Comcast and NBCU will be back on Capitol Hill tomorrow, this time testifying before the House Judiciary Committee. Comcast Chairman & CEO Brian L. Roberts and NBC Universal President & CEO Jeff Zucker will testify, and they will be joined by witnesses from the Consumer Federation of America, the Independent Film & Television Alliance, the Communications Workers of America, George Mason University and possibly others.
The hearing will be chaired by Rep. John Conyers (D-MI) with ranking member Rep. Lamar Smith (R-TX). Rep. Conyers had this comment when Comcast filed our FCC Public Interest Statement last December: "It is clear to me that any merger of this magnitude should be reviewed carefully. Nonetheless, Comcast’s commitment to diverse programming and maintaining the journalistic independence of NBCU is encouraging. I am also glad to see that Comcast has committed to maintaining local affiliates, local news coverage and other public interest programming."
With some of the same witnesses as the hearings earlier this month, some of the testimony will be familiar, but new issues are likely to be brought up as well based on the Committee’s interests and probable witness testimony.
Once again, Brian and Jeff will make the case why this joint venture will benefit American consumers by helping to accelerate the transition to a future of "anytime, anywhere" TV content. They’ll also discuss the transaction’s pro-competitive impact and the competitiveness of the markets in which we operate. In the first two hearings, there was a lot of discussion of competition related issues and online video. As Brian Roberts has said for several years, video over the Internet is our friend not our foe, and we want to bring more video to the Internet, not less. An interesting chart from the Public Interest Statement we filed with the FCC last month shows that Comcast and NBCU are pretty small players in the online video space. Google is the clear leader with nearly 55% of online viewing. Hulu is the second most viewed with 4%, (It’s important to remember that NBCU has only a minority interest in Hulu, whose other owners include Disney-ABC and News Corp-Fox).
Based on the background of the other witnesses, we expect issues related to labor and independent programming to be discussed.
In terms of independent programming and the programming market in general – we don’t think there’s ever been a better time to be an independent producer of video content. Opportunities to produce shows and reach an audience have exploded. Thirty years ago, "video" pretty much meant three networks (owned by three companies) that accounted for virtually all viewing. Then came the cable industry and new channels - first 20, then 40, then 100, and now over 600. And at the same time, satellite and cable companies added hundreds of new distribution channels.
Today, the vast majority of channels Comcast carries are not affiliated with us, and this will continue to be the case even after we join with NBCU – in fact, on a typical Comcast cable system 6 out of 7 channels won’t be affiliated with Comcast or NBCU. And vertical integration of cable channels has been substantially decreasing over time. As this chart shows, in 1992, about 57% of channels were vertically integrated while in 2006 only about 14% were. One of the reasons is the enormous increase in the number of channels available to consumers.
Comcast now offers hundreds of linear channels from companies large and small. They are owned by big companies like Disney, Time Warner, Viacom, and Fox; and by independents like Hallmark, Bloomberg TV, Ovation, The Outdoor Network and ReelzChannel. There are also whole networks devoted to independent films, such as the Sundance Channel and the Independent Film Channel.
And linear channels don’t tell the whole story. In just the last decade, Video on Demand (VOD) has emerged as a distribution vehicle, followed by online video. Our customers have watched VOD over 14 billion times. We’ve got about 17,000 titles now available at any given time. VOD makes millions of potential viewers available for independent programmers as diverse as Havoc which shows specialty surfing, skating, and snowboarding content; Concert TV, Hip Hop on Demand, and KidzBop.
The surge in American homes with fast broadband connections has opened up online video as another outlet. Just in the past few months, Comcast launched the beta version of our Fancast Xfinity online service – this is allowing us to put even more programming online than we have on VOD. Already we’ve got 19,000 titles online, and independent programmers are being distributed in this new way. Ovation TV and Hallmark Channel, which also have linear outlets, are joined online by independent film distributors like Cinetic and Snagfilms. But this service also competes with Netflix, AppleTV, Blockbuster, and scores of other online video services.
All of this means unprecedented opportunities and outlets for all programmers, including independents.
Turning to labor and workforce issues, jobs were on the minds of many Senators and Representatives in the earlier hearings. In many horizontal mergers, because of overlapping workforces there can be significant layoffs after the close of such deals. But this is primarily a vertical transaction with little overlap between the two companies. The goal of bringing the two companies together is not to cut costs by eliminating jobs, but to grow the company by investing, innovating and competing.
Comcast is a pro-employee company and has been for over 45 years. We are very proud of our employees and value their contributions to the success of the Company. We’ve grown to over 100,000 employees and offer all full-time employees healthcare benefits and 401k accounts with company matching. Our competitive pay and benefits package is just one reason why we are an employer of choice across the country. While union-represented employees are a small percentage of our total workforce, we respect the right of employees to choose whether to be represented by a union and have pledged to honor the existing collective bargaining agreements between NBCU and its unions and to preserve and continue these productive relationships. We value good union workers. In fact, our new headquarters building in Philadelphia - the largest private development project in the history of the Commonwealth of Pennsylvania - was built with 100% union labor.
As at the earlier hearings, we expect a lot of questions, and we’re ready to provide good answers.