal add-on by
providers, whether they be over-the-air, a cellular event,
FiOS, whoever, if that were all in place, do you have any
objections to this merger.
Mr. Cooper. The hypothetical you have given me--and I have
been an expert witness for 30 years, and the first lesson you
do is make sure you actually don't accept the hypothetical--if
that were true, we would live in a wonderful place, but none of
that is true.
Mr. Issa. Okay. Well, let me go through this again, though.
And actually, I will go to Mr. Roberts, because he is enjoying
this too much on the end of the table there. What is your
bandwidth today for being able to broadcast, let's just say,
low-def level, you know, 480, in number of channels versus what
was it, let's say, 20 years ago? Just give me a round number,
if you know it.
Mr. Roberts. Probably has gone in 20 years from 150
megahertz, which would be, say, 30 channels to 860 today. And
then when you multiply the digitization that occurs within that
bandwidth, which is 10 to 20 times, you can begin to get the
range of the outcome.
Mr. Issa. So essentially we have gone from 30 to 1,000
potential channels before you get into basically an On Demand
or a system in which you push out more channels, but deliver
them from a server locally, which is----
Mr. Roberts. The only thing that would not get you to 1,000
was that we then devoted, let's say, 100 into high-def, and
high-def took two and three times the capacity, where--you
started with low-def----
Mr. Issa. Having help pay for the model station and all
that work when I was at the Electronic Industries Alliance,
trust me. We are acutely aware that that was a tradeoff. So we
did go for quality, not quantity in that case.
Mr. Roberts. We also had On Demand, to your point.
Mr. Issa. Right. So if we look at it as sort of the old
standard, we have gone from 30 to 1,000. And if we go to an all
On Demand, then it is virtually infinity, because you can push
down 1,000 things to various sub-areas or 100,000 things and
then they can be divided up to each individual TV.
And if you eliminated all your cable and you only had your
broadband, you could essentially have an unlimited amount of
channels delivered through that system, only limited by how
many the last mile would achieve, with today's predictable
technologies. Is that true?
Mr. Roberts. I think there is a theoretical that you could
somehow get to that scenario, I think so.
Mr. Issa. Okay. Dr. Cooper, I will go back to you, because
although I can't guarantee you that the cellular network will
roll out on that model, they could. I can't guarantee you that
FiOS and others can roll out on that model, but they could. I
can guarantee you we are not in the near future going to find
enough bandwidth over-the-air generally in a non-cellular way,
so we will eliminate that part of it.
So if you recognize that we are increasing bandwidth at an
incredible way, assuming now only that Mr. Roberts' company and
companies like it are not prohibited from any way impeding
others getting on to that digital highway and delivering
content if I want it, do you see why we are leading toward a
question of, if not now, is it foreseeable that in the future
good content will have no limit to being able to get to me,
should I choose to want it, even if Mr. Roberts, through his
selection of channels, chooses not to have me, let's just say
because I want 25 million, to let his channel have it and he
doesn't want to pay it, but I can still send it on a
subscription basis through the Internet.
Does that affect your thinking at all?
Mr. Cooper. Well, here's where your hypothetical has bumped
into the antitrust laws. Of course, the antitrust laws are not
``it could be,'' but ``what is'' and ``when will it be?'' And
if in the relevant timeframe--and we tend to use a couple
years--it won't be. It isn't today--we know that--and it won't
be within the relevant timeframe, then antitrust looks at the
market as it actually is, not the hypothetical market, first
answer.
Mr. Issa. Okay. Give me only two answers, because I am a
very simple guy. Remember, I am not an attorney.
Mr. Cooper. Second answer is that TV Everywhere is an
effort to prevent that from happening. So essentially what that
deal says to the public is it says, look, you have to subscribe
to cable or another MVPD in order to get Internet content. And
the effort here--the two biggest guys have made the deal--the
effort here is to signal to the rest of the industry that the
gentleman's agreement that has existed in physical space--let's
be clear: Comcast has never chosen to compete in physical space
with a neighboring cable operator. It has never overbuilt
someone.
It could have--at least since the 1996 act, it could have
entered someone else's service territory to compete. It might
claim there are difficulties, construction costs, et cetera,
in----
Mr. Issa. I would only ask that you not apply that to the
District of Columbia, where my own scheduler had multiple
choices and chose to go from one cable provider to another
within her apartment complex and is so delighted to have left
the unnamed other company.
Mr. Cooper. Well, but that company never has. They have
chosen not to compete. They have occasionally been the target
of competitors who would come in here and----
Mr. Issa. Actually, they were the winner in that particular
one. That is why I didn't name the one that she left.
Mr. Cooper. And the guy who is in bankruptcy will explain
to you why denial of access to programming helped put him
there. So in cyberspace, however, there are--those impediments
don't exist.
Mr. Issa. Okay, well, let----
Mr. Cooper. Now they have made this deal, to require me to
get Internet content to subscribe to a cable operator. That is
a market division scheme. That is an antitrust----
Mr. Issa. Okay, and a given. Mr. Zucker, I am now going to
concentrate the rest of the time on you, because, first of all,
I have got a lot of time with broadcast and not all of it was
good, so I want to try to enjoy my time here today asking you
some questions.
You currently have the ability to send how many broadcast
channels if you choose to go to your lowest resolution today
with your new spectrum in the markets where you have some?
Mr. Zucker. Three.
Mr. Issa. Do you anticipate being able to potentially go
further with the existing spectrum in any time in the future?
Mr. Zucker. In each local market you are talking about?
Mr. Issa. Yes, sir.
Mr. Zucker. Yes. That is about what we will----
Mr. Issa. At 720, you can do three.
Mr. Zucker. Yes, exactly, so that is about it.
Mr. Issa. You want to give me that old fuzzy stuff, you can
do a lot more, but it is 720p.
Mr. Zucker. Well, high-def and all of that, I mean----
Mr. Issa. Right.
Mr. Zucker. Yes, so----
Mr. Issa. Or as I like to say, having come from the
industry, higher but not what I call high. But at that point,
you have three. How many channels does NBC currently produce--
obviously, not broadcast--but all forms, how many channels do
you believe you own, how many network, sub-networks?
Mr. Zucker. You know, more than 20.
Mr. Issa. More than 20. So broadcast is really a relatively
small amount of your model now, compared to what it once was.
Mr. Zucker. Completely. Broadcasting accounts for less than
10 percent of our operating program. The name of the company is
NBC Universal, but NBC accounts for a minimal part of our
revenue and profit.
Mr. Issa. So although Dr. Cooper is talking not about you
as a content entity, because the truth is, Mr. Roberts has the
ability to start content and build it to create studios. He can
do all of that. There is no barrier for him choosing to do it.
And with what he is paying for you, it would be less expensive
to do that, but that is a business decision.
You could, for all practical purposes, walk away from every
transmission capability, all your bandwidth, and simply take
your content, walk out one day, and deliver it to cable or
DirecTV or anybody and you would still have what percentage of
your revenue, not knowing bottom line, but what percentage of
your revenue, if you cease to be a broadcaster in the old
system?
Mr. Zucker. Well, probably more, because it would continue
to be a majority.
Mr. Issa. Okay, so trying to understand the market that we
are being asked to, we have been modeling here today--and the
Chairman's been very generous with everyone having an
opportunity to try to model it--we have been modeling some old
models. You know, we are sort of thinking that the Peacock,
before it was in color and then when it was first in color and
then when people fooled around with it for a long time trying
to figure out how it was going to look, but, in fact, what we
are really talking about is a broad content designer, producer,
licenser, enabler who, in fact, is more and more looking for
places to go, including cable, all cable providers, DirecTV,
and the Internet, right?
Mr. Zucker. Well, I think this is the most salient point of
the entire day, which is that much of what we have been talking
about here, whether it is old Simpson rules or casting of
television shows or access to have your programming out there,
the world is incredibly different today, and it is more
different today than it was 2 or 3 years ago.
