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Regulators eye Internet, program conditions to Comcast-NBC merger, sources say

By Cecilia Kang

Federal regulators have told Comcast and NBC Universal that they have significant concerns that a proposed merger will harm competition in the cable and satellite market and the nascent but fast-growing Internet TV industry, according to sources familiar with the reviews.

As such, the Justice Department’s antitrust division and Federal Communications Commission are expected to approve the merger on the condition the companies agree to allow competitors -- such as Time Warner Cable, Dish Network and even newcomers such as Netflix and Apple TV -- are offered access to Comcast-NBC Universal’s massive library of network shows and movies, according to one source familiar with the reviews.

Comcast said it expects the reviews to be complete by the end of the year. But the sticking point may be what sorts of restrictions the FCC may put on Comcast's ability to withhold NBC shows and movies from Internet delivery platforms. In a meeting on Nov. 8, Comcast and NBC senior officials told FCC Chief of Staff Eddie Lazarus and Senior Legal Advisor Rick Kaplan that it would continue to put NBC television content on and that "there is no factual or economic evidence in the record to support such conditions."

A spokeswoman for the FCC declined to comment.

The Wall Street Journal reported Sunday evening that the agencies have quickened their reviews.

One source with knowledge of the reviews said much of the timing depends on Comcast and its willingness to volunteer conditions. The source said CEO Brian Roberts has indicated his desire to quickly close the deal but the agencies haven’t done anything lately to show a change in pace. Another source said the FCC’s merger review team has been meeting with Chairman Julius Genachowski twice a week since August, but wouldn’t comment on the timing of its decision.

The company has said it doesn’t believe it should be singled out with net neutrality rules or program access rules for Internet TV platforms, unless the FCC mandates similar regulation for the industry.

Stifel Nicolaus analyst Rebecca Arbogast said recently she believed the FCC’s review could stretch into 2011 because of the complexity of the deal and judging from several additional questions the agency sought in understanding the merger’s impact on fees negotiations and advertising. The agency also sought additional information on how the merger could affect new Internet video platforms and how new industry strategies such as TV Everywhere – a method of releasing shows over the Internet only to those with cable subscriptions –- could potentially harm competitors.

Related reading:

Internet television battles comes to head at FCC

The battle for your viewing habits

By Cecilia Kang  | November 14, 2010; 11:59 PM ET
Categories:  Comcast  
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There is a crisis because of this merger that makes no sense according to me. The Internet is under pressure and COMCAST will have to wait for a Happy End of the MYSPACE problem, a subject that I am promoting as the leader of the community 24/7. I had some manipulation issues with an employee of E! Entertainment in January and I think it is connected with my company, TIMEFRAMES, LLC. We need to manage this Cable Chaos with a coordination between all the people of the Social Media! NBC UNIVERSAL is still my main concern, COMCAST and MGM: this could be a more social merger!
Frederic Vidal, CEO

Posted by: vidal4senate | November 15, 2010 4:29 AM | Report abuse

Rupert Murdoch will soon be running NBC. How? Comcast's existence depends on Murdoch's NewsCorp which supplies 70% of Comcast's content. Once Comcast owns NBC, Rupbert, as usual, will be calling the shots. Look for Keith Olbermann to be permanently 'suspended'.

Posted by: ctenwith | November 15, 2010 2:29 PM | Report abuse

This merger is not good for the company, or consumers. Comcast's fees are already way too high. My bill used to average around $150 per month after all the taxes. Not worth it, especially with the internet tv feeds available now. You can watch regular tv with just a web connect and . Pocket the nearly $2,000/year savings.

Posted by: meganbrod | November 15, 2010 5:38 PM | Report abuse

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