Update: FCC, Justice approve Comcast and NBC joint venture

By Cecilia Kang

Federal regulators on Tuesday approved Comcast's acquisition of NBC Universal, allowing for a joint venture that puts a vast library of television shows and movies under the control of the nation's biggest cable and broadband Internet service provider.

The Justice Department also announced its approval of the deal with conditions aimed at keeping Comcast-NBCU from quashing competition from other networks and Internet providers.

Together, the companies have 16.7 million broadband subscribers, about 23 million cable customer and dozens of lucrative channels such as USA, Bravo, MSNBC and CNBC.

In a 4-to-1 vote, the Federal Communications Commission determined the deal was in the nation's public interest and assigned a number of conditions to the venture to ensure that Comcast shares content with cable competitors and gives other networks fair access to its customers.

Many of the conditions focus on the burgeoning online video industry, ensuring that Comcast doesn't stifle competition there with its control over access to content and so many shows.

FCC Chairman Julius Genachowski approved of the joint venture late December, saying that ultimately the union would benefit consumers as Comcast promised to contribute more local news and informational programming on some channels, more programming aimed at children and minorities, and $9.95 broadband Internet service for low-income households.

In a release, he noted that several conditions with a duration of seven years aimed to ensure competition in the cable and Internet space. Online video conditions are unprecedented and are the agency's first foray into shaping that industry as more consumers jump onto the Web for their video entertainment and news.

"After a thorough review, we have adopted strong and fair merger conditions to ensure this transaction serves the public interest," Genachowski said.

Specifically, the FCC required Comcast to offer Internet versions of its content -- such as "Saturday Night Live" and "Top Chef" -- to "bona fide" online distributors of video at the same terms and conditions it gives to cable and satellite providers. Those distributors would have to be services that doen't engage in piracy and meet certain financial qualification, according to a official at the FCC. Those businesses could include Apple TV and YouTube. To prevent Comcast from unfairly targeting competitors, Comcast would also have to offer Internet videos to online distributors who partner with NBC's peers.

The FCC did not require the venture to divest its stake in Hulu, a condition proposed by lawmakers such as Sen. Herb Kohl (D-Wis.). Hulu is jointly owned by NBC, News Corp. and the Walt Disney Co. The FCC and Justice said Comcast has to give up its management rights over Hulu, but can maintain its equity in the firm. A FCC official said during a press call that it wanted Comcast to be able to maintain its equity in Hulu so, "they have some skin in the game to have Hulu be successful.”

"The conditions imposed will maintain an open and fair marketplace while at the same time allow the innovative aspects of the transaction to go forward.” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.



The FCC also required Comcast to offer broadband Internet access as a stand-alone service at "reasonable prices" and with "sufficient bandwidth" so customers can choose to watch video online without having to also subscribe to cable television.

Democratic Commissioner Michael J. Copps, the sole dissenting vote, said the concentration of media under Comcast's control would put too much power into one company that controls the access consumers have to entertainment and news. He said in the end that the venture would have too many potential conflicts.

The deal "reaches into virtually every corner of our media and digital landscapes and will affect every citizen in the land," Copps said in a statement. "All 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."