And to apply the old rules when 30 years ago three networks
owned 90 percent of all television viewing and to think that
that is the way it is today, we live in a multicultural
society. That is why the programming, the casting of our TV
programs today is multicultural. It is not all one ethnicity.
It is why the idea that there are barriers to access of where
programmers can bring their material and it is to just one of
the networks is looking at the world 20 years ago.
The world is incredibly different. And to apply the models
that were in vogue 20, 30 years ago doesn't work today.
Mr. Issa. So let me just briefly summarize. You make a lot
more money not broadcasting. You are a content creator looking
for distribution, looking for every distribution, including
through all cable networks. You live or die based on whether or
not, in some way, shape or form, somebody's going to pay for
your content. A chunk of your content is advertiser attached,
although sometimes not.
Your competitors or everybody who is creating content, all
of you have a Web presence, more all the time. All of you, in
fact, are perfectly willing to have a model in which your
subscriber is a direct customer through some transport which is
ubiquitous. See, if I was a lawyer, I would be able to see that
more clearly.
The fact is that, whether I get it on my cell phone, I get
it through my cable provider, I get it through a fiber optic
link somewhere else, or, quite candidly, anywhere I go, I
simply log in and it is there for me on the Internet the way
Sirius-XM is both broadcast from satellite and available on any
Internet connection, that is who you are.
Mr. Roberts has made a decision to make an acquisition
because he thinks it is a good combination, but he is in an odd
situation. Everyone else who is like you--if I understand
correctly--is able to do all the same things you do, and he
either now or likely throughout all of our actions is not going
to be able to prohibit your competitors from jumping on to his
backbone, even if he owns you, and at least, at a minimum,
delivering content directly to my PC, which is a media center
that goes to all my TVs.
Did I misunderstand any of that?
Mr. Zucker. I think you got it exactly right.
Mr. Issa. Mr. Chairman, hopefully for both of our
deliberation, that will add to our small body of knowledge.
Thank you, and I yield back.
Mr. Conyers. Judge Hank Johnson?
Mr. Johnson. Thank you. It is hard to follow a mind like
Darrell Issa's. And then, I must admit, during my prior career,
I was an attorney. And so I feel like I have been set up here
to seem like attorneys throughout the country look either good
or bad. And so----
Mr. Issa. If the gentleman would yield, it is my
inferiority complex. I hope you didn't take it in any other
way, Hank.
Mr. Johnson. No, I did not. Now I am worried about my
inferiority complex.
But I do understand that our regulatory environment,
including antitrust regulation, has to be flexible enough to
allow for ingenuity and innovation. Before I proceed, I will
share this.
Back around 1993, 1994, 1995, in that era, in that time
period, I was faced with a cold slap in the face, a harsh
reality set upon me. It was during--it was around September,
whenever the football season started. And I turned on channel
six, CBS in Atlanta. They say you could get two, channel two
was NBC, channel four was ABC, channel six was CBS.
I turn on CBS, channel six, and, you know, because the
football game is on, and it was not CBS anymore. It was FOX.
And I tried to find CBS somewhere around and had to go up to
channel--I still don't know what channel--where CBS is now on
the channel.
And since then, we have had so much change coming at us, it
is almost like now I don't even get upset about it. I just try
to adapt to it. And I certainly want our business or our
regulatory system to be able to do that same thing, adapt to
current realities which are changing on a daily, if not moment-
by-moment basis.
I guess at some point in the future there will be like a
watch that could plug in to. You can get the time. You can your
news. You can get your content on that watch. And you can even
take a phone call on it. And then you can--when you need to add
something up, go to the calculator that is already there on
your watch.
And so the content being delivered in forms that--or in
ways that we can only dream of now, but others are working on
that stuff, and they are working not just in America, but they
are working in China, they are working in India, because, right
now, we don't really share much international programming, but,
you know, with all of the migration going on and the fact that
we are living in a world of global economy and a global world,
we can't assume that content will remain limited to that which
is produced in America.
So, you know, I am looking toward the future without
knowing how it will actually go in this industry, as well as
other industries. And that is a cause for concern for some, and
it is also a cause for curiosity from others. And those with
the curiosity will be the ones to come up with new ways of
doing things differently than we have done them in the past.
And then as far as cost goes, I don't know--even a
haircut--I forget how much I used to pay for a haircut, but
now, you know, I see haircuts being offered for $20 bucks. And,
Mr. Zucker, I am sure you don't have to really----
Mr. Zucker. I was not aware of the current prices of
haircuts. [Laughter.]
Mr. Johnson. But I say all that to say that, you know, I am
open to this vertical merger. I do associate myself with
remarks that have been made and questions asked earlier about
diversity, but even things like that, I see so much potential
for change, I see dynamic--I see the dynamic nature of this
business, and I see Black entrepreneurs offering African-
American-based or-themed content, as well as non-African-
American-themed content, and just competing on a level playing
field.
And that is why what Mr. Morial has stated is so important
in terms of diversity in the ranks of companies from the
boardroom all the way down to where you started, Mr. Zucker, at
NBC and below. But you had a very humble beginning. And so I
believe in this country, and I believe that we can make a lot
happen with just a little something, just like Mr. Roberts,
your dad, Mr. Roberts, 1963, Tupelo, Mississippi.
I imagine--I don't know anything about your dad, other than
what he has accomplished, but I don't know whether or not he
was a lawyer or whether or not he was a businessman, whether or
not he was a local broadcaster, or--but I imagine that down in
Tupelo, Mississippi, in 1993, that, you know, I imagine him
being on the town square with an office or just talking with
some friends about the football game getting ready to come on,
and it is on CBS, and we can't catch it here. And we are going
to drive to Memphis to pick it up for whatever. I don't know
what was happening.
But on a hot summer afternoon in Memphis, with all of the
sand twirling, and folks just knocking around, somebody came up
with an idea and, boom, executed the idea, and now it has blown
up into 100,000-person or 100,000-employee company, that is a
great American success story. And for America to compete in the
future in this global environment, we are going to have to
continue to produce the same humble people, small beginning,
and they have the opportunity to do what has been done with
Comcast, which is to turn it then over to the next generation
for further expansion.
And at some point, it would become too big, and it will
start to just fall over due to its own weight. And then there
will be some person who is there to pick up the pieces, some
company that is there to pick up the pieces or to step over the
carcass or the dying company, step over it and take over with a
new operation, new attitude, new means of conveying the same
kind of info and distributing it, maybe breaking that whole
process up again. I don't know what is going to happen in the
future, but I do think there is a lot of things that can be
left to future circumstances, especially in this particular
industry.
It is not subject to being--should not be subject to being
overregulated so as to stunt the ingenuity and the innovation
that we need in order to keep this country as the top of the
pecking order from an economic standpoint.
But I will ask this question, Mr. Roberts. Mr. Cohen has
issued what I would consider to be a scathing indictment, and
the allegations of the indictment are that Comcast has made
promises in the past. The past promises including a 2002, I
believe, negotiation with labor, insofar as whether or not
labor would oppose or support a merger effort by Comcast.
And during those negotiations, it is alleged in the
indictment, Comcast made certain representations like it has
done on its commitments. And one of those was that the unions
then representing the acquisition target would be left in
place. They would not be--they would be--status quo would be
left insofar as that relationship and the new company.
And I know that you were not at the helm of this great
company at that time, but would you care to offer a response to
the comments that were made by Mr. Cohen? Or would you prefer
to take the Fifth Amendment so that you can talk to your lawyer
before you respond to the question?
Mr. Roberts. Well, first of all, no Fifth Amendment. But I
probably should consult with my lawyer. You can be my lawyer,
because I thought to be--what you described as what makes
America so great I could not imagine articulating any better.
It is exactly how Comcast began. It is an idea to dream--to
answer your question, my dad's not a lawyer. He was an
entrepreneur, is an entrepreneur, and has tried many different
ventures, and one day was fortunate enough to get out of the
belt business and to get into cable TV. And I would not be
probably sitting here today if we were doing a belt deal, but
rather in something as vibrant and as important as
communications and entertainment.
