Category Archives: Regulatory Risk

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The Comcast/NBC Merger Faces a Diversity Hurdle

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african american tv

In May, we covered the the risk management complications of the proposed merger between NBC and Comcast. The crux of the piece was to look at the unique difficulties of any media sector merger and we also looked back at the failed AOL/Time Warner marriage as well as the legal liabilities that Google inherited when it bought YouTube for $1.6 billion in 2007.

Now, however, the future of a combined Comcast/NBC look murkier than expected.

On Monday, a House Judiciary Committee hearing into whether or not the deal would be approved took an abrupt turn. The Los Angeles Times show business blog Company Town explains:

C-SPAN didn’t cover Monday’s nearly four-hour House Judiciary Committee “field hearing” on Comcast’s proposed deal to take control of NBC Universal. But if it had, viewers accustomed to the network’s trademark colorless coverage would have been treated to a Hollywood-worthy drama.
After all, who would expect a gathering of staid Washington lawmakers to feature a congresswoman implying that she had been offered a bribe, another member oblivious to media consolidation, one witness likening a corporate giant to a “plantation,” and three attendees arguing about race?
But this hearing had all that, plus plenty of grandstanding from lawmakers and the witnesses, who both faced cheers and groans from the audience.

C-SPAN didn’t cover Monday’s nearly four-hour House Judiciary Committee “field hearing” on Comcast’s proposed deal to take control of NBC Universal. But if it had, viewers accustomed to the network’s trademark colorless coverage would have been treated to a Hollywood-worthy drama.

After all, who would expect a gathering of staid Washington lawmakers to feature a congresswoman implying that she had been offered a bribe, another member oblivious to media consolidation, one witness likening a corporate giant to a “plantation,” and three attendees arguing about race?

But this hearing had all that, plus plenty of grandstanding from lawmakers and the witnesses, who both faced cheers and groans from the audience.

Reps. Maxine Waters (D-CA), John Conyers (D-MI) and Louie Grohmert (R-TX) all questioned company executives on the diversity — or lack thereof — of their staff and airwaves. None of Comcast’s stations are wholly owned by African Americans and, given the increasing consolidation of media in today’s world, this was viewed by some lawmakers as not just less than adequate in 2010.

The New York Times‘ Media Decoder blog highlighted the issue by quoting one of the hearings witnesses.

“Black executives have never had greenlight power at a major studio or network,” said Suzanne DePasse, the chief executive of DePasse-Jones entertainment, and an established film and television producer who broke into the business with Motown.

“We need greenlight power,” she said.

Those from the corporate side of things disagreed. Comcast carries TV One, for instance, they claim, which while not 100% owned by African Americans is a network aimed at black families. Hip Hop on Demand is another black-targeted channel on the Comcast roster, noted Company Town.

Such analysis provoked a rebuke by TV One Chairman Alfred Liggins, who said the relevant factor is that his network is managed by, and programmed for, African Americans.

Will Griffin, head of Hip Hop on Demand, a video channel, found Washington’s logic even more perplexing. In testimony, he said Washington’s view of “racial purity in public policy almost cost us a chance at American history. Our president is black enough … and so is TV One, and so is Hip Hop on Demand.”

Furthermore, Griffin added that Comcast is “blacker” than much of the other media companies out there.

Will Griffin, the chief executive of the Hip Hop OnDemand, a service that has been closely associated with Comcast, described that large minority base as reason to approve the merger, rather than oppose it. “This is far more direct and immediate market leverage than minorities have over other media companies,” Mr. Griffin said in prepared remarks that were distributed before the session began. During the hearing, Mr. Griffin spoke forcefully in favor of Comcast, as did a handful of others.

In her testimony, NBC’s VP of diversity Paula Madison outlined a post-merger plan to add “two new independent cable two new independent cable services annually for the first next three years, with substantial minority ownership in at least half of them.”

That’s a good start, say some. But it’s now beginning to look like this issue, which has led some minority advocates to call for a boycott against the companies, will present a much larger hurdle to the media marriage than most expected.

“It’s not going to happen without conditions,” said Alex Nogales, the president of the National Hispanic Media Coalition

Stay tuned — quite literally.

The Risks of Oil-Producing Countries

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Understanding the unique risks of oil-producing countries is not easy.

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From political to economic to security risks, there are many and they are far-reaching.

I was lucky enough to participate in a webinar yesterday on this very topic. Leading the presentation was Fareed Mohamedi, partner and head of markets and country strategies for PFC Energy and Raad Alkadiri, partner and head of PFC Energy.

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The webinar was thought-provoking and insightful, offering a glimpse into the oil production of such countries as Iraq, Iran, Russia and Brazil.

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Picture 21

Iraq, according to the U.S. Energy Information Administration, holds more than 112 billion barrels of oil — the world’s second largest proven reserve — and also contains 110 trillion cubic feet of natural gas, and is a focal point for regional and international security issues. Mohamedi and Alkidiri see this oil-rich country as a ongoing risk.

Picture 22

The presenters also focused on OPEC constraints on oil production and the eventual quota applied to Iraq, stating that “OPEC may be able to live with maximum Iraqi production of 6 mmb/d by 2017 assuming relatively benign supply/demand fundamentals, but the risks are all on the downside.”

