Comcast-NBCU Order Circulates; Commissioner Review May Wait Until Early January

The Department of Justice review of Comcast’s multibillion dollar planned purchase of control in NBC Universal is ongoing as well, the cable operator said. A DOJ spokesperson didn’t immediately respond to our query about its status.

Many eighth-floor officials are off for the holidays and most are expected to attend CEA’s annual trade show in Las Vegas the first week in January, a communications attorney watching the deal said. “That will cause disruption in trying to seriously review this transaction,” the lawyer said. “While there will certainly be people checking their BlackBerrys and e-mail … maybe the real serious work starts to happen the second week of January.” Some investors have been skeptical the deal would even close in January, but Thursday’s news “should put these doubts on a January close to rest,” Wells Fargo analyst Marci Ryvicker wrote clients.

Negotiations are continuing between Genachowski and senior Democrat Michael Copps, FCC officials said Thursday. One official noted it’s unusual, though not unprecedented, that Genachowski did not vote the order at the time he circulated it. No votes had been cast on the order on the commission’s electronic voting system as of late Thursday, officials said.

Commissioner Mignon Clyburn “will pay extremely close attention to the proposed conditions” that are in the draft order, she said, “as it is our duty to ensure that this acquisition is strongly within the public’s interest.” Commissioner Meredith Baker, who also has received the proposed order, “will be reviewing it carefully to ensure that it is in the public interest,” she said in a written statement. A Copps aide declined to comment on the draft.

The FCC rarely votes on merger orders during an open meeting, and if the agency approves the item on circulation, companies and public interest groups will be free of Sunshine Act deadlines that bar lobbying ahead of a public meetings, said Media Access Project Associate Director Matt Wood. FCC officials wouldn’t discuss specifics of the order in a Thursday briefing with some reporters, but they said it includes transaction-specific conditions that meet agency concerns about the deal. Those concerns include program access, program carriage and online issues such as over-the-top video, as well as broadcast localism and diversity, they said.

Comcast believes the draft order, as circulated, will let it operate the new NBC Universal joint venture and its legacy Comcast systems in an “appropriate way,” Executive Vice President David Cohen wrote on the company’s blog. “We will continue to work with the Commissioners so that the FCC order will not undermine our business combination and will ensure that consumers will benefit and that competitors are treated fairly."

Critics of the transaction are disappointed Genachowski is moving to approve it, they said. Free Press is worried the conditions don’t go far enough to protect consumers from the combined entity, said Corie Wright, Free Press policy counsel. “The five commissioners of the FCC have a duty to protect the public, promote competition for consumers, and preserve the free and open Internet,” she said. “Weak, short-lived conditions won’t do that.” The conditions should be strict and enforceable, Consumers Union policy counsel Parul Desai said. “The FCC appears to be identifying the right areas of concern … but the devil is in the details,” she said. “We believe that consumers would be best served if the deal was rejected."

Sen. Bernie Sanders, I-Vt., voiced outrage over the draft order: “Once we allow companies to become this powerful, the FCC does not regulate them. They regulate the FCC.” The conditions placed on the deal won’t help, he said. “If this merger is approved, I have little doubt that Comcast-NBCU will retain hundreds of attorneys and lobbyists to exploit gaps and loopholes in any conditions and regulations."

Stakeholders continued to make their cases to the FCC before the item circulated, filings show. Viacom lawyers met with an aide to Commissioner Michael Copps to express concerns the transaction could “limit the availability of programming to non-traditional distributors,” an ex parte filing said. “Comcast would have increased incentive and ability to use its market power to affect carriage of independent linear and over-the-top programming by favoring its own content to the detriment of independent programmers.” But HDNet said working with Comcast’s Xfinity online video platform has been a positive experience for HDNet, which might not be able to afford to offer online video on its own. Online, “the cost to the programmer increases with each individual that wishes to view the individual programmer’s content,” it said in a letter sent to the commission Wednesday. “Therefore, the distributor assumes a difficult-to-predict and very substantial cost, which could be prohibitive if required to be borne by an independent network."

Any conditions related to online video should have a “term of limited duration,” Comcast said in a Dec. 21 meeting. Participants included FCC Chief of Staff Eddie Lazarus, Chief Counsel Rick Kaplan and John Flynn, heading the regulator’s review of the deal, according to an ex parte notice. Some sort of program-access rules could be applied to help over-the-top video providers and facilitators, Stifel Nicolaus analysts Rebecca Arbogast and David Kaut wrote investors. Those could apply to conventional pay-TV distributors and possibly new entrants such as Netflix, Google and Apple, they said. Those conditions will probably be limited, but “we can’t rule out” that “the government will impose more aggressive conditions,” they said.