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FTC to Lead Review of Vivendi-GE Transaction

October 11, 2003|Jube Shiver Jr. | Times Staff Writer

WASHINGTON — Setting the stage for a potentially lengthy and contentious antitrust examination, the Federal Trade Commission has indicated that it -- rather than the Justice Department -- would review a proposed merger of entertainment operations by Vivendi Universal and General Electric Co.-owned NBC, sources close to the agency said.

The commission's move signals its reemergence as the principal overseer of the cable, media and entertainment industries a year after the failure of a plan under which such authority would have shifted to the Justice Department.

The FTC is an independent, five-member agency, while the Justice Department is an arm of the executive branch. They share antitrust enforcement and determine primary responsibility for specific mergers based on expertise and precedent.

Although the agencies use similar criteria in their reviews, consumer groups say they tend to have more input at the FTC. What's more, the review process can be slower at the commission, which often gets two chances to challenge a merger: first before an FTC administrative judge and then in federal court. At the Justice Department, challenges go straight to court.

Jeff Chester, head of the Washington media advocacy organization Center for Digital Democracy, applauded the FTC's move and said his group would work to block the NBC Universal deal or at least get conditions placed on it.

The Vivendi transaction has drawn opposition from some consumer watchdogs, who say that by further consolidating the nation's media market, it would limit democratic discourse.

"This is extraordinary, good news" for those "concerned about this merger," Chester said. "The FTC is a much more supportive place for critics of media consolidation than ... the Justice Department, which is more beholden to the [Bush] administration."

GE has agreed to acquire the movie studio, theme parks and TV group components of Vivendi's Universal unit in a deal valued by the companies at about $14 billion. GE would then combine its cable channels and NBC broadcast network with the Universal assets.

The new venture would rank as the nation's seventh-largest publicly traded media company. It would boast strategic advantages similar to those enjoyed by rival media conglomerates such as CBS television network owner Viacom Inc. and ABC network owner Walt Disney Co.

An NBC spokeswoman confirmed that the FTC had told the company it would be reviewing the deal.

NBC executives have said they hoped to close the deal as early as the first quarter of next year. "Time is not our friend," NBC Chairman Bob Wright said this week. "People have to realize that business relations and advertising sales suffer the longer it takes to get approval."

Vivendi Universal executives couldn't be reached Friday for comment.

Despite the glee of consumer groups over the FTC's involvement, some antitrust attorneys said the commission's procedures are actually quite similar to those at the Justice Department.

"They pretty much follow the same process in reviewing a merger," said Todd Miller, a veteran antitrust lawyer in Washington.

In January, the FTC and the Justice Department abruptly canceled plans to change the way corporate mergers were reviewed after some Capitol Hill lawmakers voiced concern over the reorganization. The agencies have returned to their previous arrangement, under which the institution with the greatest experience in an industry sector gets to review combinations in that sector.

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Times staff writer Meg James in Los Angeles contributed to this report.

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