Conditions Attached To Comcast-NBC Universal Deal

The Federal Communications Commission and the Justice Department approved the merger of the nation's largest cable provider and an entertainment giant Tuesday. The deal between Comcast and NBC Universal was reviewed for more than a year. Both federal agencies attached conditions to their approval.

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Federal regulators approved the merger of a giant company that produces television programs and a giant company that distributes them. NBC-Universal is merging with Comcast. The Justice Department and the Federal Communications Commission did attach conditions, though. Regulators are trying to guard against this new company using its size and strength to stifle competition. NPR's Joel Rose reports.

JOEL ROSE: It took more than a year. But Comcast finally got the prize it wanted: NBC-Universal, and its wide and deep roster of TV shows, cable channels and movies. Comcast CEO Brian Roberts sounded almost relieved in a conference call with reporters yesterday.

Mr. BRIAN ROBERTS (Chairman and CEO, Comcast Corporation): All of us at Comcast and NBC-Universal are incredibly excited today. We believe the new company will be well positioned to compete and to compete fairly in today's fast-changing marketplace.

ROSE: There was never much doubt that federal regulators would approve the merger. But there was plenty of suspense around what conditions they would attach to the deal. The Justice Department's antitrust division was concerned about the possible effect of combining the nation's biggest Internet provider with one of its top content producers. Here's Assistant Attorney General Christine Varney on her own conference call.

Ms. CHRISTINE VARNEY (Assistant Attorney General): The transaction had the potential to stifle new online competition. The settlement we are announcing today ensures that the transaction will not chill the nascent competition posed by online competitors.

ROSE: Varney says the conditions imposed by the Justice Department and the FCC will make it harder for Comcast to abuse its new power. Take, for example, Hulu.

(Soundbite of commercial)

Mr. ALEC BALDWIN (Actor): You know, they say TV will rot your brain.

(Soundbite of laughter)

That's absurd. TV only softens the brain, like a ripe banana. To take it all the way, we've created Hulu.

ROSE: NBC-Universal is a co-owner of the popular online video site. The government stopped short of requiring the newly merged company to give up its ownership stake in Hulu. But regulators are forcing it to give up day-to-day control of the site. The idea is to make sure consumers can still watch NBC shows online even if they don't subscribe to Comcast.

Many consumer advocates, including Gigi Sohn at the non-profit Public Knowledge, say regulators struck the right balance.

Ms. GIGI SOHN (President and Co-Founder, Public Knowledge): I think they set some baselines for the future of competition with online video. And I think that's the most important part of the conditions. And that is something that the FCC had not done before.

ROSE: Regulators also took steps to ensure that the new company has to share its programming with other online video competitors that it doesn't own, including Netflix and Apple TV. And Comcast agreed not to slow or block the Internet traffic of its rivals at least, for 7 years. Still, that wasn't enough for some critics.

Mr. MICHAEL COPPS (FCC Commissioner): I'm not saying there are no benefits attached to this deal at all. But they just at the end of the day don't measure up, where you can say, yes, this deal is good for American consumers. Because it's not.

ROSE: FCC Commissioner Michael Copps is worried the merger will lead to fewer choices and higher prices for consumers. And he's not impressed by Comcast's promise to inject more diversity into its programming and its Board of Directors.

Mr. COPPS: We've got a real problem with diversity and media in this country. And that's not fixed by having one person on a board, nice though that is. It doesn't get to the crux of the problem.

ROSE: But Copps wasn't able to persuade any of his colleagues on the FCC, who voted 4 to 1 in favor of the merger. It's set to close by the end of the month.

Joel Rose, NPR News, New York.

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