FCC’s Comcast-NBCU Questions Show Much Interest in Web Video

That replies from the companies are due June 11 and the questions were issued at this point in the FCC review of Comcast’s plan to buy control of NBC Universal indicate the agency may finish reviewing the deal within its 180-day goal for deciding on all deals, communications lawyers not involved and industry officials said. In past deals, such questions have been asked farther along during the review, and sometimes haven’t been released publicly by the commission, they said. The clock is now paused at day 29 and will resume ticking June 3 (CD May 6 p3). An NBC Universal spokesman declined to comment, and a Comcast spokeswoman didn’t reply to messages seeking comment.

Commission approval of the transaction still seems likely, with the information requests illustrating a concern about whether access to programming gets restricted, said lawyer Michael Hazzard of Arent Fox, an antitrust expert. Over-the-top video “is an area where at least arguably the cable operators have not had an incentive to bring a lot of technical change,” he said. “My sense is that the questions have been in the works for a while” -- well before the FCC said outsider John Flynn will lead review of the deal (CD May 20 p14) -- and reflects Genachowski’s interest in the transaction, Hazzard said. “We have this new form of vertical integration that I think people are quite right to ask broad, wide-ranging questions for what this means going forward."

A question for the companies was asked about profit margins Comcast earns on cable networks and NBC Universal earns on broadcast network programming that both relate to independent online video. NBC Universal also was asked about margins each month on cable networks it owns, manages or are attributed to the company for each pay-TV provider, unaffiliated online programming distributor and affiliated Web programming distributors, in the questions at http://xrl.us/bhmvz4. The company was asked about the incremental value of selling each such network to every additional customer on those three bases. Comcast was asked a similar question, at http://xrl.us/bhmv6x.

A question posed to the companies asked each to “describe in detail” all “discussions, deliberations, analyses, and decisions related to providing or not providing the Company’s Video Programming to unaffiliated Online Video Programming Distributors, including but not limited to ... Boxee, YouTube, Amazon, and iTunes. Identify all persons, including their respective positions and organization, involved in such decisions, deliberations, analyses, or discussions.” Comcast and NBC Universal also were asked to provide all deals now in effect and those agreed to since Jan. 1, 2006, between each company and any other entity granting online video distribution rights to either of the two merging companies: “Identify any agreements that grant exclusive online video distribution rights to the Company."

Comcast and NBC Universal were asked to provide “all strategic plans, policies, analyses, and presentations” discussed by board members or top executives about entry into the Internet video programming business. Comcast was asked about its TV Everywhere and Xfinity TV initiatives and its rationale for buying thePlatform. Both merging companies were asked for internal estimates of the “minimum viable scale necessary for entry” related to distribution of online video content and whether carriage on any particular distributor is needed. The commission requested of both companies materials discussed by directors or top executives on advertisers’ willingness to buy ad inventory on websites, portals, aggregators or syndicators of amateur video in lieu of inventory from online video programming distributors.

Comcast was asked for a list of all set-tops it makes available to subscribers for purchase or lease, the portion of its customers who buy the devices from the company and from other sources and those who lease them. “Provide all strategic plans, policies, analyses, and presentations prepared for, presented to, reviewed by, or considered by the Company’s board of directors or the Company’s executive management, or any member thereof, to deliver” Comcast video online to set-tops, TVs and video consoles, the request said. “Such devices include, but are not limited to, AppleTV, Roku, Vudu, Xbox, Nintendo Wii, and Sony Playstation."

The expression of potential FCC concern on exclusivity of content online may not find much damning once the review is complete, “but that doesn’t mean they won’t take a hard look at it,” said a telecom lawyer. The June 11 deadline for responses represents “an aggressive schedule, but I don’t think they would have done it in a way that’s not doable.” For communications attorney Paul Feldman of Fletcher Heald, with pay-TV clients not party to the deal at the FCC, the request “shows that the commission intends to inspect the details and the impact of the deal very deeply,” he said.

Feldman agreed with other lawyers that the information request “is very broad and detailed.” That’s as it should be “in light of the broad impact that this deal would have if approved,” he added. “It is good for the process and for the public to get as much information as possible early in the process, although it would be of greatest value if some or much of this information were actually made public.” Much of the information may be considered confidential and not be accessible to those not participating in the proceeding, Feldman and other industry lawyers said.