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Comcast makes case for NBC Universal deal to FCC

January 28, 2010 |  9:25 am

Cable giant Comcast Corp. made its case as to why it thinks its deal to acquire majority control of General Electric Co.'s NBC Universal is -- to borrow from Martha Stewart -- a good thing.

In a 145-page application to the Federal Communications Commission, Comcast said its $30-billion merger with NBC Universal would not stymie competitors and would be beneficial to the public interest. The filing is part of Comcast's transfer request for the licensees of NBC's 26 television stations. The Comcast-NBC Universal deal puts under one roof cable systems that reach almost 25% of the country with NBC Universal's broadcast networks NBC and Telemundo, TV stations, the Universal movie studio and more than 30 cable channels including CNBC, USA, E! and MSNBC.

Comcast's filing, which was dropped off at the FCC this morning, tries to make the case that this deal will not really shake up the current media landscape all that much.That will probably be a hard sell.

Public-interest groups and media watchdogs will scrutinize the filing and already have been critical of the proposed marriage of the nation's biggest cable and broadband provider with the programming powerhouse. Their fears are that the combined entity could use its muscle to limit what content reaches consumers over the air, through cable and on the Internet.

ROBERTSBURKE Comcast reiterates many of the arguments it made when it announced the deal in December. The combined entity, the company said, will still trail News Corp., Time Warner and the Walt Disney Co. in terms of advertising revenue and will own only one of every seven channels piped into a typical cable subscriber's home.

Furthermore, the company said, it had nothing to gain and everything to lose by favoring NBC Universal content over that of rivals. Noting that it has already lost more than 1 million subscribers in the last few years to competing satellite and telephone-company distributors, the company said the need to have a wide variety of content was key for growth. "There is simply no prospect of Comcast 'going it alone' and relying exclusively or even primarily on NBC Universal content."

As for worries that Comcast, with NBC Universal content in hand, could become a powerful gatekeeper to the Internet, the company said, "To the extent that any one company maintains a substantial advantage in attracting online video viewers, that company is Google -- not Comcast or NBC Universal." Comcast and NBC combined, the filing said, accounted for just 1% of all video properties viewed online. Comcast added that even if Hulu were included (NBC owns 32% of the video site), the figure would still be just under 5%.

Even if that is the case, one of the other big concerns of media watchdogs is that Comcast can use its power as the nation's biggest broadband provider in more subtle ways when it comes to positioning its own online content versus content from rival sites. Comcast said there was "no realistic prospect" that it would "abuse its role" as a high-speed Internet service provider.

Comcast also argues that its deal to take 51% control of NBC Universal and create a new programming company will allow it to jump start the video-on-demand business. Comcast said it had struggled to persuade movie studios to embrace video on demand and now it will be able to get movies to consumers in their homes or online faster.

The filing details Comcast's commitments to increase the amount of children's programming it currently carries, primarily through video on demand. It also reiterates a promise to beef up news and public-interest programming on the NBC TV stations. Not all such programming would appear on the NBC stations or the network but, rather, online, on video on demand or on digital channels. Comcast also again stated it would not tamper with NBC News in any way that would favor coverage of itself or issues important to the company's bottom line.

Anyone looking for dirt on how the company will operate after the merger will be disappointed. Comcast confirms that NBC Universal Chief Executive Jeff Zucker has been selected as the "initial CEO of the new entity" and should that position open up within the first 3 1/2 years of the merger, General Electric Co. has the right to veto up to two choices for Zucker's replacement. After that, the new entity's board of directors will have the right to make a choice. 

This is the second major regulatory filing Comcast has made regarding the deal this week. Earlier this week, it filed sealed documents to the Justice Department arguing that the merger was not anti-competitive. Next month, Comcast and NBC Universal executives will be questioned by various House and Senate committees about the deal. 

-- Joe Flint

Photo: Comcast Corp. CEO Brian Roberts, left, and Chief Operating Officer Steve Burke. Credit: Comcast