Comcast/NBCUDown With D.C. Deals

Merging giant says it can live with FCC, Justice conditions
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The Comcast/NBCU meld is a done deal, at least in terms of Washington. While it has plenty of conditions and voluntary commitments, none came as a surprise—Comcast and NBCU had been working with the FCC and the Justice Department on those conditions—and none will keep the new company from getting down to business.

Comcast will have to share its programming with online content distributors, but with enough caveats to prevent it from being a wholesale open-access condition. It will also have to abide by network neutrality conditions for the next seven years regardless of what happens to the FCC’s new rules in court. But it had already signed off on those conditions as part of the FCC’s compromise rules.

Comcast/NBCU EVP David Cohen last week said that the FCC order and the Justice consent decree “will not impede our ability to operate the business or to compete at all.” In fact, Cohen could not find anything to criticize in the merger approvals, which he said were fair and balanced.

An FCC official speaking on background backed up the general tenor of the negotiations over conditions, saying that Comcast was basically trying to avoid crippling conditions, and that was how the FCC approached it.

Comcast even came in at the last minute with more voluntary commitments, including agreeing to name an ombudsman to oversee its compliance with all those pledges and mandates.

Despite all those conditions, consolidation critic Michael Copps was ultimately unable to give FCC Chairman Julius Genachowski the unanimous vote he preferred.

That strong dissent—Commissioner Copps called it “a damaging and potentially dangerous deal”—came even though Comcast last week agreed in writing that it would abide by the FCC’s new network neutrality rules for seven years even if they were thrown out by the courts, would apply those same rules to broadband via a set-top, and would not use metered broadband pricing to discriminate against unaffiliated networks or favor its own content.

Comcast’s Cohen told reporters those pledges already squared with the way the company does business.

Republican FCC members, who could have torn into some of the conditions in their statements had they appeared too onerous, did not, though they did say the process had gotten too coercive. They also referenced, if obliquely, the network neutrality condition.

An FCC source speaking on background said Comcast had urged the Republican commissioners to vote for the network neutrality condition, which they were reluctant to do given their opposition to the just-voted FCC network neutrality rules. That hurdle was cleared when Comcast and Genachowski agreed to take out that condition and have Comcast file a letter essentially agreeing to the condition, which then became an enforceable part of the order, though not a part of the vote.

Robert McDowell, the senior Republican FCC commissioner, put it this way: “The chairman graciously agreed to take the network neutrality condition out of the merger order and negotiated for it to be included into Comcast’s letter…that both Comcast and the chairman’s office have agreed contains enforceable commitments.”

By mandating that Comcast make content available to online video distributors, the FCC and Justice were further signaling that they viewed broadband as an increasing competitor to traditional video distribution.

One potential shot across the bow came from Justice, which said it would be getting into the online video oversight business. Assistant Attorney General Christine Varney said in announcing the consent decree that Justice would share jurisdiction over conditions related to the online video space.

Under certain circumstances, Comcast will have to make its content available to online video providers (OVDs). Cohen says the circumstances are sufficiently narrowly tailored for there to be no broad mandate that forces Comcast to make all its content available online to anyone. There will be an arbitration gauntlet that OVDs have to run in order to get access.

The FCC’s conditions will not become effective until the deal closes, which is expected by the end of the month.

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