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The Federal Communications Commission is a step closer to approving the $37 billion joint venture between Comcast and General Electric’s NBC Universal.
FCC Chairman Julius Genachowski gave his blessing today to the new joint venture, which was announced a year ago. He circulated an order among the four other FCC commissioners stating that he believes the venture, which will be controlled by cable giant Comcast, will be in the public interest, paving the way for the full FCC to approve the marriage between the two companies.
That full FCC approval isn’t expected until January. The deal must also be approved by the Department of Justice, which is still examining the deal.
Genachowski noted that he only approves of the deal if Comcast and General Electric, which owns NBC Universal, can agree on certain conditions. These conditions are meant to protect consumers from Comcast asserting too much control over content and distribution services. Once the deal is completed, Comcast will own 51 percent of the new joint venture.
There is particular concern that Comcast, loaded with NBC Universal content, will have too much power in determining how the Internet develops as a video medium. Consumer groups and other critics fear that Comcast will stifle this emerging medium. They are also fearful that Comcast will use its strong content position, with cable channels, such as MSNBC, USA, and Bravo, to harm its existing paid TV competitors.
Earlier this week, the FCC pushed through controversial rules meant to prevent the owners of high-speed lines and airwaves, such as Comcast, from favoring their services and content over competitors’ content and services.
The FCC chairman’s office has not released details of the proposed conditions it hopes to put on the deal, but during a call with journalists today, representatives gave a sense of areas that the agency is examining.
First, the agency is looking at ways to ensure that Comcast will not be able to favor its own video content over content of its rivals. For example, the conditions would likely make it difficult for Comcast to withhold content from its paid TV competitors. And it will not be able to slow or block traffic from online video providers such as Netflix.
The FCC is also examining the role that Comcast should play in Hulu, the online video service that is partly owned by NBC Universal. Walt Disney Co. and News Corp. are also co-owners of Hulu. Comcast has its own online video site and some opponents of the merger are worried that Comcast may cripple the service in some way, because it is seen as a competitor to its existing cable service or its online video services.
Eventual approval of the merger could require Comcast to share its NBC programming with online video providers, who have reached similar deals with Hulu partners and competitors Walt Disney and News Corp.
The agency is also considering measures that would put conditions on where Comcast can place the NBC channels on its cable TV lineup. In addition, it is likely to require Comcast to keep similar channels, such as sports or news channels, close to its rivals’ similar channels.
Any conditions that the FCC puts on Comcast could eventually expire or be reviewed on a regular basis to see if the government still thinks they are necessary.
Genachowski’s recommendation must be approved by the other four FCC commissioners, who could change aspects of the conditions. The two Republicans on the FCC are likely to want fewer conditions, while the two Democrats are likely to ask for more conditions, or at the very least stricter conditions.
Regulators have spent roughly nine months reviewing the deal antitrust issues and to ascertain whether the deal is in the public interest. Comcast executives had expected regulators to conclude their review and approve the deal by the end of the year. But yesterday, Comcast issued a statement saying it doesn’t expect to close the transaction until January at the earliest.
Comcast said in the statement that it would continue to “work with the commissioners so that the FCC order will not undermine our business combinations and will ensure that consumers will benefit and that competitors are treated fairly.”
