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>> this week on "the communicators," an analysis of congressional hearings this week on the proposed merger of comcast and nbc universal.

our guests are joelle tessler of the associated press and amy schatz of the "wall street journal." >> well, this week in the house and the senate the nbc comcast merger proposal was the focus of two hearings. one in the house and one in the senate. and that's our focus this week on "the communicators." joining us to analyze what happened this week. i mean, one of the things to keep in mind is that this deal doesn't have to be approved by the congress and the justice department and the fcc. it's really just an indirect influence that congress can have. but i think it's likely to be approved but probably with conditions and the democrats really raised a number of issues that could be addressed through conditions attached to any type of approval.

comcast owns some cable channels but it really is primarily distribution company whereas nbc is a media company and they own a lot of programming, obviously the nbc network and sports programming and the concern is that comcast will put a stranglehold on that programming and basically put competitors sunday disadvantage, satellite companies that are providing video services and so they want to ensure that competitors can get access to that programming on fair rates and fair rates and on fair terms. >> host: amy schatz did this break down the hearings along -- partisan lines? >> guest: basically. i think mostly you saw democrats were raising conditions and democrats mostly were at the hearing. a few republicans showed up but

there weren't that many there. basically democrats were talking. one of the most interesting things about both the house hearing in the morning and the senate hearing in the senate judiciary antitrust committee in the afternoon was that none of the lawmakers actually said they thought the deal should not be approved. mostly they were just talking about what kind of conditions should you impose on this deal so that consumers aren't harmed or competitors aren't harmed or the comcast -- the combined comcast nbc would have too much market power. i think that was a really interesting thing because, you know, as joelle said congress does not to have approve this deal but if congress is upset about the deal they could put a lot of pressure on the fcc and the depth to do a little bit more or to try to stall this or kill it all together. and so i thought that was the pretty interesting part. it did break down along party lines. republicans were saying there's not that many competitive issues because comcast and nbc don't really compete on each other's markets. democrats were saying, this could really lead to higher prices for consumers.

and this could really hurt comcast competitors as they're trying to get programming or re-tran fees from comcast. >> host: two of the lawmakers who did show up, henry waxman and the ranking member of the telecommunications subcommittee cliff stearns, a republican of florida, had an exchange regarding the proposed merger. here it is. >> 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 nbc u 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 wholly owned cable networks. together these networks only represent about 3% of national cable network advertising and affiliate revenue. >> 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 urge the fcc and the department of justice to assess rigorously whether this transaction is in the public interest. well, two months have passed since this transaction was announced. and after additional review, i'm now even more certain that this new joint venture, if approved,

could trigger drama changes in the way consumers access video programming intthe way independent programmers distribute their works and also in the way all video distributors compete for customers. >> host: joelle tessler, what did you hear in that exchange? >> guest: well, i think cliff stearns actually got to the heart of one of the biggest issues that is going to be a focus of the review which is essentially is this -- what kind of a combination is this? and what type of antitrust issues does it raise? and what cliff stearns -- the point that he was making is that these companies operate in different businesses. they don't overlap. comcast is primarily distribution company. they provide cable services. they provide broadband connections to the internet. whereas, nbc is a media company. and so essentially they are in different businesses. and that's why a lot of the republicans really feel that

this doesn't raise traditional antitrust concerns and the deal should go forward without conditions, i think, some of them believe. but the concern is really that what you have here is a vertical integration. you have the company that already owns the pipes that go into people's homes that deliver content will now own the content insolvent. it's a different matter. it's not a matter of two companies reducing the competition in one market. it's about comcost -- whether they will use their hold over the must-have programming that nbc will bring to competitors at a disadvantage. the program access questions that we talked about earlier but it also gets into questions about will comcast allow more independent networks on its own system -- its own cable systems since it will have so much of its own programming that will compete from those networks from the nbc acquisition. and that's really going to be one of the issues that will be at the heart of the review at the fcc and doj especially.

