[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]







AN EXAMINATION OF THE PROPOSED COMBINATION OF COMCAST AND NBC UNIVERSAL

=======================================================================

                                HEARING

                               BEFORE THE

      SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                            FEBRUARY 4, 2010

                               __________

                           Serial No. 111-94




[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]






      Printed for the use of the Committee on Energy and Commerce

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                    COMMITTEE ON ENERGY AND COMMERCE

                       HENRY A. WAXMAN, California
                                Chairman
JOHN D. DINGELL, Michigan           JOE BARTON, Texas
  Chairman Emeritus                   Ranking Member
EDWARD J. MARKEY, Massachusetts     RALPH M. HALL, Texas
RICK BOUCHER, Virginia              FRED UPTON, Michigan
FRANK PALLONE, Jr., New Jersey      CLIFF STEARNS, Florida
BART GORDON, Tennessee              NATHAN DEAL, Georgia
BOBBY L. RUSH, Illinois             ED WHITFIELD, Kentucky
ANNA G. ESHOO, California           JOHN SHIMKUS, Illinois
BART STUPAK, Michigan               JOHN B. SHADEGG, Arizona
ELIOT L. ENGEL, New York            ROY BLUNT, Missouri
GENE GREEN, Texas                   STEVE BUYER, Indiana
DIANA DeGETTE, Colorado             GEORGE RADANOVICH, California
  Vice Chairman                     JOSEPH R. PITTS, Pennsylvania
LOIS CAPPS, California              MARY BONO MACK, California
MICHAEL F. DOYLE, Pennsylvania      GREG WALDEN, Oregon
JANE HARMAN, California             LEE TERRY, Nebraska
TOM ALLEN, Maine                    MIKE ROGERS, Michigan
JANICE D. SCHAKOWSKY, Illinois      SUE WILKINS MYRICK, North Carolina
HILDA L. SOLIS, California          JOHN SULLIVAN, Oklahoma
CHARLES A. GONZALEZ, Texas          TIM MURPHY, Pennsylvania
JAY INSLEE, Washington              MICHAEL C. BURGESS, Texas
TAMMY BALDWIN, Wisconsin            MARSHA BLACKBURN, Tennessee
MIKE ROSS, Arkansas                 PHIL GINGREY, Georgia
ANTHONY D. WEINER, New York         STEVE SCALISE, Louisiana
JIM MATHESON, Utah                  
G.K. BUTTERFIELD, North Carolina    
CHARLIE MELANCON, Louisiana         
JOHN BARROW, Georgia                
BARON P. HILL, Indiana              
DORIS O. MATSUI, California         
DONNA M. CHRISTENSEN, Virgin Islands        
KATHY CASTOR, Florida               
JOHN P. SARBANES, Maryland          
CHRISTOPHER S. MURPHY, Connecticut  
ZACHARY T. SPACE, Ohio              
JERRY McNERNEY, California          
BETTY SUTTON, Ohio 
BRUCE L. BRALEY, Iowa
PETER WELCH, Vermont                 
                                     

                                  (ii)
      Subcommittee on Communications, Technology, and the Internet

                         RICK BOUCHER, Virginia
                                 Chairman
EDWARD J. MARKEY, Massachusetts      FRED UPTON, Michigan
BART GORDON, Tennessee                 Ranking Member
BOBBY L. RUSH, Illinois              CLIFF STEARNS, Florida
ANNA G. ESHOO, California            NATHAN DEAL, Georgia
BART STUPAK, Michigan                JOHN SHIMKUS, Illinois
DIANA DeGETTE, Colorado              GEORGE RADANOVICH, California
MICHAEL F. DOYLE, Pennsylvania       MARY BONO MACK, California
JAY INSLEE, Washington               GREG WALDEN, Oregon
ANTHONY D. WEINER, New York          LEE TERRY, Nebraska
G.K. BUTTERFIELD, North Carolina     MIKE FERGUSON, New Jersey
CHARLIE MELANCON, Louisiana
BARON P. HILL, Indiana
DORIS O. MATSUI, California
DONNA M. CHRISTENSEN, Virgin 
    Islands
KATHY CASTOR, Florida
CHRISTOPHER S. MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
JERRY McNERNEY, California
PETER WELCH, Vermont
JOHN D. DINGELL, Michigan (ex officio)












                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Rick Boucher, a Representative in Congress from the 
  Commonwealth of Virginia, opening statement....................     1
Hon. Cliff Stearns, a Representative in Congress from the State 
  of Florida, opening statement..................................     3
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     4
Hon. Roy Blunt, a Representative in Congress from the State of 
  Missouri, opening statement....................................     6
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............     6
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................     7
Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of California, opening statement...............................     8
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, opening statement.................................     9
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................    10
Hon. Jay Inslee, a Representative in Congress from the State of 
  Washington, opening statement..................................    11
Hon. Mary Bono Mack, a Representative in Congress from the State 
  of California, opening statement...............................    12
Hon. Doris O. Matsui, a Representative in Congress from the State 
  of California, opening statement...............................    13
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................    14
Hon. Christopher S. Murphy, a Representative in Congress from the 
  State of Connecticut, opening statement........................    14
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................    15
Hon. Kathy Castor, a Representative in Congress from the State of 
  Florida, prepared statement....................................    17
Hon. G.K. Butterfield, a Representative in Congress from the 
  State of North Carolina, opening statement.....................    19
Hon. John B. Shadegg, a Representative in Congress from the State 
  of Arizona, opening statement..................................    20
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................    21
Hon. Peter Welch, a Representative in Congress from the State of 
  Vermont, opening statement.....................................    22

                               Witnesses

Brian Roberts, Chairman and CEO, Comcast Corporation.............    23
    Prepared statement...........................................    26
    Answers to submitted questions...............................   112
Jeff Zucker, President and CEO, NBC Universal....................    39
    Prepared statement...........................................    26
    Answers to submitted questions...............................   168
Colleen Abdoulah, President and CEO of WOW!, Wide Open West 
  Internet, Cable and Telephone..................................    40
    Prepared statement...........................................    43
Michael Fiorile, Chairman, NBC Affiliates Board, and President 
  and CEO, Dispatch Printing Company.............................    52
    Prepared statement...........................................    54
Dr. Mark Cooper, Director of Research, Consumer Federation of 
  America........................................................    65
    Prepared statement...........................................    67
Adam Thierer, President, Progress and Freedom Foundation.........    76
    Prepared statement...........................................    78

                           Submitted Material

Letter of January 29, 2010, from the City of Pittsburgh to Mr. 
  Doyle..........................................................   110
Letter of January 29, 2010, from the Pittsburgh City Council to 
  Mr. Doyle......................................................   111

 
AN EXAMINATION OF THE PROPOSED COMBINATION OF COMCAST AND NBC UNIVERSAL

                              ----------                              


                       THURSDAY, FEBRUARY 4, 2010

              House of Representatives,    
Subcommittee on Communications, Technology,
                                  and the Internet,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:34 a.m., in 
Room 2123, Rayburn House Office Building, Hon. Rick Boucher 
[chairman of the subcommittee] presiding.
    Present: Representatives Boucher, Markey, Gordon, Rush, 
Eshoo, Stupak, DeGette, Doyle, Inslee, Weiner, Butterfield, 
Melancon, Matsui, Christensen, Castor, Murphy, Space, McNerney, 
Welch, Dingell, Waxman (ex officio), Stearns, Upton, Shimkus, 
Shadegg, Blunt, Buyer, Bono Mack, Terry, Rogers, Blackburn and 
Barton (ex officio).
    Staff Present: Roger Sherman, Chief Counsel; Pat Delgado, 
Chief of Staff; Tim Powderly, Counsel; Amy Levine, Counsel; 
Shawn Chang, Counsel; Greg Guice, Counsel; Sarah Fisher, 
Special Assistant; Michiel Perry, Intern; Neil Fried, Minority 
Counsel; Will Carty, Minority Professional Staff; Garrett 
Golding, Minority Legislative Analyst.

  OPENING STATEMENT OF HON. RICK BOUCHER, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF VIRGINIA

    Mr. Boucher. The subcommittee will come to order. Today the 
subcommittee convenes to consider the proposed combination of 
two of our Nation's largest media and entertainment companies, 
Comcast and NBC Universal. I will note at the outset that it is 
my intent to urge the FCC and the Department of Justice to move 
expeditiously concerning their review and approval of this 
matter. I am not saying that the agency should not impose 
conditions on the transaction, but the companies deserve an 
answer in a timely manner.
    The key to evaluating any merger or joint venture is to ask 
how it will affect consumers. Some combinations may benefit 
consumers by enabling the deployment of new and better products 
and services; others may harm consumers by limiting the choices 
that are available to them. Sometimes these harms can be 
limited or completely eliminated through the imposition of 
conditions, and other times they cannot. So we will inquire 
this morning about whether synergies will arise from the merger 
that will confer benefits on consumers, whether there is the 
potential for consumer harm through lessened access to 
programming that is available today on NBC Universal, and, if 
there is the potential for consumer harm, whether the merger 
should be conditioned so as to guard against it.
    Comcast is the Nation's largest multichannel video 
programming distributor, the largest residential broadband 
provider and third largest home telephone service provider, as 
well as the owner of a number of cable channels and regional 
sports networks. As measured by annual revenue, NBC Universal 
is the Nation's fourth largest media and entertainment company. 
It owns the NBC and Telemundo television networks, television 
broadcast stations and many of our Nation's largest television 
markets, cable channels and a movie studio, as well as an 
interest in the online video programming provider Hulu.com.
    As these facts revealed, the merger, if approved, will 
substantially transform the media and entertainment 
marketplace, and it requires very careful scrutiny. That 
scrutiny boils down, I think, to three basic questions. First, 
assuming the combination is approved, what benefits will 
consumers see a year after the merger that they do not enjoy 
today? Secondly, what, if anything, are consumers receiving 
today that they will not continue to receive a year after the 
merger is consummated? And finally, are there conditions that 
regulatories should consider imposing on approval of the merger 
to ensure that it serves consumers; and if so, what are those 
conditions?
    I want to thank our panel of distinguished witnesses for 
their appearance here this morning and for their testimony 
enlightening our deliberations. I also want to remind the 
members of our subcommittee that several of our witnesses are 
scheduled to testify this afternoon in the other body, and we 
want to make sure that we do not detain them from their 
appointed rounds. So I would ask that Members adhere very 
closely to our time limitations on opening statements and also 
during the question period. And I hope that this brief opening 
statement has set something of an example.
    I am pleased at this time to recognize the Ranking 
Republican Member of our subcommittee, the gentleman from 
Florida, Mr. Stearns.
    Mr. Stearns. Good morning. And thank you, Mr. Chairman. I 
just want to yield to the Ranking Member of the veterans 
committee who has to leave, Mr. Buyer, for a quick statement.
    Mr. Buyer. I thank the gentleman for yielding to me. I am 
going to have to waive my opening statement. I want to thank 
you and the Chairman. When I asked for this hearing, I think it 
is extremely important for all the views to be aired, and I 
want to thank you for that.
    I am going to take off and receive the VA Secretary's 
testimony, and I plan to return.
    Mr. Stearns. Very good. I look forward to it.

 OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Mr. Stearns. Mr. Chairman, obviously this is a very 
important hearing. The merger between Comcast and NBC Universal 
is indeed a major transaction that could possibly fundamentally 
alter the media and entertainment landscape in the United 
States. It deserves close examination by this subcommittee, our 
jurisdiction, as well as the Justice Department and the FCC. I 
am glad that the CEOs of both Comcast and NBC and Universal are 
here this morning. I look forward to their testimony and the 
testimony to the rest of the panel.
    Comcast, as all of us know, is the Nation's largest video 
programming distributor, and NBC is the Nation's fourth largest 
media and entertainment company. Nevertheless there is, in my 
opinion, little to suggest that a Comcast/NBCU combination 
would seriously threaten competition in the media entertainment 
industries. We all know this is a highly competitive segment of 
the economy, and ultimately consumers stand to benefit. Since 
NBCU and Comcast do not compete in most segments of the market, 
this deal will not bring about consolidation, so to speak.
    Comcast has interest in only five wholly owned and six 
partially owned national cable networks. So together these 
networks only represent about 3 percent of national cable 
network advertising and affiliate revenue. NBC's network 
represent approximately 9 percent of national cable networks' 
advertising and affiliate revenue, giving the combined entity a 
total of 12 percent, which would place it behind Disney, ABC, 
Time Warner and Viacom. That is the same position NBC occupies 
today before the deal, and approximately six out of every seven 
networks Comcast carries will remain unaffiliated with Comcast 
or NBC.
    Now, the idea that Comcast/NBCU combination will harm 
competition is something we are looking at today. I don't think 
it is a--founded under the data that I have looked at. In fact, 
such vertical integration will lead to greater innovation and 
drive more competition in this already competitive market. 
Moreover, under the prevailing economic view, a firm that does 
not have market power in either the video distribution or 
programming markets is no more capable of exerting market power 
simply because it is vertically integrated.
    As mentioned before, the combined Comcast/NBCU will control 
content representing only 12 percent of the national cable 
programming market. Were the new venture to unreasonably 
withhold any of this programming, the combined entity would 
likely just lose programming revenue as distributors and 
viewers turn to other alternatives. Indeed, in many cases, 
viewers might be able to find the identical content from 
another distributor and perhaps even for free, over the air or 
over the Internet. And while there is debate whether the 
program access rules are even needed, if not harm--even need if 
not harmful in light of the level of competition, Section 628 
would also limit the combined entities' conduct.
    Furthermore, and, my colleagues, in order to demonstrate 
the public's interests, benefits that will come from this deal, 
Comcast and NBCU have made a number of voluntary commitments in 
their filings. Among the commitments, they have pledged to 
continue offering NBC and Telemundo network programming free 
over the air; to make more local news, public affairs, 
children's ethnic and other public interest programs available 
over the air on cable channels, on demand and on line; and to 
continue the position of the NBC News ombudsman to ensure 
journalistic independence from each of the owners. They should 
be commended for these voluntary commitments.
    And lastly, Mr. Chairman, I would like to offer a word of 
caution to those who may want to add perhaps unrelated 
conditions to this merger. For example, proponents of Internet 
regulation may seek network-neutrality mandates on the Comcast/
NBCU deal. I think this would be inappropriate. Not to get 
ahead of ourselves, but it appears that Comcast is in court and 
is near victory on net neutrality in the sense that the U.S. 
Court of Appeals for the District of Columbia heard the case, 
heard our oral arguments last month, and the court, in fact, 
seemed skeptical that the FCC even had legal authority to 
impose these mandates. One of the judges asked the FCC counsel, 
quote, whether he wanted to lose on process or jurisdiction, 
end quote.
    Unless a condition is narrowly tailored to a transaction-
specific harm to competition, it does not belong in this 
negotiation. Since this deal will not materially increase 
concentration in either the distribution of programming 
markets, demonstrating such harm will be difficult, especially 
in light of the robust competition in the video sector.
    Mr. Chairman, thank you for holding this hearing. If 
Comcast and NBCU are right that this deal creates a stronger 
entity that can better serve viewers, I think it will succeed. 
If they are wrong, it will fail, just as the AOL/Time Warner 
merger failed ultimately. As competitive as this market is, 
regulatory intervention is not only unnecessary, but it will 
hurt competition and consumers.
    Thank you, Mr. Chairman.
    Mr. Boucher. Thank you very much, Mr. Stearns.
    The Chairman of the full Energy and Commerce Committee, the 
gentleman from California, Mr. Waxman is recognized for 5 
minutes.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you very much, Mr. Chairman.
    When the proposed combination of Comcast and NBC was 
announced last year, I said that this transaction had the 
potential to shape and reshape the media marketplace and raise 
fundamental questions regarding diversity, competition and the 
future of the production and distribution of video content. I 
urged the FCC and the Department of Justice to assess 
rigorously whether this transaction is in the public interest.
    Well, 2 months have passed since this transaction was 
announced, and after additional review I am now even more 
certain that this new joint venture, if approved, could trigger 
dramatic changes in the way consumers access video programming, 
in the way independent programmers distribute their works, and 
also in the way all video distributors compete for customers.
    Given the significance of the proposed joint venture, the 
committee should examine its implications carefully and 
dispassionately. We should ask hard questions, but we should 
also keep an open mind. There could be benefits that flow from 
this transaction, and I look forward to hearing Mr. Roberts and 
Mr. Zucker expand on the positive aspects of this deal. For 
example, will Comcast be a better long-term steward of NBC News 
than the current owner? Will Comcast be more committed to 
developing the quality original programming? Will Comcast 
invest necessary resources to promote localism and diversity 
and support free over-the-air broadcasting.
    One important issue is whether Comcast, as the Nation's 
largest residential broadband provider and a potential owner of 
NBC's valuable content, will help protect the intellectual 
property. The theft of content on line is a serious issue for 
the creative community. It is unlawful, and it is a serious 
drain on our economy. This problem deserves more attention and 
better efforts by broadband providers. We also need to know 
what Comcast will do to ensure that independent writers, 
directors and producers won't be harmed.
    There are many other essential questions, the move to 
online video and the TV Everywhere model could shape the future 
of how all customers access the programming. Perhaps sooner 
rather than later almost everything we do and see on our 
television will be just another application riding over a 
broadband connection. We should ask how Comcast, the Nation's 
largest video programming distributor, will deal with its 
customers and its competitors as this transition progresses.
    I believe that the best way to protect consumers is through 
competition, but will competition be sustainable with the 
largest video and broadband provider controlling huge 
quantities of content? There may be plenty of content outside 
Comcast/NBC, but will consumers have the same ability and 
opportunities to access that content both on and off Comcast's 
distribution platforms as they will content from Comcast?
    The future of free over-the-air broadcast television is 
also tested by this transaction. Many are concerned that this 
transaction could result in the best of NBC's programming being 
transitioned to pay TV service. Might the Olympics or the Super 
Bowl one day be available only to paying customers? Will the 
Comcast/NBC joint venture affect local affiliates and the 
network affiliate model? We must consider how this transaction 
will impact the coverage of local news and events as well as 
major televised events of interest to all Americans.
    There are other issues to examine as well, including 
Comcast's treatment of pay channels, how this transaction will 
affect the diversity of voices in the marketplace, and how 
independent programmers will be impaired. We need to weigh all 
these topics as this process moves forward and the subcommittee 
considers related matters.
    Ultimately this transaction must be scrutinized with regard 
to its impact on consumers, the choices they will have in the 
market, and the bills they will pay. This is the highest 
consideration required by the public interest review mandated 
under the Communications Act.
    In closing, I want to thank Chairman Boucher for convening 
this hearing so quickly, and I look forward to hearing from our 
distinguished panel, and I thank them for their participation.
    Mr. Boucher. Thank you very much, Chairman Waxman.
    The gentleman from Nebraska Mr. Terry is recognized for 2 
minutes.
    Mr. Terry. Thank you, Mr. Chairman, for holding this 
hearing, and I would like to waive and reserve.
    Mr. Boucher. Thank you very much, Mr. Terry.
    The gentleman from Missouri, Mr. Blunt is recognized for 2 
minutes.

