December 23, 2010
US comms head seeks conditions on Comcast, NBC deal
WASHINGTON (AP) — The head of the Federal Communications Commission proposed regulatory conditions Thursday to ensure that cable giant Comcast Corp. cannot stifle video competition once it takes control of NBC Universal (News - Alert).
The conditions are intended to guarantee that satellite companies, phone companies and other traditional subscription television services can still get access to marquee NBC programming once the transaction closes. FCC (News - Alert) Chairman Julius Genachowski also wants to ensure that new Internet video distributors can get the programming they need to grow and compete.
FCC officials, however, wouldn't disclose the specific conditions Thursday as fellow commissioners consider whether to back Genachowski's proposal. The chairman needs the support of at least two of them to get the plan passed. He is likely to modify parts of his proposal to win the backing he needs.
Comcast (News - Alert) is seeking government approval to buy a 51 percent stake in NBC Universal from General Electric Co. for $13.8 billion in cash and assets. The deal would create a media powerhouse that both produces and distributes content.
The deal is also still awaiting approval by the Justice Department, which will attach its own conditions. Those are likely to be similar to the final conditions imposed by the FCC.
Approval with conditions is expected early next year.
The combination would give the nation's largest cable TV company control over the NBC and Telemundo broadcast networks; 26 local TV stations; popular cable channels including CNBC, Bravo and Oxygen; the Universal Pictures movie studio and theme parks; and a stake in Hulu (News - Alert).com, which distributes NBC and other broadcast programming online.
Although the FCC didn't disclose details of Genachowski's proposal, one measure that has been under consideration would try to guarantee that satellite operators, phone companies and rival cable companies can still get access to NBC broadcast and cable channels, Comcast's regional sports networks and other marquee programming at reasonable prices.
That condition would mandate arbitration to settle any disputes and would potentially prohibit Comcast from withholding content during negotiations.
Another condition that has been under consideration would require Comcast to abide by the FCC's existing "program access" rules in dealing with online video distributors. Those rules require cable companies to make programming they own available to rivals such as satellite companies, but right now they do not apply to Internet distributors.
By extending these obligations to Web distributors under certain circumstances, such a condition could prevent Comcast from stifling the growth of the nascent Internet video market, which could eat into Comcast's core cable operations if enough consumers drop their cable subscriptions in favor of low–cost online alternatives. Such a condition would be a setback for Comcast, which had argued that the online video market is still too young for such mandates.
Comcast already owns a handful of cable channels, including E! Entertainment, Versus and the Golf Channel. It also has a controlling interest in the Philadelphia 76ers and Flyers, and its SportsNet Philadelphia channel carries Flyers, Phillies and Sixers games.
But for the most part, Comcast has built its business on distributing video programming and providing Internet connections. The company has about 23 million video subscribers and nearly 17 million broadband subscribers. Taking over NBC Universal would transform it into a media giant too — giving Comcast control over major box office releases and a wide range of popular television programming.
Comcast is contributing assets worth $7.25 billion to NBC Universal and paying General Electric Co. $6.5 billion in cash for the majority stake.