Critics Warn as DoJ, FCC Clear Comcast-NBC Merger

Open Internet provisions, other conditions apply, but critics warn the $30 billion mega-merger will create unhealthy media consolidation.

After more than a year spent selling a blockbuster media merger to financial analysts, a skeptical public interest sector and government regulators, Comcast has won approval from the federal government to complete its $30 billion takeover of NBC Universal.

On Tuesday, the Department of Justice and Federal Communications Commission, which had been working closely together on their separate reviews of the transaction, each announced approval of the deal, accompanied by several conditions intended to preserve fair access to NBC's content, both online and off.

The conditions include voluntary commitments the companies had made to secure approval of the merger, such as a pledge to preserve local and public-interest programming on the NBC affiliates that Comcast will acquire.

Additionally, Comcast, both the nation's largest residential Internet service provider and cable distributor, has agreed to provide discounted broadband service to low-income residents, and the FCC and DoJ both included a condition barring discrimination of rivals' online video content on Comcast's broadband network, in keeping with the FCC's recently adopted net neutrality rules.

"As we proceed to close this transaction, we look forward to ushering in new benefits for consumers and hastening the arrival of the digital multiplatform, anytime, anywhere media and communications future that Americans want," Comcast Executive Vice President David Cohen, the firm's top lobbyist, wrote in a blog post after the approvals. "We have stated -- and we believe the years ahead will prove -- that this combination is pro-competitive, pro-consumer and strongly in the public interest."

But the approval of one of the largest media and technology mergers in history didn't sit well with the Washington advocacy groups that have been staging a public campaign to derail the transaction.

Free Press CEO Josh Silver blasted the FCC for failing "to live up to its own public interest mandate, as well as Barack Obama's promise to promote media diversity and prevent excessive media concentration." The Media Access Project raised similar concerns that the conditions don't go far enough to preserve competition and safeguard against price gouging, praising FCC Commissioner Michael Copps for casting the one dissenting vote in the agency's approval.

The merger establishes NBC Universal as a joint venture in which Comcast will hold a 51 percent stake, and former NBC parent General Electric will hold a 49 percent share.

Public interest groups that generally oppose media consolidation had warned against the massive alignment of NBC's content with Comcast's cable and Internet distribution empire. The conditions imposed by the DoJ and FCC are meant to guard against Comcast unfairly raising the program carriage rates for rival providers, and to preserve fair licensing terms for online video content.

Through the online video conditions, Comcast agreed to relinquish the management position NBC holds in the Web video hub Hulu.

"The settlement we are announcing today ensures that the transaction will not chill the nascent competition posed by online competitors -- competitors that have the potential to reshape the marketplace by offering innovative online services," Assistant Attorney General Christine Varney said in announcing the DoJ's approval, which was joined by five state attorneys general.

The orders of approval establish several reporting requirements for Comcast to supply information about various market practices to both the FCC and DoJ for periods ranging from three years to seven years. While the agencies paid particular attention to shaping the competitive landscape in the emerging online video space, the tangle of licensing obligations in play could lead to industry squabbles going forward, according to Stifel Nicolaus analyst Rebecca Arbogast, who noted the significant reporting requirements included in the DoJ's antitrust approval.

"The access regime is complicated, and we believe there could be lots of wrangling and disputes going forward, but the basic framework is that the government requires Comcast to track evolving industry practices," Arbogast wrote in a research note.

With regulatory approval in hand, Comcast expects to close the transaction by the end of the month.

Kenneth Corbin is an associate editor at, the news service of, the network for technology professionals.

Tags: FCC, Comcast, NBC, DOJ, mergers and acquisitions

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