   OPENING STATEMENT OF HON. ROY BLUNT, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MISSOURI

    Mr. Blunt. Thank you, Mr. Chairman. Thank you and our 
Ranking Member Mr. Stearns for holding this hearing.
    I have a slightly longer statement for the record, but I 
would just like to say it is often the case in our economy when 
you are going through a period of repositioning and shakeups--
and certainly this new joint venture between Comcast and NBC 
Universal would seem to be another evidence of what is 
happening generally in the economy--I actually understand and I 
support the necessity of businesses constantly needing to 
evaluate their market position, constantly figuring out how 
they reposition themselves to provide the best service and to 
do the best thing for the business they are in.
    At the same time, as this hearing progresses this morning, 
I am very interested in gaining a better understanding of how 
Comcast and Comcast/NBC, this new entity, will affect the 
competitive forces in the television marketplace. This joint 
venture between Comcast and NBC may be as far-reaching as it is 
intricate, and I look forward to hearing about the various 
issues like competitive imbalance and market power that 
something on this level can bring with it.
    The Chairman's points were points of interest to all of us, 
the full committee Chairman's points that he just expressed.
    So I thank you again, Mr. Chairman, for holding this 
hearing this morning, and I yield back my time.
    Mr. Boucher. Thank you very much, Mr. Blunt.
    The gentleman from Massachusetts Mr. Markey is recognized 
for 2 minutes.

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN 
        CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS

    Mr. Markey. Thank you, Mr. Chairman, very much.
    There are significant questions about how consumer choice 
and competition, innovation and investment in the media 
marketplace would be affected by this planned joint venture. 
There will be discussion this morning and further scrutiny in 
the months to come of important ramifications of this proposed 
transaction, including the exercise of market power, higher 
barriers to entry, and the consequences of vertical integration 
associated with this proposed transaction, as there should be.
    Essentially, though, for our constituents, for our 
consumers across America, the issue really boils down to the 
seven Cs: Will the combination of communications colossi 
curtail competition and cost consumers? That is the question 
that must be answered as this process moves forward.
    While Comcast and NBC Universal have determined that this 
transaction advances their business interests, it is essential 
that the public interest also be served. As the author of the 
Internet Freedom Preservation Act to ensure network neutrality, 
along with Chairman Waxman and Congresswoman Anna Eshoo, I want 
to ensure that the combination of a major network operator and 
a large content owner does not enable the creation of 
discriminatory fast lanes and slow lanes on the Internet to the 
detriment of consumers.
    I am also concerned about how this proposed joint venture 
would impact the emerging online video marketplace now and in 
the future. As consumers increasingly utilize their broadband 
connections to access online video content, control of both the 
content itself and the conduit through which it is delivered 
raises important issues with respect to competition, choice, 
diversity and innovation. Today's hearing is an important 
opportunity to raise and hopefully answer these questions.
    I thank you, Mr. Chairman, for calling this hearing.
    Mr. Boucher. Thank you, Mr. Markey.
    The gentleman from Illinois Mr. Shimkus is recognized for 2 
minutes.

  OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Shimkus. Thank you, Mr. Chairman. And I want to thank 
the witnesses. I know it is difficult to get here, especially 
during the proceedings and all the machinations that are going 
on in the merger, but we appreciate it.
    There are many different issues that we will be dealing 
with today, and I just want to make it pretty clear I do not 
want the Department of Justice enacting policy, legislative 
policy. That is our job, and I would be careful if Members find 
another way of giving up our responsibilities on telecom policy 
by enacting processes and procedures and using this and the 
Department of Justice to do that. So that is kind of where I 
stand.
    A profitable NBC Universal is good for all of our 
constituents, and I hope that this venture between Comcast and 
NBC will facilitate the creation of more popular programming 
choices for all Americans. One of the great exports our country 
has is our media. American films and television shows are one 
of the ways we reach cultures throughout the word. And I also--
I am not sure that is necessarily a good reach of culture, and 
I do question some of the things our consumers like to watch 
and what we do sell abroad, and I do think it sometimes does 
not put the best focus on us as a culture and the greatness of 
our country. But having said that, I do believe that the market 
rules, and the market does have a place for that. It is a great 
export.
    I appreciate you all being here. I know it is tough in 
challenging times. I look forward to working with you all in 
the future.
    I yield back my time, Mr. Chairman.
    Mr. Boucher. Thank you very much, Mr. Shimkus.
    The gentlelady from California Ms. Eshoo is recognized for 
2 minutes.

 OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Eshoo. Good morning, Mr. Chairman, and thank you for 
scheduling this hearing at the onset of the merger review 
process so we can gauge the potential effects of this 
transaction and weigh in with our concerns before the agencies 
begin their analyses.
    The Comcast/NBC Universal merger will affect millions of 
people, many of them, obviously, in my own district. Comcast 
has 24 million cable subscribers and 16 million broadband 
subscribers nationwide. NBC Universal produces and distributes 
broad swaths of entertainment programming. Like any merger, 
this transaction could produce beneficial synergies.
    Comcast's FCC filings spell out a sincere commitment to the 
public interest, but having a philosophical commitment to 
protect consumers is far different than having a legal 
obligation to do so. Telecommunications megamergers, as well as 
those in other industry sectors, have the potential to create 
monopolistic titans. The Department of Justice will ensure that 
this merger doesn't violate our antitrust laws.
    But the FCC has a special burden; it must also ensure that 
this merger protects the public interest. The Comcast/NBC 
Universal merger is not just about the purchase and sale of 
private businesses; it involves the transfer of public 
property, broadcast licenses to operate on America's spectrum. 
Just as importantly, if left unchecked, this merger has the 
potential to place a choke hold on the transfer of information 
on the Internet to consumers today and well into the future. If 
anything, this proposed merger, I think, demonstrates why we 
need net neutrality across the board.
    So thank you, Mr. Chairman, for holding this important 
hearing for us to weigh in before the other agencies do, and I 
look forward to hearing the diverse viewpoints of the witnesses 
here today. I would especially like to welcome the 
representatives from Comcast, whose father established the 
company some 47 years ago. I think it is 47 years ago. It is 
really an amazing American story that in four-plus decades, 
that a company that was born with a great idea is what it is 
today. And so I congratulate you, and I look forward to the 
testimony. Thank you.
    Mr. Boucher. Thank you very much, Ms. Eshoo.
    The gentleman from Michigan Mr. Rogers is recognized for 2 
minutes.
    Mr. Rogers. Thank you, Mr. Chairman. I appreciate you 
having this hearing.
    And thank you for your testimony today. I think it is an 
incredibly important issue, and as the proposed merger, I hope, 
is fully reviewed and done diligently by the FCC and Department 
of Justice, the one concern that I have, Mr. Chairman, is that 
there is no time lines for either approval or rejection. So it 
is my hope, given the amount of expense and I think what is at 
stake, that they will not only be diligent, but they will be 
quick in their decision as they move forward in the merger. And 
I am sure they can accomplish both. I just hope they know that 
what is at stake for a long time line. I think that is probably 
not helpful to anybody either, whatever their outcome is.
    The other issue I hope that we get discussed at some length 
is the retransmission consent agreements. The law and 
regulations governing them were created nearly 20 years ago, 
and this committee should take a look to see if there is any 
changes that need to be made. There is so much, again, at stake 
in this when you talk about market power and content and who 
controls what in a spectrum. Lots at stake for the American 
public. So I hope we will have that opportunity to discuss it.
    And to my friends at NBC, I have an opening for a 
constituent humorist specialist. If Conan would call my office, 
we could probably arrange to help you all out in any way we 
could possibly do that.
    I yield back, Mr. Chairman.
    Mr. Boucher. Thank you very much, Mr. Rogers.
    The gentleman from Michigan Mr. Dingell, Chairman Emeritus 
of the full committee, is recognized for 5 minutes.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Dingell. Mr. Chairman, I thank you for your courtesy, 
and I commend you for having this hearing. I believe it is 
important that we should go into these matters with a great 
deal of care, and I am hopeful we will get the answers for 
which we have need.
    I also would suggest if we may not have quite enough time 
this morning to hear from all of our witnesses to get the 
answers that this committee needs. I would also observe that it 
may be necessary for us to hear from the regulatory agencies, 
which I believe we can do in a way that would not constitute a 
problem or a potential violation to the Pillsbury rule.
    I do extend a warm welcome to our witnesses today, 
especially my old friends Brian and Ralph Roberts, as well as 
Colleen Abdoulah, whose companies provide cable service in my 
district. I also want to thank Comcast for its cooperation in 
the recent resolution of the PEG issue in Dearborn, Michigan, 
and I want you to know my appreciation in that matter.
    The competitive incentives behind the proposed venture 
between Comcast and NBC Universal are quite unambiguous. In a 
world of fragmented viewing audiences created by proliferation 
of video service providers, Comcast and NBC Universal's 
proposed partnership does make quite a lot of sense. 
Consolidated control of content and distribution will help 
Comcast to become a more competitive player in the multichannel 
video marketplace.
    At the same time, by virtue of the magnitude of the 
transaction, the Comcast/NBCU proposed joint venture raises 
legitimate concerns about the new entity's leverage vis-a-vis 
existing competitors and consumers, control of content and its 
distribution, and the general media consolidation. We will be 
interested in how this will impact on government, the industry 
and also on the consuming public.
    Moreover, as I have heard a lot about Internet video and 
how it may well be the future in television, I look forward to 
hearing from the witnesses about online video, how they see it 
developing, and whether this deal would impact it and how.
    To summarize, while I understand the motivation behind the 
joint venture proposal pending the committee's consideration, I 
have concerns about its effect on the public interest. In 
particular, I am going to be asking witnesses to respond to 
questions about commitments from Comcast and NBC Universal to 
ensure the following in the future: editorial neutrality on 
network news--this is something which we have some small 
problems with in this country; local access to free over-the-
air broadcast television, a matter of great concern to me over 
the many years; fair access for content distributors and 
consumers to programming provided via online video services; 
and collective bargaining rights of employees. This is by no 
means a complete list of concern, but I think it is a good 
place to start.
    I would add also my desire to hear from the Federal 
regulatory about this matter, and I believe we need to have 
their input in order to have a proper understanding of the 
circumstances. While I understand they cannot comment on the 
pending merger, their input on facts and the general principles 
would be most helpful in helping us and the public to 
understand the situation before us.
    In closing, I look forward to a frank discussion with our 
witnesses today. Mr. Chairman, I commend you for this hearing, 
and I thank you for your courtesy, and I yield back the balance 
of my time.
    Mr. Boucher. Thank you very much, Chairman Dingell.
    The Ranking Member of the full committee, the gentleman 
from Texas, Mr. Barton is recognized for 5 minutes.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton. Well, thank you, Mr. Chairman.
    I want to welcome back two of my colleagues from the 
committee. They are sitting side by side out in the audience. I 
hope you are on the same side. You may be on opposite sides on 
this. We are glad to have my two good friends back.
    I am glad to have all of our friends at the witness table, 
and as far as I am concerned, it is good to see NBC and Comcast 
sitting side by side. That doesn't break my heart.
    I think it is important and appropriate that we hold this 
hearing, Mr. Chairman. This type of a merger should be examined 
by this committee and subcommittee and should be reviewed by 
the people of the United States. Having said that, I hope 
today's hearing is level-headed and really focused on the 
issues and the details of the merger, and not on some ``what 
if'' discussion about what might happen if this and that were 
to occur.
    As we all know, back in December, Comcast and General 
Electric announced this merger or this, I guess you would say, 
sale to combine the broadcasting, cable programming, movie 
studio, theme park and online content businesses of NBC 
Universal with the cable programming and certain online content 
of Comcast. As I understand, Comcast is going to purchase 51 
percent of NBC Universal; General Electric will still retain 49 
percent.
    Since the merger or since the sale has been announced, we 
have heard some of the usual predictions that this is the end 
of the media world as we know it. Put me down as skeptical on 
that. I don't think that is going to happen. I hope good things 
happen for the viewers and the folks that provide the content 
to the media. But let us let the market make those decisions.
    We should allow companies to take risks. We should allow 
companies to seek out niche markets. We should allow companies 
to use their natural and competitive advantages to serve up 
material for the marketplace of various interests. It is a 
testament to our system that even in these uncertain economic 
times, there are people, some of them are at this table, that 
are willing to take such market risks.
    There are some analysts that have expressed doubts about 
the economic case for the Comcast/NBC deal precisely because 
they don't see that a competitive advantage will materialize 
from this combination. So instead of condemning such an effort, 
we should stand back and watch it and hopefully be willing to 
applaud if, in fact, good things happen for the markets that 
both NBC and Comcast serve at the current time.
    There don't appear to be any major overlaps in the markets. 
There do appear to be some synergies from the two companies 
coming together. There are certainly no antitrust implications 
in the classic sense, because it is my understanding that the 
Justice Department is not going to review it for antitrust 
under the classic antitrust review.
    To the extent that concerns exist, Comcast has said that it 
will make a number of voluntary commitments to help assuage 
these anxieties. They plan to honor and extend the current 
program access rules. They will continue to offer NBC and 
Telemundo programming free over the air, rather than turn them 
into cable networks. And they also plan to add new, 
independently owned channels to their cable lineup. 
Furthermore, more local news, local public affairs, children, 
ethnics, and other public-interest programming is planned to be 
made available over the air on cable channels through on demand 
service and on online.
    And so, again, Mr. Chairman, thank you for holding the 
hearing. I thank all of our witnesses. I look forward to an 
interesting exchange today.
    Mr. Boucher. Thank you very much, Mr. Barton.
    The gentleman from Tennessee Mr. Gordon is recognized for 2 
minutes. He is no longer with us.
    The gentleman from Washington State Mr. Inslee is 
recognized for 2 minutes.

   OPENING STATEMENT OF HON. JAY INSLEE, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF WASHINGTON

    Mr. Inslee. Thank you, Mr. Chair.
    We are here to talk about control of America's most 
precious asset and that, of course, is Tina Fey. And that is 
one of the reasons we are so interested in this issue.
    I do want to suggest something as we look through these 
issues, the potential upsides for consumers and the potential 
concerns for consumers, and I think they are both those 
potentials. I would suggest that we need to look at it a little 
bit through the lens of democracy, not just commercial 
activity, and I just throw in a little Jefferson who said, 
where the press is free and every man able to read, all is 
safe. And I think in today's electronic world, the modern 
corollary is that where content is freely available, and every 
man and woman able to watch, all is safe. And I think there is 
a democracy issue here that ought to be considered, and I will 
look forward to everyone giving us their views in that regard.
    In that regard, I think there are three fundamental 
questions I hope the witnesses will address. One, in the new 
world where we are developing Internet-based systems, such as 
Hulu and iTunes, networks like Comedy Central, where people are 
going on line, where we do not have programming rules, how do 
we intend to ensure access to Americans in that sort of 
Jeffersonian ideal?
    We know that the cable industry is realizing the market 
dynamic in this, as evidenced by the recent announcement of TV 
Everywhere, and I would hope the witnesses will tell us how can 
we assure that access to important content in that new system.
    Although this merger is only between two companies, I would 
ask the witnesses to tell us if they think we ought to look at 
our transmission access rules in general on how they are 
working or not working. Are there ways that we can make them 
more usable to both parties to try to determine how to make it 
work for both parties in a way that is not so costly and gives 
consumers more credibility or more confidence in the system? 
And third is cost, which is an obvious one. Rates have gone up, 
I am told, three times the rate of inflation. Consumers are 
going to have obvious concerns about that. I hope obviously you 
will address that.
    We look forward to this hearing from all parties. Thanks 
very much.
    Mr. Boucher. Thank you, Mr. Inslee.
    The gentlelady from California Mrs. Bono Mack is recognized 
for 2 minutes.

