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Comcast denies that NBC Universal deal would hurt competition

In a filing with the FCC, the cable giant says it doesn't expect the $30-billion takeover to significantly change the media landscape.

January 29, 2010|By Joe Flint

Cable giant Comcast Corp., in a filing with the Federal Communications Commission seeking regulatory approval of its $30-billion deal to take control of General Electric's NBC Universal, said it didn't expect the transaction to significantly change the media landscape.

The 145-page document accompanying a joint request by the companies to transfer control of NBC's TV station licenses, argued that there was "no plausible basis for claims that the proposed venture will have anti-competitive effects."

Sanguine assurances aside, that will probably be a tough sell with government regulators.

The merger, announced last month, would create a media and entertainment goliath by putting under one roof cable TV systems that reach almost 25% of the country with NBC Universal's broadcast networks NBC and Telemundo, TV stations, the Universal movie studio and more than 30 cable channels, including CNBC and USA.

Besides the FCC, the Department of Justice will also weigh in on the transaction. The review is expected to take at least a year.

Comcast, which previously said that Jeff Zucker would remain chief executive of NBC Universal after the deal, in the filing said that he would be the "initial CEO of the new entity." If the position opens up within 3 1/2 years of the merger, then GE -- which is retaining a 49% stake in the company -- has the right to veto up to two choices for Zucker's replacement, according to the filing.

Public-interest groups and some industry competitors have been critical of the proposed marriage of the nation's biggest cable and broadband provider, Comcast, and programming powerhouse NBC, fearing that the new entity could use its muscle to limit content reaching consumers. Lawmakers have also promised to scrutinize the deal.

"How the FCC and the Department of Justice handle Comcast's proposed acquisition of NBC will shape the future of media and the Internet for a long time to come," said Andrew Schwartzman, president of Media Access Project, a public-interest law firm.

Comcast said that even with the addition of NBC Universal's vast holdings, it would still trail News Corp., Time Warner and Walt Disney Co. in advertising revenue and would own only one of every seven channels piped into a typical cable subscriber's home. Noting it has lost more than 1 million cable TV customers in the last two years, the company said the need to have a variety of content is crucial. "There is simply no prospect of Comcast 'going it alone' and relying exclusively or even primarily on NBC Universal content."

As for worries that Comcast, with NBC Universal content in hand, could become a powerful gatekeeper to the growth of TV viewing online, the company painted Internet giant Google as the potential villain.

"To the extent that any one company maintains a substantial advantage in attracting online video viewers, that company is Google -- not Comcast or NBC Universal," Comcast said. Comcast and NBC combined, the filing said, accounted for just 1% of all videos viewed online last year. Comcast added that even if video site Hulu, in which NBC has a 32% stake, were included, the amount would still be just under 5%.

Another big concern of media watchdogs is that Comcast can wield its power as the nation's No. 1 broadband provider in more subtle ways to favor the distribution of its content online. Comcast, however, contends there was no realistic prospect that it would abuse its role as a high-speed Internet service provider.

The filing details Comcast's commitments to increase the amount of children's programming it carries, primarily through video on demand. It also repeats a pledge to beef up news and public-interest programming by 1,000 hours a year.

But not all the additional programming would appear on NBC's local TV stations or the NBC network. Instead, Comcast said it would funnel the extra programming to digital channels -- which are not as widely viewed -- or on-demand services.

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