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Kohl Wants Hulu Divestiture as Part of Any Comcast/NBCU Deal

Senator Herb Kohl (D-Wis.), chair of the Senate Judiciary Antitrust Subcommittee, is calling for a raft of strong conditions on any Comcast/NBCU deal, including that it divest its stake in online video site Hulu within a year and apply program access rules to online video.

That came in a letter from Kohl to the Justice Department and FCC Chairman Julius Genachowski in which Kohl said the proposed joint venture "has the potential for serious anticompetitive and anti-consumer effects in at least three respects." Those are 1) ability of competitors to access NBC broadcast and cable content, 2) the ability of "independent programmers" and diverse voices to get a platform on the combined company, and 3) the impact on online distribution.

Kohl said that the FCC should look carefully at online content to insure the deal does nothing to "stifle, block or retard" the emergence of that outlet.

Other conditions include nondiscriminatory access to any programming in which Comcast has a financial interest, binding arbirtration over any retransmission consent disputes and firewalls between the two companies to prevent sharing pricing or contract terms.  There are also requirements that Comcast not be allowed to favor its own content, allowing competitors access to online distribution of content from any programming or channel that Comcast/NBCU have an interest in, that NBC content on the net not be tied to a cable subscription, that Comcast not be allowed to migrate NBC broadcast net content to cable for at least 10 years and that Comcast not discriminate or degrade any Internet distribution of programming that competes with Comcast or TV Everywhere.

Kohl's subcommittee held a hearing on the deal Feb. 4 and said he has since been investigating its impact on the marketplace.

The FCC is preparing on June 3 to re-start its informal 180-day shot clock on the deal, which it hopes to have finished vetting by the end of the year.  The Justice Department is conducting a separate investigation.

Comcast did not address the letter's specifics in its official response, but said the deal was an all-around good thing.

“This partnership is pro-competitive, pro-consumer and in the public interest," said Comcast in a statement. "Together Comcast and NBCU will enhance the entertainment experience through bold innovation and expanding consumer choice. We expect a thorough and expeditious regulatory review and that any conditions will not unduly burden either Comcast or NBCU’s businesses.”

The American Cable Association, which argues the merger could "harm competition and consumers" without strong conditions, suggested Kohl's prescription was just what the doctor ordered. "ACA commends Sen. Kohl for suggesting that the Federal Communications Commission impose conditions on the transaction that would ensure that all pay-TV providers have access to Comcast-NBCU programming on reasonable and nondiscriminatory terms," said ACA President Matt Polka in a statement. "As the largest pay-TV operator in the country, Comcast-NBCU must not be able to charge itself one price and all other smaller operators a higher price. This is harmful to competition and consumers.  The structure of the merger is an issue of great concern that ACA members have addressed with Congress, the FCC and the Department of Justice, and ACA will continue to do so."

Senator Arlen Specter (D-Pa.), said he supported the FCC's examination of Kohl's concerns, but said he did not agree with them. Specter has praised the Philadelphia-based Comcast before as a good corporate citizen who would bring that legacy to the new venture.

“Recently a number of concerns have been expressed to the FCC and Justice Department regarding the proposed Comcast/General Electric joint venture with NBC Universal with which I do not agree," he said not long after the Kohl letter was circulated. "The parties have made numerous, unprecedented upfront commitments to meet the needs of viewers and protect the interests of competitors."

Specter said he thought a "fair and thorough" look by the FCC and Justice would result in a finding that the deal "advances the national communications policy goals of diversity, localism, innovation, and competition."