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Comcast/NBCU Celebrate Government Deal Approval

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Reaction poured in Tuesday to the news that the FCC and Justice had approved the Comcast/NBCU deal, including from the apparently relieved executives involved, who suggested the deal's online access conditions, among others.

"This is a proud and exciting day for Comcast," said Comcast Chairman Brian Roberts "We are grateful for the leadership of FCC Chairman Julius Genachowski, Assistant Attorney General Christine Varney, the other FCC Commissioners and their staffs for the months of hard work that went into reviewing an unprecedented number of documents and public comments."

GE Chairman Jeff Immelt suggested GE wasn't as much saying goodbye to NBCU as sharing the wealth with Comcast, which is buying a 52% stake, but with an option to buy out GE over time.

"NBCU has been a great business for GE over the past 20 years, generating an average annual return of 11 percent. Reducing our ownership stake from 80 percent to 49 percent allows GE to continue sharing in NBCU's growth while also providing significant cash to invest in our high-technology infrastructure businesses, growing an attractive dividend, and continuing our buyback program," he said, pegging that cash as about $8 billion at closing, which is expected by the end of the month.

On a conference call with reporters Tuesday, Comcast EVP David Cohen said the conditions and commitments on program access and carriage, including online, and on network neutrality had been expected and had been crafted in such a way to allow the company to operate and grow its business. That suggested the access and carriage conditions did not break new ground, extend broadly into the online space, or require the company to make all its content available
to anyone who asked for it.

"We believe the new company will be positioned to compete, and compete fairly," said Cohen, "and these commitments and conditions while bringing significant public interest benefits will not impede our ability to operate the business or compete at all."

He said he was grateful for the "integrity and the thoroughness of the process."

Cohen spelled out some of the key things that were not in the FCC or DOJ orders ,including no divestitures of broadcast stations or NBC's stake in Hulu (though it must give up any management authority over the online site), no unbundling or program discounts on the access front, no extension of program access broadly to online, no arbitration condition for program carriage disputes, no wholesale condition on high-speed data (as there was on the Time Warner/AOL merger), and not programming or cable channel quotas--Comcast has volunteered to add programming or channels, but those are commitments rather than FCC conditions.

And while Comcast will be required to make its programming available to online video providers, there are stipulations, carve-outs and caveats, including for "industry-typical" exclusivity arrangements--an exclusive film content window. Comcast will still also be able to provide an online authentication model for its programming (giving subscribers online access to their video content). It will have to make that programming available to competitors with similar authentication models, but Comcast says it can live with that.

And the online program access conditions stipulate that it must be similar programming. Say, if Viacom makes its MTV network available to an OVD, Comcast must make a similar channel, not just any channel available, so that the OVD could not say that because it had access to MTV, Comcast must make USA Net available, unless the OVD could convince either Comcast or an arbitrator they were similar enough to invoke the condition.

Cohen said he was not disappointed with FCC/Justice decision to require Comcast to become a passive investor in Hulu, with NBC no longer having any operational say, including any board member. "We're perfectly satisfied with that," he said. Cohen pointed out that there had been calls for divestiture, and he was pleased Justice did not require that. "We're not uncomfortable with the restrictions on governance rights," he added.