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Category: Justice Dept.

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

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.

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Last-minute lobbying for and against Comcast-NBC deal as approval nears

With the Federal Communications Commission and the Justice Department gearing up to give their blessing to Comcast Corp.'s proposed deal to take control of General Electric Co.'s NBC Universal, a slew of last-minute lobbying is being done by both those in favor and those against the marriage of the two media giants.

Last week, Comcast Chief Executive Brian Roberts met personally with Republican FCC Commissioners Robert McDowell and Meredith Attwell Baker as well as Edward Lazarus, the chief of staff for FCC Chairman Julius Genachowski. A few weeks ago, Genachowski's office circulated a draft of conditions it wanted put on Comcast and NBC as part of an approval.

Also last week, 97 members of Congress sent the FCC a letter urging the agency to finish its review of the deal and give it a stamp of approval so that "all Americans can reap the benefits of this transaction as quickly as possible."

The Center for Responsive Politics noted that of the 97 House members who signed the letter, 84 had received donations from Comcast. Of course, it is hardly a headline that politicians often send letters on behalf of companies that coincidentally may have made donations to their political action committees.

And it is also not unusual that many of the House members who signed the letter count Comcast or NBC Universal employees as constituents. Comcast has over 100,000 employees in 39 states.

Comcast competitors also continue to make their case to the FCC. Last week, DirecTV lobbied for conditions on how Comcast negotiates programming agreements with rival distributors. On Monday, the Tennis Channel, one of the more vocal opponents to the deal, once again argued that approval of the marriage of Comcast, the nation's biggest cable and broadband provider, with NBC Universal, a programming giant, would be bad for smaller cable channels. Also continuing to sound warnings about the deal is the American Cable Assn., which represents small cable operators. They fear that Comcast will jack up the prices on its cable networks.

Much has been made aboutthe length of time it has taken the FCC and Justice Department to complete their review of the deal. However, it appears that approval will end up taking just over a year, which is much shorter than the review that the mergers of America Online with Time Warner and satellite radio broadcasters Sirius and XM each endured.

-- Joe Flint

RELATED:

FCC likely to approve Comcast - NBC deal with conditions

For the record: The original version of this post misidentified Meredith Attwell Baker as Meredith Attwell.

FCC likely to approve Comcast-NBC Universal deal with conditions

FCC

The Federal Communications Commission is expected to give its blessing to Comcast Corp.'s deal to take a controlling interest in General Electric Co.'s NBC Universal.

FCC Chairman Julius Genachowski is pushing for approval of the deal, but only if it includes conditions that would seek to limit Comcast's ability to flex too much muscle in ways that would harm consumers or unfairly disadvantage its competitors, people close to his office said.

The regulatory agency, which along with the Department of Justice is charged with reviewing the deal to determine if it serves the public interest and is not anti-competitive, has circulated a proposed order to approve the deal from Genachowski's office. It will now be reviewed by the four other commissioners and voted on sometime early next year.

The combination of Comcast's distribution with NBC Universal's content has some competitors, lawmakers and media watchdogs concerned that it would give Comcast an unfair advantage in cable television and online video.

With that in mind, the proposed conditions on FCC approval include requirements that would attempt to prevent Comcast from favoring its own content versus that of its rivals, both on its systems and in online operations, agency officials said. There will also likely be conditions that would make it difficult for Comcast to withhold its own content from rival distributors and platforms.

There is particular concern that Comcast, loaded with NBC Universal content, will have too much power in determining how the Internet develops as a video medium. Earlier this week, the FCC pushed through controversial rules meant to prevent the owners of high-speed lines and airwaves from favoring their services over competitors and to preserve open access to the Internet.

Specifically, there is a mechanism in the proposed order that would make it difficult for Comcast to withhold its content from video sites that its competitors are providing with content, people familiar with the document said. These conditions would apply only to Comcast, so if, for example, CBS isn't giving content to a company but other media companies are, CBS would not be coerced into having to provide its content.

One of the other key areas the FCC and Justice Department may look at is what role Comcast should have in Hulu, the popular online video site that NBC Universal co-owns with Walt Disney Co. and News Corp. Media watchdogs have waived red flags about the idea of Comcast, which has its own online video site, also having a role in Hulu. The Senate's antitrust subcommittee even suggested that Comcast should have to divest NBC Universal's stake in Hulu. Whether the FCC and Justice Department would go that far remains to be seen, but they could try to regulate Comcast's role in the operation and management of Hulu.

The agency is also concerned about how Comcast positions its own cable networks vs. its competiors on the dial and may try to require the cable operator to put similar channels near its each other on the dial.

The FCC has a say in the deal because the agreement includes the transfer of licenses for NBC Universal's broadcast television stations to Comcast. The FCC also often weighs in on deals that combine content with distribution.

The $30-billion deal would lead to the creation of a new company made up of NBC Universal (parent of NBC), Universal Studios and several powerful cable networks including USA, CNBC and Bravo and Comcast's smaller programming units, which includes E!, Versus and the Golf Channel. NBC Universal's stake in Hulu would also be part of the new company.

