The Comcast-GE deal includes NBC local stations -- triggering regulatory scrutiny

Comcast will take control of NBC Universal's 10 owned-and-operated stations, triggering a federal investigation, according to a source with knowledge of the deal. On Tuesday, the source says, GE (GE), the bellwether American icon that produces everything from jet engines to lightbulbs, agreed to sell control of news and entertainment giant NBC Universal to Comcast (CMCSA), the largest cable-TV provider in the U.S.

"This is for all of NBC, not part of it," the source tells DailyFinance. NBC Local Media comprises 10 NBC owned-and-operated TV stations reaching 27% of U.S. households, according to the company. The source cautions that delays could arise due to the deal's complexity, but the companies are aiming to announce the agreement Thursday morning.

Although a 2002 court decision threw out formal rules preventing a company from owning a cable system and a broadcast station in the same market, the Federal Communications Commission will review any deal of this magnitude that transfers broadcast licenses in so many major markets. The deal has sparked much speculation about whether it would include the owned-and-operated stations, given the regulatory scrutiny that would draw.

"The FCC has to affirmatively approve the transfer of the licenses," Glenn Manishin, a former antitrust counsel and trial attorney at the Justice Department's Antitrust Division, tells DailyFinance. "There will be pressure on Comcast to divest some and perhaps all of the stations."

Multifaceted Agreement

The merger unites two huge companies with powerful brands: NBC Universal is home to the news organization that bears its name, as well as the TV network familiar to millions of Americans for its Peacock logo. Comcast in an American corporate giant: It provides cable and broadband service to one-quarter of American households in 39 states.

NBC-owned and -operated stations include NBC New York (WNBC), NBC Los Angeles (KNBC), NBC Chicago (WMAQ), NBC Philadelphia (WCAU), NBC Bay Area (KNTV), NBC Dallas/Fort Worth (KXAS) and NBC Washington (WRC).

The complex pact took weeks to hammer out, in part because it was predicated on Vivendi selling its 20% NBC Universal to GE, a deal that was finalized only in recent days. Comcast CEO Brian Roberts is now poised to realize what many consider to be the ultimate prize in media: a vertically integrated content and distribution network.

The deal calls for the cable giant to contribute several billion in cash and its cable channels to the new company, which it would direct. GE would retain a 49% stake in the new company, but it would no longer control NBC Universal.

Critics Are Howling Already

Sources familiar with the talks have told DailyFinance that the companies expect the Federal Communications Commission and either the Federal Trade Commission or Justice Department to explore the deal -- a process that could take six months to a year.

Critics of media consolidation immediately denounced the agreement. "Washington and Wall Street want the public to think this is a done deal," says Josh Silver, executive director of Free Press. "But it's time for policymakers to stop putting the narrow interests of big corporations ahead of what's best for the American people."

Silver adds: "Free Press will be rallying people across the country who are tired of megamergers being rubber-stamped. We will make sure that this time their voices can't be ignored." No doubt both Comcast and its critics will make their voices heard in the months to come.

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