 OPENING STATEMENT OF HON. MARY BONO MACK, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mrs. Bono Mack. Thank you, Mr. Chairman. I would like to 
thank you and Ranking Member Stearns and the distinguished 
panel for being here today. I think this is an important 
hearing as well.
    As I see it, the proposed transaction between Comcast and 
NBC is an example of vertical integration within the media 
marketplace. The proposal is a marriage of upstream and 
downstream companies that do not significantly compete against 
one another.
    Now, I am sure we will hear opinions that attempt to label 
this transaction as horizontal integration. While I respect the 
right of everyone to have their own opinion, we are not 
entitled to our own set of facts. And in that vein, I remain 
unconvinced how the combination of two entities where one 
concentrates on the distribution of content and the other 
concentrates on the development of content can be determined to 
be anything other than a case of vertical integration.
    I will admit there are certain aspects of the transaction 
that are of particular interest to me. For instance, I would 
like to hear how independent programmers are going to be 
impacted by this deal. I am sure others have certain questions 
as well, and they are entitled. However, if we use this hearing 
as an opportunity to cast blame and air grievances about every 
problem we perceive in the communications or media marketplace, 
we will have wasted everyone's time.
    Additionally, and perhaps more importantly, this 
transaction should not be used as a vehicle to advance a 
specific policy agenda that is unrelated to the matter at hand 
and cannot be implemented on the industry as a whole. It is my 
hope that these types of regulatory shenanigans have no place 
at the new FCC. At the moment, I have no reason to associate 
that type of behavior with this Chairman or Commission.
    With that, I yield back my time, and I thank you again, Mr. 
Chairman.
    Mr. Boucher. Thank you, Mrs. Bono Mack.
    The gentlelady from California Ms. Matsui is recognized for 
2 minutes.

OPENING STATEMENT OF HON. DORIS O. MATSUI, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Matsui. Thank you very much, Mr. Chairman. And thank 
you, witnesses, for being here today.
    Like other major mergers or joint ventures, there will be a 
real impact on consumers and the marketplace, and this one is 
really no different. Comcast is a dominant cable provider in my 
hometown of Sacramento, providing service to over 200,000 
households. This joint venture will only enlarge the footprint 
in Sacramento.
    Over the last few days, I received numerous e-mails from my 
constituents wanting to know what this deal would mean for 
them. They want to know if it means higher cable rates. They 
want to know if they will be able to continue to receive the 
independent programming they are used to without any 
unwarranted interference or preference. They want to know what 
it would mean for the distribution of online video, and they 
want to ensure it continues to be open to all and is preserved 
so that they can view their favorite programs when they choose. 
They want to know the ramifications of this joint venture and 
what it may cause within the industry. Will there be a domino 
effect whereby Comcast competitors are likely to combine or 
merge with others in order to compete in the marketplace, 
creating a media and entertainment environment where only a few 
will be heard? Additionally, the people of Sacramento rely on 
local affiliate stations for local news and information. Would 
this merger put local NBC affiliates not currently owned by NBC 
itself at a competitive disadvantage from a programming 
standpoint?
    I recognize that Comcast has made a series of proactive 
commitments on some of these subjects. I look forward to 
further exploration of these and other concerns today and in 
the weeks and months ahead. Ultimately I believe that this 
proposed merger should not leave consumers with less choice, 
lower quality, less diversity and higher programming costs. As 
the FCC and Department of Justice review the proposed merger, 
it is my hope that they consider every aspect, particularly its 
impact on consumers, competition and innovation.
    I thank you, Mr. Chairman, for calling this hearing today. 
I yield back the balance of my time.
    Mr. Boucher. Thank you very much, Ms. Matsui.
    The gentlelady from Tennessee Mrs. Blackburn is recognized 
for 2 minutes.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Mrs. Blackburn. Thank you, Mr. Chairman.
    I want to welcome all of our guests today, and I certainly 
am looking forward to a discussion with you as we move through 
the day. I have read through your statements, and I will tell 
you it is absolutely puzzling and amusing to me that such 
intelligent people, when given the same set of statistics and 
the same information and the same data, can arrive at such 
vastly different opinions and such conclusions as to how this 
union would affect telecommunications moving forward. So I 
think we are going to have a rather robust discussion today, 
and I am truly looking forward to it.
    I will tell you at first glance that my reaction is that if 
this deal results in no additional market power and content and 
no additional market power and distribution, then why are there 
such concerns about antitrust violations? And that is the point 
I want to discuss with all of you. And if this deal does not 
increase any market share, then I cannot accept the suggestions 
that we need to put conditions on it. So let us discuss that as 
we move forward.
    We want to make certain that we are doing things that are 
good for consumers, and being from Tennessee, and having the 
number of content--independent content producers that we have 
there, we are very concerned about what this would do to access 
and to content. And for those of you that hold an opposing view 
on the antitrust violations, I want to hear from you as to how 
you have read the same set of material and data and arrived at 
other outcomes from that.
    So looking forward to the discussion. Thank you for being 
here.
    I yield back.
    Mr. Boucher. Thank you, Mrs. Blackburn.
    The gentleman from Connecticut Mr. Murphy is recognized for 
2 minutes.

      OPENING STATEMENT OF HON. CHRISTOPHER S. MURPHY, A 
    REPRESENTATIVE IN CONGRESS FROM THE STATE OF CONNECTICUT

    Mr. Murphy. Thank you, Mr. Chairman. Thank you for holding 
this hearing, and I agree with Mrs. Blackburn that we are going 
to have a lively debate.
    I hope that the panel will spend some time addressing one 
issue that Chairman Waxman raised, and that is the issue of 
content protection and how this transaction may affect how we 
deal with protecting the copyrights of content innovators. We 
know the statistics. Each year our Nation's content industry is 
losing hundreds of millions, if not billions, of dollars to 
online piracy. And up until now, however, the largest 
distributors of that content and the largest providers of that 
content have largely been separate entities, and this new 
relationship between Comcast and NBC Universal is going to 
change that dynamic fundamentally if approved.
    As mentioned before, this deal represents the Nation's 
largest broadband provider combining with the Nation's fourth 
largest entertainment company. The problem is that historically 
too often content providers and content distributors just 
aren't on the same page with respect to a strategy for 
combating online piracy, and often this lack of cooperation has 
simply to do with the disparate economic goals of all the 
parties involved.
    However, the ramifications of this issue are too great to 
ignore, and I think the current events surrounding us today, 
namely the FCC's open Internet rulemaking and today's 
examination of this new business relationship, provide us with 
an opportunity to explore what steps need to be taken to ensure 
that we continue to deal with the theft of content that is 
hurting some of our Nation's most innovative job creators.
    I look forward to this hearing today, and I look forward to 
hearing a discussion about how the combination of these two new 
entities may change Comcast's approach to dealing with the 
unlawful content flowing across its network.
    Thank you, Mr. Chairman. I yield back the balance of my 
time.
    Mr. Boucher. Thank you, Mr. Murphy.
    The gentleman from Michigan Mr. Upton is recognized for 2 
minutes.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Thank you, Mr. Chairman.
    And I want to welcome all of our witnesses, but 
particularly to a good friend who is sitting behind Brian, and 
that is his dad Ralph, who I see here in this audience. It is 
good to see you, and I appreciate all that you have done.
    Today we are examining the proposed merger of Comcast and 
NBC, and I am encouraged by the many voluntary commitments 
being made by Comcast as a part of this merger. And I welcome 
the evaluation of the merger and the potential impact on the 
video programming in the broadband marketplace. However, I hope 
and expect a quick review and approval. All parties involved 
will be best served if this is a prompt process.
    I believe that the merger is in the public interest and 
should bring greater competition to the programming and 
distribution markets. One of the most interesting points about 
the deal is that Comcast and NBC have very little overlap. The 
combined entity will be a more diverse company; it will be in a 
better position to succeed during these very difficult economic 
times, and that would not necessarily be the case if another 
entity purchased NBC from GE.
    I would like to stress that the merger shouldn't be used as 
an opportunity to push unrelated policy agendas or extend 
unnecessary regulations that do not extend to the broader 
market. For example, I would strongly oppose any efforts to 
impose network neutrality conditions as a part of the deal. 
Doing so would be highly inappropriate.
    I yield back the balance of my time, Mr. Chairman.
    Mr. Boucher. Thank you very much, Mr. Upton.
    The gentlelady from Florida Ms. Castor for 2 minutes.
    Ms. Castor. Good morning. And thank you, Chairman Boucher, 
for calling the hearing. I will waive my opening statement so I 
have more time for questions.
    Mr. Boucher. Thank you very much, Ms. Castor.
    [The prepared statement of Ms. Castor follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Boucher. The gentleman from California Mr. McNerney is 
recognized for 2 minutes.
    Mr. McNerney. Thank you, Mr. Chairman.
    I would like to say the biggest concerns about the merger I 
think were well articulated by the Chairman of the full 
committee and others. So given that, the questions of the 
proposed venture come down to a couple of things: Will the 
merger enhance or will it impede competition? Will it enhance 
or will it impede access? Will it enhance or impede diversity 
of programming? And finally, how will it impact the cost on the 
consumer?
    Hopefully we can begin to answer these questions this 
morning, and I look forward to the testimony.
    Mr. Boucher. Thank you, Mr. McNerney.
    The gentleman from Louisiana Mr. Melancon is recognized for 
2 minutes.
    Mr. Melancon. Thank you, Mr. Chairman. I will waive my 
opening statement.
    Mr. Boucher. Thank you, Mr. Melancon.
    The gentleman from Ohio Mr. Space is recognized for 2 
minutes.
    Mr. Space. Thank you, Mr. Chairman. And thank you for 
convening this hearing today. I believe this is the first kind 
of our subcommittee in this Congress, and we will be discussing 
some critical issues that may influence the future of video 
programming and distribution for some time to come.
    I represent a very rural district in southeastern Ohio. It 
is part of five broadcasting markets, and many of my 
constituents, in fact much more than the national average, rely 
upon free over-the-air broadcasting for emergency information, 
for news, for weather, sports. And with the national broadband 
plan set to come out next month and the debate about spectrum 
on everyone's minds, there are certainly many challenges facing 
the free over-the-air broadcast model. But a strong vibrant 
broadcast television industry is important to my constituents, 
so I am very interested to hear what our witnesses have to say 
today regarding the future of free over-the-air television.
    I am also interested in learning more about how the joint 
venture will impact the continued expansion in the deployment 
of broadband, which is an issue of high priority for me 
personally and certainly for my constituents as well.
    So I would like to welcome our witnesses and thank them for 
their testimony, and again, thank you, Mr. Chairman.
    Mr. Boucher. Thank you, Mr. Space.
    The gentleman from North Carolina Mr. Butterfield is 
recognized for 2 minutes.

OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF NORTH CAROLINA

    Mr. Butterfield. Thank you, Mr. Chairman, for holding this 
very important hearing. I thank the witnesses for their 
testimony today.
    Mr. Chairman, this historic coming together of two unique 
media powerhouses presents the potential for expanded 
entertainment opportunities and an increase in choice for our 
television viewers. The proposed joint venture between these 
two companies creates a new NBCU, a leading communications and 
entertainment company. This is a transaction that should 
receive a fair, but intensely thorough review by the Justice 
Department and the FCC. I am hopeful that both DOJ and the FCC 
will see that the vertical integration of Comcast and NBC 
Universal will ultimately prove to be in the public interest 
whereby competition and innovation will be fostered.
    It is vitally important for NBC to maintain their editorial 
independence. We have heard other Members speak to that today 
with respect to how they report the news as well as other 
content that will be viewed by millions of Americans. I am 
confident that NBC will continue to operate with the same 
neutrality that we see today. It is in the best interest of 
Comcast and NBC to report the news with objectivity, because, 
as we all know, if people do not like what they are watching, 
they can simply change the channel.
    As was the case with the XM/Sirius merger, I remain 
committed to ensuring minority programming has a home and a 
voice. And I am pleased to see the commitment to increasing the 
diversity of programming across the spectrum of audiences and 
viewpoints and across all media platforms. Comcast already has 
a strong record in program diversity--I thank you for that--
having entered into a venture with Radio One to create TV One. 
But continued recognition of the value of diverse programming 
is always welcome. I also believe that Comcast's approach of 
leveraging diverse content across multiple media platforms to 
increase the programming's reach and its prospect for success 
have proven effective.
    Finally, I would like to commend these two companies for 
their proactive outreach to Members of this body. Thank you for 
the visit that you had with my office recently.
    With that, my time has expired and I yield back.
    Mr. Boucher. Thank you, Mr. Butterfield.
    The gentleman from Arizona Mr. Shadegg is recognized for 2 
minutes.

OPENING STATEMENT OF HON. JOHN B. SHADEGG, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF ARIZONA

    Mr. Shadegg. Thank you, Mr. Chairman. And thank you for 
holding this hearing. I would also like to thank the witnesses 
for spending time with us this morning.
    As a supporter of the free market and competition, I also 
support this joint venture. I support the right of two 
companies, big or small, to enter into a contract and to 
negotiate a deal that has the potential to inspire innovation 
and benefit consumers, although the authority to approve this 
joint venture lies within the hands of the FCC and the 
Department of Justice. By having this hearing, we are opening 
up the debate of this merger to the public. I applaud this form 
of transparency.
    In addition, I believe our discussion and the investigation 
by the FCC and DOJ should be thorough and complete. However, it 
is critical that opponents to this joint venture do not 
deliberately slow the process down as that will prove to be 
costly and unfair to the parties involved. It would be a 
disservice to all consumers if lengthy investigations and 
unfair treatment deterred business from entering into 
negotiations. The purpose of antimonopoly laws is to ensure 
that one company does not dominate a market by unfair 
practices, not to discourage companies from making advances to 
get ahead.
    When this joint venture is complete, NBCU will be 100 
percent an American-owned company. We should not discourage 
this. Although there are some concerns that this merger will 
eliminate competition, I think otherwise. I believe it will 
inspire competition. This is innovation that our country needs, 
and it will create the jobs our country needs.
    I would like to thank NBC and Comcast for their many 
voluntary public interest commitments in the course of this 
process. These commitments show that not only are they not 
attempting to take advantage of their competitors, but instead 
respect many of the long-standing agreements that are in place. 
These commitments, along with the fact that Comcast will not 
have a large market share by joining forces with NBC--a larger 
market share by joining forces with NBC, is evidence that this 
joint venture will not hinder competition, but will benefit 
consumers.
    I look forward to hearing from all the witnesses today and 
playing an active role in the debate surrounding this merger. 
And I thank you, Mr. Chairman, for holding this hearing.
    Mr. Boucher. Thank you very much, Mr. Shadegg.
    The gentleman from Illinois Mr. Rush is recognized for 2 
minutes.

 OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Rush. Thank you, Mr. Chairman, for convening today's 
hearing to consider this matter that is before us.
    Comcast and GE, these parties have argued in recent filings 
with the FCC and presumably with the Department of Justice that 
their union is a classic model of vertical integration. They 
contend the proposed combination will also advance key 
commercial policy goals of diversity, localism, innovation and 
competition. To underscore their claims, Comcast and NBC are 
offering up a number of voluntary commitments. They say these 
commitments will expand consumer choice, ensure over-the-air 
broadcasting, enhance programming opportunities, ensure 
competition on multiple-content delivery platforms, and 
maintains NBC's journalistic independence as a provider of 
news.
    Unfortunately, Mr. Chairman, what they have not said, what 
they have not committed to, and what is not making news is how 
this deal will promote meaningful opportunities for minorities 
to become FCC licensees and owners of communications and 
programming as such. How will minority viewers and existing 
minority licenses and programs be affected by this combination? 
How will minority suppliers and advertisers be integrated into 
the joint ventures procurement and purchasing challenge? And 
what will these two Fortune 100 companies do to ensure greater 
diversity in hiring, training and retaining minority employees 
at both management and nonmanagement levels of the proposed 
joint venture?
    These are types of integration and diversity to which I 
hope Comcast and GE will pay more attention to and make further 
commitments. Although the potential rewards for the public are 
significant, the collective risk to minority inclusion and 
diversity as this transaction is currently structured are just 
as important.
    As we continue to discuss the merger and the effects of 
this proposed combination in the coming months, you can be 
assured these will be my key areas of focus. I look forward to 
the hearing and perspective of our witnesses, and I want to 
welcome each and every one of the witnesses, and I thank you 
for participating this morning.
    Mr. Chairman, with that I yield back the balance of my 
time.
    Mr. Boucher. Thank you, Mr. Rush.
    The gentleman from Michigan Mr. Stupak is recognized for 2 
minutes.
    Mr. Stupak. Mr. Chairman, I will waive and ask for extra 
time for questions.
    Mr. Boucher. Thank you very much, Mr. Stupak.
    And the gentleman from Vermont Mr. Welch is recognized for 
2 minutes.

