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Comcast-NBC Universal deal gets thumbs up from FCC and Justice Department

January 18, 2011 | 12:20 pm

GENACHOWSKI

The Federal Communications Commission and the Justice Department have approved Comcast Corp.'s deal to take a majority stake in General Electric Co.'s NBC Universal, the government actions needed to create a new media and entertainment behemoth that spans television, a Hollywood movie studio and the Internet.

Announced 13 months ago, the deal puts under one roof the nation's largest cable and broadband operator with one of the country's most storied broadcasters, whose assets include networks NBC and Telemundo as well as Universal Pictures and cable channels USA, Syfy and Bravo.

The FCC didn't give carte blanche to Comcast Corp, however. Its approval was contingent upon Comcast Corp. agreeing to conditions that the government hopes will reign in the media giant. Comcast also made commitments to boost NBC Universal's news and public affairs programming.

The conditions, most of which run seven years, include requirements that Comcast make its content available to rival cable and satellite distributors as well as online distributors.

"These conditions respond directly to the concerns voiced by participants in the proceeding — including consumer advocates, online video distributors, and MVPDs [multichannel video programming distributors] — while respecting the legitimate business interests of the applicants to protect the value of their content," the FCC said. Comcast also has to sell its content to online distributors at the same price it offers it to cable and satellite companies.

The FCC also said it will require Comcast to "offer standalone broadband Internet access services at reasonable prices and of sufficient bandwidth so that customers can access online video services without the need to purchase a cable television subscription from Comcast." 

The Department of Justice, following quickly on the heels of the FCC, saying Tuesday  it would not block the deal and that the parties had agreed to conditions for the merger to proceed.

The conditions were reached in a settlement with Comcast, the DOJ said.

Those conditions include Comcast-NBC Universal  subjecting itself to “anti-retaliation provisions” and complying with open Internet requirements.

While there is overlap between the FCC and the Justice department, Justice's mandate is to make sure a merger doesn't diminish competition, and the FCC examines whether a deal serves "the public interest."

The Justice Department  said in a statement that the conditions to the deal “will preserve new content distribution models that offer more products and greater innovation, and the potential to provide consumers access to their favorite programming on a variety of devices in a wide selection of packages.”

Comcast Corp. will own 51% of a joint venture, while seller General Electric Co. will retain a 49% stake. The venture's value is estimated at $30 billion.

Although Comcast and NBC Universal are not head-to-head competitors and their merger did not trigger significant antitrust issues, media watchdogs, lawmakers and competitors scrutinized the pairing because the combined company creates a vertically integrated giant that represents a formidable video gateway reaching consumers over the air, through cable and on the Internet.

A greenlight from the FCC, which has regulatory oversight over the media industry, was telegraphed last month when the agency's Chairman -- Julius Genachowski -- signaled that his office would vote in favor of the deal. The final vote was 4-1, with Democratic commissioner Michael Copps casting the lone ballot against the two companies combining.

The deal, Copps said in a statement, "confers too much power in one company’s hands." Copps, a critic of media consolidation, had warned at the outset that the two companies would "face a very steep climb with me."

Some of those concerned about the implications of the deal expressed satisfaction with the FCC's vote.

"We are pleased that the conditions in this merger, if properly enforced, will allow new online competitors to cable to develop, much as satellite service did in the 1990s," said Harold Feld, legal director for Public Knowledge, a public policy group that has been pushing for limits on Comcast.

Not everyone, though, was as pleased.

"Free expression online and on television will be worse off as a result of today’s action," said Andrew Schwartzman, policy director of Media Access Project, an advocacy group. He warned that Comcast's deal with NBC could lead to more marriages of content and distribution, which he feels is bad for consumers.

"Perhaps the worst thing about today’s announcement is that it sends a message to other phone and cable companies that they, too, can buy up content providers," he said. "We may be about to see a new wave of media consolidation as a result."

The FCC review took about a year and there were several congressional hearings examining what the combination of Comcast and NBC Universal would mean for consumers and competitors. In a filing to the FCC defending the deal last year, Comcast and NBC Universal said the new entity would be able to "increase the quantity, quality, diversity, and local focus of its content and accelerate the arrival of the multiplatform, 'anytime, anywhere' future of video programming that Americans want."

Comcast has said it hopes to close the deal on Jan. 28. It announced new executive leadership for NBC Universal last November.

-- Joe Flint

Related blog posts:

News Corp. worries about conditions on Comcast-NBC deal

FCC likely to approve Comcast-NBC Universal deal with conditions

Comcast unveils management team for NBC Universal

Photo: FCC Chairman Julius Genachowski. Credit: Alex Wong / Getty Images

 

 

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