>> guest: i think one of the other interesting issues that chairman waxman brought up during the hearing was the issue about online video. and what kind of power -- market power is comcast going to have moving forward because as joelle said comcast is really a distribution company and they distribute cable to your house but they also distribute the internet. and so when you're combining internet lines like that and also content with nbc's content and partial ownership of hulu which is one of the major online video places where people go to watch tv shows now for free -- when you combine that all together, that adds a whole different issue. that was one of the major focuses of both of the hearings and henry waxman brought it up. and some of the other members did, too, where they were asking, you know, what kind of market power is comcast going to have on the online video field and how is that going to impact local station owners? and how is that going to impact other cable providers in the future? >> host: another piece of video

we have from the thursday hearing was the house subcommittee chair rick boucher and he talked about online programming. and here's what he had to say. >> you probably are in a better position to answer that. did hulu block the boxy users from access to the hulu programs? >> this was a decision made by the hulu management to -- what boxy 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. >> well, when you have happen negotiations with boxy -- >> we have always said we are open to negotiations. >> 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 website 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? >> yes. >> guest: that was really fun because just a few hours after that exchange, boxy actually came out with a statement said, wow, we don't know where jeff zucker came up with that because they said basically, look, we're not illegally taking hulu and having it over devices and for people who don't use boxy. it's a program that you can have on your pc and it allows you -- if you put some cables in your laptop and you put -- pop them into your digital tv you can watch streaming video that you would normally watch on a pc you could watch it on tv and hulu had been blocked off boxy for a while.

and after that exchange boxy came out with a statement, wow, we would love to talk to hulu about this and we would love to not have this problem. but -- and it's right that hulu management had had some problems with boxy but hulu's management said it was because of nbc. and so they basically said in their statement, wow, you know, we would love to talk to jeff zucker going to a licensing deal for this. if he says he's going to do it now, okay, we'll try. but it was a really interesting exchange. and it's one that's going to keep coming up because this is an issue -- it's really where people are starting to watch more tv now. and, you know, they can watch c-span online. they can watch other things online. it's really3pz -- that's where future is and that's where a lot of the affiliates are worried about -- you know, as you're moving forward and if more people are going to watch video online, the people who control that video and control that content, how are they going to use their market power to prevent other companies from getting it? >> host: joelle tessler, anything to add to that?

>> guest: one thing to add on the boxy exchange which amy was talking about is that i believe that -- there's some difference of opinion about exactly who made the decision to block hulu content from boxy because essentially i think -- that was nbc that pressured the management of hulu to do that. meanwhile, at the hearing yesterday, jeff zucker said oh, that was a decision made by hulu's management. but going back to the broader point, the -- what this really gets at is the internet is -- as amy said, more and more people are watching video on the internet. and the question for a company like comcast in particular, the nation's largest cable company, do they see the internet as a threat to their core cable business? and, you know, it's really unclear. they say that they don't. they say that they actually think that the internet is a

good thing and it will expand their business and they want to allow people to watch programming in any form and in any type of device that they want. and they'll deliver it to them as they say wherever they want it. but it is a significant threat. and the question is, are they going to move programming that right now is available for free, both over the air programming from nbc and available online, will they move it online. will you be able to have access to programming online or love to pay it similar to the way you pay for subscription television service like congress. >> host: you mentioned congress really doesn't have a role in saying yes or no to this joint venture or merger. but do you see congress and individual members working to get concessions from nbc and/or comcast to, you know, sign off on this deal? >> guest: yeah. i mean, i think actually -- amy can jump in here.

but i would imagine that -- i'm sure that they will weigh in with the companies but i would imagine that the pressure actually is going to fall more on the fcc and do skwlshgs they're likely to try to influence the analysis that goes on at the agencies that are actually doing the review of the process. and that's how they could influence the outcome of the reviews and what types of conditions get attached. >> guest: yeah, that gets really dicey because a lot of members of congress also accept campaign contributions from these companies. and so if you're a member, you can't actually say wow, i think this deal should be approved. fcc you should really go do that right now. that can look pretty bad actually if you've gotten a huge campaign contribution from comcast or nbc in the past. they'll say well, these are a lot of issues that we think the agency should look at. and we think this is a concern. wow, the agency should look at that and they will have a hearing and talk to the agency and try to pressure them that way.

