The Federal Communications Commission has granted its approval to the controversial merger between U.S. cable and Internet operator Comcast and the NBC Universal (PDF). Under the deal, Comcast will be allowed to take a 51 percent controlling stake in NBC Universal, but the FCC is imposing terms to ensure Comcast doesn’t use its position as both a creator and distributor of content to stifle competition, particularly in the online video market. Specifically, Comcast will be permitted to keep its ownership stake in the online video service Hulu, but will not be permitted to assert managerial authority: basically, Comcast will be able to earn money off Hulu’s success, but will not be able to assert authority in Hulu’s day-to-day operations. The FCC is also requiring that Comcast not discriminate against video programming from competitors, and offer broadband Internet access to 2.5 million low-income households for under $10 per month.
“The conditions include carefully considered steps to ensure that competition drives innovation in the emerging online video marketplace,” wrote FCC chairman Julius Genachowski, in a brief statement (PDF). “Our approval is also structured to spur broadband adoption among underserved communities; to increase broadband access to schools and libraries; and to increase news coverage, children’s television, and Spanish-language programming.”
The FCC approved the transaction by a four-to-one vote. Although the FCC’s approval is necessary for the merger to go forward, the deal must still be approved by the U.S. Department of Justice.
Under the deal, Comcast will pay General Electric some $13.8 billion in cash to acquire a 51 percent controlling stake in NBC Universal; the deal includes all of NBC Universal’s assets, including the NBC broadcast network, numerous cable operations (like USA and Telemundo, MSNBC, and CNBC) along with Universal Studios. The deal puts Comcast in a position not unlike Time Warner, where it will be both a creator of content (Universal movies and NBC television programming) as well as a distributor of television and digital video. As a result, Comcast—as the largest ISP in the United States—will potentially be in a position to create a walled garden wherein NBC content and that of preferred partners is easier to access than that of its competitors.
Being both a content developer and distributor didn’t work out so well for Time Warner; the company spun off its cable operations in 2009 and become a “pure” media content company.
NBC and Comcast have many numerous concessions to the FCC to get the deal approved. However, Commissioner Michael J. Copps voices the sole dissent to the deal “There are many potential harms attending this transaction,” Copps wrote in a statement (PDF). “The majority’s efforts—diligent though they were—to ameliorate these harms cannot mask the truth that this Comcast-NBCU joint venture grievously fails the public interest.” In addition to noting consumers shouldn’t expect their cable or Internet bills to go down—quite the contrary—Copps noted the deal may have far-reaching implications for the future of investigative journalism and public broadcasting, and notes that many loopholes still exist whereby Comcast/NBC can apply pressure to competitors and distributors for programming and network access.