But let’s not leave out Iraq’s neighbor and fellow oil-rich country, Iran. According to PFC Energy, the country’s oil production forecast looks something like this:

Picture 23

But this excessive production doesn’t come without some consequences. Iran faces severe natural decline rates from its reservoirs, forcing Iran to rely heavily on proven undeveloped reserves (PUDs). However, the country’s unstable investment climate is a downside risk for PUD development. And as the webinar stated, “Iran’s production struggles will continue, or even worsen in the future due to geological constraints, lack of domestic technical capacity and the impact of sanctions on investment.”

U.S. dependency on foreign oil may decrease as the Obama administration opens up even more water for exploratory drilling. But, as we have seen recently with the Deepwater Horizon, that too comes with extreme risks.

To view an archived version of the webinar click the following link:
http://www.talkpoint.com/viewer/starthere.asp?Pres=130886
Password: pfcglobalrisk

The FDA and Food Fraud

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In our April issue (which will be available online tomorrow available now), we feature an article about how the Consumer Product Safety Commission (CPSC) is ramping up its enforcement efforts of late. Our May issue will discuss how OSHA is doing the same. And this post last week talks about how the EPA is planning to re-new its mission to safeguarding the nation’s drinking water.

Will the FDA be the next watchdog to flex its muscle?

Some think it should, specifically when it comes to “food fraud.”

Increasingly, companies, retailers and consumers are pressuring the U.S. Food and Drug Administration (FDA) to act on the rising incidence of food fraud, the Washington Post reports.

Examples of food being mislabeled abound: “sheep’s milk” cheese really being made from cow’s milk; “Sturgeon caviar” being Mississippi paddlefish; grouper, red snapper and flounder actually catfish fillets from Vietnam; and honey diluted with sugar beets or corn syrup sold as 100 percent pure.

This type of “food fraud” has been found in fish, fruit juice, maple syrup, olive oil, spices, spirits, vinegar and wine. Those affected by the fraud include consumers and companies such as E&J Gallo and Heinz USA.

Rhetorically, the FDA definitely wants to increase its ability to monitor such violations, but the past few years have seen so many incidents of rampant — and at times deadly — food quality issues that the regulator has instead focused on that side of things.

And rightly so. I mean, look at this list of recalls in just November 2009 alone.

Still, one issue being more troubling doesn’t mean that the other one isn’t also a threat.

“We put so much emphasis on food and purity of ingredients and where they come from,” said Mark Stoeckle, a physician and DNA expert at Rockefeller University. “But then there are things selling that are not what they say on the label. There’s an important issue here in terms of economics and consumer safety.”

The CPSC and OSHA have both needed more funding and resources to expand their mission. Does the FDA deserve the same? In a vacuum, of course. And food fraud has the potential to cause some very serious health and safety problems.

But in a still-shaky economy and with a new, historic commitment to health care, can every agency in Washington really expect to get a higher budget?

maple syrup tootbrush

Brushing your teeth has never been so delicious … Hey! Wait! That’s not tooth paste.

EPA Aims to Strengthen Drinking Water Regulations

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Obviously, EPA chief Lisa Jackson has been reading the Risk Management Monitor.

Because yesterday, just on the heels of some extensive coverage by us on water quality concerns (this one last week from Emily and this post yesterday from me), the EPA announced a major shift in how it will regulate the nation’s drinking water, focusing specifically on protecting people from the potentially harmful chemicals that have become increasingly prevalent in recent decades.

EPA’s current approach to protecting drinking water involves assessing each individual contaminant, which can take many years, according to the agency. The new strategy seeks to achieve protections more quickly and cost-effectively with strategies like advanced treatment technologies that address several pollutants at once.

Additionally, Jackson said, the agency plans to use programs in tandem to address water pollution, rather than view them in so-called silos. Jackson said EPA can use the Federal Insecticide, Fungicide and Rodenticide Act, which regulates pesticides, as well as the Toxic Substances Control Act to assess the risk of chemicals and stop contaminants before they get into drinking water.

Jackson broke down the new strategy at the Association of Metropolitan Water Agencies’ annual conference.

The strategy, Jackson said, contains four key components: addressing contaminants in groups rather than individually, fostering the development of new treatment technologies, using multiple statutes to safeguard water supplies, and enhancing state and local partnerships.

In its official release, the EPA went into even more depth, identifying several substances that would now be put under more scrutiny through regulations.

In the newly finalized review of existing drinking water standards, EPA determined that scientific advances allow for stricter regulations for the carcinogenic compounds tetrachloroethylene, trichloroethylene, acrylamide and epichlorohydrin. Tetrachloroethylene and trichloroethylene are used in industrial and/or textile processing and can be introduced into drinking water from contaminated ground or surface water sources. Acrylamide and epichlorohydrin are impurities that can be introduced into drinking water during the water treatment process. Within the next year, EPA will initiate rulemaking efforts to revise the tetrachloroethylene and trichloroethylene standards using the strategy’s framework.

Of course, nothing has changed yet legally and until the environmental watchdog actually does “initiate rulemaking efforts,” the status quo will remain the status quo.

Notes the New York Times:

Until new policies and rules are unveiled, it is difficult to say precisely how these shifts will affect Americans. Some within the E.P.A. and Congress remain skeptical.

“There is a history of this agency making big announcements, and then changing very little,” said an agency regulator who was not authorized to speak to the media. “The real test will be to see how many new chemicals have been regulated six months from now.”

Currently, only 91 contaminants are regulated by the Safe Drinking Water Act, though more than 60,000 chemicals are used within the United States. No chemicals have been added to that list since 2000.

Rhetorically, it’s a good start. We will see how long it takes to actually make any difference.

And, as evidenced by the graphic below (found at I Love Charts), there isn’t a lot of time — or water — left to waste.

global water supply