Comcast & NBC Merging?

Comcast-NBC Universal merger review hits FCC speed bump

A review of the proposed merger of Comcast and NBC Universal hit a speed bump Monday, as the Federal Communications Commission asked for more information from both companies.

The FCC asked dozens of questions (pdf comcast.doc) of both firms with answers due by Oct. 18, to better understand how the combined broadband, cable and media powerhouse could affect those industries and competitors. The questions also show that the agency is interesting in exploring how the merger could affect online video distribution and competitors in the field. The FCC has a broad mandate to determine how a communications industry merger affects the public interest.

Comcast said it expected its review to be approved by the Justice Department and Federal Communications Commission by the end of the year. The FCC declined to comment on its own timetable for its review. update: The agency didn’t announce the additional questions would delay its review and it didn’t stop its review “clock” as it has in the past.

Specifically, the FCC asked Comcast to submit copies of its agreements to distribute its cable channels such as Regional Sports Network, E! and the Golf Channel to Time Warner Cable, Cox, Brighthouse, DirecTV and other competitors. NBC was asked to show recent contracts for the distribution of its cable networks. Those terms, experts say, would give the agency insight into the market position of the companies and into how a combined firm could have more leverage over such deals going forward.

The FCC also asked how Comcast operates its “managed services” such as video on demand and pay-per-view.

The agency asked Comcast to “explain the advantages” of providing its own services over competing services. And it asked the cable and broadband giant to identify competitors in the managed service market.

Managed services are hotly debated among policymakers and businesses as a business model that could help broadband service providers strike new kinds of distribution contracts. An example would be Verizon striking a deal with Nexflix to stream videos to FiOS customers delivered at better speed and quality at an extra cost for users. Advocates of a net neutrality rule against prioritized traffic say managed services hurt new competitors that wouldn’t be able to get choice content to compete with powerhouses such as Comcast, Verizon and AT&T.

In its letter to Comcast and NBC Universal, the FCC asks several questions about managed services, asking how pay-per-view, video on demand and other video services are sold and who pays for them (the video provider, subscriber or the network).

The FCC asked Comcast to identify its competitors in the managed services space, what programming Comcast provides to those competitors and compensation it receives. The FCC also asked about programming it doesn’t provide to competitors and why it doesn’t.
The FCC asked for all revenue and cost data over the past five years from managed services.

Photo: Brian Roberts, CEO of Comcast
Credit: NCTA


By Cecilia Kang  | October 5, 2010; 6:00 AM ET
Categories:  AntitrustComcastFCC

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