Senate Commerce Takes Its Swing at Consolidation Deals
Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., and ranking member John Thune, R-S.D., questioned the consolidation sweeping the industry and pointed to what they see as transformation afoot in many ways, especially in online video, during a hearing on the future of video Wednesday. But Commerce will not consider Satellite Television Extension and Localism Act (STELA) reauthorization until September, following the August recess, they announced. Rockefeller and Thune are collaborating on a draft that they say may revamp video marketplace rules.
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The STELA timeline is “consistent with what’s happened before,” Thune told us at the Capitol Wednesday, alluding to continued discussion with stakeholders and not suggesting anything was awry with negotiations. Some industry lobbyists had suspected a draft may have been in the works for release and markup this month and have awaited this hearing for possible details regarding a draft. STELA expires at the end of the year, and three other committees with jurisdiction have cleared STELA legislation.
Commerce “will consider and report legislation during the Senate’s September work period, including the reauthorization of expiring provisions of the Satellite Television Extension and Localism Act of 2010,” Thune and Rockefeller said in a joint statement earlier that day. “We look forward to continuing the productive bipartisan work of the committee."
With STELA off the table, Rockefeller and Thune focused on Comcast’s proposed acquisition of Time Warner Cable and AT&T’s proposed acquisition of DirecTV. Rockefeller is dubious of the benefits CEOs promise in requesting consolidation approval, he said. “These mergers create even larger companies that combine high-speed broadband and extensive media holdings,” Rockefeller said. “These proposed combinations of video, broadband and content have real implications for the future viability of competitive online video services.”
Thune acknowledged the two deals would affect “tens of millions of American households” but “I am not convinced they will necessarily change the market in a permanent, or negative, way.” Senators and witnesses consistently referred to the market being at a tipping point, an allusion to a phrase in the hearing’s title.
Rockefeller touted online video as a key market-changing force. He did note that Netflix CEO Reed Hastings declined an invitation to testify, “which I can’t figure out … I'm trying to help him, I think.” Netflix told us Friday it declined due to a scheduling conflict. Rockefeller introduced the Consumer Choice in Online Video Act last fall and brought it up multiple times. Lobbyists have long wondered about the Senate Commerce STELA draft and to what degree the consumer choice bill and other provisions would be attached. Commerce should “solicit the input of online video providers and major unaffiliated video programmers,” Thune said.
AT&T Chief Strategy Officer John Stankey and Comcast Executive Vice President David Cohen reiterated the ways they feel their respective deals would help consumers. No conditions would alleviate the harms of a combined Comcast/Time Warner Cable, Dish Deputy General Counsel Jeff Blum warned, calling it a “serious threat to competition” and fraught with other concerns. “There’s a lot in it that we like,” Blum told Rockefeller of his online video distributor bill.
"I think it’s the tipping point to Comcast,” Public Knowledge CEO Gene Kimmelman said. “Are we tipping toward AT&T as well? … Are we tipping toward the next wireless merger? Are we tipping toward a major content merger?” He cautioned against the consolidation trend, reiterating Public Knowledge’s opposition to the deals at hand. He praised Rockefeller’s legislation for recognizing the need to eliminate discrimination.
Senators raised different concerns. Sen. Cory Booker, D-N.J., asked Cohen about both peering and independent programmers. Cohen defended Comcast’s positions and the legal prohibitions that would apply to Comcast while also distinguishing between traditional net neutrality rules and interconnection. Sen. Bill Nelson, D-Fla., tried to coordinate a back-and-forth between Kimmelman and Cohen, focusing on the differing competition in the broadband and video markets. Cohen pointed out that Comcast and Time Warner Cable do not compete in any markets, a major factor worth considering when weighing market share. “Now we have merger mania,” Sen. Ed Markey, D-Mass., said.
Sen. Kelly Ayotte, R-N.H., asked about Title II reclassification. Comcast opposes it and worries what it would do to innovation in the sphere, Cohen said. “We have no plans to develop any,” he said of Internet fast and slow lanes. “We're not offended in any way.” Sen. Dean Heller, R-Nev., brought up many changes lawmakers should potentially make to this overall market, citing STELA as a vehicle and suggesting stakeholders help hash out what changes should be integrated into that bill.