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Comcast's Roberts begins merger talking tour with The Post, regulators

Comcast CEO Brian Roberts and NBC Universal executives swung through Washington on Tuesday, pitching their $30 billion merger to The Washington Post and the federal regulators who will ultimately decide its fate.

They stopped by The Post to talk to the editorial board and newsroom editors and reporters to try to debunk concerns that the creation of a media behemoth would lead to less choice in programming and a retreat from local broadcasting. The New York Times and The Wall Street Journal have already weighed in with editorials about the deal.

The merger, announced last week, will go before antitrust watchdogs at either the Justice Department or Federal Trade Commission. The Federal Communications Commission will determine if the deal benefits the public as it decides to approve the transfer of broadcast licenses in the deal. Analysts generally expect the merger will be approved by regulators -- particularly at the FCC -- who have some latitude to attach conditions to the merger that could pave the way for competition in the nascent but fast-growing market for Internet video.

"Today NBC makes certain content available online and I can't imagine we will change that process," Roberts said.

Roberts and NBC Universal and GE executives spent the day meeting with Julius Genachowski, chairman of the FCC. They also met with Democratic Commissioners Michael Copps and Mignon Clyburn, and Republican Commissioner Robert McDowell. They didn't meet with Republican Commissioner Meredith Attwell Baker, because she was out of town on business travel.

The FCC didn't comment on the meetings. But Roberts later told Post editors and reporters that the FCC meetings were intended to brief regulators on the deal and to reiterate what it views as public interest commitments to local broadcasting and program-access rules that require Comcast to share content with other cable and satellite competitors.

"Today was the beginning of the process, kicking off what will be a thorough review," Roberts said. He reiterated that regulatory scrutiny of the deal could take between nine months and one year. Analysts say it could take longer, with some of the toughest questions surrounding how the merger would affect television competition on the Internet.

Public interest groups have balked at the regulatory commitments announced with the merger. Gigi Sohn, the executive director of Public Knowledge, a public interest group, warned that the merger could lead to less choice in programming and higher prices -- particularly for those who watch video over computers.

"With all that programming under its control, Comcast will have every incentive to take its shows off of the Internet and force consumers to buy a cable subscription to get online access to that programming," she said. "Want to watch reruns of '30 Rock?' Buy a Comcast subscription."

Smaller cable companies said the deal would hurt industry competitors.

"Independent operators already have very little leverage in their negotiations with broadcasters for retransmission consent and with the national and regional sports networks for carriage rights," the American Cable Association said in a statement. "These problems become far worse when they have to negotiate programming deals with an entity that has the alternative option to distribute the content directly to customers either through their cable plant or online."

Earlier in the day, Roberts said at a financial analysts conference in New York that his company is still trying to figure out a business model online, according to reports.

According to Dow Jones, Steve Burke, Comcast’s chief operating officer, said at the same conference that the cable giant largely sees eye-to-eye with NBC when it comes to its Web strategy. They are also careful to hold back some shows from the Internet that could encourage consumers to cut their cable cords, Burke said. “Their interests, and the interests of the distributors, are exactly the same, to make sure that those great revenue streams related to affiliate sales are not harmed," he said.

In the meeting at The Post, Roberts and Comcast Executive Vice President David Cohen said debates over online video distribution shouldn't be tangled in a regulatory review of the merger. Cohen has said the merger should be viewed as a straight vertical merger deal, where exclusionary concerns are already largely addressed by program-access rules already in place for the cable industry.

Copps of the FCC has already expressed concern about the concentration of media that will result in the merger. Copps questioned how the deal would affect cable prices for consumers and whether the merger pointed to a pressing need for new open-Internet rules that are already being crafted by the FCC. Those rules would prevent Comcast from prioritizing its own content or blocking that of others. Imagine Comcast, for example, giving priority to its Universal movies on the Web over that of competitors. Copps said the deal would "face a very steep climb with me."

Cohen said in an interview last week that the question of net neutrality and competition in the online video market "should not be part of the conversation about the merger."

He and Roberts reiterated those points yesterday at The Post. And they said the future of online video still poses great uncertainty for online video distributors trying to find a solid financial footing with online business models in which online advertising alone doesn't seem to be supporting the high costs of producing content.

Photo Credit: USA Today

By Cecilia Kang  |  December 9, 2009; 8:00 AM ET
 
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