Comcast-NBC Deal Wins Federal Approval
By BRIAN STELTER and TIM ARANGO
6:00 p.m. | Updated The proposed combination of Comcast and NBC Universal was approved by the Federal Communications Commission and the Justice Department on Tuesday, smoothing the way for the deal to close by the end of January.
As expected, the approvals came with significant conditions attached. The combination of Comcast’s cable systems and NBC Universal’s channels will create a media powerhouse, and it will represent the first time that a cable company will control a major broadcast network.
“This is a proud and exciting day for Comcast,” Brian L. Roberts, the Comcast chief executive, said in a statement that thanked the government agencies for their hard work.
The approval has been expected for at least the last few weeks. It has been the subject of intense lobbying both by Comcast and by opponents of the deal, who fear that Comcast will restrict access to NBC programming. Comcast says the deal will help achieve its vision of anytime, anywhere access to content.
As is normal in media mergers, the F.C.C. imposed a long list of conditions on the deal. They were outlined in an F.C.C. news release on Tuesday. The conditions are intended to ensure that Comcast plays fair when dealing with rival programmers, cable providers and broadband Internet providers. Many of the conditions are intended to remain in place for seven years, an unusually long period of time.
The F.C.C. vote was 4 to 1, with the senior Democratic commissioner, Michael J. Copps, casting the dissenting vote. Mr. Copps, who had expressed doubt in the past about whether the combination would benefit consumers, said in a statement Tuesday that it “confers too much power in one company’s hands.”
Mr. Copps also said, “The Comcast-NBCU joint venture opens the door to the cable-ization of the open Internet. The potential for walled gardens, toll booths, content prioritization, access fees to reach end users, and a stake in the heart of independent content production is now very real.”
Seeming to temper that concern, Julius Genachowski, the F.C.C. chair, said in his own statement that the conditions imposed by the F.C.C. “include carefully considered steps to ensure that competition drives innovation in the emerging online video marketplace.” He continued, “Our approval is also structured to spur broadband adoption among underserved communities; to increase broadband access to schools and libraries; and to increase news coverage, children’s television, and Spanish-language programming.”
In coordination with the F.C.C., the Justice Department’s antitrust division said it would not block the deal, but like the F.C.C. it put a number of conditions in place.
Notably, Comcast is being required to give up NBC Universal’s management stake in Hulu, the premier online TV Web site. “Without such a remedy, Comcast could, through its seats on Hulu’s board of directors, interfere with the management of Hulu, and, in particular, the development of products that compete with Comcast’s video service,” the Justice Department stated in a news release. NBC and the owners of ABC and Fox all have minority stakes in Hulu. Comcast said it would retain an economic stake in Hulu, and would continue to provide TV shows and movies to Hulu the same way that Hulu’s other minority owners do.
In the complicated transaction, Comcast is buying a majority stake in NBC Universal from General Electric. Over time, Comcast will have the option to buy a larger share of NBC.As expected, the approvals came with significant conditions attached. The combination of Comcast’s cable systems and NBC Universal’s channels will create a media powerhouse, and it will represent the first time that a cable company will control a major broadcast network.
“This is a proud and exciting day for Comcast,” Brian L. Roberts, the Comcast chief executive, said in a statement that thanked the government agencies for their hard work.
The approval has been expected for at least the last few weeks. It has been the subject of intense lobbying both by Comcast and by opponents of the deal, who fear that Comcast will restrict access to NBC programming. Comcast says the deal will help achieve its vision of anytime, anywhere access to content.
As is normal in media mergers, the F.C.C. imposed a long list of conditions on the deal. They were outlined in an F.C.C. news release on Tuesday. The conditions are intended to ensure that Comcast plays fair when dealing with rival programmers, cable providers and broadband Internet providers. Many of the conditions are intended to remain in place for seven years, an unusually long period of time.
The F.C.C. vote was 4 to 1, with the senior Democratic commissioner, Michael J. Copps, casting the dissenting vote. Mr. Copps, who had expressed doubt in the past about whether the combination would benefit consumers, said in a statement Tuesday that it “confers too much power in one company’s hands.”
Mr. Copps also said, “The Comcast-NBCU joint venture opens the door to the cable-ization of the open Internet. The potential for walled gardens, toll booths, content prioritization, access fees to reach end users, and a stake in the heart of independent content production is now very real.”
Seeming to temper that concern, Julius Genachowski, the F.C.C. chair, said in his own statement that the conditions imposed by the F.C.C. “include carefully considered steps to ensure that competition drives innovation in the emerging online video marketplace.” He continued, “Our approval is also structured to spur broadband adoption among underserved communities; to increase broadband access to schools and libraries; and to increase news coverage, children’s television, and Spanish-language programming.”
In coordination with the F.C.C., the Justice Department’s antitrust division said it would not block the deal, but like the F.C.C. it put a number of conditions in place.
Notably, Comcast is being required to give up NBC Universal’s management stake in Hulu, the premier online TV Web site. “Without such a remedy, Comcast could, through its seats on Hulu’s board of directors, interfere with the management of Hulu, and, in particular, the development of products that compete with Comcast’s video service,” the Justice Department stated in a news release. NBC and the owners of ABC and Fox all have minority stakes in Hulu. Comcast said it would retain an economic stake in Hulu, and would continue to provide TV shows and movies to Hulu the same way that Hulu’s other minority owners do.
In the nearly two years since Comcast began negotiating to buy NBC — the deal was hatched in the spring of 2009 — the media marketplace has shifted considerably as online video viewing has grown in popularity, even as television advertising has rebounded from its recessionary lows.
One result of the consumer tilt toward online video has been the rise of Netflix, which has pivoted from its beginnings as a DVD-by-mail business to a streaming video company. The success of Netflix in changing consumer behavior has raised fears that the heart of Comcast’s business — selling cable subscriptions — could be in jeopardy. To that end, the deal to acquire NBC Universal will give Comcast a significant role in the future of online television viewing.
The F.C.C. acknowledged Tuesday that the deal could create risks “to the development of innovative online video distribution services.” So, in certain cases, Comcast may be required to distribute certain programming on the Internet — if one of its rivals does so first.
Susan Crawford, a professor who is writing a book, “The Big Squeeze,” about the Comcast deal, said that the government was giving online video upstarts several ways to challenge Comcast to gain access to its programming.
“As at many junctures in the history of telecommunications policy, government intervention has made it possible for new media distributors to exist,” she said. “This is the latest intervention to provide daylight — just to open up enough daylight to give this nascent online marketplace a chance to take off.”
Among the other conditions is an arbitration process in the event of disputes between Comcast and other cable providers over access to any of NBC Universal’s cable channels.
“We will be good to our word — and we will be respectful stewards of the strong and iconic assets of NBC Universal, particularly NBC News,” said David L. Cohen, an executive vice president at Comcast, in a letter about the regulatory approvals.
The Consumer Federation of America, which initially opposed the merger, said Tuesday that it thought the government conditions and enforcement measures would protect consumers and provide “additional momentum for the development of the Internet as a platform for video competition.”
Other public interest groups were much more critical. Free Press said the approval failed to live up to “Barack Obama’s promise to promote media diversity and prevent excessive media concentration.”
With the government approvals in hand, Comcast executives can now participate in management decisions at NBC Universal — which they have been champing at the bit to do — though they can not formally lead the company until the deal closes, according to an executive involved in the process.
The deal’s closing will happen after the end of the company’s next pay cycle, which is Jan. 28.
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