  OPENING STATEMENT OF HON. PETER WELCH, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF VERMONT

    Mr. Welch. Thank you, Mr. Chairman.
    Being from Vermont, a rural State, at the end of the line 
are customers who are primarily going to be concerned about 
their bill and about their access and about what programs they 
get. And the question that I will be very eager to get 
commentary upon, particularly from Comcast, what will be the 
relationships that the larger provider has with the smaller 
carriers?
    And there seems to be a bit of an internal conflict, 
because on the one hand, the large carrier--and this is not 
precipitated just by this merger, there are other questions 
there, but it raises the issue there is a bit of conflict where 
the larger carrier is dependent on the local carriers to 
provide that content to the customers. On the one hand, it is 
in the interest of the larger carrier, whether it is Comcast or 
anyone else, to get the best price possible.
    It is in the interest of the consumer to pay the lowest 
price possible, and the local carrier--and we have these in 
Vermont--is caught in between. And my concern is that there be 
mechanisms that provide for fair negotiation and interaction 
between the smaller carrier and then the larger carrier as 
well, because at the end of the day it is the customer who gets 
whacked on this, and it is a very serious issue, obviously, for 
the customer but also for the media companies that are 
involved. And that needs more attention that it has been 
getting. It is not specifically related to the merger, but it 
is a moment of opportunity for us to examine this. And it is 
very important to individual Vermonters and individual 
Americans who really do need the services that are being 
provided by all of you. So, thank you.
    Mr. Boucher. Thank you very much, Mr. Welch. And thanks to 
all members for their statements. We have a series of recorded 
votes pending on the floor of the House, five of them in total, 
which will take us somewhere between one half hour and 45 
minutes, we would estimate, to complete. And so pending the 
completion of these votes, the subcommittee stands in recess. I 
would ask our witnesses to remain close at hand, and as soon as 
we can return we shall do so and proceed with your opening 
statements.
    [Recess.]
    Mr. Boucher. The subcommittee will reconvene, and our 
apologies for the lengthy delay. It is a matter over which we 
have little control.
    I am pleased now to welcome our panel of witnesses and I 
will say a brief word of introduction about each. Mr. Brian 
Roberts is the Chairman and Chief Executive Officer of the 
Comcast Corporation. Mr. Jeff Zucker is the President and Chief 
Executive Officer of NBC Universal. Ms. Colleen Abdoulah is the 
President and CEO of WOW, or Wide Open West Internet, Cable & 
Telephone. Mr. Michael Fiorile is the Chairman of the NBC 
Affiliates Board; he is also the President and Chief Operating 
Officer of the Dispatch Printing Company. Dr. Mark Cooper is 
the Director of Research at the Consumer Federation of America. 
And Mr. Adam Thierer is the President of the Progress and 
Freedom Foundation.
    We welcome each of you this morning, thank you for your 
testimony. Without objection, your prepared written statement 
will be made a part of our record and we would welcome your 
oral summary and ask that you keep your oral summary to 
approximately 5 minutes.

    STATEMENTS OF BRIAN ROBERTS, CHAIRMAN AND CEO, COMCAST 
  CORPORATION; JEFF ZUCKER, PRESIDENT AND CEO, NBC UNIVERSAL; 
  COLLEEN ABDOULAH, PRESIDENT AND CEO OF WOW, WIDE OPEN WEST 
 INTERNET, CABLE AND TELEPHONE; MICHAEL FIORILE, CHAIRMAN, NBC 
  AFFILIATES BOARD, AND PRESIDENT AND CEO, DISPATCH PRINTING 
   COMPANY; DR. MARK COOPER, DIRECTOR OF RESEARCH, CONSUMER 
 FEDERATION OF AMERICA; AND ADAM THIERER, PRESIDENT, PROGRESS 
                     AND FREEDOM FOUNDATION

    Mr. Boucher. Mr. Roberts, we will be pleased to begin with 
you.

                   STATEMENT OF BRIAN ROBERTS

    Mr. Roberts. Thank you, Mr. Chairman.
    Mr. Boucher. And you need to turn your microphone on and 
pull it as close as you can so that we can hear you well.
    Mr. Roberts. Thank you, Mr. Chairman. Is that OK?
    Mr. Boucher. Yes.
    Mr. Roberts. It is a privilege to come here today to talk 
about Comcast's planned joint venture with GE regarding NBC 
Universal. As has been mentioned, my father, Ralph, is sitting 
just behind me. He started the company almost a half century 
ago. And Ralph built the company from a single small cable 
system in Tupelo, Mississippi to where we are today. And with 
this combination we are taking the next step in our improbable 
journey. This is indeed an important moment in our history.
    Let me briefly summarize the transaction. Under our 
agreement, Comcast will become majority owner of NBC Universal. 
We 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 channel. Comcast will hold 
51 percent of the venture and we will manage it, while 49 
percent will remain with GE.
    The transaction puts two Great American communications 
companies under one roof. It will help to preserve traditional 
broadcast television, a business that faces serious challenges. 
And it will also help to accelerate a truly amazing digital 
future for consumers' commerce. Together, Comcast and NBCU can 
help deliver the anytime/anywhere multiplatform video 
experience that Americans want.
    In combination we will be a more creative and innovative 
company that will meet customer demands, and our success will 
stimulate our competitors to be more innovative too. So this 
joint venture should be good for consumers, good for innovation 
and competition. To leave no doubt about the benefits of the 
new NBCU, we have made a series of public interest commitments 
detailing how we will bring viewers more local programming, 
more children's programming, 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, the program access rules have never applied to 
retransmission consent negotiations, but we volunteer to have 
the key components of these rules apply to our retransmission 
negotiations for NBC stations.
    Second, we want independent programmers with quality 
content to know that we are determined 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.
    The combination of NBC and Comcast will have no significant 
overlap between the assets of the companies. It is primarily 
vertical which generally poses fewer antitrust concerns. That 
also means no massive layoffs, no closures of facilities, 
nothing to produce hundreds of millions of dollars of 
``synergies.'' That is why some on Wall Street may not have 
initially loved this deal; but this same lack of overlap is why 
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 
potential risks. At that time there was almost no competition 
to cable, and more than half of 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.
    In the last week, some have suggested that our prior legal 
challenge to certain portions of the program access rules is 
inconsistent with our commitments in connection with this 
transaction. But while we have argued and believe that today's 
marketplace is sufficiently competitive to do away with the 
program access rules, we didn't pursue this transaction with 
the intention of not following those rules, and we don't intend 
to behave any differently. So we are willing to discuss, with 
the FCC, making the program access rules binding on us, even if 
they were to be overturned by the courts.
    In the past decade Comcast has come to Washington twice to 
seek much 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 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 phone 
choice.
    Once again we have described how consumers will benefit, 
and I want to assure you that we will deliver.
    Mr. Chairman, we are asking for the opportunity to make one 
of the great icons of American broadcasting and communications 
part of the Comcast family. We promise to be reliable stewards 
of the national treasures of NBC and NBC News. It is a 
breathtaking and humbling moment in our history and we hope we 
have your support. Thank you.
    Mr. Boucher. Thank you very much, Mr. Roberts.
    [The prepared statement of Mr. Roberts and Mr. Zucker 
follows:]


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    Mr. Boucher. Mr. Zucker.

                    STATEMENT OF JEFF ZUCKER

    Mr. Zucker. Mr. Chairman, members of the subcommittee, 
thank you for the opportunity to testify here 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. I am grateful for the opportunity to tell you 
how the proposed venture between Comcast and GE will help NBC 
Universal thrive and also benefit our local communities, our 
employees, and the American consumers who enjoy our content.
    In today's intensely competitive, unpredictable and dynamic 
media markets, this deal is critical to realizing these 
benefits. The marketplace that I live in is a mediawide free-
for-all, a media donnybrook, whether you look at the overall 
media marketplace, the cable channels, broadcast networks or 
the Internet. 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 the fundamental competitive dynamic or the 
extraordinary rate of technological change, but it will help 
NBC Universal compete in the new media world.
    Why is this transaction good for NBC Universal, for the 
U.S. economy, and the consumers we serve? My answer can be 
captured in two words, investment and innovation, both of which 
I believe 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.
    First, investment. The creative programming that lies at 
the heart of our business is neither easy nor inexpensive to 
produce. The entertainment programming on our broadcasting and 
cable networks will require an investment this year of nearly 
$4\1/2\ billion. Every year we invest another billion dollars 
in news gathering and news production. An investment of half a 
billion dollars annually makes Telemundo the leading U.S. 
producer of Spanish language programming. In a highly 
competitive, unpredictable and dynamic media marketplace, 
Comcast desires to expand our business and investing in 
programming will benefit NBC Universal, the American consumer, 
and the U.S. economy.
    Also with regards to investment, Comcast's written 
commitment to over-the-air broadcasting has been widely 
underappreciated. In addition, Comcast has expressed a 
willingness to play a constructive role in the business 
negotiations between broadcast stations and MVPDs. Those two 
positions could play a pivotal role in finding the sustainable 
new business model for the struggling broadcast business.
    Second, innovation. We believe Comcast's history of 
delivery, innovation, and technological vision will help us 
better serve the 21st century consumer. We must find the 
sustainable business model to meet consumer demands for access 
to programming anytime, anywhere. We need to be more nimble in 
taking advantage of new digital distribution capabilities, on 
demand, on line, mobile and beyond.
    This venture with Comcast positions NBCU to be a leading 
innovator in delivering content to consumers where they want 
it, when they want it, and how they want it.
    In this extraordinarily competitive industry, sustained 
investment and innovation will be the keys to remaining a 
vigorous competitor. This is not your father's media market. 
Less than 40 years ago, three companies enjoyed 90 percent of 
all television viewing. Oh, how simple it was. Today the world 
could not be more different. Each of the five largest media 
companies in America now only account for between 5 and 10 
percent of all viewing, and a multitude of smaller competitors 
actually account for half of all television viewing. The new 
NBCU's cable channel business, where we will add Comcast 
networks, will account for just 7 percent of total viewing and 
be fourth by revenue among owners of national cable networks.
    Television is also a shrinking proportion of the media 
market. People today choose not only between broadcast and 
cable television but increasingly the Internet, Xbox, iPhone 
and PlayStation and so many other new platforms and 
technologies for their media choices. Very simply, this 
transaction will not change the tidal wave of competition 
inundating today's media market. The big winner here is the 
consumer. More investment leads to more and better content, 
more innovation leads to more access anytime, anywhere.
    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 NBC Universal into the diversified 
and vibrant broadcast, cable, film, cable programing and media 
company that we are today. With this deal, GE will have 
billions of dollars to invest in new technologies and jobs in 
its core business.
    I could not be more excited about the future of this 
company. This deal will give us the resources and the tools to 
innovate and adapt in an unpredictable media world and meet the 
needs of 21st century consumers.
    Thank you for the opportunity to testify, and I look 
forward to answering any questions that this subcommittee may 
have.
    Mr. Boucher. Thank you very much, Mr. Zucker.
    Ms. Abdoulah.

                 STATEMENT OF COLLEEN ABDOULAH

    Ms. Abdoulah. Hi. I am very proud to be here. Oh, is this 
on? Hi, I am very proud to represent WOW and the American Cable 
Association. We are a broadband competitor in five markets in 
the Midwest. One million of the households that we pass 
directly compete with Comcast in Michigan and Illinois. I know 
customers appreciate having competitive choice. They do not 
choose WOW because we are the low-cost provider, they chose us 
because we differentiate ourselves based on the service 
experience that we provide.
    Customers recognize this. We have received 10 JDPower 
awards for service. Just recently they awarded us the First 
Place Provider of Internet, phone and cable in Consumer 
Reports. I don't tell you about this recognition to brag, but 
to illustrate that when we have direct influence and control 
over our operations, we can be very customer-centric and focus 
on what the customer needs and wants.
    Yet as a buyer of content of both cable and online, we face 
a different set of challenges. We buy most of our content from 
a handful of large-content providers who have significant 
market power and leverage. The prospect of having Comcast NBCU 
as the largest vertical integrator of content as my direct 
competitor does concern me, and it concerns me because the 
combined company will have power, full ability, and incentives 
to possibly hurt a competitor like us and increase our costs. I 
have these concerns because of current behaviors and 
experiences that we have today.
    Now, the reality is that whether the distribution medium is 
broadcast cable, online or mobile, video content is key. So 
content negotiations are critical for us. The behaviors we 
experience today during those negotiations are things like 
price value. Not all content is created equal, yet content 
providers come--who have large market power--come to the table 
with their network offerings packaged in a take-it-all, or 
take-it-or-leave-it kind of fashion. Meaning that low-value 
networks, not highly viewed or wanted by customers, are 
associated with or packaged with the high-value networks that 
we need to buy in order to compete. And the issues with this 
are several. One, we end up using channel space for networks 
customers don't want and aren't viewing, channel space we could 
give to independent networks. And it consumes our valuable 
bandwidth that we would rather allocate to advance services 
that we know customers want, HD, Video on Demand, interactive, 
and especially faster online speeds.
    Then there is carriage availability. Content providers with 
large, significant market power can withhold or delay launch 
timing by slow-rolling the negotiations. One example of this is 
for online content. The concept of TV Everywhere, which 
basically involves packaging cable networks and allowing them 
to be viewed by your broadband customers, I think Comcast 
brands their XFINITY. We went to Comcast, we went to the other 
networks, and we asked for rights to access that programming 
for our broadband customers. To date we have been denied that 
access.
    A cable example. We were negotiating with a network that 
Comcast has a significant investment in. During that 
negotiation, the networks refused to include the rights to 
their advanced programming that they were developing. And the 
bottom line is this: We are not here to whine or ask for 
special advantages because we are the smaller guy.
    I believe in competition. As my peers here have said, it 
breeds creativity, innovation, and especially a clear focus on 
the customer. And I think our JDPower and Consumer Report 
ratings validate that.
    We simply ask for a thorough and thoughtful consideration 
of specific conditions that may be imposed so that we can 
continue to preserve and promote the competitive choice that we 
provide and that Congress sought in the 1992 and 1996 acts.
    The types of conditions we would ask for are the following: 
the terms and conditions for access for content, whether it is 
cable, online, or otherwise, should be the same terms and 
conditions that are available to Comcast.
    And then, business is business. If there is a time when 
discriminatory behavior occurs and market power is--and 
leverage is exerted inappropriately, I really ask for a remedy 
structure that is meaningful and accessible for companies like 
WOW.
    The current retransmission consent and program access 
complaint procedures do not help us. An outside arbitration 
process does not help us. And the reasons are they are time-
consuming, they are very costly, they don't ensure continued 
carriage while you are in dispute, and especially they place 
the burden of proof on the complainant who doesn't have the 
access to the data, since there is absolutely no pricing 
transparency. So to protect the competition and consumers from 
this combination, regulators must impose different and better 
remedies for us, and we look forward to participating in that 
process.
    Thanks for having me.
    Mr. Boucher. That you very much, Ms. Abdoulah.
    [The prepared statement of Ms. Abdoulah follows:]


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    Mr. Boucher. Mr. Fiorile.

