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Comcast Purchase of NBC Universal Questioned

February 5, 2010

On Thursday, executives from Comcast Corp. and NBC Universal were challenged by Congressional Democrats to show that the cable TV operator’s plan to take control of the entertainment company would not hurt consumers and rivals.

The Associated Press reported that members of House and Senate subcommittees said they were concerned the transaction could lead to competitive harms like higher cable TV rates and fewer shows.

“The issue before us really boils down to the seven C’s,” said Rep. Edward Markey, D-Mass., a senior member of the House Commerce subcommittee on communications and technology. “Will this combination of communications colossi curtail competition and cost consumers?”

Comcast is looking for federal approval to obtain 51 percent of NBC Universal from General Electric Co.  The Justice Department and the Federal Communications Commission are expected to approve of it, but with conditions.  Congress could help sway the outcome of those regulatory reviews.

Comcast CEO Brian Roberts told AP that the combination would produce “a more creative and innovative company that that will meet consumer demands” and drive more innovation among competitors.

Jeff Zucker, NBC Universal CEO, said significant investment made possible by the combination would help NBC Universal compete in a rapidly evolving entertainment business that has become a “media free-for-all.”

Comcast already owns some cable channels like E! Entertainment and the Golf Channel.  The deal would give Comcast control of the NBC and Spanish-language Telemundo broadcast networks, popular channels like CNBC, Bravo and Oxygen and the Universal Pictures movie studio.

Senator Al Franken, D-Minn., said he worries it could be a dangerous move to allow the nation’s largest cable and broadband provider to take control of NBC Universal’s vast media empire.

“When the same company produces the programs and runs the pipes that bring us those programs, we have a reason to be nervous,” said Franken, a comedian who spent nearly two decades as a writer and performer for NBC’s “Saturday Night Live.”

Satellite companies have warned that this combination could drive up prices for popular channels.  Small independent programmers fear that Comcast cable systems could stop carrying channels that compete with their own, or relegate rival channels to premium tiers with fewer subscribers.

This combination has also raised concerns to public interest groups that said Comcast would begin charging for its media content online.

Roberts said the proposed transaction does not raise significant antitrust concerns because Comcast and NBC operate in highly competitive markets.  Several Republicans echoed that point.

“We’ve heard some of the usual predictions that this is the end of the media world as we know it,” said Rep. Joe Barton of Texas, the top Republican on the House Energy and Commerce Committee. “Put me down as skeptical on that.”

Comcast has made some pledges to help ease worries about the deal.  The company has vowed not to move NBC’s free, over-the-air network to cable and pledged to ensure that rival providers can get access to Comcast-owned programming at fair rates.

Chairman of the Senate Judiciary subcommittee Herb Kohl said those pledges are just a starting point and called on regulators to attach strong conditions on any merger approval.

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