Thursday, January 7, 2010

Justice Dept. To Scrutinize Comcast-NBC Deal

The potential merger between Comcast and NBC Universal will be under the regulatory microscope of the Justice Department.

The U.S. Department of Justice confirmed Wednesday that it would be the agency to spearhead a review of the $30 billion deal that would give Comcast majority ownership of NBC, Universal Studios, and a host of cable TV franchises. The antitrust portion of the review could have gone to the Department of Justice or FTC. At least one watchdog hailed the DOJ decision.

According to Reuters, DOJ’s main area of concern is likely to be assuring that NBCU programming will remain available to Comcast’s MVPD competitors. Others are concerned that Comcast will wield too much internet programming power.

Free Press executive director Josh Silver said, "A Comcast/NBC merger would create a media behemoth with too much power in too few hands. It is a good sign that the Justice Department was given the green light for the review. The DOJ’s antitrust division now has a chance to make a clean break from the inactivity of recent years and tackle this merger with the urgency it deserves."

Silver lauded the presence of Christine Varney at DOJ as head of the antitrust division. A former FTC employee, she is on record as being wary of vertical integration.Silver quoted her words from a 1995 speech, when she said, "Vertical acquisitions can be anticompetitive. Vertical mergers can create or raise entry barriers that lead to higher prices or lower quality or innovation for consumers.... Vertical mergers can, in certain instances, increase those barriers to entry even more, raising costs and reducing innovation and quality for consumers."

Both the Justice Department and the Federal Trade Commission typically look into mergers that involve potential antitrust issues, but DOJ is taking the lead on this one. Ultimately, the Federal Communications Commission will also need to examine the deal.

First revealed last October, the merger would create a joint venture 51 percent owned by Comcast and 49 percent by NBC parent company General Electric. Comcast would pay GE about $6.5 billion in cash upfront. A special option would allow GE to eventually sell off pieces of its stake in the new venture to Comcast over a period of seven years.

Comcast is already the nation's largest cable provider with 23.8 million cable TV customers. The company also owns a few select cable channels, including E! Entertainment and two sports channels--the Golf Channel and Versus. If the NBCU deal is consummated, Comcast will also claim ownership of not just NBC and Universal Studios, but also an array of popular cable networks, including CNBC, MSNBC, Bravo, USA, SyFy, and Oxygen. NBCU also has a minority share in Hulu, while Comcast has Fancast, its own video streaming site.

Since the merger would turn Comcast into both a provider and distributor of news and entertainment, the DOJ has reason for concern. One hot button issue has been Comcast's treatment of cable channels outside its ownership.

On Wednesday, the Tennis Channel filled a complaint with the FCC accusing Comcast of giving preferential treatment to Comcast-owned sports networks. Comcast's Golf and Versus channels are free as part of a basic cable subscription, while the Tennis Channel is only available through a premium sports package that costs $5 to $8 extra per month, thereby hitting a smaller number of subscribers.

The National Football League also fought a lengthy battle with Comcast over the same issue. The two sides finally came to peace last May after Comcast agreed to move the NFL Network from its premium sports package to a less pricey digital package that would reach more customers.
GE said had it no comment on the DOJ's investigation, while Comcast failed to respond to a request from CNET.

Originally posted at Digital Media

Comcast, NBC Heads Expected At Senate Deal Hearing

WASHINGTON (Reuters) - The heads of Comcast Corp and NBC Universal have been asked to appear at a Senate committee hearing later this month to discuss a deal pending between the two companies, a spokeswoman said on Monday.

Comcast Chairman Brian Roberts and NBC Universal President Jeff Zucker are expected to appear at the hearing held by the Senate's antitrust subcommittee, which will probably take place in late January, said Dawn Schueller, a spokeswoman for Sen. Herb Kohl.
"It will consider implications of the merger for consumers and the cost that they'll pay for cable," said Schueller.

Other witnesses will likely include a representative of a consumer group and a spokesman for a rival company, she said. Neither has been identified.

Antitrust experts have said that Comcast Corp's NBC Universal deal faces a long and intense regulatory review that will likely end in approval only after the cable giant agrees to give rivals access to NBCU's television shows and movies.

Reporting by Diane Bartz; Editing by Richard Chang

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