                  STATEMENT OF MICHAEL FIORILE

    Mr. Fiorile. Chairman Boucher and members of the 
subcommittee, my name is Michael Fiorile. I speak to you today 
as Chair of the NBC Television Affiliates Board, representing 
some 200 independently owned local television stations. For 
more than 60 years now, the affiliates and NBC have worked 
together as partners. The result has been free and universally 
available local and national news, weather, sports, emergency 
information, and some of the highest quality programming.
    The question today is whether or not the benefits of this 
partnership produces for local viewers in your districts will 
thrive if and when Comcast owns NBC. The NBC Affiliates Board 
has been very pleased to hear Comcast's response to this key 
question. Steve Burke, the Chief Operating Officer at Comcast, 
has assured us on more than one occasion that the company's 
intent is to grow our partnership, providing free and over-the-
air television service through the affiliates. In fact, also, 
Comcast's desire to retain NBC's 10 owned and operated 
television stations in some of our country's largest cities is 
very important to us, and we support that. Ownership of these 
stations will provide Comcast with a direct stake in serving 
local television viewers just as the affiliates have.
    This is a very positive start, but at this point it is in 
fact just a start; the fact that never before has a major cable 
operator controlled one the four major broadcast networks is 
here. The stakes for free local television service and for 
viewers are too high to leave the statements alone.
    In the weeks ahead, the Affiliates Board and Comcast have 
work to do. Together we hope to design and agree upon clear, 
specific, and enforceable conditions defining what it means in 
practice for Comcast to deliver on its promise to uphold the 
network affiliate partnership for free, local television 
service that has served viewers so well for so long.
    We have Comcast's word on these principles and we look 
forward to getting to specifics such as those that had been 
proposed in the application. First, there must be protections 
in place to prevent the erosion of the NBC Network through 
migration of popular NBC news, sport and entertainment content 
and talent to cable channels or to other pay services. For 
example, consider the prospect, if you will, of NFL football 
games, currently broadcast for free by NBC affiliates, 
migrating to a Comcast sports channel. Or consider NBC Nightly 
News moving to a pay channel. That would be an immediate and a 
significant loss to affiliates and to all of our viewers. The 
public and the affiliates also need assurances that Comcast 
will continue to invest in new and compelling sports news and 
entertainment programming for the NBC Network.
    Secondly, Comcast must not interfere with NBC's affiliates' 
right to serve our local communities as the first point of 
availability of network programming. This longstanding 
principle serves the network, serves the affiliates and 
consumers by maintaining the broadcast medium with its unique 
reach and accessibility to viewers as a strong and economically 
viable platform provided free to all Americans.
    And thirdly, this transaction raises questions about 
retransmission consent. As you know, thanks to this committee 
and others in Congress, retransmission consent is a market-
based mechanism that clearly works. It supports stations' 
investment in local and national programming. The Comcast-NBC 
transaction could threaten this essential economic foundation 
of NBC affiliates' localized services. It puts the station's 
supplier of network programming and their single largest 
distributor under one roof. Simply put, Comcast should not use 
its control of the NBC Network to undermine the market for 
retransmission consent of affiliate signals on Comcast systems.
    One way to address this concern is to keep network 
affiliation negotiations with the NBC Network and to keep 
retransmission consent negotiations with Comcast Cable separate 
in the future, as they are today. We are also considering other 
ways to preserve retransmission consent because of its vital 
role in the underpinning of local service that we provide to 
communities.
    So you have heard briefly about three principal areas of 
concerns to the affiliates. Given your oversight role, we would 
hope and we would encourage you to encourage the FCC to adopt 
the necessary conditions to protect consumers' continued access 
to free quality local television. Like the commitments Comcast 
has volunteered in its application, these conditions need to 
become part of the FCC's order and need to be binding.
    Comcast and the affiliates are off to a very promising 
start in fleshing out the principles which both of us consider 
very important. With concrete and enforceable safeguards and 
conditions, we believe this transaction can actually strengthen 
the ability of affiliates and NBC to serve our communities for 
many, many years to come, and we know from discussions with 
Comcast that Comcast shares these goals.
    And I thank you for the opportunity to be here today.
    Mr. Boucher. Thank you, Mr. Fiorile.
    [The prepared statement of Mr. Fiorile follows:]


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    Mr. Boucher. Dr. Cooper.

                  STATEMENT OF DR. MARK COOPER

    Dr. Cooper. Thank you, Mr. Chairman and members of the 
committee, for the opportunity to offer a public interest 
analysis of a merger that is unique in the history of the video 
market and will go a long way toward determining whether or not 
the future of the video viewing in America is more competitive 
and consumer-friendly than the past.
    There is another side to this story. Comcast straddles the 
dominant video distribution platform of the 20th century as the 
Nation's largest cable operator and the emerging video 
distribution platform of the 21st century as the Nation's 
largest broadband Internet service provider. In its cable 
franchise service territories, the market share of Comcast in 
these two vital distribution platforms exceeds 50 percent.
    Allowing it to acquire one of the Nation's premiere content 
producers will radically alter the structure of the video 
marketplace, triggering a bevy of anticompetitive effects that 
will result in higher prices and fewer choices for consumers. 
Allowing Comcast to acquire NBC will increase the likelihood 
that the ugly business model of the cable cartel will be 
strengthened and extended to the Internet.
    There are huge horizontal problems with this merger. 
Broadcasters and cable companies have a natural competitive 
rivalry, witnessed every day. They argue about their price, 
channel location, and carriage of content. The rivalry is so 
intense that each side has attempted to enter the rival's 
market in an effort to diminish their market power. They are 
known as disruptive entrants in each other's market.
    This merger would eliminate that primary line of conflict 
between two of the most important of these potential entrants. 
These two companies compete for audiences and advertise in a 
dozen of the Nation's most important local markets, serving 
about a fifth of the Nation's population. There are more people 
in the markets where Comcast and NBC compete head to head 
through NBC O&Os than there are where O&Os own stations and 
Comcast is not present. There is more population that they 
compete for directly than they do not.
    These two companies compete in the video programming 
market, where Comcast original sports and news production 
compete with NBC's news and sports production. Three-quarters 
of the regional sports networks that Comcast has rolled out are 
located in the markets where they compete directly with NBC for 
eyeballs and advertiser dollars. If that ain't competition, 
there is no such thing as competition. That is horizontal 
competition.
    These two companies compete in cyberspace where NBC has 
funded an alternative distribution, platform Hulu, as well as 
numerous Web sites for its media properties. Comcast has 
launched its own video portal and has big plans to expand that 
competition. That is head-to-head competition in cyberspace; 
that is horizontal competition.
    By combining its distribution market power, that 50 percent 
market share, that 24 percent national share of cable viewers, 
with a huge portfolio of content, the merger would dramatically 
increase the incentive and ability of Comcast to raise prices, 
discriminate in carriage, foreclose and block competitive 
entry, and force larger programming bundles on to other 
systems. Those strategies raise prices and reduce choices, as 
you have heard from Ms. Abdoulah.
    The merger has so many anticompetitive and anticonsumer 
effects that it just can't be fixed, they can't be unraveled. 
The claim that there is enough other competition to prevent 
these anticompetitive effects is based on the denial of the 
existence of a well-recognized $80 billion multichannel video 
market. That is a marketplace that we recognize and we can 
evaluate. The likely response in that market to the creation of 
a giant that has both massive content and massive distribution 
is to get the other members of the market to bulk up in the 
same way. We will lose more choices in that market.
    They claim that FCC oversight under current law or Comcast 
promises to obey the law for a change will protect the public 
is absurd. The FCC rules have failed to undermine, eliminate, 
prevent the stranglehold of the cable operators to date. And 
there is no reason to believe that they will be better able to 
tame the video giant that will result from this merger.
    Comcast public interest promises do not even acknowledge 
the existence of these horizontal competition problems, not to 
mention offer serious remedies. Their temporary Band-Aids that 
have been offered cannot cure the long-term structural injuries 
that will result from this merger.
    For decades Congress has labored to bring consumers price 
competition in the video market by opening the door to 
different business models and different technologies, but in 
every instance, key policy mistakes were made that allowed the 
cable industry to preserve and extend its market power. This is 
the first big policy test for the Internet as the alternative 
video platform that can compete with cable. If policymakers 
allow this merger to go forward, the prospects for a more 
competition-friendly, consumer-friendly, multichannel video 
market will be dealt a setback.
    Thank you, Mr. Chairman.
    Mr. Boucher. Thank you very much, Dr. Cooper.
    [The prepared statement of Dr. Cooper follows:]


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    Mr. Boucher. Mr. Thierer.

