Comcast-NBCU merger review expected to go into 2011: analyst
The federal reviews of Comcast’s proposed merger with NBC Universal will likely extend into early 2011, according to Stifel Nicholaus analyst Rebecca Arbogast.
One increasingly thorny part of the merger is Comcast's tangle of relationships with broadcasters and competitors. Those ties get even more complicated as Comcast seeks to acquire a vastly larger library of channels and content from NBC, analysts say.
In a research note to investors on Friday, Arbogast noted the Federal Communications Commission recently made additional requests to Comcast and NBCU for extensive information and documents on programming deals. That information is due Oct. 18. The FCC reviews the merger for its implications for the public. Comcast has said it expects the merger to be approved by the end of the year.
Among dozens of questions, the FCC asked for information related to Comcast's agreement to distribute its regional sports network programs and other channels like E! and Sprout to competitors Time Warner Cable, DirecTV, Dish and others.
"We believe the detailed information requests are consistent with the broad and
deep probing that both the FCC and DOJ have been doing in their reviews, and are a further sign of the complexity of the policy issues raised by a major industry transaction combining video distribution, content, and broadband/Internet assets," Arbogast wrote in an earlier note on Oct. 4. "We also do not believe such second requests for information in big, complicated deals are uncommon, but we do believe this one increases the likelihood the government’s review will not be completed until early next year."
The inquiry comes amid a heated battle between broadcasters and paid television providers over the past year on retransmission fees. The most recent battle between Cablevision and Fox could come to head Friday at midnight if those companies can't come to an agreement on fees. Fox is demanding $150 million, more than double its annual fees, according to Cablevision.
FCC Chairman Julius Genachowski said Thursday he would not interfere with negotiations, even with the threat of Fox pulling its signal from New York and Philadelphia Cablevision subscribers. update: A source familiar with talks said the FCC has asked Fox and Cablevision to continue negotiations into next week, even with its midnight contract deadline. The agency wants the parties to avoid a television blackout, the source said.
"I don't think the FCC wants to step in, but if there are a couple of signal blackouts that are relatively close in time, (the FCC chairman) could feel compelled to step in and try to do something to protect consumers," said Concept Capital analyst Paul Gallant.
The Justice Department, which is conducting a separate antitrust review of the deal, will likely coordinate its merger analysis to be released at the same time as the FCC’s, Arbogast said. Comcast and NBCU may trade concessions on merger conditions for a speedier review, she said. So completion of the merger by December could still happen.
| October 15, 2010; 1:05 PM ET
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