“We’re in an arms race,” Public Knowledge CEO Gene Kimmelman told the Senate Commerce Committee at a hearing to explore the prospects for broadband video. It’s “no surprise, content companies bulk up” as Fox wants to do with its $80B bid for Time Warner, which was rejected by the company but disclosed today. Following Comcast’s deal to buy Time Warner Cable, and AT&T’s with DirecTV, “consumers are between a rock and a hard place….They started the ball rolling and as we’ve seen from today’s stories, we don’t know where it’s going to end.”
Representatives from Comcast and AT&T indirectly debated with execs from Dish Network, the WGA, and Kimmelman over whether online video providers have to fear mergers or need strong net neutrality rules. Committee Chairman Jay Rockefeller (D-W Va) ended the proceedings by arguing for municipal broadband to provide a low-cost option for poor residents. He also said that he invited Netflix CEO Reed Hastings, who declined to show. “I can’t figure [it] out because I’m trying to help them, I think. But he didn’t want to be here.”
Dish says that later this year it plans to introduce a low-priced online video service that will include live streams of ESPN, and could be threatened by the union of the two largest cable companies. “Comcast doesn’t necessarily want us to succeed because we’re competitors,” says the satellite company’s Deputy General Counsel Jeffrey Blum. “We are very concerned that a combined Comcast and Time Warner Cable will have an incentive and ability to stifle our service.”
WGA West representative Shawn Ryan, who was executive producer of CBS’ The Unit, echoed those fears. Big Media companies control the major networks and “almost all the scripted content” — and want to “reap monopoly profits.” That shapes their view of online video. “They would like nothing more than to take their content distribution monopoly and apply it to the Internet.” That’s why he wants to encourage companies including Netflix and Amazon which he says together could spend $1B on original series this year.
Comcast’s ubiquitous EVP David Cohen says that there’s no need to worry. “If we start blocking or degrading content then we’re going to lose customers. So it’s not in our interest to do so.” As for Dish’s concerns, Cohen says that a merger with Time Warner Cable would help because the company has agreed, as a condition for the deal, to uphold net neutrality across all of the systems.
AT&T’s Chief Strategy Officer John Stankey added that mergers wouldn’t endanger TV competition: “Video competition today is strong and it is increasing.”
The problem with that, Kimmelman says, is that “consumers have more choices but at higher price points…What we don’t have is the broader individualized selection driven by the consumer. It’s driven by the packager.”
As an aside, Cohen clarified one question hanging over Comcast’s deal with Charter Communications to provide it with some subscribers and spin off others to a partnership it has referred to as Spinco. “I guarantee you, no one will ever get a bill from a company called Spinco,” he says. “It will have a real name by the time we start this service.”