So I take my responsibilities very seriously, but I always
say thank you to my father for the wisdom of seeing the
greatest trend that could happen, and change and not being
afraid of it, but rather embracing it. And I think that same
spirit, as you look at where we are at today, he feels as
bullish about this opportunity as I do.
It is not without its risks. You are right. I hope
everything until you got to the carcass and somebody stepping
over us, but that is a very real risk for any company as they
get larger. And we have got to keep the culture--and part of
that culture is how you treat your employees.
So I want to, first of all, just state for the record that
we don't believe and I don't believe that there are any
commitments that we have made that we have not kept at the time
of that acquisition. But let's look forward, not backwards.
We are making commitments today. We made commitments in the
Adelphia deal to invest in a bankrupt company, and those
communities all have seen an upgrade since that time.
We are making commitments in this deal that do involve
labor commitments, and we are endeavoring to reach out to the
principal areas where there is organized labor and to have a
new beginning. And that is all I think you can do as you start
out.
It is nice to hear that NBC has enjoyed good relations, and
we certainly want to do that which we can to maintain and
improve on that.
And, finally, I think the key to any enterprise is
attracting those people who say, ``This is where I want to
work. If I am creative, if I am a technologist, and if I am not
necessarily in the company, I want to start my own company, I
want to work with this company, whether you are an independent
company or a new kid in a garage inventing that next dream that
you have talked about.''
And for me to do my job really well is we have to foster an
inclusive, open culture and to try to build on the things that
my father started that I think I have helped continue that has
put Comcast in a position to be before you today.
Mr. Johnson. Thank you. I have one last question. Mr.
Roberts and Mr. Zucker, recently Americans have been glued to
NBCU channels watching the Olympics in Vancouver. However, just
this past July, Comcast and the United States Olympic Committee
tried to launch a cable TV network devoted to the Olympics that
would launch after these current Olympics.
Now, I understand that that effort has been dropped in the
face of objections from the International Olympic Committee.
And I think they are planning on doing much the same thing. And
it seems to me that this was an area where Comcast and NBCU
were going to directly compete.
Can you explain to us why this example does not show that,
absent this merger, Comcast and NBCU would be actively
competing for programming?
Mr. Roberts. Well, the example you cite is complicated,
because this was the United States Olympic Committee's
initiative, and they came to seek carriage for a channel they
wanted to start, and then they have since, as you have
described, suspended that initiative.
More broadly speaking, it is very competitive--anyone,
whether it is that group or a content company, a producer,
sporting event, there are multiple parties who get the
opportunity to bid. That particular example, what NBC does
today, is broadcast the Olympics. That particular channel was
not going to broadcast the Olympics, but rather events from the
sporting community sort of during the intervening 4 years, and
to try to build up those sports locally and communities where
there is not an opportunity traditionally to see those sports,
because they are not necessarily popular except during the
Olympics.
So it actually wasn't trying to supplant NBC's broadcast of
the Olympics, I don't believe. That was never stated to us. It
was actually going to be everything but the Olympics, but
everything about the Olympic sports.
But in general, my answer is, we don't--events that NBC
makes, shows that they make, like ``The Office'' or theme park
rides or movies. Those are not things that Comcast does today.
And so I think there is very little, if almost no overlap, and
I think we have shown that in our statement and believe that.
Mr. Johnson. Mr. Zucker?
Mr. Zucker. I would concur with what Mr. Roberts said. I
mean, the idea of that channel that had been proposed was not
competitive with what our broadcasts were.
And I think that is similar to what Mr. Roberts said, is
that I think one of the great things about this coming together
is that we really are in different businesses. And so I think
this is complementary, and that is why I think it is so
beneficial.
Mr. Johnson. All right. Well, I thank you all for your
patience and for submitting to our questions. And mercifully, I
will yield back, but not before letting the Chairman know that
I really appreciate his--this is a complicated area. And it has
profound ramifications. And so I appreciate the Chairman being
able to see that and give us time to build on certain themes
and ask certain questions in excess of the 5 minutes that we
normally limit ourselves to.
Thank you.
Mr. Conyers. Judge Louie Gohmert?
Mr. Gohmert. Thank you, Mr. Chairman. There have been so
many nice things said that I will skip right through all of
those and go right to my question. With the intellects I have
got here in front of me on the witness panel, I need to address
my question mainly to Mr. Roberts and Mr. Zucker.
You know, believe it or not, I have a district in which I
have got Democrats who are friends. And they like to see a
channel not only where they can watch the Olympics, but where
they can find something favorable being said about the majority
in the House and Senate. And NBC helps fill that need. And so--
-- [Laughter.]
So, anyway, you have a combination of NBC and Comcast. And
in my northeast part of my district, you have got potential
Comcast competition. And the other cable providers, you know,
they would like to provide NBC to fill that need that is out
there.
So how is it that there doesn't end up being some conflict
when other cable providers want to compete with Comcast, and
yet Comcast would be in a position to say, ``We own NBC. You
want and need NBC. We have got quite a bargaining position with
the conflict we have.'' How do you resolve that?
Mr. Zucker. Yes, well, thank you for your comments, by the
way. I think the answer to that is there are actually laws in
place dating back to the 1992 act which would preclude Comcast
from withholding NBC and our channels from their competitors
and----
Mr. Gohmert. Well, it could never be done overtly, but if a
conflict is there, I mean, just like in Washington, you know,
there are things people aren't supposed to do here. And lo and
behold, they have enough pressure and power and significant
position that they can get things done that perhaps overtly
they are not supposed to. So how do you deal with that?
Mr. Roberts. You know, I guess there is any--you can always
imagine scenarios of bad behavior. You are not going away.
Government is not going away. That has not been our history. We
have been in the content business for more than a decade. We
have built a successful content company, albeit small.
Other content and distributors have been in businesses
together. News Corp. owned DirecTV.
Mr. Gohmert. I mean, this is not a new question.
Mr. Roberts. It is not a new question. And history has
shown that the market is so competitive that you can't just
artificially change the price and imagine that the whole market
is going to follow behind. There are too many channels. There
is too much visibility. There is too much contention. There are
too many independent distributors and too many independent
programmers that we wouldn't be involved with. We are probably
10 percent to 12 percent of the TV audience, so 90 percent, 80
percent----
Mr. Gohmert. Yes, but you understand, when you get in a
very rural area, there is just not much competition. And that
is why, you know, the relationships are so important.
Mr. Roberts. Well, when Congress in 1992 to help address
that issue created the satellite industry, so that every home
in America would have at least three choices for their content,
with DirecTV and Dish, and then in many cases now the phone
company, and in some cases an overbuild company, such as RCN,
it is a very different marketplace.
But even back then, it recognized that, okay, let's--if you
want to be in the distribution business and the content
business, you have to agree to comply with this program access
law, program carriage law. Back then, about 55 percent of the
channels were owned by distributors. Today, that number is like
15 percent.
And the trend, as has been pointed out during this hearing,
is to go the other direction. So we are actually not doing
this. The motivation for this transaction is not to do that
kind of behavior. That is not where we are going to win or
lose.
The motivation is, we think that with--now that there are
more distributors and there are new technologies coming, if you
can keep it licensed--one of the discussions has been piracy--
then I think you are going to see creation of value in content
here and around the world.
We also think GE wanted to sell, had lost some motivation
to invest and we also have an economy that we believe is
hopefully past the bottom. So there are certain fundamental
bets that we are making, and it is not universally agreed that
those are the right judgments, but I hope they are, that we are
going to see these businesses grow, the economy grow, and that
we are going to have a new dimension to our company that we
haven't had the last 40 years.
Mr. Gohmert. Giving an answer like that to a question that
I ask tells me you really ought to be up here, anybody that can
dance that effectively. But it sounds like, seriously, that
what you are saying is, well, with the laws and, you know, with
the competition, it sounds like it falls back on Committees in
Congress that need to do a far better job of oversight than we
did when Republicans were in the majority, to make sure that
the--that the temptation to perhaps maneuver and use position
doesn't occur.
