FCC Grants Approval of Comcast-NBCU Transaction

The Federal Communications Commission has granted -- with conditions and enforceable commitments -- approval of the assignment and transfer of control of broadcast, satellite, and other radio licenses from General Electric Company (GE) to Comcast Corporation. The approval will allow GE and Comcast to create a joint venture involving NBC Universal, Inc. (NBCU) and Comcast. Based on its review, the FCC has determined that granting the application, with certain conditions and contingent upon enforceable commitments, is in the public interest.

As part of the merger, Comcast-NBCU will be required to take affirmative steps to foster competition in the video marketplace. In addition, Comcast-NBCU will increase local news coverage to viewers; expand children's programming; enhance the diversity of programming available to Spanish-speaking viewers; offer broadband services to low-income Americans at reduced monthly prices; and provide high-speed broadband to schools, libraries and underserved communities, among other public benefits.

More specifically, the conditions imposed by the Commission address potential harms posed by the combination of Comcast, the nation's largest cable operator and Internet service provider, and NBCU, which owns and develops some of the most valuable television and film content. These targeted conditions and commitments, which generally will remain in effect for seven years, include:

• Ensuring Reasonable Access to Comcast-NBCU Programming for Multichannel Distribution. Building on successful requirements adopted in prior, similar transactions, the Commission is establishing for rival multichannel video programming distributors (MVPDs) an improved commercial arbitration process for resolving disputes about prices, terms, and conditions for licensing Comcast-NBCU's video programming. The Commission is also requiring Comcast-NBCU to make available through this process its cable channels in addition to broadcast and regional sports network programming.
• Protecting the Development of Online Competition. Recognizing the risks this transaction could present to the development of innovative online video distribution services, the Commission has adopted conditions designed to guarantee bona fide online distributors the ability to obtain Comcast-NBCU programming in appropriate circumstances. These conditions respond directly to the concerns voiced by participants in the proceeding-including consumer advocates, online video distributors (OVDs), and MVPDs -while respecting the legitimate business interests of the Applicants to protect the value of their content. Among other things, the Commission requires that Comcast and/or Comcast-NBCU:
• Provides to all MVPDs, at fair market value and non-discriminatory prices, terms, and conditions, any affiliated content that Comcast makes available online to its own subscribers or to other MVPD subscribers.
• Offers its video programming to legitimate OVDs on the same terms and conditions that would be available to an MVPD.
• Makes comparable programming available on economically comparable prices, terms, and conditions to an OVD that has entered into an arrangement to distribute programming from one or more of Comcast-NBCU's peers.
• Offers standalone broadband Internet access services at reasonable prices and of sufficient bandwidth so that customers can access online video services without the need to purchase a cable television subscription from Comcast.
• Does not enter into agreements to unreasonably restrict online distribution of its own video programming or programming of other providers.
• Does not disadvantage rival online video distribution through its broadband Internet access services and/or set-top boxes.
• Does not exercise corporate control over or unreasonably withhold programming from Hulu.
• Access to Comcast's Distribution Systems. In light of the significant additional video programming Comcast will control after the merger with NBCU-programming that may compete with third-party programming Comcast currently carries or otherwise would carry on its MVPD service-the Commission requires that Comcast not discriminate in video programming distribution on the basis of affiliation or non-affiliation with Comcast-NBCU. Moreover, if Comcast "neighborhoods" its news (including business news) channels, it must include all unaffiliated news (or business news) channels in that neighborhood.

The FCC also adopts as a condition of the transaction Comcast's voluntary commitment to provide 10 new independent channels within eight years on its digital tier.

Protecting Diversity, Localism, Broadcast and Other Public Interest Concerns. The FCC is also imposing conditions and accepting voluntary commitments concerning a numbers of other public interest issues, including diversity, localism, and broadcasting, among others. For example, to protect the integrity of over-the-air broadcasting, network-affiliate relations, and fair and equitable retransmission consent negotiations with the joint venture, the Commission adopts a series of conditions that were independently negotiated between the Applicants and various network affiliates.

