Justice Department to review Comcast’s proposed acquisition of NBC Universal

Justice Department to review Comcast, NBC deal

WASHINGTON — The Justice Department said Wednesday that it will be the agency to scrutinize Comcast Corp.’s plans to buy a controlling stake in NBC Universal’s broadcast networks, cable TV channels and movie studios.

The announcement settles questions about whether the federal antitrust review of the deal, announced late last year, will be handled by Justice or the Federal Trade Commission. The Federal Communications Commission must also approve the combination, including the transfer of the NBC broadcast licenses to Comcast.

Even though federal regulators are expected to approve the transaction, many analysts and watchdogs believe they will attach significant conditions because a merger would give the nation’s largest cable TV operator control of a vast media empire as well.

Comcast is seeking to buy a 51 percent stake in NBC Universal from General Electric Co., which is acquiring the portion of NBC that it doesn’t already own from France’s Vivendi SA.

Both the Justice Department and the FCC will focus on the implications of allowing one company to control of both the creation and the distribution of content.

NBC Universal owns the NBC and Telemundo broadcast networks; 26 local TV stations; an array of popular cable channels including CNBC, Bravo and Oxygen; the Universal Pictures movie studio and theme parks; and a stake in Hulu, which distributes free television programming online.

Comcast, meanwhile, has 23.8 million cable TV customers and owns some cable channels already, including E! Entertainment and the Golf Channel, as well as a controlling interest in the Philadelphia 76ers and Flyers.

Comcast’s planned acquisition of NBC Universal will face a tough review at the Justice Department, where its antitrust chief, Christine Varney, has vowed to ramp up enforcement and take a tough look at potential abuses of market power.

Still, things may not have been any easier at the FTC, an independent agency whose members are nominated by the White House and approved by the Senate. Although the legal analysis at the two agencies would be the same, the FTC is potentially less insulated from political pressure.

If regulators approve the deal, they are likely to attach conditions that would prevent Comcast from denying access to NBC channels and sports programming to DirecTV Inc., Echostar Corp.’s Dish Network, Verizon Communications Inc.’s FiOS and other competitors. Regulators could also mandate binding arbitration in disputes over access fees and terms.

In addition, regulators are expected to impose obligations that would prohibit Comcast from dropping smaller, independent channels from its lineup. Comcast has been involved in a number of high-profile disputes in recent years over where it places channels on its lineups and how much it pays for them.

Just this week, the Tennis Channel filed a complaint with the FCC accusing Comcast of discriminating against its cable TV network by relegating it to a premium sports tier that reaches only a small number of subscribers, even as Comcast-owned Golf and Versus channels get much wider distribution.

The National Football League had also sued Comcast and complained to the FCC over the cable provider’s decision to move the NFL Network to the premium package following a dispute over fees. The impasse nearly led to a blackout of the NFL Network on Comcast, but the two sides settled their dispute in May after the NFL agreed to reduce its price.

Comcast has already tried to address some of the concerns likely to be raised by regulators. When the deal was announced, Comcast and NBC offered several “public interest commitments,” including a pledge to continue free, over-the-air broadcasts of the NBC and Telemundo networks and a promise to add new independent channels to Comcast’s digital cable lineup.