Career FCC Staff May Soon End Work on Comcast-NBCU Draft; No Order Circulating Yet

There’s “still an outside chance” the companies could complete the deal in 2010, “but the window is getting very tight” and the issue of over-the-top (OTT) Internet video “is thorny,” analyst Paul Gallant of MF Global wrote investors Monday. An arbitration process may be set up for disputes between Comcast and OTT providers, and the absence of an established business model for such Internet video programmers “may be complicating regulators’ efforts to specify how an arbitrator would resolve disputes,” he said. “A relatively rigorous screen” for what qualifies as an OTT provider able to license NBC Universal programming is likely, Gallant said. Comcast-NBC Universal may be barred from withholding channels from DirecTV, Dish Network and other pay-TV providers, during contract disputes, he said.

Viacom fears that “Comcast would have increased incentive and ability to use its market power to affect carriage of independent linear and over-the-top video programming by favoring its own content to the detriment of independent programmers,” the cable programmer said in a filing posted Friday to docket 10-56. Viacom executives met last week with FCC officials reviewing Comcast-NBC Universal, including John Flynn, who is heading the review. Comcast asked that any conditions on Internet video “be narrowly tailored,” said a filing posted Friday on a meeting with Chief of Staff Eddie Lazarus and Flynn and another just with Lazarus. “Onerous conditions or obligations in this nascent and dynamic business could have significant unintended consequences for consumers, competition, and Comcast’s and NBC Universal’s businesses,” the cable operator said.

Rep. Maxine Waters, D-Calif., has seen little progress by NBC Universal in meeting earlier diversity pledges, she wrote FCC Chairman Julius Genachowski on Monday. New pacts agreed to by the companies (CD Dec 20 p13) don’t foreshadow a reversal of “a steady decline in diversity among all the major broadcast networks,” she wrote. The commission should “clearly define ‘diversity’ and the types of public interest conditions that promote ‘diversity of license holdings and broadcast viewpoints,'” Waters said. “If the Commission ultimately approves the Comcast-NBCU merger, it must be conditioned upon substantive and enforceable commitments that are in conformity with the agency’s statutory standards and goals.”

Comcast will publish an annual progress report on diversity that will “include tracking and percentage metrics for both supplier and employment diversity,” executives told Commissioner Mignon Clyburn, said a filing made public Friday. The report will track “diversity spending as a percentage of total available dollars” and “outreach related activities and events,” the cable operator said. It will disclose the total number of women and “people of color” employed by Comcast-NBC Universal and their ranks among management, and the number of new hires in those groups and their annual retention rate.

Groups opposed to the deal have a hard time figuring out “the nature of discussions between the applicants and Commission staff,” from what the companies put in ex parte filings, said four non-profit groups. A Comcast spokeswoman didn’t reply to a message seeking comment on that and on Waters’ letter. “While the merging parties appear to be in discussions with FCC staff regarding potential merger conditions,” such filings “provide little-to-no information on the substance of the proposals,” said Consumers Union, Free Press, Media Access Project and Public Knowledge. “Interested parties and the public have been left in the dark as to these negotiations. To remedy this, the public interest groups asked that the Commission publish any proposed conditions and solicit public comment on them before adoption.”