The Comcast/Nbc Universal Merger: What Does the Future Hold for Competition and Consumers?
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S. HRG. 111–976 THE COMCAST/NBC UNIVERSAL MERGER: WHAT DOES THE FUTURE HOLD FOR COMPETITION AND CONSUMERS? HEARING BEFORE THE SUBCOMMITTEE ON ANTITRUST, COMPETITION POLICY AND CONSUMER RIGHTS OF THE COMMITTEE ON THE JUDICIARY UNITED STATES SENATE ONE HUNDRED ELEVENTH CONGRESS SECOND SESSION FEBRUARY 4, 2010 Serial No. J–111–72 Printed for the use of the Committee on the Judiciary ( U.S. GOVERNMENT PRINTING OFFICE 66–290 PDF WASHINGTON : 2011 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Nov 24 2008 11:07 May 24, 2011 Jkt 066290 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 S:\GPO\HEARINGS\66290.TXT SJUD1 PsN: CMORC PATRICK J. LEAHY, Vermont, Chairman HERB KOHL, Wisconsin JEFF SESSIONS, Alabama DIANNE FEINSTEIN, California ORRIN G. HATCH, Utah RUSSELL D. FEINGOLD, Wisconsin CHARLES E. GRASSLEY, Iowa CHARLES E. SCHUMER, New York JON KYL, Arizona RICHARD J. DURBIN, Illinois LINDSEY O. GRAHAM, South Carolina BENJAMIN L. CARDIN, Maryland JOHN CORNYN, Texas SHELDON WHITEHOUSE, Rhode Island TOM COBURN, Oklahoma AMY KLOBUCHAR, Minnesota EDWARD E. KAUFMAN, Delaware ARLEN SPECTER, Pennsylvania AL FRANKEN, Minnesota BRUCE A. COHEN, Chief Counsel and Staff Director MATTHEW S. MINER, Republican Chief Counsel SUBCOMMITTEE ON ANTITRUST, COMPETITION POLICY AND CONSUMER RIGHTS HERB KOHL, Wisconsin, Chairman CHARLES E. SCHUMER, New York ORRIN G. HATCH, Utah SHELDON WHITEHOUSE, Rhode Island CHARLES E. GRASSLEY, Iowa AMY KLOBUCHAR, Minnesota TOM COBURN, Oklahoma EDWARD E. KAUFMAN, Delaware ARLEN SPECTER, Pennsylvania AL FRANKEN, Minnesota CAROLINA HOLLAND, Democratic Chief Counsel/Staff Director JACE JOHNSON, Republican Chief Counsel (II) VerDate Nov 24 2008 11:07 May 24, 2011 Jkt 066290 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 S:\GPO\HEARINGS\66290.TXT SJUD1 PsN: CMORC C O N T E N T S STATEMENTS OF COMMITTEE MEMBERS Page Cornyn, Hon. John, a U.S. Senator from the State of Texas, prepared state- ment ...................................................................................................................... 147 Feingold, Hon. Russell, a U.S. Senator from the State of Wisconsin, state- ment ...................................................................................................................... 161 Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah, ........................... 3 Kaufman, Hon. Edward E., a U.S. Senator from the State of Delaware ............ 4 Klobuchar, Hon. Amy, a U.S. Senator from the State of Minnesota ................... 4 Kohl, Hon. Herb, a U.S. Senator from the State of Wisconsin ............................ 1 prepared statement .......................................................................................... 172 Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont, prepared statement .............................................................................................................. 174 Specter, Hon. Arlen, a U.S. Senator from the State of Pennsylvania ................. 5 WITNESSES Abdoulah, Colleen, President and Chief Executive Officer, WOW! Internet, Cable & Phone, Denver, Colorado, and Board Member, American Cable Association ............................................................................................................ 12 Cooper, Mark, Director of Research, Consumer Federation of America, Wash- ington, DC ............................................................................................................. 14 Roberts, Brian L., Chairman and CEO, Comcast Corporation, Philadelphia, Pennsylvania, and Jeff Zucker, President and Chief Executive Officer, NBC Universal, New York, New York ......................................................................... 8 Schwartzman, Andrew Jay, President and Chief Executive Officer, Media Access Project Washington, DC .......................................................................... 15 QUESTIONS AND ANSWERS Responses of Colleen Abdoulah to questions submitted by Senators Feingold, Hatch and Kohl .................................................................................................... 38 Responses of Brian L. Roberts to questions submitted by Senators Feingold, Franken, Hatch, Klobuchar, Kohl, Schumer and Specter ................................ 45 Responses of Andrew Jay Schwartzman to questions submitted by Senators Feingold, Hatch and Kohl .................................................................................... 105 Responses of Jeff Zucker to questions submitted by Senators Kohl, Hatch, Schumer, Franken and Feingold ........................................................................ 