Early Christmas for Comcast: FCC Chair Approves NBC Universal Merger

Jonathan Berr
Updated
Comcast won some key backing for its NBC Universal takeover with the approval of the Federal Communications Commussion chairman. But will the deal kick net neutrality out the window?
Comcast won some key backing for its NBC Universal takeover with the approval of the Federal Communications Commussion chairman. But will the deal kick net neutrality out the window?

It may be going too far to say that Comcast (NASDAQ:CMCSA) got a Christmas miracle, but FCC Chairman Julius Genachowski's approval of its takeover of NBC Universal comes awfully close.

As The Wall Street Journal notes, Genachowski agreed to back the $13.75 billion deal, which will give Philadelphia-based Comcast a 51% stake in NBC Universal. This approval comes tied to the following conditions:

  • Comcast needs to provide NBC and its other Comcast-owned video content to pay-TV competitors at "reasonable, nondiscriminatory terms";

  • It must operate its Internet network under the principals of "net neutrality," meaning that it can't favor its websites over others;

  • Comcast must offer NBC programming to other online video providers;

  • Similar channels, in areas such as sports and business news, would be kept together;

These terms are chock full of vague promises that render them almost meaningless. The definition of "reasonable, nondiscriminatory terms" will vary largely depending on which lawyer is talking. And critics say the net-neutrality rules that FCC narrowly passed Tuesday don't go far enough.

In essence, Comcast will be able to do what it would have done anyway. Activists say they're disappointed by Genachowski's action, which still requires the approval of the majority of the FCC to take effect.

Huge Ramifications

The ramifications of this deal are huge. If the FCC approves it, a combined Comcast and NBC Universal will control one in five television viewing hours, with a stake in 125 cable channels, film studios, websites and other properties such as theme parks and regional sports networks. Among its holdings will be CNBC, the top cable news channel, Bravo and the NBC television network.

Sponsored Links

"Comcast's takeover of NBC would have a harmful impact on competition and consumers, particularly in the emerging online video market," Corie Wright, a policy attorney at media advocacy Free Press, said in a press release. "The conditions reportedly proposed by the FCC chairman recognize this danger, but we have serious concerns that they will go far enough to protect the public from this unprecedented media behemoth."

The competitive implications extend beyond just TV, too. Take NetFlix (NFLX), for example. The video-rental company is morphing into a video-streaming company that competes against Hulu, and NBC is an investor in Hulu. Apple (AAPL), which sells and rents videos over iTunes, is in the same situation of competing against an NBC-backed -- and now Comcast-backed -- site.

Should these rival video companies worry that Comcast may use its market position to stymie their access to content? A NetFlix spokesman declined to comment and Apple representatives didn't respond by press time.

Will Comcast Behave?

For its part, Comcast argues that the deal will benefit the public and that it has worked hard with government leaders to address all the concerns. "We will continue to work with the Commissioners so that the FCC Order will not undermine our business combination and will ensure that consumers will benefit and that competitors are treated fairly," Senior Vice President David L. Cohen writes on the company's blog.

But extracting promises of good behavior from Comcast is not enough. The cable giant must agree to make specific and verifiable commitments not to abuse its market position. Otherwise, these guarantees are worthless.

So far, about the only thing that hasn't gone Comcast's way in this deal has been the timing. The company had hoped the deal would close in the fourth quarter. If it gets FCC approval, the new media colossus will be created next month.

Advertisement