                   STATEMENT OF ADAM THIERER

    Mr. Thierer. Thank you, Mr. Chairman and members of the 
committee, for inviting me here today to testify. My name is 
Adam Thierer. I am the president of the Progress and Freedom 
Foundation here in Washington.
    Although we are still early in this process, there has 
already been a great deal of hand-wringing and even some dire 
predictions about the pending merger of Comcast and NBC 
Universal. I hope to put this proposed marriage in some 
historical content and explain why the deal certainly wouldn't 
have the detrimental impact that some critics fear, and also 
try to explain why it might even be one potential model for how 
to sustain traditional media going forward.
    First, let's remember that we have been here before. 
Paranoid predictions of a media merger apocalypse have 
accompanied the announcements of many previous deals from AOL-
Time Warner to News Corp.-DirecTV to XM-Sirius. In these cases 
and most others, the sky-is-falling claims are typically proved 
to be greatly overstated. The only harm that one could 
reasonably claim came from most of those mergers was not to 
consumers or content providers, but to the merging firms 
themselves and their shareholders. That is because many mergers 
simply failed to create the sort of synergies and benefits 
originally hoped for, and consequently die of natural causes 
over time. Other firms, however, have found ways to make deals 
work and deliver some important news services that previously 
were unimaginable or simply too expensive to offer alone. 
Regardless, the point here is we will never know what works 
unless we permit marketplace experimentation with new and 
innovative business models.
    Second, the fear that Comcast-NBCU will act as a gatekeeper 
over video content is also largely overblown, especially in 
light of preemptive concessions that they have already made on 
program access and carriage. It is important to realize that 
the merger will only marginally affect vertical integration in 
the cable marketplace. Currently the percentage of cable 
channels owned by individual distributors is in the single 
digits. And even after this merger, it will only be in the 
teens. Stated differently, the vast majority of cable channels 
will be independent of Comcast-NBCU control.
    More importantly, it is hard to believe that the new firms 
would restrict its content to just Comcast's own distribution 
networks, since they would be losing eyeballs, advertisers, and 
revenues that accompany the carriage of their content on other 
platforms. Likewise, it would make little sense for the firm to 
block newer competing channels on their own platform, since 
they would incur the wrath of programmers and the viewing 
public alike. And those channels will likely find a home 
elsewhere which could incentivize subscribers to switch video 
service providers.
    The really great thing about the modern media marketplace 
is that there is always another place for consumers to turn to 
find what they want. Comcast faces increasing robust 
competition in the video programing market place from satellite 
and telco providers as well as from a variety of Internet-based 
video providers. And NBC Universal's stable of programming, 
while quite impressive, is a mere trickle in the ocean of 
content that consumers can choose from.
    Meanwhile cutting the cable cord altogether and instead 
getting the video they want from a bewildering array on online 
video services today. Netflix, Julu, Joost, Roku, Apple, the 
Sony PlayStation Store, the MicroSoft Xbox store, and many 
other online sites such as YouTube and Vimeo, and Justin.TV 
offer a mix of professional and amateur content.
    In sum, there has never been so much competition for our 
eyes and ears, and audiences and advertising dollars have 
become increasingly fragmented as a result.
    Finally, we need to realize that the ongoing digital 
revolution is upending many traditional business models--
especially advertising supported over-the-air broadcasting--and 
that alliances like Comcast-NBCU may be one blueprint for how 
traditional media operators can involve and compete going 
forward. With both the FCC and FTC currently investigating 
whether journalism is in trouble and what it might take to save 
the news, many media economists and industry analysts seem to 
agree that at least some degree of consolidation or 
collaboration might be necessary.
    Consider last week's news that NBC Universal saw quarterly 
profits plunge by a whopping 30 percent in the first quarter of 
2009. This is indicative of the general downturn the entire 
media sector has been experiencing as of late. Why not then 
allow Comcast to try to help NBC out and try to get back on 
track, instead of forcing them to make it on their own in such 
a radically and uncertain future? It goes without saying that 
Comcast might be in a better position to protect NBC 
Universal's copyrighted content from digital piracy, at least 
over their own pipes.
    So those who are concerned about the future of broadcasting 
and local news should remember that news and local news--and 
broadcast news in particular--isn't cheap. Unless we want to 
embark on massive government subsidization to bail out 
traditional media providers, Congress and regulatory officials 
must be willing to grant private media operators the 
flexibility to restructure their business affairs so they can 
continue to provide important public needs while also turning a 
profit. That can't happen unless we allow media markets to 
evolve and let operators experiment with new business models 
and ownership structures.
    Although there are no guarantees, deals like Comcast-NBC 
Universal may be one model that helps firms create and extend 
and monetize their media content going forward. But, again, 
regulatory flexibility is crucial so we can figure out what 
works and what doesn't.
    Thank you again for inviting me here today.
    Mr. Boucher. Thank you very much, Mr. Thierer.
    [The prepared statement of Mr. Thierer follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Boucher. And we express our appreciation to all of the 
witnesses for thoughtful and well-presented comments this 
morning.
    I am going to recognize myself for an opening round of 
questions. Increasingly, the viewing of television programs 
over the Internet has become a useful and attractive 
alternative to viewing those programs over cable television. 
Concerns have been raised, including some this morning, about 
the fact that the Comcast-NBC combination would place Comcast 
in a position to inhibit the online viewing of television 
programs for a very large amount of television content. That 
concern is heightened by the TV Everywhere model that Comcast 
and Time Warner Cable have now launched, through which the 
online TV programs are made available only to the subscribers 
to the cable television service itself.
    With regard to TV Everywhere, smaller cable companies, 
including Ms. Abdoulah's, as she just indicated, have in 
instances been denied access to the content that is being made 
available on TV Everywhere. And there are questions about 
whether programs that are offered over the air today and made 
available through the nbc.com Web site for online viewing might 
in the future migrate into TV Everywhere, a very real concern a 
number of people have expressed.
    The concern about the Comcast position enabling it to 
potentially inhibit the availability of TV fare over the 
Internet is also heightened by the fact that, for at least some 
period of time last year, users of Boxee--which is a software 
application that enables people to see online television 
programs on their television sets, not just on computers but 
actually on their TV sets--are giving them a very seamless 
experience, similar to what they would get from cable TV. But 
the Boxee users were apparently blocked from being able to view 
the Hulu-delivered programs on their TV sets. And presumably 
that blocking came from Hulu. And I would note that NBC 
Universal is a part owner and one of the founders of Hulu.
    And so, Mr. Roberts and Mr. Zucker, my question to you is 
this. What response do you have to those concerns and what 
assurance can you give us that, when this combination takes 
place, there will not be an inhibition put in place that would 
limit the amount of online video content that viewers can see?
    Mr. Roberts, would you like to start?
    Mr. Roberts. Thank you. Thank you, Mr. Chairman, and I 
appreciate the opportunity to talk about some of those issues. 
First of all, as has been mentioned previously, we have helped 
create the broadband experience that consumers enjoy today, 
some of the work out of cable labs going back a decade was one 
of the first to create high speed broadband. It is the fastest 
growing part of Comcast, is our broadband business.
    In fact, we are in the process of completing nearly a 
billion-dollar upgrade to create wideband. And if you say what 
do you do with wideband right now, at 50 megabits a second I 
trust there are great entrepreneurs to come up with the 
answers, and we want to be a company on the leading edge. So we 
think this is absolutely one of the most exciting areas.
    And I have said consistently for several years that we 
believe video over the Internet is one of those applications 
that requires more speed and justifies the investments that we 
are making in wideband and broadband. So we think it is a 
friend, not a foe.
    That position is demonstrated by the surge of usage and the 
amount of bits that consumers continue to consume each month, 
and it is growing at a very fast rate. So in this transaction, 
if you look at the facts, there were 30 billion views of video 
Internet last month. NBC was less than 1 percent of that. Hulu, 
of which NBC is one of four partners, I, think is around 4 
percent. Comcast is less than half a percent of any of our 
video-owned content assets being viewed on the Internet.
    Mr. Boucher. Mr. Roberts, my time is running out rapidly 
here. Let me pinpoint a couple of key concerns. Ms. Abdoulah 
has said that she has been denied access to the content 
available on TV Everywhere. What is your response to that?
    Mr. Roberts. I am not aware exactly what she is referring 
to----
    Mr. Boucher. Do you agree she ought to be able to get 
access to it on reasonable terms?
    Mr. Roberts. Yes. And I believe she can by going to--the 
biggest proponent of TV Everywhere is----
    Mr. Boucher. Let me just accept the ``yes.''
    Mr. Roberts. OK, fair enough.
    Mr. Boucher. The second key question that I have is this: 
What about Boxee? Mr. Zucker, you probably are in a better 
position to answer that. Did Hulu block the Boxee users from 
access to the Hulu programs?
    Mr. Zucker. Well, this was a decision made by the Hulu 
management to--what Boxee was doing was illegally taking the 
content that was on Hulu without any business deal and, you 
know, all--we have several distributors, actually many 
distributors of the Hulu content that we have legal 
distribution deals with. So we don't preclude distribution 
deals. What we preclude are those who illegally take that 
content.
    Mr. Boucher. Would you have negotiations with Boxee?
    Mr. Zucker. We have always said we are open to 
negotiations.
    Mr. Boucher. All right. One further question and my time 
has expired. Can the two of you offer to us assurance that the 
programs that are delivered over the air by NBC today and are 
then available on the nbc.com Web site for online viewing will 
not migrate into the TV Everywhere format so that they then 
would be available only to people who have a cable 
subscription? Can you give us that assurance?
    Mr. Roberts. Yes.
    Mr. Boucher. Thank you very much. I appreciate your answers 
to those questions.
    The gentleman from Florida, Mr. Stearns, is recognized for 
5 minutes.
    Mr. Stearns. Thank you, Mr. Chairman.
    Dr. Cooper, you have testified before our committee before 
many times, and I thank you for coming. Ms. Abdoulah, we sort 
of all are on your side; you are the small person in this big 
room here, so we are sympathetic to you. As I understand it, 
you don't oppose a merger, you just want conditions in place; 
would that be an ample way to say your opinion?
    Ms. Abdoulah. That is a fair statement.
    Mr. Stearns. Dr. Cooper, you are against this merger; is 
that fair? Yes or no?
    Dr. Cooper. I believe--I am against the merger, I don't 
think you can unravel the anticompetitive----
    Mr. Stearns. You have been here before and I know you 
testified against other mergers, so I am going to ask you 
succinctly if you can tell us that--I mean, you say control 
over the production and distribution of information has 
critical implication for society and democracy. We all agree 
with--no one disagrees with that. The problem is that the 
proposed deal before us doesn't speak to all the production and 
all distribution. So when you make that statement, you know, 
Comcast-NBC, it is not all of production, all of distribution. 
I mean, you and I we both agree there is diversity of news and 
entertainment from all kinds of different things. I don't have 
to go in and enumerate them.
    But how could Comcast in your opinion, very succinctly, now 
control production and distribution, to go back to your 
statement overall? I mean in one or two sentences.
    Dr. Cooper. I am not worried about overall. I am worried 
about in specific local markets where they have market power. 
So in 12 of this Nation's markets, Comcast and NBC compete head 
to head for eyeballs, for advertisers. In many of those markets 
they produce programming, new programming and sports 
programming, marquis programming.
    Mr. Stearns. In those 12 markets, what will happen if this 
merger comes? Tell me worst-case scenario.
    Dr. Cooper. Worst-case scenario, one of those entities 
abandons the market and ceases to try to win eyeballs. Today 
they both vigorously try to win eyeballs; tomorrow I have lost 
a competitor.
    Mr. Stearns. And which one of those markets, or those 12, 
you think is most likely in your opinion?
    Dr. Cooper. They are all good candidates. They are all 
important markets.
    Mr. Stearns. Come on, just one of those 12 that we can 
highlight.
    Dr. Cooper. Well, the premiere one is, of course, 
Philadelphia.
    Mr. Stearns. OK, Philadelphia, that is a market. It is 
going to happen in 2 years, 5 years, 2 days, 1? What?
    Dr. Cooper. These are long-term structural changes.
    Mr. Stearns. Five to 10 years?
    Dr. Cooper. In those markets we have a record of Comcast 
making it difficult for competitors to enter. You have heard 
from those people.
    Mr. Stearns. Yes, yes.
    Dr. Cooper. They have withheld their sports programming.
    Mr. Stearns. I got it.
    Dr. Cooper. Slowed down, driven hard bargains, and raised 
their prices.
    Mr. Stearns. Ms. Abdoulah, do you agree with him? Do you 
think that is true, that in these 12 markets we are going to 
lose Comcast will dominate and we will lose competition? He is 
buttressing your argument in a way, so he is on your side even 
though you wanted the conditions.
    Ms. Abdoulah. Well, I think we are speaking of different 
things. He is speaking of the 15 markets and the O&Os.
    Mr. Stearns. And you are speaking of your own?
    Ms. Abdoulah. And I am speaking as a competitor in markets.
    Mr. Stearns. Mr. Thierer, what would you say to Dr. 
Cooper's comment?
    Mr. Thierer. I think the problem with this story is that 
right now you see Comcast actually losing share in those 
markets.
    Mr. Stearns. In those 12 markets?
    Mr. Thierer. In some of them; I can't speak for all of 
them. We know that telco operators have taken away a lot of 
that market share; satellite operators are still highly 
competitive. I hear a lot of concern about advertisers and 
viewer options from Mark. I am sure the advertisers will be 
pleased to hear Mark is so concerned about their welfare. They 
are actually doing all right.
    I have some data I present in my testimony showing just how 
many different avenues advertisers can take their dollars to. 
In terms of viewers, they are shifting their eyeballs and ears 
all around these days. So it is hard for me to believe this 
will be some sort of nightmare Chicken Little scenario where 
the sky is going to fall in these markets.
    Mr. Stearns. Ms. Abdoulah, I am coming back to you; you are 
sort of the person here. Given that Comcast would not be 
gaining any new cable properties to compete with your company, 
what advantage would this company gain from withholding content 
from you or your customers?
    Ms. Abdoulah. What advantage? I can't offer the same 
content. If I don't have access to the content where does my 
customer go? To my competitor, to Comcast.
    Mr. Stearns. Mr. Roberts, you might want to comment on 
either her comment or Dr. Cooper's.
    Mr. Roberts. I go back to the principle, first of all, the 
content that is going to be made available to our competitors 
is available today. In the last 2 years Comcast has lost 
nationally over about a million and a half customers, while 
phone, satellite, and Wide Open West of the country, have added 
over 7 million. In fact, the second and third largest 
distributors of multichannel video in the country today are two 
satellite companies. So there is a very competitive market.
    One of the reasons we want to get more invested in content 
is we see the value of that content growing. I think the 
premise of the way you phrased the question I agree with, which 
is we will be well-served to make that content available to all 
the growing players in the marketplace. So I think this will 
ultimately lead to more innovation, more content creation. We 
see it as a growing business.
    I am sure somewhere we will talk about the intellectual 
property and how to protect it. We are very much focused on 
that same issue. And I think we recognize that this is a very 
competitive video distribution marketplace, and this is an 
opportunity to participate in the growing part. And as the 
Internet grows, as the Chairman asked, we want to see the 
content available and growing for the consumer, because that is 
where the consumer wants to be.
    Ms. Abdoulah. May I respond?
    Mr. Boucher. Very quickly, Ms. Abdoulah.
    Ms. Abdoulah. It is not just about withholding content. It 
is also about putting restrictions and conditions on how we 
offer that content. Those are two things that we need to 
consider here because that happens as well.
    Mr. Boucher. Thank you very much, Mr. Stearns.
    The gentleman from California, Mr. Waxman, is recognized 
for 5 minutes.
    Mr. Waxman. Thank you very much, Mr. Chairman.
    Mr. Roberts, NBC has been a long-time proponent of vigorous 
protection for the intellectual property rights of content 
creators and owners. Mr. Zucker and I have had opportunity to 
discuss the need for more robust action by broadband providers 
and protecting content available on line. On-line content theft 
is a serious problem. It is a drain on our economy and one that 
I am committed to addressing.
    If your transaction is approved and you find that you own 
NBC's valuable content catalogue, can you tell us what actions 
you are considering to reduce content theft on line?
    And secondly, will you ask other broadband providers that 
seek access to NBC content to adopt measures to reduce content 
theft?
    Mr. Roberts. I think we absolutely recognize the vital 
nature of protecting the licensed, legitimate, non-theft model 
is what has propelled NBC Universal to what it is today, and 
every other owner of content. In the distribution business we 
also rely on licensed content to be the successful part of our 
business. So I think we now have doubly the incentive or double 
the incentive to figure this issue out better than it is 
figured out today.
    Specifically, I think there have been technological 
advancements in the last couple years. They are going to make 
it more likely that we can cooperate.
    And to your very specific question, would we encourage the 
rest of the other broadband providers and distributors to try 
to find solutions here, the answer is yes. We will now be an 
active member of NCTA, MPAA, and other industry trade groups 
that are focused on these questions.
    I think it is vital that we have cooperative solutions. We 
obviously, on one hand, have privacy concerns, and copyright 
protection concerns on the other hand. We want--by having such 
a--33,000 employees at NBC Universal that I have to worry 
about, and 100,0000 employees at Comcast cable, it is in my 
interest and I think the consumer's interest to continue the 
licensed model and find solutions that are acceptable.
    Mr. Waxman. I appreciate that. On this issue about fair 
competition, the Communications Act prohibits cable companies 
from requiring a financial interest in any program service as 
condition for carriage, or forcing a programmer to grant an 
exclusive to the cable provider as a condition of carriage. The 
idea behind this prohibition is to protect independent 
programers from being forced to accept unfair terms as the 
price for being distributed and seen by viewers. Do you agree 
that this kind of prohibition make sense?
    Mr. Roberts. I do. And we have abided by that prohibition 
since 1992.
    Mr. Waxman. There was a statement by Steve Burke during a 
program carriage dispute between Comcast and the NFL. And Mr. 
Burke, who was Comcast chief operating officer, stated that 
Comcast treats its own programming services as siblings, as 
opposed to strangers. Do you agree with Mr. Burke's statement? 
Does Comcast treat its own programming services differently 
than those outside of the Comcast family?
    Mr. Roberts. I am not familiar with the context of that 
remark, so I if may, Mr. Burke----
    Mr. Waxman. Put his statement aside. Do you treat your 
programming service differently than those outside of the 
Comcast family?
    Mr. Roberts. I think that what he may have been referring 
to is, as employees of the company and just how--as chief 
operating officer he is concerned with both parts, the company 
and the welfare of the assets and the people. But specifically 
to--we have six out of every seven channels that Comcast 
carries, we do not have any financial interest in. The 
competitiveness of DirectTV, WOW, Dish Network, Verizon Fios, 
AT&T U-Verse requires us to have the most compelling product, 
as fairly and exciting presented to the consumer as possible.
    Mr. Waxman. You are going to treat your content and other 
content not produced by your----
    Mr. Roberts. We have to get the best content, otherwise 
people are not going to want our product. I think that is what 
is driving us, from a competitive standpoint, as to how to have 
the best offerings possible.
    Mr. Waxman. Let me ask Mr. Zucker. As a programmer 
interested in bringing NBC's programming to as many people as 
possible, are you expecting Comcast to look out for its own? 
And if so, would you expect such a preference to be good for 
NBC?
    Mr. Zucker. The fact is that we would like our content to 
be as widely seen as possible. So our relationship with every 
distributor is the same, that we would like them, though they 
don't always, to carry all of our networks and all of our 
content. And we have those conversations all the time with all 
distributors.
    Mr. Waxman. Mr. Chairman, I know my time has expired, but I 
want to point out that companies, like people, naturally have 
an interest in taking care of special family members. But in 
looking at this transaction, I think the FCC needs to analyze 
carefully what such potential favoritism might mean for 
competition from independent programmers and ultimately a 
consumer choice.
    Mr. Boucher. Thank you very much, Mr. Waxman.
    The gentleman from Indiana, Mr. Buyer, is recognized for 7 
minutes.
    Mr. Buyer. Thank you very much.
    I have worked hard to do my due diligence, to examine this 
from all sides.
    Mr. Roberts, what I am going to ask of you, if you can grab 
your pen, I have six questions that I am going to ask. And you 
