Comcast OK near, with conditions

Measures expected to test merger clearance

Comcast’s proposed combination with NBC Universal looks more than likely to obtain clearance from federal regulators, but as word of the approval conditions leaked out over the holiday weekend, the question now is just how restrictive the measures will be.

On Thursday, FCC chairman Julius Genachowski started circulating a draft order that gives the $30 billion joint venture the greenlight with a series of substantial conditions, including some having to do with the ability of rivals — such as other cable firms, satellite and phone companies — to obtain access to NBC U programming and Comcast’s regional sports channels at reasonable rates.

Genachowski’s proposed order must obtain votes from two other commissioners for the transaction to clear, and the Justice Dept. also must approve the deal, and the FCC and the Dept. of Justice are expected to issue a coordinated order approving it. Comcast and NBC U had hoped that the transaction would close by the end of the year; the new target appears to be mid- to late January.

For Comcast one big benefit of joining with NBC U has been the plethora of programming opportunities for its on-demand channels. But central to critics’ concerns throughout the government review process has been that Comcast, the country’s largest cable distributor and Internet service provider, would be a de facto gatekeeper in the emerging online video market, withholding NBC U shows from competitors or Universal movies from the likes of Netflix and Apple.

One condition would require that Comcast make NBC U programming available to other online distributors, although it is more nuanced than the program access requirements that require cable operators to make channels they own available to competitors, according to an industry source with knowledge of the conditions.

The requirements distinguish between type of programming, such as whether it is a broadcast, cable or feature film. And Comcast’s requirement to offer NBC U programming to an online video provider also would kick in onlywhen that provider has a similar agreement for content in place with another studio like Disney, Warner Bros. or Fox, the source said.

Because details of the FCC conditions have yet to be made public, it is unclear exactly how that rule would affect Hulu, the online video site that is a joint venture of NBC Universal, Walt Disney Co., News Corp. and Providence Equity and depends on some exclusivity in its offerings. Although the condition would apply to some forms of NBC U content on Hulu, it wouldn’t apply to the shows offered by its other owners.

Another condition has to do with how Comcast negotiates with cable rivals for the rights to carry NBC U broadcast and cable channels. Such “retransmission consent” negotiations have become increasingly acrimonious, as evidenced by a two-week battle in October between News Corp. and Cablevision that led to a blackout of Fox stations in the New York market.

The FCC condition would mandate that Comcast go through arbitration to settle its own disputes and, under some circumstances, that it be barred from withholding NBC U content during negotiations.

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