Lots of smoke but likely to be few flames in D.C. for Comcast-NBC
The takeover of General Electric Co.'s NBC Universal by cable giant Comcast Corp. is expected to be announced very soon, and already public interest groups are lining up to do battle in D.C. against the deal. The Center for Digital Democracy's chief, Jeff Chester, recently told Broadcasting & Cable that the still-to-be proposed marriage is "the equivalent of Godzilla swallowing Rockefeller Plaza." How's that for hyperbole?
Yes, a deal between Comcast and NBC Universal should be scrutinized. But the bottom line is there are -- on the surface anyway -- no major regulatory hurdles here that could seriously impede Comcast's taking a majority stake in NBC Universal. We've already reported on this, but thought it appropriate to offer a refresher course as the Comcast-NBC dance moves from a waltz to a tango.
Many keep mentioning Federal Communications Commission rules that prohibit a cable operator from owning a TV station in the same city. Alas, those rules were blown out ten years ago. No headaches there.
There is talk that having the biggest cable operator own so much programming (NBC, E! USA, Bravo, CNBC, MSNBC, etc.) will also automatically raise red flags. Well, until it spun off its cable systems, Time Warner owned the nation's second-largest cable operator and several big cable networks including CNN, TNT, TBS, Cartoon Network and HBO. The FCC has rules already (the so-called program access regulations) that safeguard against distribution companies withholding their content from competing distributors. Those rules are set to expire in three years, although this deal could give the commission juice to argue to keep them around a little longer.Furthermore, the deal probably will be a merger of Comcast's programming units with NBC Universal into a new company. Comcast's cable systems, which reach almost 25% of the country, would not be part of the new entity. Now we can all roll our eyes at that, but regulators usually take things at face value. If Comcast keeps its cable systems at arms-length, on paper anyway, don't expect a heavy-handed FCC.
Could the FCC try to ram some extra safeguards down Comcast's throat? Sure, and it's nothing that Comcast would probably let stand in the way of its deal.
The FCC will have to approve any transfer of NBC's broadcast TV stations. Quick, tell me the last time the FCC denied a license transfer.
There are areas the commission should look at with a Comcast-NBC combination such as what the impact that one company owning about 30 cable networks and broadcast networks NBC and Telemundo has on program suppliers and distributors. While the FCC has rules that are supposed to keep a cable operator that owns programming from refusing to sell content to competing distributors, it doesn't have any rules that stop a cable programmer from using its leverage to squeeze distributors. For example, go ask a cable operator if they can cut a deal with Walt Disney Co. to carry only ESPN and none of its sister channels. It can, but at a cost so prohibitive that the distributor is better off just buying all the ESPN channels.
Whom does that hurt? Any programmer that is not part of some big media company and doesn't have the juice to get its channels off the ground.
Now head out to Hollywood and ask independent programmers (if you can find any left) what it's like to work in an industry that has shrunk down to about half a dozen major players.
The trouble is the FCC already got rid of most of its regulations having to do with content ownership and broadcast networks (remember the financial interest and syndication rules?) and it has never weighed in on those issues with regards to cable programming. Heck, it doesn't even regulate cable content the way it does broadcast because cable programming does not use the public airwaves.
If the FCC really does want to crack down on a Comcast-NBC deal, it will have to be willing to rethink how it regulates media. It is probably time the commission did that, especially since we're now firmly in the digital age, but that is easier said than done. The agency would have to have justifications to start creating new regulations, especially when so many of the old ones and current ones were not and have not been supported by the courts when challenged. On top of that, if the FCC does create some new rules for Comcast and NBC Universal, said rules would then have to be applied to News Corp., Viacom, CBS, Time Warner, etc., and that would get ugly.
For what it's worth, FCC Chairman Julius Genachowski recently met with reporters and editors here and although he was typically vague on his agenda, he did indicate that when it came to issues having to do with ownership of programming, there was little desire to turn back the clock.
The Obama administration has said it will take a hard look at media consolidation, but frankly, the toothpaste is already out of the tube and most of that took place during the Clinton administration. Expect a lot of tough talk about safeguards and public interest. Yes, Comcast's Brian Roberts and NBC brass will probably do a song and dance before the FCC and Congress, but in the end this one should get through Washington relatively unscathed. Not saying that should be the case, just that it likely will be the case. But hey, we'd love a surprise.
-- Joe Flint
Photos: Top right: Comcast's Brian Roberts. Credit: Brian Snyder / Reuters. Bottom Left: FCC Chairman Julius Genachowski. Credit: Gary Friedman / Los Angeles Times