That company would be 51% owned by Comcast Corp. and 49% owned by General Electric and would be housed inside Comcast Corp., which is the nation's largest cable and broadband provider. Comcast has almost 23 million cable subscribers and 16 million broadband subscribers.

The requirements the FCC wants Comcast to adhere to are to be made public after the agency votes on the deal. Although it is possible that the vote could go against Comcast, usually when the FCC chairman signs off, there will be a majority in favor of the decision. The makeup of the commission is three Democrats (including Genachowski) and two Republicans. One of the Democrats, Michael Copps, is very outspoken about his concerns with media consolidation. Both Republicans are likely to support the deal, although they may seek to water down the conditions, meaning that even if Copps was to take the unusual step and vote against Genachowski, Comcast would still have its three votes.

In a statement, Comcast said it would continue to "work with the commissioners so that the FCC order will not undermine our business combinations and will ensure that consumers will benefit and that competitors are treated fairly."

Any conditions the FCC puts on Comcast could eventually expire or be reviewed on a regular basis to see if the government thinks there is still a need for them.

Though the FCC's review process is fairly public -- more than 30,000 comments on the merger have been filed since the agency started its analysis early this year -- the Justice Department operates below the radar. It has been working closely with the FCC to ensure that neither steps on the other's toes.

Comcast, which announced the deal last December, has already detailed its executive team for the new company. Steve Burke, currently the chief operating officer of Comcast, will become the chief executive. Jeff Zucker, the current chief executive of NBC Universal, will leave the company after the merger is closed.

-- Joe Flint

Photo: FCC Commissioner Michael Copps (left) and Chairman Julius Genachowski (center) at a recent meeting. Credit: Andrew Harrer / Bloomberg

 

Sen. Kerry tells FCC, Justice Department to make sure Comcast behaves

Sen. John Kerry (D-Mass.), Chairman of the Commerce Subcommittee on Communications, Technology, and the Internet, said he thinks the merger of Comcast Corp. and NBC Universal could work for consumers, but only with a little nudge from the government.

KERRY In a letter to the Federal Communications Commission and the Justice Department, Kerry stressed the need to ensure that Comcast, the nation's largest cable and broadband provider, does not use its clout to behave in anticompetitive fashion, particularly with regards to the Internet.

"I do not think anyone wants this new entity to act unfairly as a bottleneck or gatekeeper for critical programming for competing distributors or leverage its distribution network against content that competes with its new property," Kerry wrote. "If you approve this merger, these are benchmarks against which it will be judged in the years to come."

If the deal, which was announced over a year ago, closes, Comcast will add NBC's content to its powerful distribution pipes. Besides the NBC broadcast network and Universal Studios, its assets would also include several powerful cable channels including CNBC, MSNBC, Bravo and USA. NBC Universal also owns a chunk of Hulu, the popular online video site. "The proposed merger will create a unique company with unique power in the market," Kerry warned.

Kerry did not list any specific conditions he wants on the $30-billion deal, instead telling the FCC and Justice Department that where they see risks, "propose remedies." Comcast and NBC Universal are pushing to get approval of the deal from the government before the end of the year, but early next year seems more likely.

-- Joe Flint

Photo: Massachusetts Sen. John Kerry. Credit: Brendan Smialowski / Getty Images

 

Sen. Franken wants Justice Dept. to investigate Comcast

Sen. Al Franken (D-Minn.), who has been outspoken about his concerns with Comcast Corp.'s proposed deal to take over control of NBC Universal, has asked the Justice Department to investigate whether the cable giant was violating antitrust rules.

In a letter to Christine Varney, the assistant attorney general for antitrust and the official who is overseeing the Justice Department's review of the merger, Franken said Comcast might be "seeking to indirectly exert managerial and operational control" of NBC Universal before its deal closes.

FRANKENFranken was writing in response to Comcast's announcement last week outlining the executive structure of NBC Universal after the merger is complete. The company unveiled the management team it said would head NBC Universal. Left out of that team and leaving after the deal closes are top NBC Universal executives Jeff Zucker and Jeff Gaspin.

This act, Franken said, may make Comcast guilty of "gun-jumping." Citing the Hart-Scott-Rodino Act, Franken said the law "prohibits certain merging companies from acquiring 'beneficial ownership, whether direct or indirect,' of one another before the end of a federally mandated waiting period."

That, Franken added, "may also facilitate and encourage NBC Universal personnel to provide their prospective superiors with competitively sensitive information."

Franken also noted that back in September after Comcast Chief Operating Officer Steve Burke was named head of NBC Universal, the company said there would be "no additional structural or personnel announcements until the deal closing process and timing is certain."

In a statement, Comcast said there was nothing out of the ordinary in anything it had done regarding NBC Universal.

“Transition and integration planning  is common, proper, and expected in a transaction of this type," a company spokeswoman said, adding that "NBC Universal has remained in total control of all decision making to date, Comcast has had no role in NBC Universal business operations."

-- Joe Flint

Related post: Comcast unveils NBC Universal management team

Photo: Sen. Al Franken. Credit: Dennis Brack/Bloomberg News

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