Network News

X My Profile
View More Activity

Potential Comcast bid for NBC raises regulatory questions

Analysts are betting that a bid by Comcast to take over NBC Universal would probably be approved by regulators in Washington but with lots of conditions. A merger would also raise a host of regulatory questions as the cable giant broadens its business into Internet services and more entertainment migrates to the Web.

In a story by The New York Times Monday, Comcast and General Electric appeared closer to reaching a deal where the cable operator would take over 51 percent of NBC Universal for billions of dollars in cash.

G.E., which currently owns 80 percent of the entertainment company, would retain the other 49 percent and would contribute about $12 billion in debt to the new entity, though it is expected eventually to sell its ownership interest over several years, the NY Times said.

Several analysts have warned that previous attempts by cable network operators to take over content businesses have ended poorly. Time Warner's merger with AOL is often called one of the worst mergers in history and the companies are currently in the process of unwinding their marriage. In 2004, Comcast tried but failed to take over Disney. The move invited lots of criticism by investors and analysts.

Even so, Brian Roberts, CEO of family-run Comcast, has been clear that he wants to diversify the company's core cable revenue streams. Right now, his company owns very little content. But if it takes over NBC Universal, regulators will be sure to attach conditions to a merger that would assure cable competitors that Comcast couldn't withhold NBC shows from other networks like Cox and Time Warner, analysts said.

Those "must-carry" conditions were attached to the 2003 merger of Direct TV and News Corp, which ensured programs like Fox were available to competing satellite providers. The Federal Communications Commission viewed the condition as a public service that also ensured competition.

"The News Corp., Direct TV deal will serve as a template for how the FCC and DOJ would look at how to deal with competition in the cable industry," said Paul Gallant, a senior vice president of research at Concept Capital.

Bigger questions arise when taking into consideration the projected explosion of online video. Comcast is also a broadband Internet service provider and regulators could question whether a merger would result in the company giving NBC content to its own subscribers before others.

"In a single stroke, the deal would give a cable distributor 51 percent ownership of one of the five video 'majors' in the United States, and about 30 percent control of Web TV purveyor Hulu," Bernstein Research said in a note... "Comcast would be calling the shots for one out of every five viewing hours in the United States."

Gallant said, for instance, Comcast could leverage its NBC programming to make it only available to Comcast broadband subscribers; farfetched? Comcast, Time Warner and some content providers are currently crafting a TV Everywhere initiative that would make some shows and movies available online to subscribers of its Internet and cable service.

The concern is that if you were an AT&T DSL subscriber or Verizon Fios user, you might not get access to some shows tied up in the TV Everywhere initiative. Take a look at a couple interviews of startups in the online video industry -- Vuze and Boxee -- that warn the project could kill competition.

Gallant said the FCC -- which is pushing for open-Internet rules and greater competition among Internet carriers -- would likely be pressured to prevent a scenario where Web users would have to choose what carriers they want based on the content they supply

"The FCC probably would not want to see the broadband world [become] fragmented," Gallant said.

By Cecilia Kang  |  November 3, 2009; 8:00 AM ET
Categories:  Net Neutrality , Online Video  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Google, Keep Safe Coalition Launch Tour on Capitol Hill About Child Internet Safety
Next: FCC Moves on Spectrum Draw New Attention to Washington

Comments

Being pro-Google means being anti-Comcast, so of course Google booster Cecilia Kang can only paint Comcast's proposed acquisition in the worst possible light.

Posted by: squirma | November 3, 2009 7:02 PM | Report abuse

Brian,

See Comcast / Versus and Directv and you'll realize that this could become a serious and much larger issue in the future.

Why don't you add something to the conversation instead of spreading your negativity? And of course, you are certainly wrong, this has absolutely nothing to Google. You are making yourself look like a lunatic.

Posted by: ryangee | November 4, 2009 10:23 AM | Report abuse

COMCAST'S VERTICAL INTEGRATION GREED IS NOT GOOD AND THIS DEAL SHOULD NOT BE ALLOWED TO HAPPEN.

This proposed deal would violate antitrust laws, reinforcing the anti-competitive nature of an already powerful opligopoly that controls media content. Comcast has no interest in preserving access to free, television broadcast over the PUBLIC airwaves. Indeed, today's cable-bandband executives appear to be hell-bent to destroy universal access to network TV. One has to wonder whether Comcast's ultimate goal is to kill off free, over-the-air network television, leaving the public with no choice but to subscribe to pay TV. This proposed deal is not in the public interest and should be killed or withdrawn by the parties involved.

Posted by: scrivener50 | November 4, 2009 2:42 PM | Report abuse

The comments to this entry are closed.

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company