Comcast-NBC deal cleared by FCC, Justice Department

LOS ANGELES — 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, allowing the creation of 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, however. Its approval was contingent upon Comcast 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 will last 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 must 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 followed 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 Justice Department 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 will own 51 percent of the joint venture, while seller General Electric will retain a 49 percent 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 green light 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 believes 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.

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