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Comcast Takeover Of NBC Universal Approved

January 19, 2011

The U.S. Federal Communications Commission (FCC) gave the go-ahead on Tuesday for Comcast’s purchase of NBC Universal, voting 4-to-1 in favor of approving the acquisition. 

Michael Copps, one of the FCC’s three Democrats and an opponent of media consolidation, voted against the deal.

The Justice Department’s anti-trust division also announced a proposed settlement that would allow the takeover to proceed, subject to some conditions.

Comcast’s purchase of 51 percent of NBC Universal from General Electric, at a price of $13.8 billion in cash and assets, would give the cable giant a media empire comparable to The Walt Disney Co.

Both the FCC and the Department of Justice tied conditions to their approval that would prevent Comcast from crushing competitors once it takes control of NBC’s massive media empire.

Among other things, the conditions require Comcast to make NBC programming available to rivals. 

Regulators also want to ensure that nascent online video platforms, such as those being developed by Apple Inc., Netflix Inc. and Amazon.com Inc., have access to the content they need to grow.

In addition to its 23 million cable TV subscribers and 17 million Internet subscribers, Comcast owns cable channels such as E! Entertainment and the Golf Channel, and has a controlling interest in the Philadelphia 76ers and Flyers sports teams.

NBC Universal owns the NBC and Telemundo broadcast networks, 26 local TV stations and popular cable channels such as CNBC, Bravo and Oxygen.  It also owns the Universal Pictures movie studio and theme parks and a 30 percent stake in Hulu.com, which distributes NBC and other broadcast programming over the Internet.

A takeover of NBC Universal would transform Philadelphia, PA-based Comcast into a dominant media and entertainment force. 

The regulatory approvals establish an arbitration process to resolve disputes between Comcast and rivals seeking to purchase programming.  They also prohibit Comcast from withholding programming during negotiations, something broadcasters have been doing lately to secure higher fees from cable operators.

Several other conditions aim to ensure that Comcast cannot stifle the growth of the fledgling Internet video market by preventing emerging companies from obtaining content.  For instance, Comcast will be required to offer its programming to legitimate Internet video providers on the same terms and conditions that it offers other pay-TV providers. 

Another condition requires Comcast to make programming available at comparable prices to Internet video providers that have reached an agreement to purchase programming from another media company.

Comcast must also continue offering an affordable, standalone broadband option to subscribers that want Internet access but not cable TV service.  This condition is designed to drive the growth of online video by allowing consumers to cancel their cable TV subscriptions without losing their Internet access.

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