FCC approves Comcast-NBC U merger

Commission's 4-1 vote paves way for deal's approval by Justice Dept

The federal government gave the greenlight to Comcast’s combination with NBC Universal on Tuesday, clearing the way for an unprecedented combination of cable, Internet, studio and broadcast assets.

The FCC and the Department of Justice each gave clearance to the transaction, following year-long reviews that centered on the mammoth transaction’s impact on a host of areas including the future of online video. As such, Comcast has agreed to a number of conditions that federal regulators said would prevent anticompetitive harms, though those conditions are raising eyebrows among execs at other showbiz congloms.

The FCC is charged with ensuring that the transaction was in the public interest, and commissioners approved the deal in a 4-1 vote. Democratic commissioner Michael Copps cast the dissenting vote.

“This is a proud and exciting day for Comcast,” said the company’s chairman and CEO, Brian Roberts. He added that the joint venture “will be well positioned to compete, innovate and bring new choices to consumers. Our original vision for the combination remains intact so that consumers will benefit, and our competitors will be treated fairly.”

FCC chairman Julius Genachowski said that “after a thorough review, we have adopted strong and fair merger conditions to ensure the transaction serves the public interest.”

He said that the approval “is 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.”

Christine Varney, the assistant attorney general in charge of the DOJ’s Antitrust Division, said that the result “fully protects competition, allowing businesses to bring new and innovative products to the marketplace, providing consumers with more programming choices.”

It had never been in serious doubt that the transaction would get the greenlight, so the bigger question was what kind of conditions federal regulators would place on the deal.

The conditions, most of which will remain in effect for seven years, include a requirement that Comcast submit to arbitration to resolve disputes over prices and terms for rights to carry the combined cable and broadcast channels, as well as regional sports networks.

Another condition is designed to guarantee that “bona fide” online video distributors have the ability to obtain Comcast and NBC U content “in appropriate circumstances.” Comcast would be required to make its “comparable” content available at “economically comparable prices” to rival online sites if they are able to reach a deal with one or more of Comcast-NBC U’s peers, like a rival studio or network.

It also requires that the combined company offer “standalone broadband Internet access services at reasonable prices and of sufficient bandwidth” so that consumers can get access to online video services without the need to get a cable TV subscription from Comcast. The FCC is requiring that the company “not exercise corporate control over or unreasonably withhold programming from Hulu.” NBC U is a joint owner of the online vid site along with News Corp. and Disney. The Department of Justice is requiring that Comcast relinquish management rights in Hulu, and is requiring that it make NBC U content available to Hulu that is comparable to the programming the online site obtains from Disney and News Corp.

The FCC is further requiring that Comcast “not discriminate in video programming distribution on the basis of affiliation or non affiliation with Comcast-NBC U.” Smaller cable channels, like the Tennis Channel and Bloomberg, as well as Viacom, had been critical of the transaction over concerns that it would give Comcast too much leverage to favor its own channels. If Comcast “neighborhoods” news channels around each other, the FCC is requiring that it also put unaffiliated news channels in the same area. The agency also is adopting as a condition Comcast’s voluntary commitment to add 10 new independently owned channels within the next eight years on its digital tier.

Comcast also has agreed to abide by the FCC’s recently established net neutrality rules, which could be the source of lawsuits, and “is required to give other firms’ content equal treatment under any of its broadband offerings that involve caps, tiers, metering for consumption or other usage-based pricing,” according to the Justice Department.

Copps said that he voted against the transaction because it “confers too much power in one company’s hands.”

He said that it “grievously fails the public interest” and said that it “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 at the heart of independent content production is now very real,” Copps said.