The Applicants have also made a number of additional voluntary commitments, many of which the Commission has adopted as conditions to the transaction's approval. Most of these commitments are geared towards enhancing the public interest as a result of the joint venture. These commitments include:

• Broadband Adoption and Deployment. Comcast will make available to approximately 2.5 million low income households:
  i) high-speed Internet access service for less than $10 per month;
  ii) personal computers, netbooks, or other computer equipment at a purchase price below $150; and
  iii) an array of digital-literacy education opportunities.
  Comcast will also expand its existing broadband networks to reach approximately 400,000 additional homes, provide broadband Internet access service in six additional rural communities, and provide free video and high-speed Internet service to 600 new anchor institutions, such as schools and libraries, in underserved, low-income areas.
• Localism. To further broadcast localism, Comcast-NBCU will maintain at least the current level of news and information programming on NBC's and Telemundo's owned-and-operated ("O&O") broadcast stations, and in some cases expand news and other local content. NBC and Telemundo O&O stations also will provide thousands of additional hours of local news and information programming to their viewers, and some of its NBC stations will enter into cooperative arrangements with locally focused nonprofit news organizations. Additional free, on-demand local programming will be made available as well.
• Children's Programming. Comcast-NBCU will increase the availability of children's programming on its NBC and Telemundo broadcast stations, and add at least 1,500 more choices to Comcast's on-demand offerings for children. It will provide additional on-screen ratings information for original entertainment programming on the Comcast-NBCU broadcast and cable television channels and improved parental controls. Comcast-NBCU also will restrict interactive advertising aimed at children 12 years old and younger and provide public service announcements addressing children's issues.
• Programming Diversity. Building on Comcast's voluntary commitments in this area, we require Comcast-NBCU to increase programming diversity by expanding its over-the-air programming to the Spanish language-speaking community, and by making NBCU's Spanish-language broadcast programming available via Comcast's on demand and online platforms. As noted above, Comcast also will add at least 10 new independent channels to its cable offerings.
• Public, Educational, and Governmental ("PEG") Programming. Comcast will safeguard the continued accessibility and signal quality of PEG channels on its cable television systems and introduce new on demand and online platforms for PEG content.

FCC Chairman Julius Genachowski said, "After a thorough review, we have adopted strong and fair merger conditions to ensure this transaction serves the public interest. The conditions include carefully considered steps to ensure that competition drives innovation in the emerging online video marketplace. Our approval is also structured to spur broadband adoption among underserved communities; to increase broadband access to schools and libraries; and to increase news coverage, children's television, and Spanish-language programming."

FCC Commissioner Michael Copps dissented from the decision, saying the merger confers too much power in one company's hands. He said he searched for public interest benefits of the merger and found only "the elimination of double marginalization." He said the conditions placed on the merger aim no higher than maintaining the status quo -- "The status quo is not serving the public interest," he added. "The Comcast-NBCU joint venture opens the door to the cable-ization of the open Internet. The potential for walled gardens, toll booths, content prioritization, access fees to reach end users, and a stake in the heart of independent content production is now very real. As for the future of America's news and journalism, I see nothing in this deal to address the fundamental damage that has been inflicted by years of outrageous consolidation and newsroom cuts."

Commissioners Robert McDowell and Meredith Baker issued a joint statement saying, "Combining assets of Comcast Corporation (Comcast) and NBC-Universal, Inc. (NBCU) is a complex and significant transaction that has the potential to bring exciting benefits to consumers that outweigh potential harms. However interesting and intricate the issues raised by the combination of Comcast and NBCU may be, as a matter of law, our role at the Commission is limited to ensuring that the transaction complies with all applicable statutory provisions, such as ensuring that the license transfers are in the public interest. Our analysis should only include a thorough examination of the potential benefits and harms of the transaction. Any proposed remedies should be narrow and transaction specific, tailored to address particular anti-competitive harms. License transfer approvals should not serve as vehicles to extract from petitioners far-reaching and non-merger specific policy concessions that are best left to broader rulemaking or legislative processes."

FCC Commissioner Mignon Clyburn said she's pleased to see that the "Order approving this transaction imposes additional conditions on the Applicants in a number of areas, including: increasing the number of years that the Joint Venture is required to expand the amount of local programming at NBCU and Telemundo Owned and Operated Stations; promoting the availability of the Joint Venture's programming to small cable operators; and preventing retaliation against any entities who seek to exercise rights in this Order or participated in this proceeding. For these reasons and others, I am willing to find that this transaction serves the public interest."