Solons losing merger urges
Pols cool on AT&T-Comcast
One of the pols, Sen. Mike DeWine (R-Ohio), went so far as to fire a warning shot at the Federal Communications Commission -- roll back too many ownership rules and Congress will intervene.
This, even though it was the Republican-controlled Congress that passed the landmark 1996 Telecom Act, paving the way for mega mergers.
DeWine's comments came during the first Capitol Hill hearing on the Comcast-AT&T merger, which would result in the country's largest cable company, reaching nearly 30% of the pay TV aud.
DeWine, along with top Senate Republican Orrin Hatch (R-Utah), sympathized with consumer groups who argue that the cable combo would equal an omnipotent gatekeeper when it comes to programming.
"This would pose a challenge for those who offer new, independent programming. These independent producers may not have the leverage of linking their product with more established programs," DeWine said.
"This creates an obvious problem -- the programmer more than ever needs the customer base of AT&T/Comcast, but does not necessarily have the leverage to strike a worthwhile deal," DeWine said.
Defending merger
AT&T chair-CEO Michael Armstrong and Comcast prexy Brian Roberts both testified during the hearing before the Senate Subcommittee on Antitrust, Business Rights & Competition. They refuted the assertion that the combined company would somehow choke out new and innovative programming.
The duo also stressed that the combined company would have the necessary resources to provide more customers with cable Internet services, as well as other advanced offerings, including video-on-demand and interactive TV.
"In short, the merger will benefit American consumers and enhance competition, without violating any FCC or antitrust rule or policy," Armstrong said.
He and Roberts also pointed out that satellite television is a potent competitor for cable throughout the country.
Conditions broached
Lawmakers conceded that the merger probably doesn't violate any antitrust laws. Still, solons said they hoped the merger is approved only with certain conditions.
Deal must be cleared by the FCC and by antitrust attorneys at the U.S. Dept. of Justice. Congress itself can't stop the merger. It can, however, use the bully pulpit.
Sen. Herb Kohl (D-Wis.), chair of the antitrust subcommittee, asked Roberts if he would be willing to condition the merger upon a promise to open up cable lines to independent Internet Service Providers. Washington regulators attached such a condition when approving the AOL Time Warner merger last year.
Roberts said he wouldn't agree to such a condition, and that AOL TW is fundamentally different, in that it owns plenty of content, along with the pipes. Comcast, on the other hand, doesn't produce content. He said his company should be allowed to work out deals with ISPs voluntarily.
Dissenting voice
Also testifying was independent cabler Mark Haverkate, prexy-CEO of WideOpenWest (WOW). He said Comcast/AT&T wouldn't hesitate to choke out competition, and that it would succeed. He said it would be difficult for smaller cablers to secure programming.
"That's a trump card they would automatically win," Haverkate said.
Both Kohl and DeWine said program access rules requiring the same content to be offered at the same price to competing cablers needs to be extended. The FCC reg expires later this year.
On Capitol Hill, there are a growing number of lawmakers alarmed over a recent string of court rulings loosening media ownership rules. Since FCC chair Michael Powell is considered a friend of deregulation, they are concerned that he will let the rules fade.
One such rule up for grabs is an FCC cap barring a cabler from reaching more than 30% of the national aud.
While Dems such as Kohl or Sen. Ernest Hollings (D-S.C.) are expected to favor regulation, it's unusual for a Republican to do so. DeWine broke that stereotype Tuesday.
"The FCC must thoroughly examine cable ownership limits and establish an appropriate limit that would ensure healthy competition and a diverse workplace," DeWine said. "If they can't do it, then Congress will need to take a look at it."
