Comcast-NBC Deal Would Face ‘Gauntlet’
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| Tue, 12-01-2009 - 4:01pm |
Dec. 1 (Bloomberg) -- Comcast Corp.’s planned takeover of NBC Universal will draw scrutiny from Obama administration regulators who have said consolidation of U.S. media companies may thwart competition.
The deal became more likely after General Electric Co., NBC’s parent company, agreed yesterday to buy Vivendi SA’s 20 percent stake in NBC for $5.8 billion, according to two people with knowledge of the discussions. The agreement paves the way for creation of an entertainment joint venture controlled by Comcast, the biggest U.S. cable company.
The Comcast-NBC combination would be reviewed by the Federal Communications Commission and either the Federal Trade Commission or the Justice Department’s antitrust division.
“Comcast is going to face a yearlong gauntlet of regulatory and political hearings,†Craig Moffett, an analyst with Sanford C. Bernstein & Co. in New York, said in an interview.
During a Senate hearing in June, Julius Genachowski, since confirmed as FCC chairman, said “excessive consolidation is something I think that still needs to be paid attention to.â€
“This deal will really be scrutinized very strongly,†Benjamin Stretch, an analyst at Macquarie Capital USA Inc. in New York, said on Bloomberg Television today. “It is the first major test of the FCC and the Obama administration, in terms of how they want to manage media and technology and distribution policy in this country.â€
‘30 Rock,’ Olympics
GE agreed to pay as much as $2 billion to Vivendi if the GE-Comcast transaction isn’t completed by the end of 2010, one of the people familiar with the matter said. Vivendi sought assurances of a payment in case the deal doesn’t pass regulatory scrutiny, said Tuna Amobi, a New York-based analyst at Standard & Poor’s.
The venture would give Philadelphia-based Comcast control of entertainment and sports programs, with shows such as “30 Rock,†and broadcast rights to the Olympics. The joint venture would also own Universal Studios, which has produced films including the “Fast & Furious†and the “Jason Bourne†franchises.
Regulators probably will examine whether Comcast might use NBC’s programming to undermine rival pay-TV services such as those of Dish Network Corp. and Verizon Communications Inc.
Officials may consider whether the joint venture “could withhold programming or content from its competitors,†said Andre Barlow, an antitrust lawyer with Doyle, Barlow & Mazard Pllc based in Washington.
Web Video
The deal’s potential impact on fledgling services that offer video over the Internet also may draw attention. NBC, News Corp.’s Fox network and Walt Disney Co.’s ABC network are partners in Hulu.com, a Web site that carries television programs and movies.
Officials are likely to question “virtually any transaction†that Comcast engages in, said the company’s executive vice president, David Cohen, in a Nov. 16 interview. It is “totally appropriate†for Comcast to own as well as distribute programming, Cohen said.
There is no FCC rule against a cable company owning a broadcaster, said Andrew Jay Schwartzman, president of the Washington-based Media Access Project, a nonprofit media law firm. That wouldn’t prevent the agency from weighing whether such an arrangement serves the public interest, Schwartzman said in an interview.
NBC Stations
The FCC must approve transfers of TV licenses such as those held by NBC Universal’s 10 NBC stations in cities including New York, Chicago, Los Angeles and Philadelphia, and 16 stations owned by its Spanish-language Telemundo network. NBC has more than 200 affiliates, and Telemundo has 45, according to the company’s Web site.
Vivendi rose 81 cents, or 4.2 percent, today to 20 euros in Paris trading. GE climbed 8 cents to $16.10 at 11:40 a.m. in New York Stock Exchange composite trading. Comcast rose 17 cents, or 1.2 percent, to $14.83 on the Nasdaq Stock Market.
Charlie Ergen, chief executive officer of Englewood, Colorado-based Dish Network, said on a Nov. 9 conference call that he’d “have concerns with anybody who owns programming and delivery distribution.â€
“Maybe I’ll just get an apartment in Washington†while agencies review the deal, Ergen said. He said Dish Network is “not treated fairly when it comes to the sports teams in Philadelphia,†where Comcast withholds rights to professional basketball, hockey and baseball games from satellite competitors.
Comcast can refuse to offer the telecasts under a legal provision intended to encourage companies to develop regional programming, Cohen said.
News Corp. Requirement
The FCC required News Corp. to make its programming available to rivals under non-discriminatory terms in 2003 before it would approve the company’s purchase of DirecTV Group Inc., the nation’s largest satellite-television provider.
That decision will serve as a precedent for Comcast and NBC Universal, Moffett said in an Oct. 23 note to investors.
Regulators may impose conditions that could “threaten the structural attractiveness of the core businesses of both Comcast and NBCU,†Moffett said.
A national campaign to block a Comcast-NBC deal was announced Nov. 13 by the groups Free Press and Consumer Federation of America and the Communications Workers of America, a union that represents employees at Comcast and NBC.
Challenges will be based on “the merger’s threat to diversity of voices†and its effects on other media networks, Marvin Ammori, a senior adviser to Free Press, a Washington- based non-profit group.
CBS, Disney
“Comcast as a distributor of content might treat NBC’s rivals like CBS and Disney worse than it otherwise would,†Ammori said.
NBC might also deal with Comcast’s competitors such as Verizon, Cablevision Systems Corp., and satellite and online TV outlets “in an anti-competitive way,†Ammori said. Verizon and AT&T Inc. provide television service in rivalry with Comcast.
Members of Congress will also examine the deal and its implications for other media.
“You can expect us on the antitrust subcommittee to look at it and look at it closely,†Seth Bloom, general counsel to the Senate Judiciary Committee’s antitrust panel said at an American Bar Association antitrust forum Nov. 12 in Washington.



"they pretty much have the market sewed up around here."
Same here. The internet service is great! The TV menu system have a long way to go. We have the digital option & that only allows two programs to be recorded at once & only one if your watching a channel not being recorded.