The NBC-Comcast 'Media Goliath' Merger Stirs Debate

On Tuesday, the FCC and the Department of Justice finally approved a major merger between Comcast and NBC, after more than a year of debate and what federal regulators called the most acute scrutiny a media merger had ever faced. The deal gives Comcast control over NBC Universal's TV and movie subsidiaries, in exchange for about $13.75 billion in cash and assets. Comcast will own 51-percent of the joint venture, which will now compete with Disney for the title of world's largest media corporation.

The FCC approved the measure by a 4-to-1 vote, the lone dissenting opinion coming from Democratic commissioner Michael J. Copps. "The Comcast-NBCU joint venture opens the door to the cable-ization of the open Internet," Copps said in a statement, echoing the sentiments of many protesters. "The potential for walled gardens, toll booths, content prioritization, access fees to reach end users, and a stake in the heart of independent content production is now very real."

In a statement, Comcast head Brian L. Roberts thanked government regulators, and heralded the announcement as "a proud and exciting day" for his company. As expected, though, his company will have to adhere to conditions imposed by the government, in order to "foster competition in the video marketplace." For instance, the new joint venture will be forced to abide by the FCC's recently approved Net neutrality rules (even if they're eventually overturned by a federal court), and it will have to provide broadband access to poor households at a rate of $10 per month. The firm will also have to diversify its programming, with an emphasis on more local news and children's shows.

Most of the restrictions, however, are geared toward protecting what FCC chairman Julius Genachowski, in a statement (PDF), called "the emerging online video marketplace."

Comcast will retain a financial stake in Hulu, but NBC will retain managerial control over the streaming service."Without such a remedy, Comcast could, through its seats on Hulu's board of directors, interfere with the management of Hulu, and, in particular, the development of products that compete with Comcast's video service," the Justice Department said in a press release. Comcast executive vice president David Cohen assured that his company has "no current contemplation" of selling its stake. The agreement also stipulates that the new firm will have to provide its content at a fair price to any online distributor that has already obtained similar content from one of its rivals.

The fact that the government approved the merger came as no surprise to most observers. But the details of the agreement have left some scratching their heads. The Washington Post's Rob Pegoraro openly asks, "Did the Feds fold?" -- pointing out that many of the conditions forced by federal regulators are things that "Comcast was willing to give ... up from the start."

Others were taken aback by the sheer size of the deal. Wired refers to the new company as a "media Goliath." NPR's John Nichols claims that the government's decision "effectively abandoned more than a century of antitrust principles," adding that the move represents "the ultimate surrender to the demands of corporate America." Senator Al Franken echoed these sentiments in a statement. "This deal would mean higher cable rates and less freedom of choice for American consumers," Franken argued. "And it would give a single media conglomerate unprecedented control over the flow of information in America."

The fact that the online video market played such a central role in the decision also says a lot about the changing nature of the media industry. "This is potentially bad news for the television business," the Economist opined. "The reason media companies, Disney excepted, do not warm to most online video services -- the reason those services remain 'emerging' -- is simple: they do not make money for media companies." Frost & Sullivan analyst Dan Rayburn told the Wall Street Journal that the move, at the very least, proves that regulators are now paying more attention to the young online video market. "This is really the first big ruling the industry has gone through," he said.

The Atlantic's Bruce Gottlieb, however, takes a more long-term look at the agreement. "The details [of the deal] surely matter," Gottlieb writes. "But years from now, the specifics of what was decided in this merger may mean a lot less than the fact that the FCC is now deeply involved in the multifront war to decide who will win online video."

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