Genachowski Eyes Changes to Retransmission Consent Policies

The FCC is reviewing what changes might make sense for the agency’s retransmission consent dispute policies (CD March 11 p8), Chairman Julius Genachowski told the Senate Commerce Committee. “The events of the last two or three months confirmed that this is a subject that should be looked at seriously,” he said in a hearing Thursday. He and Christine Varney, assistant attorney general for the Justice Department Antitrust Division, pledged to narrowly review on the merits Comcast’s acquisition of NBC Universal.

Responding to a question on retransmission consent by Communications Subcommittee Chairman John Kerry, D-Mass., Genachowski said the issue has been one of “active consideration” at the FCC since disputes of late December. Consumers say they're confused why their viewing is affected by media company negotiations, and the FCC is hearing more lately that existing policies may have “lost pace” with marketplace changes, Genachowski said. He refused to specify what approaches the agency is considering. “All ideas should be looked at with the goal of coming up with a framework that works for consumers and that’s fair for the parties involved."

Only Sen. Maria Cantwell, D-Wash., opposed the Comcast-NBC Universal deal outright during the hearing. “At this point in time, you know, I can’t support this merger,” she said. “We're talking about one of the largest carriers” of Internet and cable merging with a large content provider, she said. Other committee Democrats seemed more interested in approval with conditions. “If in the future this is approved, there are going to be conditions,” said Sen. Byron Dorgan, D-N.D. “Mergers can increase efficiencies and promote innovation when done well,” Kerry said. “But without proper scrutiny and strong conditions, big mergers can distort markets, reduce consumer choice and drive up the price of services."

Ranking Member Kay Bailey Hutchison warned Congress and regulators to “tread very carefully and make sure that the policies we discuss take account of the evolving nature of the marketplace, the competition between providers and the growing number of choices consumers have to access content.” FCC review “should be limited to the transfer of the relevant licenses between the parties and whether that’s consistent with the public interest,” she said. That’s not always been the case in past deals before the FCC, which has sometimes taken a “creative” approach to merger review, she said.

Genachowski said any commission conditions “will be tied to issues raised in the transaction that are appropriate for decision and action in the transaction.” Varney said DOJ will look only at the deal’s merits. Asked by Kerry if DOJ would consider Internet video competition in its review, Varney said the department is “committed to preserving all competition,” including “potential competition."

Hutchison and other senators called for a quick transaction review. The FCC has already started talking about how to make its review process efficient but thorough, said Genachowski. Looking back at past reviews, the FCC and DOJ found that “sometimes the delays in process are due to understandable issues that the parties have in claims about the information that’s required,” he said. The FCC has just now begun its public proceeding because “it took the parties some time to assemble the information.” Asked which agency would issue a decision first, Varney said they have “parallel proceedings” and intend decisions “to go together at the same time.” Varney takes “seriously the need for vigorous review of transactions and judicious enforcement of the antitrust laws,” she said in opening testimony. “Size cannot be the determinate factor in an antitrust evaluation.” While DOJ and the FCC have “different missions,” they “share similar concerns and intend to collaborate,” she said.

The FCC’s review of industry deals “must be thorough, efficient, timely, and transparent, Genachowski said in opening testimony. “It must have the appearance as well as the reality of objectivity, fairness, and reliance on the best available data and analysis.” He cited concerns about the speed, openness and thoroughness of previous FCC merger reviews. “I am committed to working with my fellow commissioners to ensure that the agency’s review procedures meet the highest standards of openness, transparency, rigor, and fairness, and minimize costs and delay while fully protecting the public interest.” He’s “directed the team to learn from experience -- to examine past similar transactions and see, with the benefit of hindsight, what the FCC did right, and where the agency could have done better,” he said. They've begun working with collleagues at DOJ. The FCC must “ensure that communications industry transactions do not enable firms to frustrate innovation or raise prices ultimately paid by consumers,” Genachowski said.

In a second witnesses panel, Comcast CEO Brian Roberts fielded a range of questions about the deal’s effect on consumer prices and industry competition, largely echoing statements from the first three Congressional hearings in the House Commerce Committee, and House and Senate Judiciary committees (CD Feb 26 p3). Roberts assured senators his company’s intentions are good. Comcast “is trying to associate ourselves with some of the most creative, talented creators, try to find the technological ways to create successful businesses for them and make it great for consumers,” he said. “There is absolutely no assurance that this is right or that this will work,” but “that’s what American business is all about."

Sen. Claire McCaskill, D-Mo., grilled Roberts on whether he'd back other cable companies doing similar deals. “I assume you would have no problem with Time Warner [Cable] buying ABC.” Roberts said he wouldn’t. He added it’s unclear others will follow Comcast since competitors’ CEOs have criticized his company’s move.

Sen. Amy Klobuchar, D-Minn., asked if cable rates would rise as a result of the deal. Nothing in the deal would encourage or require Comcast to raise customer prices, Roberts said. But Colleen Abdoulah, CEO of Comcast rival WOW, said the deal could mean higher rates for Comcast competitors unless conditions are attached to keep prices low for accessing NBC Universal programming.