it's slightly different but they can't actually say, wow, you got to go approve this right now because this is really important for the american people. that does not look very good. >> host: well, two more members talked about who has authority to yea or nay this. >> there are many different issues that we'll 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's our job. and i would be careful for members to -- another way giving up our responsibilities on telecom policy by enacting processing and procedures and using this and the department of justice to do that. that's kind of where i stand. a profitable nbc universal is good for all of our constituents. and i hope 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 world; '[ and i also i'm not sure that's a good reach of culture. and i question what some of our consumers like to watch and we do sell abroad and it sometimes does not put the best focus on us as a culture. >> telecommunications mega mergers 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 is 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. >> guest: yeah, both of those -- i can't remember -- representative shimkus was talking about net neutrality too when he was talking about the department of justice and the fcc. basically making policy through mergers. and that's something that republicans complain about a lot. and they actually complained when kevin martin was the chairman of the fcc and was still in charge because the fcc likes to basically create policy and merger conditions because they can do a lot with merger conditions. you can get companies to agree to an awful lot. and that's something that, you know, we're seeing here with the net neutrality debate which is something that comcast is knee deep in because they've got a

pending lawsuit against the agency about this and the democrats would really like to see some sort of net neutrality condition put on this merger. republicans don't want to see that at all. and comcast doesn't want to see that. and comcast along with the republicans are arguing that it doesn't make a lot of sense to impose some sort of net neutrality condition only on comcast as a merger condition because it wouldn't apply to at&t, verizon or any other comcast competitors. and so, yeah, it's one of those things we're going to see as we go along what justice and the fcc does. but there's certainly going to be pressure on the hill, both sides, to get some kind of net neutrality condition put on this thing. >> host: joelle tessler? >> guest: yeah, it's interesting because comcast -- comcast is in the middle of this unrelated fight with the fcc over net neutrality, which is playing out in the courts here in washington. and that stems from an action taken under the previous fcc chairman kevin martin.

he essentially ordered comcast to stop blocking traffic, online peer-to-peer file-sharing traffic a service called bittorrent. in that case, comcast said it was blocking bittorrent traffic because it was very bandwidth intensive and slowing down the network for everybody else. but a lot of people feel that they were slowing down -- or blocking bittorrent traffic because they saw online file-sharing as a way to trade video on the internet. and that comcast in turn saw it a threat to its core business. so you've got that playing out because comcast essentially challenged that order in court. and at oral arguments a few weeks ago here in washington, the judges essentially really cast doubt on the fcc's authority to mandate net neutrality rules and so that's sort of the backdrop of what's happening now because this concern becomes even bigger when you talk about it in the context

of the comcast/nbc merger because now you're talking about allowing comcast which owns the pipes to own the content as well through nbc and the concern is that what they could do, which would really violate the concept of net neutrality is favor their own content and put competing content at a disadvantage and a core content competing with their business which is video delivered over television. so that whole dynamic is playing out in the background here. and comcast said repeatedly that they don't want net neutrality to be decided as part of -- as a condition to this merger. that has to be addressed separately in the court case and also at a proceeding at the fcc to adopt net neutrality rules which is going on right now. >> host: amy schatz where do we stand -- first of all, is it a merger, a joint venture? what should we call it officially? >> guest: it's a joint venture. it's not necessarily a merger because they're talking about creating basically a different kind of company that will be

controlled by comcast because basically comcast is buying 50% of nbc and ge is going to have the other 49% at least for a few years and so we're calling it aent venture. -- calling it a joint venture. >> host: comcast has submitted paperwork to the fcc; correct? did they submit an application? what did they submit? >> guest: yeah, they submitted an application to the department of justice a couple of weeks ago or last week, and they also recently submitted 145-page document to the fcc where they talked basically about why this was in the interest of the public and why they're going to do all these really awesome things for consumers and how this doesn't have any competitive concerns. they did basically 145 pages of why this is a really good deal and they still have to file -- i think they may have filed formal paperwork to transfer the licenses 'cause really what the fcc has to do here is to agree to transfer the licenses from the control of ge to comcast.

