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Analyst: Comcast-NBC merger review could extend through 2010

Rebecca Arbogast, managing director of research at Stifel Nicholaus, says the regulatory review of a merger between Comcast and NBC Universal could stretch out to the fourth quarter of next year.

Much of the scrutiny is expected to revolve around programming carriage agreements as Comcast obtains valuable entertainment content from NBC's Universal studios -- broadcast programs such as the Jay Leno Show and Heroes, and network channels like USA, Bravo and MSNBC.

There will also be a number of tougher questions, such as how the proposed combination would impact the burgeoning market of online video.

"Comcast-NBCU would be on more sides of programming and carriage negotiations, potentially giving the partners added leverage to obtain favorable terms with other multichannel and content companies and to extend the cable model to the Internet," Arbogast said.

She said by acquiring NBC's 30 percent stake in, Comcast runs into concerns that it could prioritize its own video content over that of competitors. By doing so, it would "ensnare the deal in the broader network neutrality debate," she said.

Comcast has said its online content deals are non-exclusive, meaning the video programmers that contract to run their shows through Comcast's Fan Cast site, are not prohibited from striking similar deals with competitors.

As reported, the Federal Communications Commission and antitrust watchdogs at the Federal Trade Commission are likely to eventually approve the deal. But Arbogast said if competitors decide to follow the proposal with deals of their own, there is a risk that the FCC would block the marriage to prevent further media consolidation and threats to local journalism, tenants that the agency seems inclined to protect.

"Merger proponents would presumably argue that government should get out of the way of an inexorable industry trend, but at some point, we believe a wary Democratic administration could gag on growing media consolidation and move to block the first deal in order to set a firm precedent," Arbogast wrote in a research note.

According to The Walll Street Journal and other reports, the deal is being held up by negotiations for Vivendi to relinquish its stake in NBC Universal. That deal would have to be done before Comcast makes its bid for NBC.

Finally, Liberty Media Chairman John Malone weighed in on the prospective deal Monday on CNBC. He said one key to negotiations and the regulatory review is what to do with local broadcast affiliates (NBC owns 27 local broadcast stations). He said those stations aren't making money on their own but could be helped by the cable subscription model that would essentially subsidize their businesses.

He said it will be interesting to see what the affiliates ask for:

"What will the broadcast affiliates of NBC say they want to not fight this transaction," he said.

By Cecilia Kang  |  November 23, 2009; 2:40 PM ET
Categories:  Antitrust , Comcast , Online Video  
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