Scenes from the Comcast Senate hearing
This morning the Senate Judiciary Committee held its hearing on the proposed Comcast-Time Warner Cable merger. If you have three hours to kill, you can watch the whole thing here: http://goo.gl/0Nv67o. Or you can wait and skim the full transcript, which the committee will post eventually. But it boiled down to a few moments and a few take-aways:
Franken’s Fireworks: The most combative moments in the hearing came courtesy of Minnesota senator Al Franken, who has made no secret of his opposition to the deal.
“There is no doubt that Comcast is a huge influential corporation, and I understand that there are over 100 lobbyists making the case for this deal to my colleagues and our staffs,” Franken said as he was called to ask question. He then noted that he had petitions signed by “over 100,000 people” questioning the deal. “I am against this deal, because I believe it does not meet other tests.”
Later in the hearing, Franken questioned Comcast’s business strategy to “upsell” consumers into bundles of services, as well as its “neighborhooding" dispute with Bloomberg TV.
Skepticism: Senators on both sides of the aisle seemed skeptical of some of the claims made by Comcast.
"Some of my friends here have never met a merger they didn’t like,” said Senator Orrin Hatch during the hearing.
One of those Senators would probably be Lindsey Graham, who expressed his view that the market should work itself out on mergers such as Comcast-T.W.C. That said, he expressed a desire to ensure consumers get a good deal out of the merger, and better service.
“I’m a DirecTV subscriber, I had problems with cable,” Graham said. “I have problems with DirecTV when the weather is bad.”
Then there was Mike Lee, who also expressed generally support for the merger, with one caveat:
“Given well known political leanings of NBC, Comcast-Time Warner Cable might have the ability to discriminate against content, in particular conservative political content,” Lee said, referring to MSNBC, the left-leaning cable news channel owned by NBCUniversal. (Of course Comcast is also one of the closest cable partners to Fox News.)
Golden parachutes: Patrick Leahy asked Time Warner Cable C.F.O. Arthur Minson about the “golden parachute” pay packages that he and T.W.C. chief Rob Marcus will get if the deal goes through. Marcus could take home $80 million for the two months he worked as C.E.O., through the transition period with Comcast, while Minson would take home $27 million.
Minson, after talking around the question and being asked again by Leahy, responded by arguing ”for transactions this size and this complex, I think you will find that they are in line.”
Broadband and channel access: The two big themes for the hearing were broadband and channel access. Would the combined company offer fast internet at fair prices? Would the company abide by Net Neutrality rules? Comcast’s Cohen responded affirmatively to both, noting that the F.C.C. is working on new net neutrality rules that would apply to all broadband providers. Comcast is obligated to abide by net neutrality rules through 2018 due to the NBCUniversal transaction.
“I can’t imagine that that the Commission will not have those rules in place by 2018,” Cohen said.
The committee heard from C.E.O. of Back9 Network, a “golf lifestyle channel” that has struggled to gain access to Time Warner Cable and Comcast. The C.E.O., James Bosworth, said that after Comcast’s proposed deal, T.W.C. executives cooled on carrying the channel, and he suggested that Comcast’s ownership of Golf Channel may have been a factor.
“They are essentially market makers,” Bosworth said of Comcast and T.W.C. “People look at them to see where the market goes [in deciding to carry a channel].”
Cohen responded by saying that Comcast carried 160 independent networks, and played a big role in helping many small independent networks succeed.
Consumers: What will happen to consumers was the other big theme of the day. In addition to broadband speed, accessibility and pricing, the executives were asked whether prices will continue to rise. Cohen previously said he could not promise that prices would decrease should the deal go through.
“There is nothing in this transaction that will cause anyone's cable bills to go up,” Cohen said today, when asked about that quote. “Between the synergies in this deal, and whatever marginal additional leverage we may have in programming or equipment side purchasing. Consumers today are in the driver’s seat.”
“Comcast will be in the driver’s seat,” responded Public Knowledge C.E.O. Gene Kimmelman, citing the size of the combined entity. ”Either they are in their system, serving more than 30 million subscribers, or they are not.”