>> guest: which is just building on the stuff amy is talking about which is essentially the review at the justice department is likely to be really focused on antitrust issues. and again that kind of goes back to the point of, is this -- this is a vertical merger rather than a horizontal merger so what types of antitrust issues does it actually bring up since we're not talking about eliminating a competitor or two companies in the same industry merging. so whereas the fcc review issue will be broader. because they have authority over the broadcast licenses, they will look at things like is this deal in the public interest? and they look at things like will it promote more local programming? what about diversity in programming? that review won't focus only on the antitrust issues. it'll be broader and look at also does this deal promote the public interest? >> host: well, one of the testifiers at the house hearing yesterday was connie abdullah

with wow, a local internet cable provider. and here's an exchange she had with cliff stearns and brian roberts. >> 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? >> 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. >> uh-huh. mr. roberts, you might want to comment on her comment or dr. coopers? >> well, i go back to the principle here. first of all, the content is going to be made available to our competitors. is available today. in the last two years comcast has lost nationally over about a million and a half customers while phone and satellite and the wide open west of the country have added over 7 million.

the distributorses in the multichannels today is two separate companies. it's 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. and 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'm sure somewhere we'll 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 'cause that's where the consumer wants to be. >> may i respond? >> sure.

>> and just clarify -- >> very quickly? >> pardon me? it's not just about withholding content. it's also about putting restrictions and on content is that. >> host: joelle tessler that one of the antitrust issues that doj will be looking at? >> guest: yeah, that's one of the biggest issues that will come up in these reviews. what happens is when you allow comcast which competes with satellite companies and competes with smaller cable companies, it competes with verizon and at&t, which rolled out their own video services in recent years. when you give comcast control of this must-have programming, the nbc network, sports programming. as the executive from wide open west said, how is she going to compete if she doesn't have access to the programming her customers will go to the

competitor. it goes to the point well, no, it's not a horizontal merger because nbc and comcast are in different businesses. and the comcast executives keep making that point over and over. and he said it there in the testimony. but the point is that they -- it raises a different set of antitrust concerns. and the regulators reviewing this deal are going to have to really address that to make sure the competitors can still get access to the programming they need. and one thing i would add on this is that there are rules in place that were put in place by the 1992 cable act and they're enforced by the fcc that require cable companies to give competitors, competing video services, access to the programming that they own. essentially to treat them the same way they treat their own network in negotiations in terms of how much money they pay for access. and the rates and the terms of carriage. and comcast has said repeatedly those rules are in place and we will abide by them. and so there's existing protections that there's no need to get -- for our competitors to

be so concerned about this. but the same time those rules are being challenged in court and comcast is actually one of the companies that has brought that challenge. cablevision is i believe leading it. and there's also a lot of concern among the competing providers is that they want to see binding arbitration. they feel the fcc is not real aggressive in the rules so they can get content on fair and indiscriminatory terms. >> guest: the wow! executive was worried about after this thing, will they still be able to get bravo? will she be able to get the golf channel and will she be able to get e entertainment or channels her customers really want. and if she doesn't have those channels they will not subscribe to her service they will subscribe to comcast or satellite. she was also talking about it in the hearings in context of the internet, too. and if she was going to provide

an internet video service for her customers, then, you know, she needs to get access to the -- you know, the online video streams of those channels, too. and right now i'm not sure the fcc rules really apply to the internet -- you know, the internet flows of those channels and so that was another issue that they were talking about in both of the hearings that's probably going to come up on the fcc side. >> host: two final topics to talk about before we close up here and amy schatz we'll start with you. there was also a senate hearing on thursday of this week on this issue. mr. zucker and mr. roberts testified there also. anything that came out of that hearing that was different than the house hearing? >> guest: right. well, i think the main take-away was that you don't want to mess with al franken because he was incredibly upset with nbc -- he's a former nbc employee. he was on "saturday night live" i think well on 20 years as a writer and a performer and he really put the whammy on both brian roberts and