But I can tell you, from having been a judge for a decade,
the longer you are in a position where you can take advantage
of the position, the more temptations arise.
I never ruled--I never exacted a grudge against attorneys
who had screwed me around before I became one, but the longer
you are in that position, as Judge Poe had verified, the longer
you are there, the more you see opportunities. You just even
have to be more and more diligent not to give into temptation.
And although I am dealing with people, I am sure we would
be very ethical and use great propriety, the longer you are in
a position that actually could be maneuvered and manipulated,
somebody will come along and the temptation gets great.
So that is my concern. Thank you for your patience in
handling it and your adeptness in dancing around it. And I will
look forward to--and, by the way, as I think you know, I mean,
any time you have additional information, additional things you
can point out, we welcome those, as I am not being facetious.
We really want to make sure things stay fair, and that
would apply to any competitor of yours trying to misuse a
position. We want fairness, and that is what we ought to be
about.
And, Mr. Chairman, I appreciate the time.
Mr. Conyers. Judge Charles Gonzalez?
Mr. Gonzalez. Thank you very much, Mr. Chairman.
And I have to respond to my fellow Texan when he said
oversight when the Republicans were in the majority. I would
have hoped for that, and we have a lot of evidence that
probably did not happen, but let's not get partisan here.
Let me start off by framing my questions with some
background in the way that I look at this. This is a particular
merger----
Mr. Gohmert. Will the gentleman yield? Because I want to
make sure you didn't--I was actually being self-effacing by
honestly saying I would hope we would have better oversight
than we did when we were in the majority.
Mr. Gonzalez. Well, let me--I misunderstood you----
Mr. Gohmert. Because that was my point. We didn't do
adequate oversight.
Mr. Gonzalez. I apologize, because I agree with you 100
percent. That is bipartisanship.
Mr. Gohmert. We didn't--yes, we did not do adequate
oversight, and so we are in agreement on that. Thank you.
Mr. Gonzalez. I have got to play that on YouTube. But two
things. We have the merger, which is the instant case, and we
go case by case, and it is important. But it is very limited to
its circumstances.
My concern--and you could say, look, that is not what we
are here for today--but I do believe that the rest of the
witnesses or most of the other witnesses are here for that,
beyond the immediate proposition or merger.
But I am looking at it systematically and how it could
affect--and what it sets in motion if people attempt to maybe
mimic these particular mergers on two different, and that is, I
understand, in the instant case, we have to make very, very
careful and be very vigilant that what might be a legitimate
business opportunity is really not an unfair advantage or is
anti-competitive. And we are going to deal with that.
But going beyond that, when I talk about public policy,
there are two areas--and I am going to direct my questions to
Mr. Roberts and Mr. Zucker--the first one is going to be the
use of the public airwaves for broadcasting, what we refer to
as really true free TV, and some people may say, ``Well,
Charlie, that is noble of you, because you are thinking of what
people can get free over the airwaves.'' That is part of my
motivation.
The other is this. I really believe this. This Committee
and the entire Congress, the entire Federal Government, the
only say that we really have over what goes on out there as far
as broadcasting on the quality of the broadcasting, on decency,
on localism, in my view, is really tied to the use of the
public airwaves.
Once you take that or once you diminish it, you diminish
the ability of Members of Congress to represent their
constituents, the American public on what they may desire. Now,
I understand that they express all sorts of choices and when
they select to go with cable or what, whatever, but I think
that is an important distinction.
The other is broadband build-out, and what does it mean in
this particular instance, and if we continue down the road that
we are going? So the question to Mr. Roberts and the question
to Mr. Zucker--and this is a hypothetical, but unlike Dr.
Cooper, I think you are going to have to accept the
hypothetical. And the reason for it is, either it is going to
happen or it is not going to happen, and I am talking about the
merger.
So I am going to read you from today's Post. Federal
Communications Commission Chairman Julius Genachowski said
Wednesday that the agency will recommend to Congress that 500
megahertz of spectrum be freed up to meet the growing needs of
mobile broadband users.
Much of the spectrum is expected to come from broadcast
airwaves and would be auctioned for commercial use. But
broadcasters that own these airwaves reacted with skepticism,
saying they need the spectrum to develop new business models
such as mobile digital television and to serve millions of
customers who still get news and entertainment through free,
over-the-air broadcasting.
Genachowski said in a speech at the New American Foundation
that the spectrum would be culled from broadcasters on a
voluntary basis. Broadcasters would get a cut of the auction
proceeds.
So the question is this: Pre-merger, you remain as you are.
It is the nature of your enterprise, everything that goes along
with it, remains as it is. There is no merger. How do you view
this? Are you ready to be culled and volunteered?
And then post-merger, the merger does go through, I want to
see how under both scenarios your decision, your interest is
affected in any way.
So, Mr. Roberts, without the merger, do you really care
about this?
Mr. Roberts. Without the merger, we don't own any of that
spectrum, so I don't have a position, or it is not our spectrum
to speak for.
Mr. Gonzalez. All right. Mr. Zucker?
Mr. Zucker. We, obviously, respect the goal of further
broadband deployment in this country, so I would say that we
are in agreement with that. We also believe that the spectrum
that we currently have is important, and we think that the goal
of the FCC to get that further broadband deployment--we
shouldn't be looking to the broadcast spectrum at this point in
order to facilitate that.
You know, there is still a considerable portion of this
country that relies upon that spectrum to receive the over-the-
air broadcasts, and so I think that we respect both goals, we
respect the goals of the FCC in the broadband deployment, but
we don't know that the broadcast spectrum is the way to get
there.
Mr. Gonzalez. Okay, post-merger, you are now merged. Mr.
Roberts, do you have an opinion on what the chairman of the
FCC's proposing?
Mr. Roberts. You know, I haven't seen today's story, I have
to say, so, if I might, I think that I am not sure what the
merger would do. I think the goal--and we are working with the
FCC right now ourselves on his ``100 Squared'' initiative, how
to get----
Mr. Gonzalez. But would you now have a dog in that fight?
Mr. Roberts. Yes. So I think we would say that we would
like to be treated as all the other broadcasters, whatever that
resolution is. We would love to be a participant in that
conversation.
We are very much in broadband today. We helped create
broadband in the United States through something called DOCSIS
cable modems. And it is a great business opportunity, in my
opinion, to speed up for the consumer broadband adoption. And
it is why we spent $1 billion on the next DOCSIS, called DOCSIS
3.0.
So I don't specifically--not a wireless expert on broadcast
wireless. I don't know if there is other spectrum that would be
available to be auctioned first. But I think that is a place
where we have got to get smarter and got to have a point of
view when a deal does close--hopefully if it closes--and we
would like to participate in, whether it is an association of
broadcasters or however best that communication takes place.
Mr. Gonzalez. Now, Mr. Zucker, post merger--and I am just
assuming that this is your----
Mr. Zucker. Yes, I think our opinion from our perspective--
you know, that is the position that we have held. But I think
you have to remember that all broadcast spectrum amounts to
less than 200 megahertz. And you can't get to the 500 megahertz
that is needed even if you killed broadcasting, which we don't
think you should do.
So we support the overall concept. I think this is just a
question of how you get there.
Mr. Gonzalez. Is that interest diminished whatsoever by the
fact you are now merged, which someone that is more into cable
and providing the Internet--and I understand about the
different platforms and trying to get what--you know, on your
telephone via Internet and so on.
But what I am talking about is, because of the merger, you
guys are going to be facing Sophie choices every once in a
while? And I am just wondering, what will be the impact on
over-the-air broadcasting, which I have said is the only nexus
for our involvement, and secondly, building out broadband?
Mr. Roberts. So I think that the merger is actually not the
relevant trigger to get this conversation--this is a very
relevant conversation with or without the merger. As you have
pointed out, there are two scenarios.