don't have to give very long answers, because you and I have 
had very good discussions with regard to the word trust. You 
can't beat up broadcasters for your entire career of Comcast 
and, all of the sudden, you become one without giving 
assurances or commitments.
    So let us go ahead and go down the line. With regard to 
your testimony on program access rules, you have now given the 
assurance that you will abide by them regardless of what the 
court may do. Does that commitment apply even after the rule 
sunsets? That is my first question.
    The second question is that, as I speak with the 
affiliates, it seems to me that you could fairly easily even 
get around the rule, even though there is a commitment. For 
example, a local NBC affiliate could significantly raise the 
price for all Comcast video competitors in that market for 
retransmission of a station's signal, but for Comcast, this 
would be basically an accounting charge from one corporate 
affiliate to another.
    What can you do to assure that Comcast will not use its 
control of the NBCU to raise the rates for all its competitors 
to pay for this valuable must have programming? That is my 
second question, please, also recognizing that if in fact that 
local market becomes--you upset the market rates, that it does 
have an impact upon smaller cable operators likewise. That is 
my second.
    My third is with regard to the issue on price. It does 
appear that you have the potential to gain a significant amount 
of leverage with your video distribution competitors for the 
price of access to these channels. Now, you might offer them 
access to programming, but at what price that effectively 
forecloses them from access or raises the providers' cost 
structure so they can't compete. Will you commit, at least with 
respect to the vast NBCU programming that you now control, that 
you will control, to maintain for some period of years the 
programming prices in the current deals? After all, these were 
negotiated arm's length before the vertical integration, so 
they should reflect the market rates.
    Secondly on my third question, will you agree to so-called 
most-favored-nations status for similarly situated purchases 
that are now in integrated programming? That is, will you 
commit all similarly situated video competitors of yours will 
automatically get the best price that you will make available 
to them?
    My fourth question with regard to the NBCU vast array of 
films in the film library, what commitments will you make about 
competitor access to valuable programming, which is essential 
for video-on-demand services?
    The next issue is on advertising. I understand Comcast does 
not currently allow its video competitors to advertise their 
services on Comcast's--on your cable channels. Do you intend to 
extend this policy to all NBCU networks and programs after the 
deal? And if you do-- well, let's just hear what your 
commitment is going to be on that, because you understand what 
this could do.
    The last is with regard to--I am not aware of any 
commitments that Comcast has made regarding the availability of 
Comcast and NBCU programming for distribution online. The 
ability of consumers to enjoy their favorite programming online 
or to take it with them on various devices is the frontier that 
you and I spoke about. Will Comcast make a commitment that it 
will not deny its video distribution rivals access to the NBCU 
broadcast or cable programming for online distribution? 
Assuming that the competitor is willing to pay a fair market 
rate, will Comcast commit not to give its online properties 
preferential treatment, for example, by making a really hot 
show available to a competitor for online distribution after 
Comcast customers have already enjoyed it first? I await your 
reply.
    Mr. Roberts. OK. I am going to do my very best, and I hope 
you will bear with me. There were a lot of questions there, and 
I appreciate that you have covered a lot of ground. I think 
what we said in my opening statement, which you may have caught 
some of or maybe not all of, is that we are prepared to discuss 
with the FCC either the sunsetting or the--any litigation that 
exists on the program assets rules and program carriage rules, 
having them remain in place after this transaction is 
completed. So I think we will continue to abide and have lived 
with, and it is not a motivation for this deal, is to see a 
massive change in that oversight that the FCC has on our 
conduct of behavior.
    Again, I want to stress the point it underscore that it is 
not the motivation for this deal to suddenly take a CNBC off of 
Direct TV or in some way try to change that relationship 
because, frankly, those are the second and third largest 
distributors. They are the fastest-growing distributors of the 
telcos, and the fact is that that is part of the growth in Mr. 
Zucker's business.
    Mr. Buyer. Number two.
    Mr. Roberts. Rates for retransmissions and smaller MSOs. I 
am not totally sure I understood all of the implications of 
that question. Could you perhaps just talk about that a little 
bit?
    Mr. Buyer. We are a little worried about, in our office 
when you talked about, well, the NBC affiliates are going to 
feel good about what we do. They may get better rates. Well, 
when you do that, you are going to change what happens in that 
local market, and there could potentially be cost shifting. And 
what type of assurances?
    And not only that, but also, some of the affiliates I have 
spoken to, it is this corporate accounting.
    Mr. Roberts. So, first of all, I hope you, as I was, 
encouraged by the head of the NBC Affiliates Board statements 
that we are off to an encouraging start in terms of trying to 
address some of the fundamental issues in a troubled business, 
because of audience share declines, technological change; 
broadcast television is going through a lot of change.
    We heard about retransmission consent, which I think is the 
axis of this question. By being at the end of this deal, about 
80 percent a cable content and about 20 percent a content 
company, we are still going to have a large concern about cable 
rates, and what is the right model and the right answer?
    Sitting here today, I don't have the perfect answer to the 
dynamic changes that are going through the industry. But the 
question I think in its essence, are we prepared to try to play 
a constructive role in the future of broadcast television and 
recognize its vital importance? We are making a huge bet by 
buying NBC. At the same time, there has been--there are the 
opportunities to revisit, what is the right answer there? And I 
hope by being in both sides, we can truly play a role in 
helping make that happen.
    Mr. Buyer. But my time is running out. If you can hit these 
commitments fairly quickly. Go to three.
    Mr. Roberts. Program prices in the current deals. I can 
assure you that all the existing contracts that NBC has, which 
I have not had access to see, we don't intend to abrogate any 
agreements or attempt to do so.
    Mr. Buyer. OK, number four.
    Mr. Roberts. Films, competitors' access. Again, I don't 
know. I have just met the Universal folks. But again, it is not 
the motivation. I am sure we are going to try to figure out how 
to make the best movies. You have many partners when you make a 
film, all the actors and the writers and the talent and the 
creative folks. And you are going to try to maximize the 
revenues as a fiduciary of that film. And if other folks want 
access to it, we are certainly in favor of that.
    Mr. Boucher. Mr. Buyer and Mr. Roberts, let me suggest 
that, Mr. Roberts, you submit the balance of those answers in 
writing. We are going to be submitting some additional 
questions to you in writing anyway, and we have such a number 
of members still to ask questions and limited time. I think we 
will move on.
    . Thank you very much, Mr. Buyer.
    The gentleman from Michigan, Mr. Dingell, is recognized for 
5 minutes.
    Mr. Dingell. Thank you, Mr. Chairman.
    Gentlemen and ladies, I am going to request a lot of these 
questions be answered yes or no. It doesn't indicate any lack 
of respect, but it indicates a very important need to conserve 
time under the very limited process as we proceed.
    To Mr. Roberts, will Comcast commit not to tie together 
retransmission consent payments with payments for network 
programming provider under an affiliation agreement? Yes or no?
    Mr. Roberts. Could you repeat the question? I am sorry.
    Mr. Dingell. Will Comcast commit not to tie together 
retransmission consent payments with payments for network 
programming provider under an affiliation agreement? Yes or no?
    Mr. Roberts. We will not do what you said, I believe. I am 
sorry. There are a couple of----
    Mr. Dingell. I will ask that the record be kept open. You 
can give us a more finished answer to that at the appropriate 
time.
    Mr. Roberts. I appreciate that.
    Mr. Dingell. And I hope you don't regard that I am trying 
to take advantage of you.
    Now, again, Mr. Roberts, will Comcast commit not to force 
network affiliates to accept unfavorable affiliation agreement 
provisions to obtain market-based retransmission consent 
payments? Yes or no?
    Mr. Roberts. We will not force them to take unfair deals.
    Mr. Dingell. Again, I will ask that the record be kept open 
so that you can amplify on that.
    Again, Mr. Roberts, does Comcast's public interest filing 
with FCC include proper assurances that Comcast will not 
migrate critical network programming away from free over-the-
air broadcasting to Comcast's cable properties? Again, yes or 
no?
    Mr. Roberts. We will not--that is not the motivation. And I 
believe our filing does address that, yes.
    Mr. Dingell. And I want to be clear, these questions are 
all asked with all respect and affection.
    Mr. Roberts, again, upon approval of Comcast's joint 
venture with NBC Universal, will Comcast commit to respecting 
collective bargaining agreements for its employees and the 
process by which they are reached? Yes or no?
    Mr. Roberts. Yes.
    Mr. Dingell. Again, Mr. Roberts, further, will Comcast put 
up roadblocks to first or initial contract negotiations with 
the unions? Yes or no?
    Mr. Roberts. No.
    Mr. Dingell. Mr. Roberts, finally, how will Comcast view 
arbitration of first contract negotiations should they break 
down between Comcast and employees seeking to form a union? 
Will Comcast support or oppose such actions?
    Mr. Roberts. In terms of mediation or some third party?
    Mr. Dingell. I am talking about arbitration. You can use 
the word mediation interchangeably with it.
    Mr. Roberts. If there is a contract breakdown, if there are 
creative ways to find solutions--we don't want to have a 
breakdown. So if that is a helpful way to go, that is something 
we will consider, sure.
    Mr. Dingell. Now, these questions to Ms. Abdoulah and Dr. 
Cooper.
    In 25 words or less, how do you see the proposed joint 
venture between Comcast and NBC Universal as affecting the 
online video market?
    Starting with Dr. Cooper.
    Dr. Cooper. Frankly, we see it as an effort to extend the 
market division agreement that has existed between cable 
operators and physical space into cyberspace. That is the 
explicit intention of TV Everywhere.
    The statement that they will not use NBC properties to 
reinforce that does not answer our concern, because NBC will 
stop developing alternative platforms.
    Mr. Dingell. I am going to request Ms. Abdoulah give us her 
comments.
    Ms. Abdoulah. I am concerned, sir, for two reasons. One, we 
have had a recent experience where we have not been granted the 
rights for online product. That is number one. And number two, 
I am concerned that the current video model where it is a take 
it or leave it, here is the high price you are going to pay, 
gets extended to the online broadband customer base as well.
    Mr. Dingell. Mr. Roberts, you had a comment; 25 words or 
less.
    Mr. Roberts. I think that the internet is a nascent market. 
I think that TV Everywhere, just to be really clear, is meant 
to say if you are subscribing--the way it was presented to us 
from HBO and Time Warner--if you can get the--if you are a 
customer of, say, HBO on television and you now want to watch 
it on the PC, this enables that to happen. And I don't believe 
there is any impediments to Ms. Abdoulah being able to have the 
same access from Time Warner. Those are the principles that 
were publicly stated and that we thought made a lot of sense.
    Mr. Dingell. Thank you.
    Now, this goes again to Mr. Roberts. Dr. Cooper asserts 
that a lack of competitive pressure has failed to produce any 
appreciable downward pressure on cable rates since 1983. In 
addition, Comcast will arguably be incentivized by virtue of 
vertical integration to charge competitors more for must-have 
content, thereby raising cable rates for consumers. What 
commitments does Comcast intend to make to prevent such abuses?
    Mr. Roberts. Well, I think that, as I said, we are still 80 
percent a cable company. So our eye is very much still in that 
perspective, Mr. Dingell.
    Number two, I don't think the deal changes anything in that 
regard. NBC has great content and charges the best price that 
it can get from its customers, and I am not sure that our 
incentive is any different given the two companies coming 
together.
    I think that the quality of the content and the technology 
that has changed in the last several years is part of the 
answer, but I think it is a broader industry question, not 
necessarily specific to this deal.
    Mr. Dingell. Thank you.
    Mr. Chairman, I know my time is up, but I think mercy 
requires that Ms. Abdoulah and Dr. Cooper be able to comment.
    Starting with Ms. Abdoulah, do you have a comment on that?
    Ms. Abdoulah. I have a comment on the previous comment that 
we have not been denied access. Comcast--it is not about Time 
Warner only. Comcast provides networks on their TV Everywhere 
platform. We asked Comcast specifically for the rights and 
they--we got sort of excuses like, it is not ready for launch, 
even though has been launched to 14 million of their 
households. We were told there are technical issues. We are 
technically able of authenticating it. So there are issues of 
content being withheld today.
    Mr. Dingell. Thank you.
    Dr. Cooper, very quickly.
    Dr. Cooper. Comcast's sob story about losing cable 
subscribers is a dog that doesn't hunt. In the past few years, 
they have shifted to Triple Play, increased the total number of 
subscribers they have across their items, increased the price 
of cable, increased the margin on their cable customers. That 
is inconsistent with a market that is forcing them to lower 
prices. They are counting the wrong thing, the thing they are 
not really interested in anymore.
    Mr. Dingell. Thank you.
    My time is up.
    Mr. Boucher. Thank you very much, Chairman Dingell.
    The gentleman from Massachusetts, Mr. Markey, is recognized 
for 5 minutes.
    Mr. Markey. Thank you, Mr. Chairman, very much.
    I think we have to just continue this conversation. It is 
obviously at the center of what this merger represents. So, as 
you know, I have introduced network neutrality legislation, and 
clearly the concern here is that, when a company that has the 
wire going into the home merges with a company that has all of 
NBC Universal's content, that there could be a temptation to 
discriminate against others.
    And again, going out in the future, we are concerned about 
the proverbial kid in the garage that has got that great idea. 
We have got a concern about the kid that thinks up the idea of 
Avatar.com TV. It could be an big concept right now, huh? And 
it is not owned by Comcast or NBC. And so we have to make sure 
that it doesn't get discriminated against because it is not an 
NBC idea; it is not a Comcast idea.
    So how can we enshrine these principles of 
nondiscrimination against those great new ideas from having 
access to the pipes that go into people's homes that are 
controlled by Comcast, Mr. Roberts? And that goes to the 
question of network neutrality, and what kind of guarantees can 
we get that those other ideas are going to be protected?
    Mr. Roberts. As you know, Mr. Markey, there is a procedure 
taking place at the FCC right now on this very question of net 
neutrality, and as you have said, you have got potential 
legislation in this committee and in the Congress.
    So I would, first, want to point out that I think, whatever 
you do, if you are really trying to make that protection or 
achieve that goal, it is going to have to apply across the 
board. And whether that is to all providers, what levels of the 
Internet, what about wireless; the world is changing and 
converging and evolving very, very quickly. So, again, I 
believe that this particular transaction doesn't really have 
the potential, in my opinion, to change that kid in the garage 
or that AvatarTV.com or whatever the example one wants to pick, 
because let's just say Google today is over 50 percent of all 
the video views of the 30 billion views that took place last 
month----
    Mr. Markey. Will you commit, will you commit to not 
creating a different standard for access by Avatar TV with the 
Comcast platform? Will you accept the principles of 
nondiscrimination?
    Mr. Roberts. We have accepted and voluntarily--we may have 
a disagreement on whether there should be a law and what that 
does specifically, how it is interpreted down the road and what 
that does to investment.
    Here we are investing in DOCSIS 3.0 wideband without any 
applications. We are counting on that kid in the garage. We had 
the same questions many years ago; what about video gaming over 
the Internet? Are you going to support it or not? It is a huge 
part of what drives broadband, are all these new applications. 
And so, yes, I believe that it is not in our business interest.
    Mr. Markey. Do you believe that there should be any 
conditions which are attached to this merger at all?
    Mr. Roberts. Yes. We have said that we have identified, I 
don't know, at least 10 commitments that get involved with 
independence of NBC news to program access applying to 
retransmission consent. What I testified this morning earlier 
was that, if for some reason the rules of program access are 
struck down by the court, we would continue--want to have a 
conversation, have a commitment with the FCC to have them 
continued because that is not a plan we plan to change. We have 
talked about children's programming, free over-the-air 
broadcasting.
    Mr. Markey. My greatest concern going forward is that the 
Internet is this incredibly chaotic generator of creativity and 
new jobs in our society. That is who we have to be in the 21st 
century, as a Nation. And it is very important that there be no 
disincentives to that young creative person, the thousands of 
them across the country, the tens of thousands that can create 
that new product, to get it into the homes of the American 
people, to feel that there was a barrier, there was a blocked, 
that they couldn't get in. That there was one standard for NBC 
Universal, Comcast programming, and another standard perhaps 
for other powerful content providers, but for that smaller 
creative person that really has to make the breakthrough, that 
they won't be able to do it.
    And I think, in the end, that that would hurt our economic 
competitiveness because broadband, to a very large extent, is a 
proxy, as a word, for 21st century American competitiveness for 
the 3 percent of the population of the world that we represent. 
And we have to make sure that all of that creativity gets 
unleashed because that is something we have to brand globally.
    So that is the conversation I think we have to have going 
forward, and this agreement that you have really should be a 
model to ensure that that becomes who we think of ourselves as 
a Nation.
    So we thank all of you for being here today.
    And I thank you, Mr. Chairman, for your indulgence and 
giving me extra time.
    Mr. Boucher. Thank you very much, Mr. Markey.
    Gentleman from Washington State, Mr. Inslee, is recognized 
for 5 minutes.
    Mr. Inslee. Thank you. Mr. Roberts, I am told that, in May 
of 2007, Comcast obtained the broadcast rights for the Portland 
Trailblazers, and at the time, the public was told that they 
would be available through competitors.
    Instead the Blazer broadcasting rights was used to run ads 
extorting satellite subscribers to switch to Comcast because it 
offered Blazer telecasts and the satellite providers did not. 
It has now been 2 and a half years and still there is no deal 
to allow the conveyance of those rights.
    This leads me to suggest we ought to think about spiffing 
up our rules on how to deal with those access rights. And there 
is an arbitration procedure now that some have suggested is not 
adequate to the task of today and has not worked.
    I wanted to ask you and Ms. Abdoulah if we should consider 
bringing those access procedures up to speed, for instance, by 
requiring continuation of coverage during the arbitration 
process, or having limits on the period of time it takes to 
reach a resolution, and/or changing the burden of proof and 
giving parties discovery of in fact the contractual relations 
with others?
    Mr. Roberts and Ms. Abdoulah, could you address that 
consideration?
    Mr. Roberts. Do you want me to go first?
    First of all, my understanding of Portland is we would love 
to have satellite carry that channel. We don't have an ability 
to begin an arbitration process to ask them to carry it. They 
are not bound by those rules. It is the other way around.
    And so I don't believe they have availed themselves because 
I am not sure that they have wanted to do that. I don't know 
what their motivation would be. So any change that you might 
have to the program access rules in general I am not sure would 
affect that particular situation.
    But just for the record, we have tried on numerous 
occasions to get that content carried by satellite and would 
welcome any way we can get that worked out.
    As to the program access rules in general, I just want to 
start--they were written in 1992. They were at a time when I 
think probably over 50 percent of all the programming channels 
were owned by cable companies, and cable at that time did not 
have satellite competition or Telco competition or Wide Open 
West type competition. It did not exist.
    Today, according to the FCC, about 15 percent of the 
channels are owned by vertically integrated companies. So there 
is a big change in the market over the last 18 years or so. But 
I think any revisiting should again go across the whole 
industry, and we would welcome that. I am not sure it is 
specific to this deal. But it is probably something that the 
FCC from time to time or Congress from time to time should look 
at; that is part of the question of whether the rules are still 
necessary, given where the market is, what is happening with 
other forms of distribution.
    But I think that we have no problem with--you know, the FCC 
has said it wants to review how it timely resolves some of 
these matters, and the new chairman I think has sort of said 
the institution needs to look at how it processes things 
differently than past FCCs. And we welcome that kind of 
institutional review and want to be a constructive part of that 
process.
    Mr. Inslee. Thank you.
    Ms. Abdoulah.
    Ms. Abdoulah. I cannot obviously comment on why Dish has 
not--or satellite has not been able to get a deal for the 
sports. I can assume it is because of the price.
    And the reason I assume that is because we recently went 
through a negotiation in Chicago for a Comcast regional sports 
network. When we came to the table to negotiate, we had a high 
single-digit increase. They had a high double-digit increase. 
We were about $2 million apart, getting nowhere in the 
negotiation.
    So we said, we will go to arbitration, thinking that was a 
remedy for us. We quickly found out that it is not. It was 