112 Questions submitted to Mark Cooper (Note: Responses to questions were not received as of the time of printing, May 18, 2010.) SUBMISSIONS FOR THE RECORD Abdoulah, Colleen, President and Chief Executive Officer, WOW! Internet, Cable & Phone, Denver, Colorado, and Board Member, American Cable Association, statement ......................................................................................... 125 Cohen, Larry, President, Communications Workers of America, Washington, DC, statement ...................................................................................................... 134 Cooper, Mark, Director of Research, Consumer Federation of America, Wash- ington, DC, statement .......................................................................................... 149 Dish Network, R. Stanton Dodge, Executive Vice President and General Counsel, Englewood, Colorado, statement ......................................................... 158 Epstein, Richard A., Free State Foundation, Potomac, Maryland: February 12, 2010 ............................................................................................ 163 March 15, 2010 ................................................................................................. 166 (III) VerDate Nov 24 2008 11:07 May 24, 2011 Jkt 066290 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 S:\GPO\HEARINGS\66290.TXT SJUD1 PsN: CMORC IV Page Organization for the Promotion and Advancement of Small telecommuni- cations Companies (OPASTCO), John N. Rose, President, Washington, DC, letter ...................................................................................................................... 175 Roberts, Brian L., Chairman and CEO, Comcast Corporation, Philadelphia, Pennsylvania, and Jeff Zucker, President and Chief Executive Officer, NBC Universal, New York, New York, statement ...................................................... 176 Schwartzman, Andrew Jay, President and Chief Executive Officer, Media Access Project Washington, DC, statement ....................................................... 189 VerDate Nov 24 2008 11:07 May 24, 2011 Jkt 066290 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 S:\GPO\HEARINGS\66290.TXT SJUD1 PsN: CMORC THE COMCAST/NBC UNIVERSAL MERGER: WHAT DOES THE FUTURE HOLD FOR COM- PETITION AND CONSUMERS? THURSDAY, FEBRUARY 4, 2010 U.S. SENATE, SUBCOMMITTEE ON ANTITRUST, COMPETITION POLICY, AND CONSUMER RIGHTS, COMMITTEE ON THE JUDICIARY, Washington, DC. The Committee met, pursuant to notice, at 2:36 p.m., in room SD–226, Dirksen Senate Office Building, Hon. Herb Kohl, Chair- man of the Subcommittee, presiding. Present: Senators Kohl, Feingold, Klobuchar, Kaufman, Specter, Franken, and Hatch. OPENING STATEMENT OF HON. HERB KOHL, A U.S. SENATOR FROM THE STATE OF WISCONSIN Chairman KOHL. All right. We will commence the hearing at this time. I need to notify all here that at around 3 o’clock we will have two votes, and we will try to see to it that the votes do not interfere unnecessarily with this hearing, although there may be some mod- est interruption. Today we examine the merger between Comcast and NBC Uni- versal. The combination of NBC’s content holdings with Comcast’s distribution power would create a media powerhouse of unmatched size and scope which, if approved, will have far-reaching con- sequences for competition and consumers. Comcast is the Nation’s largest and most powerful cable tele- vision company—with 24 million pay TV subscribers and the domi- nant share of customers in the markets it serves. It now seeks to acquire NBC Universal, which includes the family of NBC broad- casting and cable networks, 25 local NBC and Telemundo stations in some of the Nation’s largest cities, and the Universal Pictures Movie Studios. NBC has some of the most popular programs on tel- evision—from the Olympics, to NFL football, to NBC news pro- gramming, to entertainment programs ranging from ‘‘The Tonight Show’’ to ‘‘The Office,’’ to give just a few examples. We are wit- nessing the creation of a media conglomerate which is likely to greatly impact both what consumers pay for cable television and the ability of other pay television companies to compete fairly in the market. The highly concentrated nature of the cable TV industry and the limited choices available to consumers have long concerned this (1) VerDate Nov 24 2008 11:07 May 24, 2011 Jkt 066290 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\66290.TXT SJUD1 PsN: CMORC 2 Subcommittee. Rather than compete with each other, large incum- bent cable companies have often divided the country into regional clusters in which their market share of pay TV viewers reach as much as 70 percent or higher. Consumers suffer from annual cable rate increases running for the last decade about