And that is because what is happening in wireless is
nothing short of a revolution and an explosion of choices. And,
you know, there are two predominant large companies that,
whether you buy an iPhone or you get other mobile broadband
that are not named Comcast, we are not today a wireless voice
provider, and we are an investor in a company called Clearwire,
trying to build a new fourth-generation wireless network.
So we very much are hoping that there are going to be more
and more wireless choices in the future, because it is a great
part of what our consumers want to do, take the products out of
their home and travel with them here and around the world, and
multiple users, and they all want to do different things at the
same time.
Mr. Gonzalez. And now are you going to have content
interests, also?
Mr. Roberts. So one of our goals is to help, how can we
accelerate that vision? Because that is what consumers want. I
don't think we have that type of choice. We are spending as
fast as we can build broadband capacity. We have got more
wideband offered in residential homes in America than all the
phone companies combined and, I believe, all the other cable
companies, something called DOCSIS 3.0, which is over 50
megabits per second. The capability to do that, that is a
forward-looking bet.
Mr. Gonzalez. No, and I understand what you do. We started
off by saying voice-over-Internet protocol and all that and
what you can do. I mean, I understand that. But what I am just
saying is that you are not going to be the same. You are going
to have other considerations.
And somewhere along the way, you have to make decisions
that obviously you wouldn't have made if you didn't have the
interest that you are going to be acquiring as a result of the
NBC Universal assets.
And I am just wondering what that really has in store for
us down the road when it does come out to build out. And I am
talking about broadband build-out. I am not just talking about
fiber optic and such and what goes into--I am talking about
broadband all the way, the wireless and so on.
When it comes to content, do you have such an advantage?
What happens to the interest of NBC at some point? You know,
what--if they diminish the importance of their broadcaster
character--and I think that is incredible important, because it
is so different from what you have in the way of cable, and I
know NBC has cable and so on programming.
The last question I have is simply going to be on
competition. Now we are going to come back to the specific
issue before us. How would this merged entity have any
advantages as to other providers that may not have the access
to the content that you are going to have, Mr. Roberts?
Mr. Roberts. As I stated previously, we have today a
carriage relationship with NBC and its channels, and six out of
every seven channels that we carry are not owned by NBC. And I
don't believe that our relationship with NBC is any different
than the other major companies, based on the other distributors
they have in the market or the other content companies who they
compete with.
So I actually think we are going into relatively a new
space with, as you have pointed out, new opportunities and new
dilemmas. And we are excited by that. We think that we can use
that new business to change the nature, the types of people
that work at the company to accelerate our growth, but I don't
think it really changes the competitive dynamic for us, because
we are about 10 percent of the programming market, and the
other 90 percent, they have to put out great shows and they
have to be on our competitors' platforms, or their 10 percent
is going to go down.
Mr. Gonzalez. And so whatever your advantage that is gained
from this, it doesn't rise to the level of what would be an
unfair advantage or anti-competitive?
Mr. Roberts. That is correct.
Mr. Gonzalez. I mean, that is what you are telling me?
Mr. Roberts. That is correct.
Mr. Gonzalez. Mr. Zucker, anything you want to add?
Mr. Zucker. No, I would add--the only thing I would add is
that it is in our interest to make sure that our programs are
as widely distributed and seen by as many people as possible.
So that is the way that we will recoup the tremendous
investment that we make in entertainment, news and sports. And
so from our perspective, we want to make sure that our programs
are as widely distributed as possible.
Mr. Gonzalez. And I want to thank the witnesses. And I know
I have gone long, and I apologize to my colleagues here real
quick, but I do want to give Dr. Cooper a few seconds, if you
want to comment on any of the responses to the questions.
Mr. Cooper. Well, the most interesting thing in--I am not
sure it was this question or the previous question, but earlier
in the testimony, Mr. Roberts said that the Xbox competes with
Comcast. He then said that Comcast regional sports network does
not compete with NBC Sports.
That doesn't make any sense. These two people sell products
that compete with each other. And that is a fundamental
observation.
It seems to me that you also said that the nexus for this
Committee is spectrum. Actually, if this were the Commerce
Committee, that would be the nexus. But in this Committee, it
is the Sherman Act and the Clayton Act.
And the analysis that you have to do is look at the
products and see if they compete. The most recent study from
Nielsen says that 98 percent of the TV viewed in America is
viewed over the traditional delivery mechanism, cable,
satellite and broadcast.
So this notion that the Internet had radically changed the
marketplace is simply wrong. Now, it could, and that is why NBC
invested in Hulu. And it is that competitive threat that going
forward we really have to preserve.
Mr. Gonzalez. Thank you very much.
I yield back. Thank you, Mr. Chairman.
Mr. Conyers. Judge Ted Poe?
Mr. Poe. Thank you, Mr. Chairman. I feel like the Lone
Ranger down here. You know, it seems like it has all been said,
but not everybody has said it, so it is my turn.
And I wish Judge Gohmert was here, because he kept saying,
as my friend, Judge Poe, knows about being on the bench too
long, you could be influenced, so I served 22 years on the
bench, twice as long as Mr. Gohmert, so I think he was
offending me when he made that comment.
I am a big believer in television. I mean, I am so old, I
remember our first black-and-white TV. My kids don't even
understand that there was such a critter. They don't.
And, you know, but I don't watch TV much. If it is not on
the History Channel or the Discovery Channel or American Movie
Classics, I am probably not watching it.
But as a judge, I was the first judge in Texas criminal
courts to allow an entire criminal trial to be televised on
live TV, introduced legislation to let the nine Supremes down
there have their Supreme Court open to the public so we can see
what they are doing. We will see if that ever gets anyplace,
Mr. Chairman, within this Committee.
But I am a believer in competition. Competition makes for
better products, and the consumer generally wins on
competition. That is my philosophy, across the board, sort of a
free-market guy.
And when you don't see competition, you see problems. And
there are a lot of anecdotal issues that we could talk about.
But to just give you one--and not picking on Comcast, but just
give you: Comcast is the only folks in town in part of my
district. If you want to watch television, you are on Comcast,
or you have to have rabbit ears.
And tomorrow, one of my constituents will have in the last
18 months the 77th visit by Comcast to come out and try to fix
the cable problem. They can't get satellite, because they are
on the wrong side of the--you know, of the sun. And they work
from their home. And so they have got to have Internet, and
they have got to have TV service, and that is the only way they
can get it. So Comcast has no competitor with this constituent.
Anyway, so I believe that we ought to promote this, the
competition. And I am concerned--I hadn't made up my mind on
this legislation. I am still open-minded about it. But the
concept of being able to deliver the service and have the
content of the service controlled by the same folks concerns me
a great deal.
So my question to you--and this is my only question, Mr.
Chairman--to each of you, including the three silent ones for
the last hour, do you believe that this deal will promote
competition where the consumer will eventually win out?
Mr. Roberts?
Mr. Roberts. I appreciate that, and I am sorry about that
customer. And if I might, I would like to see why there have
been so many visits. That is not how we like to do business.
Mr. Poe. Well, they have been out there that many times----
Mr. Roberts. Well, that may be true, but that is not
acceptable. I believe this is pro-competitive, because we are
going to innovate as a company, we are going to make better
programming for NBC and Universal. We are going to try to
accelerate how it is used by technology.
The consumer's time--what I am referring to and what is
being competed with from the Internet and from Xbox and from
iPhones and from television. And as you pointed out, not
everybody watches TV like they have in the past, and the world
is changing at a breathtaking speed.
So we are at a crossroads in time. And our company is
wanting to invest in advertisers, having more ways to reach
their message than ever before. Again, it has been said, oh,
this will reduce the way for advertisers. I don't believe that.
I believe you have a company, one of the great brands and
assets in America in history of television, NBC, and it is now
in fourth place, and it is not what it once was.
So it is not a risk-free decision on our part to want to
come in and try to make it much greater, invest in it, and I
think that that is all about competition, because they have
more competitors than they have ever had as the technology has
changed, and I think that there are more technologies coming
that we can't envision. As Jeff has said, in the next 5, 10
years, there will be more change again.
