Video Hearing: Senate Commerce Dems Grill Comcast, AT&T on Mergers

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Reports that Fox made a failed bid for Time Warner added a few more sparks to Senate Commerce’s hearing on the video market Wed. The reported transaction suggested that “we are in an arms race,” said Gene Kimmelman, pres/CEO of Public Knowledge. It’s “no surprise that content companies bulk up,” he said. Operators like Comcast and AT&T “started the ball rolling, and as we’ve seen from today’s stories, we don’t know where it’s going to end,” he told the panel. As expected, Comcast and AT&T execs faced another (3-hour) grilling by Democratic lawmakers over their respectively proposed mergers. Among committee chmn John Rockefeller’s biggest concerns was whether the mergers would prevent access to content. “Does your company, and will it, enter any competitive contracts to prevent content companies from selling content to online video companies… Is there evidence that companies are locking up content?” he asked Comcast evp David Cohen and AT&T senior evp John Stankey. While it’s a “No” from both, Cohen added that Comcast, through its NBCU unit, has made dozens of deals selling “vast amount of highly popular content” to OTT providers like Netflix and Amazon. Netflix CEO Reed Hastings was invited to testify but didn’t make it. DISH, a vocal Comcast-TWC opponent, said its digital video service could be threatened by a bigger Comcast. “Comcast doesn’t necessarily want us to succeed because we’re competitors,” said deputy general counsel Jeffrey Blum. “We are very concerned that a combined Comcast and Time Warner Cable will have an incentive and ability to stifle our service.” Cohen shot back. “If we start blocking or degrading content then we’re going to lose customers. So it’s not in our interest to do so.” Among other potential merger implications, Richard Blumenthal (D-CT) was again especially worried that a bigger Comcast, which would own 16 RSNs (5 from TWC) plus 16 local sports channels, will have enormous market power on sports programming. “Why not commit to offering all RSNs on an a la carte basis?” he asked Cohen. The problem is RSN programming is by definition local and negotiated market by market, so it doesn’t make a difference owning 1 or 30 RSNs, the exec said. Using TWC’s LA Dodgers net as an example, he said a bigger Comcast won’t have any more market power than TWC currently has. And based on independent studies, mandatory a la carte would result in less consumer choice, less diverse programming and higher prices, Cohen said. “A la carte isn’t the solution.” Kimmelman, of course, disagreed. While MVPDs claim consumers have sufficient choice, the issue isn’t whether services are available, he said. “You can’t get a lot of the individual channels you want without paying a high price… What we don’t have is a broader individualized selection driven by consumers… That’s our problem.” Aside from the usual debate on the mergers’ impact on the broadband market, Ed Markey (D-MA) asked whether Comcast and AT&T oppose municipal broadband as a 3rd option, referencing Comcast’s claim that most communities have at least 2 broadband providers. “I think it’s a mistake to do to it, and so we will advocate at the municipal government level that we think this is a mistake,” Cohen said. Clearly Markey wasn’t satisfied. “More competition is the answer to all of these problems… My basic philosophy… is that Darwinian, eye-watering, bone-chilling competition is the answer to all regulation. The smaller the number of competitors, the more regulation you need.” The bottom line, according to Cohen, is “taxpayer subsidy of poorly-run and ultimately bankrupt municipal broadband networks don’t benefit anyone.”

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