The Federal Communications Commission has approved plans for Comcast and General Electric to create a joint venture involving Comcast and NBC Universal, subject to certain provisions. Among other conditions, the combined business will be committed to some measures for seven years, designed to ensure competition in the video market. However, there are concerns that it will lead to a powerful consolidation of media and distribution interests and prompt further major mergers. One of the commissioners opposed the approval and issued a dissenting statement, calling it “a damaging and potentially dangerous deal”.
Comcast and NBCU will be required to offer video programming to legitimate online video distributors on the same terms and conditions that it would be available to a rival multichannel video programming distributor. They will be required to make comparable programming available on economically comparable prices, terms and conditions to an online video distributor that has entered into an arrangement to distribute programming from one or more of their peers.
They must not enter into agreements to restrict online distribution of video programming or discriminate in the distribution of video programming on the basis of affiliation. They must not disadvantage rival online video distribution through their cable networks or set-top boxes, and must offer standalone broadband internet access at reasonable prices and of sufficient bandwidth so that customers can access online video services without needing to subscribe to Comcast cable television services.
In addition, the joint venture must not exercise corporate control over or unreasonably withhold programming from Hulu.
Julius Genachowski, the chairman of the Federal Communications Commission, said in a statement: “After a thorough review, we have adopted strong and fair merger conditions to ensure this transaction serves the public interest. The conditions include carefully considered steps to ensure that competition drives innovation in the emerging online video marketplace.”
Michael Copps, the only commissioner to vote against the approval, issued a lone highly critical dissenting statement, saying that the transaction was like no other that had ever come before the commission and it confers too much power in one company’s hands. He said there were many potential harms and he searched in vain for the benefits. “In sum, this is simply too much, too big, too powerful, too lacking in benefits for American consumers and citizens.” He said: “It puts new media on a road traditional media should never have taken. It further erodes diversity, localism and competition — the three essential pillars of the public interest standard mandated by law.” He said he considered it to be “a damaging and potentially dangerous deal.”
Immediately following the FCC announcement, the Department of Justice effectively approved the deal, subject to further conditions, which is now expected to complete by the end of January. It will create a joint venture, managed and 51% owned by Comcast, consisting of its cable networks and channels, with the remainder held by General Electric, which will contribute its cable networks, studio interests and theme parks.
As part of an antitrust settlement, the Department of Justice proposes that Comcast give up its seats on the board of Hulu, the online video service in which NBC has a 32% stake, alongside ABC and Fox.
Comcast and NBC Universal have said they will agree to give up voting rights and board representation on Hulu and to continue to provide content in a manner consistent with the other broadcast network owners. That affords some protection to Hulu, while other online video service providers will effectively have access to NBC Universal programming it carries on similar terms.
Comcast welcomed the approval. “The NBC Universal joint venture will be well positioned to compete, innovate, and bring new choices to consumers,” said Brian Roberts, the chairman and chief executive. “Our original vision for the combination remains intact so that consumers will benefit, and our competitors will be treated fairly.”
“Bringing the legendary assets of NBC Universal together with the content assets and technology expertise of Comcast will create many new opportunities for consumers,” said Steve Burke, who will become chief executive officer of NBC Universal. “The combination of these assets will allow us to bring the future of anytime, anywhere media faster to consumers in America and around the globe.”
The merger of Comcast and NBC Universal will create a powerful vertically integrated media and communications company. However, one is reminded of the marriage of AOL Time Warner a decade previously, which ultimately proved to be a disastrous destroyer of value. We will have to wait and see whether putting this cable company in control of a broadcast network will indeed accelerate the future of media distribution