And I think this is building America and sold all over the
world, and we are looking forward to trying to transform our
company with that kind of innovation.
Mr. Zucker. I believe it is a fiercely competitive world,
and this doesn't change that at all. The fact is, with this
combination of assets, we will still reach less than 11 percent
of all television viewing on a daily basis, so vibrant
competition is really the hallmark of what we do in our
business.
On the Internet, where there is so much attention,
programming on the Internet is even more competitive. The fact
is, today, NBC Universal has 1.6 percent of all viewing on the
Internet. With this, we would move to 2.2 percent.
So no one, in fact, has more than 5 percent, other than
Google. So I think that the competitive dynamic remains
fiercely alive even with this.
Ms. Prewitt. I think we believe that this merger creates
and bolsters the power of two gatekeepers who determine what
content will actually flow through the major pipelines that
come to the consumer's home. We think that conditions that
protect competition both at the NBC level and at the Comcast
level can make that problem come right.
And if the merger is properly conditioned, we would hope to
share in their vision of a vibrant distribution infrastructure
within the United States. But without those conditions, what we
see is a vision in which no one else can be a part, except
these two companies. Thank you.
Mr. Cooper. In my testimony, I identified three areas where
it directly reduces horizontal or head-to-head competition,
local TV markets, multi-channel video content market, and the
Internet, where they both distribute content.
I also identified two areas where vertical leverage can be
used to undermine horizontal competition. That is in program
access and cable carriage. And they identify a sixth factor,
which is the illegal tie and the market division scheme between
cable and Internet. For those reasons, I believe it will
significantly reduce competition.
Mr. Poe. Thank you, Dr. Cooper.
Mr. Cohen. Yes, I would echo that. My frame here was, most
consumers are also workers. And the consequences about
employment both internally and the combined companies, huge
employers, and also externally, in terms of the competition and
investment.
And we believe that as it is structured now, it would
impede investment and investment particularly in high-speed
connections, fiber connections to the house, like in your
district, at least the parts of it that are rural. It won't
encourage that competition because of what we earlier
discussed, bulk pricing that is bundled up when a potential
competitor decides, do we invest or not?
I would agree with Mr. Roberts that their own investment in
DOCSIS 3.0 is a positive and that we all need to encourage
investment in high-speed connections to houses across this
country, and we need to look at the impact of these kinds of
decisions not only on competition, which is at the core here,
but also in terms of investment and jobs and where the U.S. is
in the global economy.
And it is in that realm that we believe that this bundling
vertical integration of content and the pipe or the network
will impede that investment and that that investment by others
is already slowing dramatically.
Mr. Schwartzman. In my written testimony, I explained why I
believe existing law is insufficient to address the anti-
competitive consequences of this transaction with respect to
availability in the video programming market and how it
increases costs to competing satellite and cable providers,
increases their programming costs in an anti-competitive way.
But I would like to focus my remarks here on what has not
been to my mind sufficiently discussed during the course of
today's hearing, and that is the impact on the nascent Internet
distribution markets, TV Everywhere model, which Comcast
employs.
The entrepreneurs that Mr. Johnson was asking about, the
wireless providers that Mr. Gonzalez was asking about, new
forms of competition, new programmers who want to reach their
customers by the Internet face barriers by having a system
advanced by Comcast that locks in the existing video
subscription model and would make it impossible for somebody
using the Clearwire system that Mr. Roberts talked about to
deliver video programming unless they were also a video
subscriber to Comcast.
It is a geographic tie-in, because Comcast will not offer
its TV service outside of Comcast's franchised cable television
areas, even though from a technological standpoint, it can
offer it throughout the United States. And it is a profoundly
anti-democratic model, which would allow Comcast in the absence
of network neutrality regulation to take the entrepreneurs that
Mr. Johnson was asking about and charge them more for Internet
access to upload than a large competitor or the NBC content
which was competing with this new entrepreneur.
So for all these reasons, I believe that the proposed
transaction is profoundly anti-competitive, will leverage
existing anti-competitive conditions in cable to a far greater
extent. Thank you.
Mr. Poe. Thank you, all of you, for being here so long.
Thank you for your patience, Mr. Chairman. I yield back the
remainder of my time.
Mr. Conyers. I am very pleased now to call our last
witness, who has been very constant with this Committee on a
number of subjects, Luis Gutierrez of Illinois.
Mr. Gutierrez. Thank you, Mr. Chairman.
Well, you have had a long day here, so I will try to keep
it brief. I want to say, first of all, that I had a wonderful
meeting yesterday, Mr. Zucker, with Paula Madison and other
people from your group, your attorney and others, your general
counsel. I think it was a very productive meeting, and so I
thank them. I know some of them are here. It was a productive
meeting, and we got a lot of things discussed there.
I want to say that I did fly out with my wife out on the
1st of February to be at the L.A. Federation of Labor. And I
had to tell you, Mr. Cohen, you inspired me that day. Thank you
so much for your commitment to the rights of working men and
women.
I was there for your entire presentation and those of
your--obviously, of your membership. And I will tell you, I
came back and told them, ``Let's get that card check,'' which
is, I think, the best and most viable way we can help you as
companies such as NBC and GE and others merge or continue to
grow and expand in America.
And I say that because, although I heard Mr. Roberts say he
is going to keep the spirit of the union contracts and union
spirit at NBC, when NBC bought Telemundo, the on-air personnel
were not allowed immediately to gain the same access to the
same union that the NBC staff did.
And it was a long wait and a long struggle, I have to say,
but we had to discuss with them, especially the contracts of
many of the on-air, because they were brought in from different
countries, and so they had immigration issues. They didn't use
any of those issues, but we have to make sure they didn't.
And in the end, the workers voted by one vote. But I just
never knew, since there were 21 people employed and 21 had
signed saying they wanted a union--I didn't know what we needed
an election for. But even after the election, we won, and it
just shows the spirit.
So I want to thank you. Keep up--and I know we have our
work to do here in the Congress of the United States.
I want to say to Mr. Roberts and Mr. Zucker, so I have two
daughters. I have Mita. She is 30, grandson, Lucito. And I have
Jessica, who is a senior in college, graduating this year. I
imagine you guys, if you don't have daughters, you have wives,
you have mothers, you have sisters.
And so I bring this issue up to you because--and I
discussed this yesterday with the folks from NBC, and I want to
bring it up again to both of you. And that is the treatment of
women particularly on Telemundo, what could only be described
as one of the most misogynist portrayals of women that is on
TV.
I do not believe that you would allow on NBC or any program
created by Comcast to have the same depiction of women on NBC
as you do on Telemundo, whether it is in your regular
broadcasting or on your news cycle.
There is a great and huge problem in the Latino community,
one of which is the relationship between men and women. We can
say it is an ageless problem. But it is a particular problem of
violence which exists in our community.
And part of it is the correlation of power between men and
women and how men and women are viewed and looked at. I
remember, as I grew up, watching ``Leave it to Beaver,''
``Father Knows Best.'' I wanted my father to be like them.
Although I had a great dad, unfortunately, that is what TV
taught me, right?
You know, I didn't like my coarse hair. You know, I wanted
to be like them, because that is what TV taught me. It taught
me that what I looked like and what I represented and what I
was wasn't of great value. It wasn't portrayed on TV as
anything of value. I never saw it. So I wanted to be, in spite
of all of the things about immigrants and not wanting to be
American, I wanted to be nothing more than American. And TV
taught me I wasn't.
So I want to go back to the issue of women. And I just want
to say to you, take a moment--Mr. Zucker and Mr. Roberts--take
a moment. You are going to buy NBC. You should know about
Telemundo. You should know. And I am particular--and let me
tell you, there are a lot of great people on the newscasts
there that do a lot of great work.
But I am going to tell you something: Something has to be
done fundamentally about the program specifically as it relates
to women. It does not help a community advance forward when one
of their major avenues of information is viewed.
