Key lawmaker outlines list of conditions to Comcast-NBC merger
Updated at 9:45 p.m. with comment from Comcast
Sen. Herb Kohl (D-Wis.) urged federal regulators to impose conditions on Comcast’s proposed merger with NBC Universal, saying the mega media merger could injure consumers and competitors. If approved, he said the combined companies should be forced to share content with competing distributors of Internet video content and that the company should sell its stake in Hulu.
In a letter to Christine Varney, assistant attorney general and head of the antitrust division of the Justice Deparment, and Julius Genachowski, chairman of the Federal Communications Commission, Kohl urged that if the agencies approved the merger should be on several conditions. The agencies are both in the middle of their separate reviews of the proposed merger, which could conclude by the end of the year.
Kohl, chairman of the Senate Judiciary Committee, said the biggest antitrust concerns about the merger revolve around the merged company’s ability and incentive to withhold its large library of shows, movies and channels from competitors or to hike rates for that content. He said independent programmers, meanwhile, could get shut out from Comcast’s subscriber base if they compete with NBC’s content. And the merged company could leverage its media library and heft as the largest broadband and cable provider in the nation to squelch new competitors trying to distribute and create content for Internet video.
“I believe this proposed acquisition presents important competition and communications policy concerns which should be carefully scrutinized by the antitrust division and the FCC,” Kohl wrote in his letters. “And should your agencies decide to approve this transaction, you should adopt conditions necessary to avoid the risk of injury to competition and consumers."
Sena Fitzmaurice, a spokeswoman for Comcast, said: "We expect a thorough and expeditious regulatory review and that any conditions will not unduly burden either Comcast or NBCU's businesses."
Those conditions include:
1) The new company makes all Comcast and NBC Universal shows and channels available to all competitors (Time Warner Cable, Verizon’s FiOs, DirectTV) on a reasonable and nondiscriminatory basis. That condition would apply even if the FCC changes its program access rules.
2) Comcast and NBC would put up a “firewall” to prevent information sharing between Comcast and NBC regarding pricing or other contract terms offered by Comcast’s competitors to purchase programming.
3) Comcast couldn’t block out other programmers who want their content on Comcast. In other words, Comcast can’t favor its programming over that of a competitor such as CBS. That condition would stay in place even if the FCC changed its program carriage rules.
4) Comcast couldn’t prevent or coerce programmers from keeping their content off Web sites or Internet distributors as a condition for carriage on Comcast. That condition would allow for a reasonable “window” or programming, such as a first-run video, to be exclusive to Comcast, but only for a reasonable period.
5) Comcast would also have to make its NBC and Comcast programs and channels available via the Web to competitors on reasonable and nondiscriminatory terms in the same way cable/satellite program-access rules apply.
6) Comcast divests NBC’s 32 percent stake in Hulu within a year of the acquisition.
7) Comcast and NBC keep a firewall between advertising in markets where NBC owns and operates a broadcast station.
8) Net neutrality: Comcast couldn’t discriminate or degrade the quality on its broadband network, any Internet distribution of programming that competes with Comcast or its TV everywhere program.
"Particular care should be taken by your agencies to ensure that existing … competition is not seriously injured, nor promising new forms of competition on the Internet stifled," Kohl wrote.
May 26, 2010; 11:54 AM ET
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