Letter to FTC: Caucus for Television Producers, Writers and Directors Opposes GE/NBC Take-over of Vivendi Universal

November 10, 2003

Timothy Muris
Chairman
Federal Trade Commission
600 Pennsylvania Ave. NW
Washington, DC 20580

RE: The Merger of GE/NBC and Vivendi Universal

Dear Mr. Chairman,

The Caucus presents itself to the Commission, as a representative of the independent television production community, which finds itself seriously impacted by the media consolidation that has taken place over the last ten years.

The Caucus consists of 140 television producers, writers and directors who have been providing television programs for the viewing audience for 50 years. They create and produce all types of series, movies and documentaries.

However, the ability to provide diverse, quality television and to control and own the copyright in the programs they create and produce has been diminished by the horizontal and vertical integration in the entertainment industry.

Attached is our pleading in the matter of the GE/NBC and Vivendi Universal merger. We stand ready to testify and/or respond to any inquiries by the Commission.

Respectfully submitted,

Charles W. Fries
Caucus Chair

Leonard Hill
Chair Government Affairs

In the Matter of the Merger of General Electric (GE) National Broadcasting Company (NBC) and Vivendi/Universal

The Caucus for Television Producers, Writers and Directors (The Caucus) was founded in 1973 with the expressed purpose of advancing the quality and diversity of entertainment made for the American viewing public. Since its inception, The Caucus has sought to transcend the boundaries of the creative Guilds (SAG, DGA and WGA). Freed of the responsibilities of collective bargaining and health and pension administration, The Caucus has sought to raise both industry and public awareness of the issues that impact the programming that is offered to the American public.

The Caucus now wishes to implore the Federal Trade Commission to scrutinize the implications of the proposed merger of GE/NBC and Vivendi/Universal. It is our considered opinion that the proposed merger will have significant negative impact on both the economic marketplace for, and on the content and quality of, filmed entertainment.

Universal Television has a long and proud history of supporting the production of some of the best filmed entertainment ever presented to the American viewing audience. The company has an unrivaled history as an incubator of new talent. Such singularly important voices as Steven Spielberg, Stephen Cannell, Richard Levinson and Bill Link, Steve Bochco and Dick Wolf were able to create content of lasting value thanks in great measure to the support of Universal Television.

If the proposed merger is allowed to go through without significant regulatory restraints being imposed, the role of Universal as a vital competitor in the programming marketplace will be permanently crippled. The merger will shackle the production prowess of Universal to the distribution channels controlled by NBC. Autonomy will be sacrificed on the altar of vertical integration. The merger will undermine the buoyant balance of a competitive market and replace it with the predatory self-dealing of corporate convenience.

In support of these contentions, The Caucus cites the extensive testimony that was given by the President of NBC, Robert Wright, when he testified before the FCC (MM Docket No. 90-162, 14 December 1990). Mr. Wright warned the FCC that diversity in program production was “… on its deathbed…” because “…the program production marketplace has become dominated by large vertically-integrated studios”.

In 1990, Mr. Wright warned the FCC that “… the domination of program production by a few huge conglomerates is an issue that dwarfs any commission concern over the details of network-supplier relationships”. Mr. Wright now comes before the FTC as the CEO of one of the most humongous media conglomerates ever conceived and would have the Commission discount the market-numbing implications of his proposed merger.

Mr. Wright was correct in warning the FCC that “… the independent producer and syndicator are becoming endangered species”. He correctly warned the Commission that “… it will not be long before virtually all network programs are produced by a handful of MPAA studios”. Now Mr. Wright seeks to join NBC with one of the leading MPAA studios and in so doing move independent production and syndication from the list of endangered to the category labeled “extinct”.

Though Mr. Wright testified that “the networks themselves have the desire and the incentive to foster a vibrant and diverse independent production community”, the effort to manufacture the proposed merger belies his own pleadings. Moreover, the pattern and practice of NBC over the past ten years demonstrates a conspicuous effort to condition access and extract rights without market based competition. The once vital independent production community has been decimated by these predatory practices and the proposed merger would be a death blow.

The Caucus believes that Mr. Wright was accurate when he noted that “… highly creative, ‘breakthrough’ programs such as “All In The Family”, “Hill Street Blues” and “Twin Peaks” have been born of the direct dealings of a network and an independent producer, without the involvement of a major studio”. If there is, as Mr. Wright asserts, a correlation between creativity and independence, then the merger of Universal and NBC would numb both market forces and creative expression.

The Caucus dissented when Mr. Wright testified that “…the natural incentives of the networks are the best guarantee that independent producers will flourish.” In 1993 the FCC gave Mr. Wright his wish. The Financial Interest and Syndication Rules were abolished and independent producers were left at the mercy of the natural incentives of Mr. Wright and NBC. In the ensuing ten years, the independent production community has been obliterated. We urge the FTC to understand that the natural incentives of NBC will be to engage in systematic self-supply and autocratic control of creative content.

Without specific provisions designed to protect the independent producer, maintain market forces and in turn protect program source diversity, the proposed merger of GE/NBC with Vivendi/Universal will be a windfall for a few stockholders and a calamity for the country.