And don't only look at it. Look at the newscasts and
compare the newscasts on MSNBC, the newscasts on NBC, portray
how women are dressed, how they are viewed, the desks they sit
behind. Just portray them in their complete context and then
see how they are seen on NBC.
There would be outrage in this country if you were to take
the same and portray it on--it just wouldn't happen in this
country. I don't believe it would, not on all the news, not on
all the news, but on some of it.
And there is enough of it to say--I just came back. There
was a study. I just came back from spending some time with my
mom in Puerto Rico, and I just got back last week, and there
was a study that was issued. Even in Puerto Rico, 10th country
in the world of men killing women, of husbands killing wives,
10th country in the world, 4 million people.
Now, that is nothing to be proud of. We are 10th in the
whole world? I am not trying to say TV is the only thing, but,
you know, it is part of the vicious cycle that we have, and it
is a powerful component for changing how people view the world.
I came back on that airplane, coming back, and I watched
the program not on NBC, and it was amazing. Here was this
senator running for President whose brother was gay, and he was
engaging his fiancee whose brother was gay, and they were
returning to the veteran that came back from Iraq, right? And
how these two gay men were portrayed in that series I think
does a lot for ending bigotry and hatefulness in how people
view one another. And I think TV and how people are portrayed
is very, very powerful.
I don't think that you would--that it would be allowable if
you were to take women and substitute them for Black people,
substitute them for Jews, substitute them for any other group,
that it would be acceptable for Telemundo to do that.
And secondly, look at how it is you look at the gay
community on your Spanish-language network, both in terms of
the jokes, in terms of the nuances, things that, I tell you,
you know, I don't believe would be acceptable in a broader
range, because I think I know where America is going and where
the programming is going, in terms of this country.
So I would ask both of you to just speak to that issue a
moment and to--look, just to say, yes, Luis, tell you what, I
am going to take a look at it, as a dad, as a father, as a son,
I am going to take a look at it and, as a human being and as a
man with power, to kind of change that equation. I guess that
is what I would like both of you to speak to.
Mr. Zucker. So, Congressman, Paula Madison, Rick Cotton
filled me on your conversation yesterday, and they were
grateful to hear from you on that, and I would echo the same
today, which is that I appreciate your comments. We are very
proud of Telemundo, but I will give you my word here today that
I will go back to the executive team at Telemundo, which
includes some very prominent women in that executive team, and
I will discuss it with the executive team to make sure that
your comments are passed along.
Mr. Gutierrez. Yes, and take the powerful women at NBC and
let them help the powerful women at Telemundo get together and
have that kind of power, you know, that they already have
within the corporate structure and convey that to them, if you
will.
Mr. Roberts?
Mr. Roberts. I am pleased to hear what he just said. I will
do the same. I will go back, as you suggested, and watch----
Mr. Gutierrez. Watch it.
Mr. Roberts. Yes.
Mr. Gutierrez. Watch it. But watch--tell them to put
together--and you will see what I mean, and you will say,
``Maybe Luis has something here.'' And if you watch it day in
and day out, you are really, really going to have a sense.
Let me go to Mr. Roberts. So you have about 100,000
employees. And I understand about 8 percent of them are Latino,
is that correct? That is the information that I have been
given.
Mr. Roberts. I don't have that stat--okay.
Mr. Gutierrez. And it is from your folks. So Latinos
constitute about 15 to 16 and ever growing part of the
population. So why is there such a disconnect between the
number of Latinos employed at Comcast, a company which much
to--we have heard from our friends from Texas from the rural
area, it is the only cable company--and one which I have sent
lots of checks to over the year, I assure you, to Comcast, you
can go check, always on time. You know, direct payment makes
for a good payment, because my bank--they are very good at
sending you the money on the appropriate date you demand it.
So as a customer and somebody who has a many, many year
relationship with Comcast, why not? Why not? We have got a
large urban city like Chicago, L.A. It is easy, and they are
easy to find. And if you can't find them, I will tell you
something. You call together your public relations folk, go to
any one of those schools, they are going to show up for jobs at
Comcast.
So why such a disconnect between--and I assure you that if
you were to take their proportion--I am using general
population. That is 16 percent of the general population. If I
were to take the kinds of jobs that exist at Comcast--that is,
the people that drive the cars and the--you will see we are
even higher participation rate. And that spectrum or that
portion of the job of the economy, we are even greater in that
area. So why such a disconnect?
Mr. Roberts. First of all, let me go back and look at that
specific number. I am not familiar that--I hope that is the
right number. And if it is not, I will write to you or come
visit.
Mr. Gutierrez. Well, come visit, but I would like to talk
to you about it, because, you know, Comcast has a huge presence
in Chicago. Through the agreement it has through the city of
Chicago, it is my cable company. I don't have a choice. They
made an agreement with the city of Chicago. And if I live where
I live, Comcast is my provider.
Mr. Roberts. We have been making a lot--I agree. There is
no disagreement. I mean, we want our employees and our channels
to represent our customers, and that is great business. I am
pleased--I don't know if you were here earlier when I said
that----
Mr. Gutierrez. I was.
Mr. Roberts [continuing]. Top 60 companies Hispanics, you
know, for 4 years--5 years in a row by Hispanic Business
magazine, we have been recognized. We have our Web site in
Spanish. We have all sorts of more programming. As we are going
from analog to digital, a lot of our initiative, are to both
English-speaking and Spanish-speaking programming and to
broaden----
Mr. Gutierrez. And, Mr. Roberts, you have great people in
Chicago. I mean, there is a--you have a Latino population of
workers there that are wonderful. I call upon them all the
time. Wonderful workers, they show up early, they stay late.
They would be a credit to the company.
Mr. Roberts [continuing]. Accelerate that.
Mr. Gutierrez. It is just you hire insufficient numbers of
them in relationship to our purchasing power. I mean, I am not
asking you to give us something for nothing. I don't know how
many Latinos purchase Comcast, right, how many of your viewers,
but I would--I believe, understanding a little bit of my
community and having grown up and never, you know, gone to
college, and I didn't move from the neighborhood, I stayed in
the same neighborhood, right, having that connection and that
nexus to that community a lot.
Because I will tell you something, I can't figure out a
person in my neighborhood that I visit that doesn't have a
Comcast box. So I can only assume and extrapolate from that
that you are doing very, very, very well in the Latino
community.
So all I am saying is, yes, look at the numbers. If you
find that they are correct and that they are insufficient, then
tell me, because I know there is going to be a grand meeting,
right, for everybody to get together and kind of say, you know,
how are we going to all get along and sing, you know,
``Kumbaya'' together.
But, listen, seriously, 8 percent, 16 percent. It is only
half. It is even greater if you look at that particular sector
of the labor force. You are going to find it is very
disproportionate. There should be a reason why it is happening,
and then it terms of other numbers.
And I will say one other thing. I know what, you know,
Hispanic magazine and others, and the Chamber of Commerce and
others, have to say about you. I am sure they are right, and I
am sure they had good reason for extolling those virtues of
Comcast. But you have 13 members of your board of directors.
You couldn't find one Gonzalez, Rodriguez, Martinez, of any
competence, of any significance to be on the board of directors
of Comcast in the year 2010? Why not? Why isn't there one?
Mr. Roberts. There is not a good answer to that. And as I
said earlier, it is a major priority for our board, and I hope
not to be before you again where we don't have an answer to
that.
Mr. Gutierrez. And it shouldn't be. And, look--and it is
not only just finding somebody, because you will find somebody,
but finding somebody who is going to go and challenge, who is
going to go and challenge and make sure that you become a
stronger, more vibrant company.
It is my opinion that in America, the companies that are
going to move forward, that are going to advance, that are
going to prosper are those that have a connection to the
communities that they serve. And the connection to the
communities that they serve are going to come through the
people on the front lines that speak to that community.
You will not know how angry it makes people feel that when
they call somebody on the phone and they go, you know, for
English press one, and then they go, ``Para espanol, oprima el
dos.'' I mean, it sounds like my Spanish teacher, you know,
from freshman year.
