Venture with NBC U expected to get greenlight

Comcast’s joint venture with NBC Universal is expected to get the greenlight from federal regulators this week, possibly as early as today.

A source familiar with the negotiations between Comcast and the FCC said that the agency is looking to approve the deal, with conditions. The expectation is that the vote will be 4-1, with commissioner Michael Copps dissenting, although that vote has not yet taken place.

The Justice Dept., which also must clear the transaction, is expected to approve the deal around the same time. Officials from the department’s Antitrust Division have been coordinating their efforts with FCC officials and have participated in joint meetings with Comcast officials.

On Dec. 23, FCC chairman Julius Genachowski started circulating a draft order approving the $30 billion joint venture, with conditions designed to maintain competition in a variety of areas, including the ability of rivals to obtain access to NBC U programming and Comcast’s regional sports channels.

Since then, there has been a flurry of last-minute lobbying from critics and supporters. Online video is a key focus, and one condition would require that Comcast make NBC U programming available to other online distributors, like Google TV, Apple or Netflix. Such a requirement would distinguish between types of programming and would set a threshold as to when it would kick in. A rival distributor would have to have a deal in place with another studio like Disney, Warner Bros. or Fox.

Lobbyists for News Corp. and Disney, as well as Time Warner chairman Jeff Bewkes, have had conversations with FCC officials in the past week to raise concerns about the impact of such a condition on their own efforts in the market.

Three News Corp. execs last week had phone conversations with FCC staffers to express worries that such a condition would “distort the marketplace,” according to an FCC filing signed by News Corp.’s Maureen O’Connell, senior VP for regulatory and government affairs.

“In particular, if NBC U were compelled to enter into an online distribution arrangement solely based on the terms and conditions reach by one other content provider, it could open the door to a single unfavorable business deal ‘establishing the market,’” O’Connell wrote in the FCC filing. “This could, in turn, have a trickle down effect by impacting other negotiations involving independent providers of content.”

She added that other content providers could feel compelled to accept similar deals because of “undue market pressure.”

Comcast has indicated that it was supportive of the conditions proposed by Genachowski.

Other conditions are expected to be placed on how Comcast negotiates with rivals for the rights to carry NBC U broadcast and cable channels and how it provides access to its own cable platforms for channels in which it has no ownership stake.

Viacom execs also have been meeting with FCC officials, arguing that Comcast and NBC U would have increased bargaining power at the expense of independent channels. They are pressing the FCC to impose a condition that would require Comcast to carry all established independently owned channels on the same terms as other cable providers, and another whereby carriage disputes are settled through “baseball style arbitration.” It would be up to an arbitrator to decide on each side’s final, best offer.

David Turetsky, co-chair of the antitrust practice group at Dewey & LeBoeuf, said that the details of the conditions will reflect in what direction federal regulators are heading when it comes to major media mergers.

But approval doesn’t necessarily signal a new wave of consolidation given the volatility of the marketplace.

“These markets are always changing,” he said. “I think (their review) will be very informative, but who knows when the next deal will be?”

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