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Comcast says NBC merger demands are more than met

by Ira Teinowitz | Published February 28, 2012 at 4:16 PM

Comcast Corp. told the Federal Communications Commission on Tuesday, Feb. 28, it not only met the conditions regulators imposed as part of its 2011, $30 billion deal for control of NBC Universal Inc. but had gone beyond regulators' demands.

In its first annual progress report on how it is meeting the merger conditions, Comcast said it had added 41,000 low-income homes to the Internet, increased the availability of independent networks on its cable systems and has major plans to add more, and had invested in news and programming.

It also said that to meet the requirements, it had stepped back from common industry practice of trying to secure exclusive access to movies for its subscribers within a given window of time.

"Exclusivity, windowing and [alternative distribution method] provisions are common in the industry as Netflix recently explained to investors and are often pro-competitive," Comcast said in the report. "Exclusive licensing deals are regularly sought by programming providers doing business with the company.

"Nevertheless, as a result of the condition, the company has on several occasions rejected or significantly narrowed provisions of this type."

To win FCC approval for buying a majority stake in NBC Universal from General Electric Co., Comcast agreed to more than 30 pages of conditions. Some of them Comcast offered to carry out voluntarily even before regulators starting reviewing the deal, while others were crafted either by the FCC or the Department of Justice.

Comcast agreed not to move broadcast sports programming on NBC to cable; to do more to roll out high-speed broadband; to offer more "independent" channels on cable; to boost news programming and staff; and to offer more minority channels. Comcast also agreed to arbitrate programming disputes with rival cable providers that wanted access to NBC Universal broadcast stations or cable channels.

Because of regulators' concerns about the potential impact on the Web, Comcast agreed to Net Neutrality conditions preventing the company from interfering with or carrying rival Web content under less favorable specifications than its in-house content and to a series of conditions to prevent it from using the acquisition to restrain emerging Internet competition to cable. One condition required Comcast to offer rival online video distributors access to NBC Universal content at rates similar to those charged by NBC Universal's "peers." Comcast also had to withdraw as a managing partner of Hulu, the webstreaming service operated by a consortium of broadcasters.

There were also several other requirements. Regulators ordered Comcast to file reports on its compliance with the merger conditions annually for the next six years.

In Tuesday's filing, Comcast suggested it had more than met the requirements.

"As the report shows, our commitments and the conditions, though extensive, have been incorporated into our business activities and become part of the company's 'DNA,' " Comcast executive vice president David L. Cohen said in a blog entry.

Comcast cited as examples of going beyond the requirements, its quick moves to launch independent cable channels, to boost news programming and to meet an obligation to serve more rural areas with broadband.

Cohen said while Comcast was supposed to launch 10 independent channels by 2019 under the agreement, five are either already launched or on their way. In addition, Comcast, which was to boost news and informational programming at its NBC stations by 1,000 hours, actually produced an added 2,000 hours. Finally, Comcast, which was supposed to expand its rural broadband network by 1,500 miles has added 2,044.

The added cable channels include the Africa channel and BBC World News in a number of markets, greater availability of TV One, and plans to add two new African-American-owned channels, Revolt and Aspire, and two Hispanic networks, El Rey and Baby First Americas.

It cited the additional spending on programming for NBC and for cable. It also cited more spending on news programming on its broadcast stations and on its networks.

Comcast cited only three concerns that had been raised.

It noted Bloomberg LP's complaint to the FCC that Bloomberg's cable news channel hadn't been moved adjacent to NBC Universal's NBC on Comcast systems. Comcast contended the conditions required a move only if it groups other news channels into "news neighborhoods" on its cable systems. Bloomberg contended the agreement requires the moves. The FCC is reviewing Bloomberg's complaint.

Greg Babyak, Bloomberg's head of government affairs, in a statement Tuesday accused Comcast of mischaracterizing the "neighborhooding" conditions imposed in the agreement.

"Comcast's report includes revisionist language that deliberately misstates its own legally binding commitments to Chairman Genachowski and the American people on the news neighborhooding condition," he said. He called on the FCC to act "swiftly" to force Comcast to act.

Comcast also reported one online video distributor had requested arbitration of a dispute over the pricing of carrying NBC Universal programming, contending Comcast isn't making content available for the same price as peers. Comcast has asked the FCC to better spell out what proof is needed to demonstrate "peer pricing" in situations where the pricing is private.

Comcast also said that the requirement to make content available to Hulu at a price similar to what rivals charge would require it to view rivals' Hulu contracts, an act Comcast implied would constitute collusion and violate antitrust law. "This presents a significant challenge that will have to be navigated in order to facilitate compliance," Comcast said.

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Tags: Comcast Corp. | Federal Communications Commission | M&A | NBC Universal Inc.

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Comcast says NBC merger demands are more than met

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