You know, we want our people speaking our language to our
people, not others doing that, because what you are saying is
that you couldn't find anyone from our community, but someone
who went to college and was smart enough to take Spanish as a
second language and put them on.
That is going to be very critical and very important, I
think, to your success. So if I were given--which is what I am
doing--given you--hire them. It is going to be good for the
bottom line. In the end, you are going to be richer and make
more money and be more profitable because they are going to
bring you ideas and they are going to bring you energy that you
do not receive because of our life experience.
It is going to happen. So don't have it, and don't do
like--let me see. I will give you an example. Don't do like my
friends at Verizon. They put a Latino on their board from
Puerto Rico, and Verizon shut down its operation in Puerto
Rico. I was like, how could this be? So it is not the fact of
simply having one, but having one that is going--that has a
stake, that has an interest to carry forward.
Thank you all very much. I know you have had a long day
here. Thank you so much for listening.
Mr. Roberts. Thank you.
Mr. Conyers. Our last witness, Judy Chu.
Ms. Chu. Congratulations on your stamina. Well, I did want
to take this time to ask about a few issues. One is on the
retransmission issue.
We are seeing an increasing number of instances in which
retransmission, consent negotiations are breaking down, leaving
consumers at risk of losing access to broadcast television
service. Even when these negotiations are resolved without an
actual disruption of service, the uncertainty is certainly
disruptive to consumers, in terms of what finally happens.
For instance, when FOX threatened to pull their premium
content during the holidays, people, of course, would have
missed the Super Bowl. And as a result, there would not have
been that content to certain cable providers.
With your merger, you would be at an advantage over other
providers in terms of being able to negotiate and to not have
this disruption in service. In your view, is there a need to
adopt reforms to the transmission consent process established
by Congress in order to protect consumers?
Mr. Roberts. I think the first point that you made, where
FOX and Time Warner, was very high-profile, and some of the
points you have made, we have traditionally also made, which
is, this is very compelling content, like the Super Bowl, and
is this the right process?
I think any review of that should be across the entire
industry, because no matter what happens with this situation,
there are several other networks at 80 percent, 90 percent of
the viewing, 75 percent of the distributors. There is going to
be this conversation of retransmission consent. This has been a
longstanding set of changes in the marketplace.
What I believe is that by now, we will still be 80 percent
a cable company in terms of cash flow after this transaction,
approximately 20 percent a content company. I think it allows
us to have a role, to help come up with constructive solutions
of how--for the industry, how should this get resolved in the
future?
There is no easy answer. I think it would have been before
you or would have happened at the FCC already. And I think it
is an ongoing conversation.
At some level, the cable companies now view us as a
broadcaster. The broadcasters view us as a cable company. So in
some respects, those conversations still have to take place
without us, but we may have an opportunity to play a unique
role.
One of the things to your other--I believe inside your
question is specifically with NBC, will we treat others in a
way that would create some harm potentially? So one of the
first conditions we made after saying we continue to want to
broadcast and will commit to broadcast NBC free over the
airwaves is to have the program access rules, which heretofore
have not applied to retransmission consent negotiations, apply
to retransmission consent negotiations.
So another distributor like DirecTV knows they are going to
have the same access to NBC that they do to CNBC in the future
with the FCC having a role, if there is a problem there.
But I think, more importantly, frankly, is, what about all
the other negotiations in the industry? And it may well be
something that you are hearing more and more about because the
stakes are so large.
Ms. Chu. Okay. Then I wanted to follow up on some of the
questions that were about piracy. I do represent a district in
L.A. County, and I have spent a lot of time talking to folks in
my district and in Los Angeles to folks in Los Angeles during
the recent congressional district about this issue.
And I learned that, in 2005, piracy costs the city of Los
Angeles about 106,000 jobs, with wages of $5.1 billion, so this
is an extremely serious issue.
So I wanted to ask about the balance, about the balance
between making sure that there is the protection of
intellectual property rights, which we certainly hope that you
can do, but also, balancing that with net neutrality and the
open Internet. How do you balance the two?
Mr. Roberts. Well, I think that we--again, it is a little
bit like retransmission. These are tough issues. Earlier, we
were talking about how fast the technology is changing, both
for the pirates and for the capabilities for the consumer to
take advantage of these technology changes in a legal way.
And one of the real opportunities for this new company is
to play a leadership role in trying to crack down on the piracy
to keep the model legitimate, because so many parts of the
ecosystem depend on that, and the statistics you have cited
just for California are stunning. And over the world, it
magnifies many, many times.
So heretofore, we have been looking at it as solely a
distributor, and now we have made a large investment in
content, so it accelerates our desire to find good
technological solutions.
One of the other points is that people try not to use this
as a competitive advantage, where some networks you can get
pirated content, and other networks are policing and enforcing
in a way that reduces that likelihood and that you are
criticized for that behavior.
So industry-wide solutions are, in my opinion--again, this
merger does nothing but to help foster our desire to try to
help play a role in those industry-wide solutions.
Ms. Chu. And how about the issue of maintaining net
neutrality?
Mr. Roberts. Well, you know, net neutrality means different
things to different people. We have always been for an open
Internet and a free Internet. We helped invent broadband in
this country with cable modems and DOCSIS. And we have invested
billions of dollars. And as I said, we are now moving on to
DOCSIS 3.0 and even faster Internet.
There has been very few allegations--it is a very vocal
community. When somebody does something that somebody's upset
about, it gets a lot of attention very quickly and tends to
change behavior quickly. And the FCC, again, industry-wide--I
don't think this merger, frankly, affects Comcast's behavior as
a cable company, as it affects its broadband. NBC doesn't
deliver ISP services.
So the question is, as the FCC reviews net neutrality, we
are an active participant. It is a very open and fair process,
very transparent that Chairman Genachowski has been having.
And, you know, we are involved. We may have a difference of
opinions as to what the definition, where it should start and
stop.
But, frankly, it is critical to our future to have
broadband continue to grow and be successful, and consumers
have to feel comfortable both with their provider and with
their access to information from the Internet. And I think, so
far, it is the engine of a lot of growth, and I hope it will be
so in the future.
Ms. Chu. Okay. And then, finally, there has been some
reference to Hulu. I just wanted to know, what is your
relationship with Hulu? And do you see them as a competitor? Do
you share content with them? And how do you see that
relationship changing with the merger?
Mr. Roberts. NBC Universal owns 32 percent non-controlling
interest in Hulu. There are other companies, FOX, Disney,
Providence Equity that own the balance, I guess, in addition to
management.
I don't view us competing with Hulu. They are an ad-
supported service today. There is so much explosionit is such a
nascent market. There is a lot of experimentation, innovation
happening on video with the 'net. What is the business of Hulu
and others who provide it? Comcast today, about 40 percent of
our video views of professional content come from Hulu, so we
are distributing. People can access Hulu through our portal.
We are about 3 percent of Hulu's views, so we are a very
small part of Hulu's eco-world. And together, NBC and Comcast
are about 2.5 percent of professional video content.
Google, YouTube, over 50 percent of the 30 billion video
views, Apple, Netflix, it is a nascent market. And many people
are trying to figure out how to participate, how to grow, how
to find things that consumers want and a great business model.
So personally, it is an exciting new area. We don't come in
with any agenda other than to help try to make it grow. And,
you know, something we will learn about once we are together,
but I have never actually met the people at Hulu. I have talked
to them on the telephone, but looking forward to learning about
their business.
Ms. Chu. Okay, thank you.
Mr. Conyers. This has been a very important hearing. We
will leave the record open for any of the witnesses that may
want to submit any additional comments or supplementary
statements. I particularly thank my staff for working for many
weeks on pulling this together. There will undoubtedly be
future public discussions about this matter.
And I thank all of you very much for your honest and
thoughtful contributions.
The Committee stands adjourned.
[Whereupon, at 3:11 p.m., the Committee was adjourned.]
A P P E N D I X
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Material Submitted for the Hearing Record