Comcast-NBC Deal Would Face 'Gauntlet' of Regulatory Reviews
Dec. 1 (Bloomberg) -- Comcast Corp.’s planned takeover ofNBC Universal will draw scrutiny from Obama administrationregulators who have said consolidation of U.S. media companiesmay thwart competition.
The deal became more likely after General Electric Co.,NBC’s parent company, agreed yesterday to buy Vivendi SA’s 20percent stake in NBC for $5.8 billion, according to two peoplewith knowledge of the discussions. The agreement paves the wayfor creation of an entertainment joint venture controlled byComcast, the biggest U.S. cable company.
The Comcast-NBC combination would be reviewed by theFederal Communications Commission and either the Federal TradeCommission or the Justice Department’s antitrust division.
“Comcast is going to face a yearlong gauntlet ofregulatory and political hearings,” Craig Moffett, an analystwith Sanford C. Bernstein & Co. in New York, said in aninterview.
During a Senate hearing in June, Julius Genachowski, sinceconfirmed as FCC chairman, said “excessive consolidation issomething I think that still needs to be paid attention to.”
“This deal will really be scrutinized very strongly,”Benjamin Stretch, an analyst at Macquarie Capital USA Inc. inNew York, said on Bloomberg Television today. “It is the firstmajor test of the FCC and the Obama administration, in terms ofhow they want to manage media and technology and distributionpolicy in this country.”
‘30 Rock,’ Olympics
GE agreed to pay as much as $2 billion to Vivendi if theGE-Comcast transaction isn’t completed by the end of 2010, oneof the people familiar with the matter said. Vivendi soughtassurances of a payment in case the deal doesn’t pass regulatoryscrutiny, said Tuna Amobi, a New York-based analyst at Standard& Poor’s.
The venture would give Philadelphia-based Comcast controlof entertainment and sports programs, with shows such as “30Rock,” and broadcast rights to the Olympics. The joint venturewould also own Universal Studios, which has produced filmsincluding the “Fast & Furious” and the “Jason Bourne”franchises.
Regulators probably will examine whether Comcast might useNBC’s programming to undermine rival pay-TV services such asthose of Dish Network Corp. and Verizon Communications Inc.
Officials may consider whether the joint venture “couldwithhold programming or content from its competitors,” saidAndre Barlow, an antitrust lawyer with Doyle, Barlow & MazardPllc based in Washington.
Web Video
The deal’s potential impact on fledgling services thatoffer video over the Internet also may draw attention. NBC, NewsCorp.’s Fox network and Walt Disney Co.’s ABC network arepartners in Hulu.com, a Web site that carries televisionprograms and movies.
Officials are likely to question “virtually anytransaction” that Comcast engages in, said the company’sexecutive vice president, David Cohen, in a Nov. 16 interview.It is “totally appropriate” for Comcast to own as well asdistribute programming, Cohen said.
There is no FCC rule against a cable company owning abroadcaster, said Andrew Jay Schwartzman, president of theWashington-based Media Access Project, a nonprofit media lawfirm. That wouldn’t prevent the agency from weighing whethersuch an arrangement serves the public interest, Schwartzman saidin an interview.
NBC Stations
The FCC must approve transfers of TV licenses such as thoseheld by NBC Universal’s 10 NBC stations in cities including NewYork, Chicago, Los Angeles and Philadelphia, and 16 stationsowned by its Spanish-language Telemundo network. NBC has morethan 200 affiliates, and Telemundo has 45, according to thecompany’s Web site.
Vivendi rose 81 cents, or 4.2 percent, today to 20 euros inParis trading. GE climbed 8 cents to $16.10 at 11:40 a.m. in NewYork Stock Exchange composite trading. Comcast rose 17 cents, or1.2 percent, to $14.83 on the Nasdaq Stock Market.
Charlie Ergen, chief executive officer of Englewood,Colorado-based Dish Network, said on a Nov. 9 conference callthat he’d “have concerns with anybody who owns programming anddelivery distribution.”
