NBC Affils Seek Clear, Enforceable Conditions On Comcast/NBCU

NBC affiliates say they are cautiously optimistic that the
merger of Comcast and NBCU can "strengthen and extend" their ability
to serve up free services to the public, but not without clear and enforceable conditions
that define and enforce Comcast's stated commitment to them.

One of those, they said, needs to be strong, structural
separation between affiliate relations and retransmission consent negotiations,
so that the combined company would not be able to force the affiliates to
"accept unfavorable affiliation agreement provisions to obtain
market-based retransmission consent payments."

That is according to the prepared testimony of Michael
Fiorile, chair of the NBC TV Affiliates Board for a House hearing
Thursday (Feb. 4) on the $30 billion joint venture/merger.

Fiorile did not suggest that there was any evidence the
combined company would produce any of the concerns raised, but also suggested
there needed to be safeguards in place to make sure they didn't, given
that the deal is an "unprecedented combination involving two companies
that create and distribute much of the best television programming in the
United States."

Fiorile called the statements from Comcast in support of the
network-affiliate model, echoed in talks between Comcast and the board, a
"welcome start" to the process. He also said he welcomed Comcast
ownership of the 10 NBC-owned stations, though that alone did not insure
Comcast's continued investment in the network-station model.

He said that by the time the process was done,
Comcast's general statements of support will have to be backed up with
"clear, specific, documented and enforceable conditions defining what it
means in practice for the new Comcast-controlled NBC to be "committed" to the
network-affiliate model and the free, over-the-air television platform that has
served the public so well for so long."

But while Fiorile said he was cautiously optimistic a set of
appropriate conditions could be arrived at, he made it clear that there was no
guarantee of support from the affiliates. "At such an early stage in the
discussion," his testimony reads, "I cannot yet know with certainty
whether these discussions will even result in a common understanding as to
appropriate conditions, which, to state the obvious, will be a prerequisite to
our support for this transaction."

Among the affiliate concerns that need to be addressed, he
said, were: 1) the migration of NBC network content to cable properties or the
under-nourishing of NBC network programming in favor of investments in cable
channel fare: "The disappearance of popular news, sports, and
entertainment programming from the NBC network would be unacceptably
harmful," he said. 2) that Comcast could bypass the affiliates via a cable
or Internet VOD model. "A cable operator with a television network...has
unique incentives to undercut its affiliates to benefit its cable and Internet
distribution outlets," he said; 3) that the combined company could use
their leverage to "undermine affiliates' ability to negotiate fair
retransmission consent agreements." On that score, Fiorile had a condition
to propose: "We tentatively believe that a strong set of structural
separation requirements for the subsidiaries of Comcast that will negotiate
retransmission consent agreements and those that will administer the network's
relations with affiliates can permit the combination to go forward."

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.