going to cost about a million dollars just to get the ball 
rolling. It could go on for months, up to 18 months. During 
that time period, there was no requirement that the service 
continue during the dispute.
    And the burden of proof was going to be placed on us to 
show that we are not getting a fair and equitable rate. Well, 
we can't do that because there is no price transparency. There 
is no market rationalization for the prices that we pay.
    So, yes, do I think it needs to be absolutely reviewed and 
reformed and restructured so that there are time limits, the 
cost is not egregious and out of the reach of smaller 
operators; that the burden of proof goes on the programmer, the 
content provider, who is setting the price, for them to prove 
that it is decent and it is fair and it is market based. And 
the timing, that there is a set timing for the arbitration 
process.
    Otherwise, we have no remedy. We have no place to go if we 
hit loggerheads, and we can't come to an agreement. And we 
absolutely need that to be fair and competitive.
    Mr. Boucher. Thank you very much, Mr. Inslee and Ms. 
Abdoulah.
    We are facing a bit of a time problem now. We are scheduled 
between 1:00 and 1:15 to have another series of four votes, and 
then this subcommittee will have to vacate this room because, 
at 2:00, there will be a hearing involving Secretary Sebelius 
on these premises.
    So I am going to ask members if they will voluntarily keep 
their questions to about 3 minutes. And that way, we can get as 
far through the list of members still to ask questions as 
possible.
    The gentlelady from Tennessee, Mrs. Blackburn, is 
recognized for such time as she may consume, hopefully no more 
than 3 minutes.
    Mrs. Blackburn. Well, I will tell you what I will do, Mr. 
Chairman, why don't I lay my questions out and then allow you 
all to respond to me in writing. And that will save some time 
and allow others to get their questions in and on the record.
    Mr. Roberts and Mr. Zucker, I am going to start with you 
because when we talk about mergers or deals or unions, things 
of that nature, whether it is large or small, we talk about how 
it is going to affect the consumer. And I mentioned this in my 
opening statement, and what I would like to hear from you, from 
each of you, is a statement as to why this is a good deal for 
my constituents, whether they are a consumer or a member of the 
content production community. And that articulation would be 
wonderful, and it would be helpful to me.
    Mr. Thierer, to you, you had in your testimony that it 
would make no sense for the new firm to block new or competing 
channels and that Comcast faces robust competition in the video 
programming marketplace from satellite and telecom providers as 
well as from Internet-based video providers. So, given the 
robust competition in the video programming marketplace, do you 
believe that government should impose network neutrality 
standards on this union? And what would some of the 
consequences for consumers and innovation be if that 
intervention took place?
    Mr. Zucker, you have been associated with NBC for at least 
a decade and CEO of NBCU for 2 years, and do you think the 
prognosis is for freestanding broadcast companies in this 
dynamic? What is the environment? What do you think it is going 
to be the prognosis there? And I am now out of time, it looks 
like.
    If I can get one more, I had a question, and this would be 
actually for all of you. Looking at what--what impact this deal 
would have on efforts by broadcast to develop additional 
revenue streams. As I have talked to broadcasters and broadcast 
companies, they are talking about looking at other streams. And 
I would like to hear from you all kind of where are you 
planning to move with this? What do we anticipate being the 
next move for you?
    Mr. Boucher. Mrs. Blackburn, is that sufficient, do you 
think?
    Mrs. Blackburn. Yes, sir. That is enough. Thank you all. I 
yield back.
    Mr. Boucher. And we will ask those to whom those questions 
were propounded to respond in writing.
    Let me also say that other members of the subcommittee will 
be submitting questions to the witnesses. We would appreciate 
your prompt answers to those, and the record will remain open 
for such period of time as is necessary to receive those 
answers.
    The gentlelady from California, Ms. Matsui, is recognized 
for 5 minutes, hopefully less.
    Ms. Matsui. Thank you very much, Mr. Chairman.
    There are about 200 independently-owned local TV stations 
affiliated with NBC network throughout the country. One of 
those happens to be in my district, KCRA, which is the region's 
local NBC station. Many of my constituents--it is a very highly 
rated station--rely upon KCRA for local news, programming and 
information. And I want to ensure that KCRA is not put at a 
competitive disadvantage to NBC-owned stations.
    Question for Mr. Fiorile. In your testimony, you speak 
about the potential need for a strong set of structural 
separation requirements for the subsidies of Comcast. Can you 
briefly elaborate on this point? And what safeguards or 
conditions, if any, do you envision to ensure independently-
owned NBC affiliates are not put at a competitive disadvantage?
    Mr. Fiorile. Thank you for the question.
    The concern that I articulate is such that we currently 
negotiated with NBC for renewal of our affiliation agreement. 
And separate and aside from that, we negotiated with a cable 
carrier for retransmission consent. The potential exists to 
reach a standstill in negotiations with the cable carrier over 
retransmission consent and then to have that same company 
withhold an affiliation renewal from the network.
    So what we would hope is that there would be some kind of 
separation between the two, and in particular, a remedy that 
that cable carrier could find, if we were at a standstill in 
negotiations or retransmission consent, is the network could be 
brought in around the local affiliates, circumventing the 
retransmission consent process.
    Ms. Matsui. Mr. Zucker, do you agree with the assertion 
that structural separation may be necessary?
    Mr. Zucker. I don't think it is necessary. I think that we 
have always been able to, in the course of these conversations 
with the affiliates, work this out. There has never been any 
issue with regard to that, and I don't foresee any need for it 
going forward.
    Ms. Matsui. You don't foresee any need at all.
    As I mentioned in my statement, there are concerns that 
this joint venture may cause a domino affect in industry, and 
some critics of the proposed joint venture fear that this deal 
will create competitive pressure that will result in further 
joint ventures between content and distribution companies.
    Dr. Cooper, in your opinion, if this joint venture goes 
through, how would the media and entertainment landscape change 
over the long run? I think you have to quickly address that.
    Dr. Cooper. As I said in my testimony, the great fear is 
that you create a merger wave where all of the other entities 
look at the advantage that Comcast has gained, one of which is 
described by Mr. Fiorile, and say, I have to get as much of a 
similar advantage as I possibly can, particularly because there 
is this market division between cable operators, so the cable 
operator elsewhere will say, I have got to have the same deal. 
And you will create a situation in which every one is seeking 
to gain maximum leverage through that sort of integration.
    Ms. Matsui. OK. I have other questions to submit. I will 
just yield back my time right now.
    Mr. Boucher. Thank you very much.
    Ms. Matsui, I would suggest you submit them in writing.
    Ms. Castor, you are recognized for 7 minutes, hopefully 
less.
    Ms. Castor. Thank you, Mr. Chairman. Mine is kind of a 
follow on to Congresswoman Matsui's question.
    Under the FCC public interest test, you will be asked to 
determine, is this transaction in the public interest, and is 
it convenient to--does it promote convenience and necessity?
    What about customers who don't have Comcast, who are not 
served in that area? For example, in the Tampa Bay area, which 
is the largest media market in the State of Florida, it has the 
flagship NBC affiliate. It is probably the most successful, 
highest rated in the entire area. What does this mean for those 
customers? We are not served. Comcast cable is a very minor 
share of the market. Verizon has a much larger share. But what 
is the impact? How does this promote the public interest for 
the customers there that will not have access to Comcast in the 
near future and maybe won't be able to achieve a larger market 
share in the future?
    Mr. Zucker. May I take that question? I think that--I 
believe it is WFLA in Tampa, which is an affiliate that we are 
incredibly proud to be associated with.
    I think what is terrific about this proposed joint venture 
is that Comcast is committing to free over-the-air television, 
and the future of broadcasting, and I have to say that, before 
this joint venture was proposed, I was concerned about the 
future of broadcasting. It has been under a tremendous amount 
of duress, especially with the economic woes that we have all 
suffered.
    I think Comcast's willingness to commit to the future of 
over-the-air broadcasting, to step up and say that they are 
willing and hope that they will be able to play a constructive 
role in retrans conversations; all of these give me greater 
comfort in thinking about the future of broadcasting. And I 
think that is good for the viewers of WFLA and your 
constituents in Tampa.
    Ms. Castor. Mr. Fiorile, you heard his answer and you also 
heard his answer on the separation condition. What is your 
reaction to that?
    Mr. Fiorile. I guess I would look for more on the previous 
question. I would look for a stronger condition and for more 
separation and some clarity on non-integration of both the 
network affiliation negotiations and retransmission consent 
negotiations. The capacity for Comcast to bring benefits to the 
over-the-air NBC affiliate family, I think there is a real 
possibility of that.
    Dr. Cooper. May I offer an alternative view?
    In point of fact, Comcast will be in a stronger position to 
demand bigger bundles at higher prices from your local cable 
operator who is not Comcast. They will have a--be in a stronger 
position to demand higher retrans where they are than OandO. So 
those two things will have a negative effect on consumers 
because they have a stronger bargaining position as a larger 
integrated entity.
    Mr. Zucker. I would just add that the program access rules 
that we have been talking about actually haven't applied to 
NBCU because we haven't been owned by a distributor. In fact, 
going forward, they will apply, and actually, we will now be 
subject to those rules. So I actually think there is a greater 
benefit as a result of that and less protection for us.
    Ms. Abdoulah. And hence why the rules need to be reviewed.
    Mr. Boucher. Ms. Castor, thank you very much.
    The gentleman from Illinois, Mr. Rush, is recognized for 
his questions.
    Mr. Rush. Thank you, Mr. Chairman.
    And, Mr. Chairman, I do know that we are operating with 
some severe time restraints.
    I am going to ask Mr. Roberts and Mr. Zucker if you could 
listen to a question and maybe we could get an answer from each 
one of you. Have your respective companies done all that they 
reasonably can to foster minority ownership of communications 
properties, improve business relationships with the existing 
minority business owners, and recruiting and retention of 
minority employees?
    And to the extent that you can, will you divulge to us what 
and when was the last large transaction that you personally or 
your executive team struck with a minority-owned firm, and what 
was their value in terms of dollars and duration?
    Mr. Roberts. Well, I think it is--one of my goals 
personally is to see our company continually improve in 
diversity; diversity in how we purchase our goods and services, 
how our employees are made up and reflect the customers that we 
serve. And I would say I would never give us a perfect 
scorecard, and I think it is something that we are constantly 
striving to improve on. And it is a major priority for the 
company.
    In terms of media-owned assets, the last deal that I can 
think of was the New York Times company a decade ago sold their 
cable systems, maybe a little longer than that, to a minority-
owned group that we participated in with Bruce Llewellyn called 
Garden State Cable. And eventually Mr. Llewellyn and the group 
that we partnered with sold their shares after more than half a 
decade.
    We built the cable system in Philadelphia. We also wanted 
to have local ownership by minority and women businesses. And 
so we had a separate public company that are Comcast 
Philadelphia, was owned with and shares were available to 
Philadelphia residents who were women and minorities. 
Eventually that got bought up. Everyone made a lot of money; 10 
times their money or more.
    So as we have, from time to time, had to dispose of certain 
assets, we have always looked for ways to find creative 
opportunities with minority entrepreneurs. We do the same for 
purchasing of vehicles and other hard goods. We spend about $5 
billion a year on capital spending. So there is great 
opportunity to support businesses with smaller ownership than 
just the large owners.
    Mr. Boucher. Mr. Rush, can we move on?
    Thank you very much.
    The gentleman from Vermont, Mr. Welch, is recognized for 
hopefully one or two questions.
    Mr. Welch. Thank you very much.
    Mr. Roberts, my understanding is, you want to be treated 
the same on net neutrality. And if there were any conditions 
that were imposed as part of this arrangement, you would want 
them imposed on everyone else. Is that more or less right?
    Mr. Roberts. I think--I am not sure there should be--that 
there has been proof that the Internet isn't growing fast 
enough or that there should be rules. But if there are new 
rules that want to be put forth, I think it should not be a 
competitive differentiator that would apply to some and not to 
all.
    Mr. Welch. Well, if in the course of this, there were rules 
that applied to net neutrality, would you be supportive of them 
as long as they were applied across the board to everyone else?
    Mr. Roberts. I think it depends on the rule. But 
conceptually, we are participating right now with the FCC. We 
have put in comments, and we think there is a constructive 
dialogue led by Chairman Genachowski.
    Mr. Welch. We are going to have to go quick because we are 
going to vote. But I want to ask you about the availability of 
nonaffiliated content on TV Everywhere. Are you going to be 
asking, you Comcast, asking independent programmers to sign 
exclusivity deals with you or with your TV Everywhere partners?
    Mr. Roberts. Absolutely not.
    Mr. Welch. You won't be doing it. That is good.
    Again, I go back to this concern about the bundling of 
services and whether there are mechanisms to work out payment 
disputes. Right now, I understand arbitration is theoretically 
available. For instance, if you and a smaller programmer, like 
the WOW! Network, had a dispute about pay, arbitration is 
theoretically available; is that right?
    Mr. Roberts. There is a dispute resolution mechanism at the 
FCC, yes.
    Mr. Welch. Ms. Abdoulah, does that work as a practical 
matter? What is involved if you have a dispute with a larger 
distributor? And we don't have to single out Comcast here. But 
how does arbitration work as a practical remedy to resolve the 
dispute?
    Ms. Abdoulah. You would file a complaint, and then there is 
the depositions and all the data gathering. And you asked, is 
it effective? No. It is a long process.
    The worst part about it is, two things, you do not get 
guarantee that the programmer will keep that service on while 
you are in dispute. That is huge because customers then lose 
the signal, and now it is a problem for your consumers, your 
paying consumers who lose a signal. That is a big issue. And 
secondarily, I would have to be the one that would prove that 
the pricing is not right, and I don't have exposure to market 
pricing or data. That is huge.
    Mr. Welch. Let me ask, Dr. Cooper, is there a suggestion 
you would have to provide fairness, and I mean to the two, 
whether it is, in this case, Comcast and WOW! that would 
resolve this dispute in a reasonable way so that both of their 
interests were respected?
    Dr. Cooper. Frankly, if you listen to the lists of promises 
that people have tried to extract of conditions that people 
have talked about, there are 15 or 16. They can't be enforced 
effectively to preserve competition in the marketplace. The 
last decade has proven that the FCC is incapable of enforcing 
these conditions. So, on this merger, the answer is, it should 
not go forward, and Congress needs to revisit all of these 
other problems as a general proposition.
    Mr. Boucher. Mr. Welch, if it is oK with you, so that other 
members can ask at least one question.
    Mr. Welch. Sorry. I yield back.
    Thank you, Mr. Chairman.
    Mr. Boucher. Mrs. Christensen from the Virgin Islands is 
recognized for 5 minutes.
    Mrs. Christensen. Thank you, Mr. Chairman.
    And since some of my questions on whether the regulations 
are strong enough I think have at least been alluded to, and 
the diversity issue has been partially addressed.
    Let me ask just one question. The unions, especially the 
CWA, have concerns based on what they say has been a difficult 
history, and this is to Mr. Roberts and Mr.--Mr. Roberts 
particularly, and Mr. Zucker may answer--the history with 
Comcast. But also on the possibility of what might happen to 
jobs at a time when this country is focused on expanding jobs. 
So what do you plan or foresee the impact of this proposed 
merger would be on jobs?
    Mr. Roberts. Thank you for that question, because it is 
something I am very proud of.
    Comcast today has over 100,000 employees and when we 
started the company, Ralph, what was it 12, in Tupelo; 12 in 
1963. I think we have a one-way track record of creating jobs 
in this country.
    And now with NBC Universal having another 33,000 employees, 
the thing that I am most excited about this deal is the hardest 
thing to convince investors, which is that there is not going 
to be massive job cuts as part of this coming together. We 
don't own a news channel, a broadcast network, a movie studio. 
So there isn't the overlap that typically you see in horizontal 
deals where then the first benefit is firing people. The great 
ideas of this country, Google, what Apple is doing, are adding, 
not by subtracting.
    So this deal is a risk. We have been talking about the 
uncertainty of the future and what is happening in technology. 
It is not clear that it is a sure thing. What is happening to 
broadcast, what is happening in the Internet, and there is an 
investment and a passion that has to come with how you operate 
a company of this nature. And I think it starts with having a 
great relationship with your employees. And if they are in a 
union, respecting that. And if they are not, it is their right 
to choose one. And hopefully, either way, we create a fabulous 
work environment that ultimately we create great products that 
consumers will want.
    Mr. Boucher. Thank you very much, Mrs. Christensen.
    The gentleman from Pennsylvania, Mr. Doyle, is recognized.
    Mr. Doyle. Thank you. And I will be brief, Mr. Chairman.
    Even though Comcast is from that other city in 
Pennsylvania, they have been solid citizens in Pittsburgh since 
their entry into the market in 2002. And I would like to enter 
into the record a letter from our Mayor Luke Ravenstahl and 
Councilman Doug Shields in support of the Comcast merger.
    Mr. Boucher. Without objection.
    [The information appears at the conclusion of the hearing.]
    Mr. Doyle. Just a quick question. I also want to say that, 
in Pittsburgh, Comcast workers are unionized, and we appreciate 
that. And Comcast has worked with the unions in Pittsburgh and 
have a good relationship, and I want to state that for the 
record.
    Very quickly, Mr. Roberts, there has been many news 
articles about how some in the copyright businesses have been 
pressuring ISPs to disconnect their users if they have been 
alleged to have illegally downloaded copyrighted materials. It 
has been called the three strikes program or the graduated 
response. I checked with your staff, and I am told that Comcast 
does not currently disconnect users. And I want to say that I 
appreciate that policy, because our concern is there are no 
avenues for the users to have a due process. And we have seen 
many instances where people have been accused of doing 
something illegal, and it turns out they hadn't. And I just 
want to make sure that Congress, hopefully, will not be passing 
an explicit mandate for three strikes. So absent one, will 
Comcast continue to commit not cut off their customers from the 
Internet without some sort of due process procedure?
    Mr. Roberts. Well, first of all, thank you for the 
introduction. What I said earlier and if I might--and we maybe 
can submit some comments, as the chairman has allowed, for 
specifically that rule and that test.
    We think that by having made multibillions of dollars of 
investment here in content and still being 80 percent a 
distributor, we can play a constructive role in figuring out 
what is the right technological answer that protects the 
consumer and protects the copyright, so that what is going over 
is legal and is protected and keeps these businesses viable.
    We have seen in other industries where that has gotten so 
bad that the viability of the industry has been jeopardized. 
Exactly what the right answer is, I am not prepared today to 
say that I know. Obviously, many smart minds are there. But I 
am going to spend a lot of time and energy at this, more than I 
have in the past because of the fact that we have such a large 
stake now in content if this deal happens. How best to do that, 
I don't know right now.
    I don't know, Jeff, if you have a point of view on that. 
But some have said we should go to that three strikes and we 
are trying to figure that out as we speak. We were going to try 
to use both industries to talk to each other through the trade 
associations in a more cooperative way than has ever happened 
before.
    Mr. Doyle. I just hope it is not based strictly on the 
people making accusations without some sort of due process on 
the other end. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Boucher. Thank you very much, Mr. Doyle.
    And thanks to all of the members for their expeditious 
questions here, at least during the last half hour, and thanks 
to all of our panel members for informing us as thoroughly as 
you have on this matter of public interest.
    We will be submitting some additional questions in writing, 
and the record will remain open for such period of time as is 
needed to receive your responses.
    The gentleman from Michigan, Mr. Dingell.
    Mr. Dingell. Mr. Chairman, I want to thank you for that. I 
was getting ready to ask that question.
    Mr. Chairman, I would also urge that the committee call the 
FCC and the Department of Justice before us. There are a number 
of questions that appear here to be in need of answering. I 
recognize there are matters there before those two agencies, 
but I think we could craft a proper hearing to get their proper 
input without intruding into the Pillsbury rule.
    Mr. Boucher. Thanks very much, Mr. Dingell, for that 
constructive suggestion.
    And we are going to adjourn this hearing. We now have to 
respond to the recorded votes on the floor, and the clock 
stands at zero. So we will be sprinting over there. So thanks 
so much to the witnesses today for your attendance and your 
answers to our questions.
    [Whereupon, at 1:13 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]


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