Any Comcast-NBCU Deal Seen Likely Getting U.S. OK
A multibillion dollar purchase of all or part of NBC Universal by Comcast probably would be approved after significant antitrust and FCC scrutiny, communications lawyers and analysts said Thursday. They were commenting on media reports that Comcast is exploring an acquisition along those lines. A lengthy FCC application by the companies would be required and public comment would be sought by the commission, said lawyers who represent TV stations. The absence of a rule prohibiting cross-ownership of cable systems and stations augurs eventual FCC approval, and the federal government probably wouldn’t challenge the deal on antitrust grounds, said attorneys and analysts.
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A significant condition that the FCC might attach to the deal would be for Comcast to follow program access-style rules, to prevent it from withholding carriage of TV stations owned by NBC Universal from other broadcasters, several lawyers said. “That would be an issue,” said a veteran broadcast lawyer not involved in the potential deal. Since cable operators are already prevented from discriminating in the programming they carry by favoring channels they own over others, “there’s a hook, but it may be that the rules in place are all you would allegedly need.” Comcast and other cable operators already face program access rules on cable channels they own. They prevent the owner of a channel from withholding it from other pay-TV companies if the programming is distributed by satellite.
Any Comcast-NBCU deal probably wouldn’t face a significant broadcast-regulation hurdle, said two lawyers representing TV stations. The FCC and perhaps other broadcasters and pay-TV providers could fear that Comcast would use its position as the owner of a TV network to extract from pay-TV companies better deals for carriage of its cable channels, one said. If General Electric, which owns 80 percent of NBCU, and Vivendi, which owns the rest, reach a deal with Comcast, the cable operator would need to file a long-form application at the FCC, the lawyers said. Depending on the structure of the transaction, the application would be for transfer of control or assignment of licenses, they said. The FCC would likely release a public notice seeking comment on the application and could open a docket, they said.
Analysts said a potential deal faces many hurdles with investors, who bid Comcast’s stock price down 7.1 percent Thursday, and at the FCC. “Any acquisition would almost certainly come with many strings attached,” wrote Craig Moffett of Bernstein Research. “Such conditions would likely include binding arbitration and no-blackout provisions in the event of programming disputes with third-party distributors. Cross-ownership of NBC broadcasting stations in Comcast’s regional markets, such as Philadelphia, Chicago, and San Francisco, would also pose significant regulatory challenges.” Paul Gallant of Washington Research Group predicted “tougher program sharing requirements” if the companies reach agreement.
Other pay-TV providers might ask the FCC for tougher enforcement of program access rules for a combined Comcast and NBCU, he said. Gallant and communications lawyers said the programming conditions imposed by the FCC on News Corp.’s purchase of DirecTV could be a model. “Nonetheless, this would be a very high-profile merger and could encounter resistance on a handful of grounds, including media consolidation and program sharing rules,” Gallant wrote. NBCU and Comcast didn’t reply to requests for comment.
NBCU doesn’t comment on rumors, Chairman Jeff Zucker told employees in a memo Thursday that we obtained. “Not surprisingly, given the attractive nature of our assets, there is always significant interest in NBC Universal,” he wrote. “That has been amplified lately with the annual discussion with Vivendi about its 20 percent ownership of our company. … Should they choose to exit, there are a number of possible things that could happen.” Zucker said Vivendi hasn’t told NBCU of any final decisions.
A cable operator-broadcast network combination would raise concerns about competing distributors’ continued access to TV shows, Associate Director Matthew Wood of the Media Access Project said. “This is a whole new ball game, where a cable company not only owns cable programming but a broadcast network.” Others couldn’t recall any deal in which a cable operator agreed to buy a TV station, let alone a network. “Something like this would highlight the importance of the program access rules and the continuing need for some sort of oversight of discriminatory practices” of vertically integrated programming and distribution, Wood said.
A large deal like one between NBCU and Comcast would set the tone for the coming discussions over the FCC’s media ownership rules and would be the first test of the new commission’s consolidation policies, Wood of the Media Access Project said. “With the three Democrats there, you'd expect maybe more a rigorous review” than under a Republican administration, he said. “But Kevin Martin was often willing to go his own way, especially when it came to cable issues, so I don’t know things will change that much in the end.”