“Maybe I’ll just get an apartment in Washington” whileagencies review the deal, Ergen said. He said Dish Network is“not treated fairly when it comes to the sports teams inPhiladelphia,” where Comcast withholds rights to professionalbasketball, hockey and baseball games from satellitecompetitors.
Comcast can refuse to offer the telecasts under a legalprovision intended to encourage companies to develop regionalprogramming, Cohen said.
News Corp. Requirement
The FCC required News Corp. to make its programmingavailable to rivals under non-discriminatory terms in 2003before it would approve the company’s purchase of DirecTV GroupInc., the nation’s largest satellite-television provider.
That decision will serve as a precedent for Comcast and NBCUniversal, Moffett said in an Oct. 23 note to investors.
Regulators may impose conditions that could “threaten thestructural attractiveness of the core businesses of both Comcastand NBCU,” Moffett said.
A national campaign to block a Comcast-NBC deal wasannounced Nov. 13 by the groups Free Press and ConsumerFederation of America and the Communications Workers of America,a union that represents employees at Comcast and NBC.
Challenges will be based on “the merger’s threat todiversity of voices” and its effects on other media networks,Marvin Ammori, a senior adviser to Free Press, a Washington-based non-profit group.
CBS, Disney
“Comcast as a distributor of content might treat NBC’srivals like CBS and Disney worse than it otherwise would,”Ammori said.
NBC might also deal with Comcast’s competitors such asVerizon, Cablevision Systems Corp., and satellite and online TVoutlets “in an anti-competitive way,” Ammori said. Verizon andAT&T Inc. provide television service in rivalry with Comcast.
Members of Congress will also examine the deal and itsimplications for other media.
“You can expect us on the antitrust subcommittee to lookat it and look at it closely,” Seth Bloom, general counsel tothe Senate Judiciary Committee’s antitrust panel said at anAmerican Bar Association antitrust forum Nov. 12 in Washington.
To contact the reporters on this story:Todd Shields in Washington at tshields3@bloomberg.net;Christopher Stern in Washington at cstern3@bloomberg.net.
Last Updated: December 1, 2009 11:43 ESTSource: Bloomberg
« Back to Business News
Related News
-
Who Can Take Charge at Bank of America? Dec 1, 2009 @ 09:53 AM
That question is reverberating through Wall Street and Washington after the abrupt resignation of Kenneth D. Lewis, the bank’s beleaguered chief executive. On Thursday, a day into this remarkable boardroom drama, bank insiders and a rapt audience in the financial community were grasping for a clear answer.
-
nbc's Zucker Has 'Excuses, Few Results' for Comcast Dec 1, 2009 @ 09:53 AM
Dec. 4 (Bloomberg) -- Jeffrey Zucker, NBC Universal’s chiefexecutive officer, may have as few as nine months to provehimself to his new bosses at Comcast Corp. while the biggestU.S. cable operator seeks regulatory approvals.
-
Comcast Gets NBC From GE, Reshaping the TV Industry Dec 1, 2009 @ 09:53 AM
After nearly nine months of negotiations, Comcast, the nation’s largest cable operator, finally reached an agreement on Thursday to acquire NBC Universal from the General Electric Company.
-
Vivendi, GE Agree on NBC Price, Paving Way for Deal Dec 1, 2009 @ 09:53 AM
Dec. 1 (Bloomberg) -- General Electric Co. and Vivendi SAagreed on a $5.8 billion valuation for the Frenchtelecommunications company’s 20 percent stake in NBC Universal,according to two people with knowledge of the discussions.
-
Vivendi, GE Agree on Price for NBC Stake, Clearing Path to Deal Dec 1, 2009 @ 09:53 AM
Dec. 1 (Bloomberg) -- General Electric Co. and Vivendi SAagreed on a $5.8 billion valuation for the Frenchtelecommunications company’s 20 percent stake in NBC Universal,according to two people with knowledge of the discussions.
