After more than a year waiting for government permission, the pending merger between broadcast content provider NBC-Universal and cable giant Comcast finally obtained approval from the Federal Communications Commission and Department of Justice.
The FCC delayed its vote on the matter until concerns the alliance would present an unfair advantage over competitors expressed by FCC Chairman Julius Genachowski were allayed. Hours later, the DOJ announced it was satisfied Comcast’s purchase of 51 percent of NBCU from General Electric represented no violation of U.S. antitrust laws.
The FCC voted 4-1 in favor of the merger on January 19. Commissioner Michael Copps was the lone dissenting vote.
“We are glad Comcast can now get back to doing business and creating jobs, but the price of doing so should not be coerced compliance with the heavy-handed tactics of an overreaching FCC,” said Rep. Fred Upton (R-MI), chairman of the House Energy and Commerce Committee, in a press statement.
Upton expressed his displeasure with Genachowski’s demands from Comcast and NBCU as a condition of FCC approval, including:
acceding to network neutrality rules on content streamed online for seven years;
• creating an additional 1,000 hours of news and informational programming on specific channels;
• setting aside $20 million for minority programs;
• providing $9.95 monthly service to low-income customers;
• instituting what the FCC considers to be “fair pricing” for content provided to Comcast’s competitors;
• making available documentation of content arbitration disputes to other cable companies;
• and guaranteeing equal transmission of content from other networks.
“The FCC’s efforts to circumvent both the free market and courts by railroading job- and investment-harming net neutrality provisions, as well as regulation of nascent Internet-distributed video, represent more of a Chicago-style shakedown than the thoughtful deliberation this transaction deserved,” said Upton.
Upton said the House Energy and Commerce Committee will ramp up congressional oversight to examine whether the FCC’s transaction review process requires revamping.
‘Merger Held Hostage’
Seton Motley, editor in chief of StopNetRegulation.org and president of Less Government, an organization dedicated to small government and protecting the First Amendment from governmental assault, says the FCC’s prolonged deliberations were an abuse of its regulatory authority designed to “exact draconian concessions” from Comcast and NBCU on behalf of activist groups.
“The FCC’s delay dangled the Comcast-NBCU merger like a piñata, allowing these PIGs—public interest groups—to beat shakedown concessions out of them and feed at the trough into which they fall.”
Referring to the December 21, 2010 session in which the FCC passed network neutrality regulations by a 3-2 vote along partisan lines, Motley continued, “I’m sure it’s just a coincidence that it took the FCC more than a year to approve the merger, all the while they were working on imposing network neutrality, which would hammer Comcast.”
Motley says the overlapping issues “cowed Comcast into silence on the net neutrality process as their merger approval was being held hostage throughout. Then, just three days after the FCC voted themselves Internet overlords, Chairman Julius Genachowski announced the commission would finish the merger approval. Interesting.”
50 Channels Set Aside
In a press statement, Genachowski asserted the government-revised deal will serve the public interest. “After a thorough review, we have adopted strong and fair merger conditions,” he said.
“The conditions include carefully considered steps to ensure that competition drives innovation in the emerging online video marketplace,” Genachowski added. “Our approval is also structured to spur broadband adoption among underserved communities; to increase broadband access to schools and libraries; and to increase news coverage, children’s television, and Spanish-language programming.”
Motley, however, argues the FCC requiring Comcast to budget $20 million for minority programs is excessive. “If this isn’t a racial grievance group set-aside, I don’t know what is,” he said.
“The National Coalition of African-Owned Media was demanding that Comcast set aside 50 channels—10 percent of its capacity—for exclusively African American owners,” Motley continued. “Who knew the FCC would also make Comcast pay to program it?”
Motley says the FCC’s demands on the joint venture to create an additional 1,000 hours of news and informational programming will force the production of shows “almost no one will watch. This is an obnoxious FCC overreach, very reminiscent of the demands it makes of over-the-air broadcast channels for public interest and children’s programming. Of course, the FCC has no authority to make such demands on cable channels.”
‘Likely Will Prove Unworkable’
“In the wake of grabbing regulatory authority over the Internet, the FCC surely wants to demonstrate its bureaucratic competence,” said Jim Lakely, co-director of the Center on the Digital Economy at The Heartland Institute, which publishes Infotech & Telecom News.
“Unfortunately, the commission has merely showed it’s in over its head when it comes to regulating media in the digital age,” Lakely added. “Approval of this merger took too long, coming nearly two months past the 180-day deadline that passed around Thanksgiving,” he explained.
“And the merger comes with conditions that will likely prove unworkable—especially the mandate that Comcast adhere to the FCC’s current version of net neutrality principles for seven years. Such a span of time is a virtual eternity in digital media, akin to locking a cell phone company into the industry standard of 2003,” he said.
He added, “While the FCC’s blessing is welcome, the commission should stop trying to micromanage an industry that moves faster than any in history. Instead it should give market forces the freedom to self-regulate and continue pushing innovation in the digital economy.”
Bruce Edward Walker
is managing editor of
Infotech & Telecom News.