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Comcast Must Allow Online Video From Rivals to Win Approval for NBC Deal

Comcast Corp. must agree to let subscribers view online video from competitors to win approval from regulators to buy NBC Universal, according to proposed conditions outlined by a U.S. agency today.

Comcast also must sell programs to rivals, and allow competing programmers to reach its video subscribers, said officials at the Federal Communications Commission, which is reviewing the deal.

The conditions are among recommendations FCC Chairman Julius Genachowski sent to fellow commissioners, agency officials said during a telephone news conference in Washington.

Genachowski has concluded that the deal, with conditions, satisfies the public-interest standard Comcast must meet, the officials said. The officials declined to be individually identified because the proposal hasn’t been made public.

FCC commissioners -- three Democrats including Genachowski and two Republicans -- can accept, strengthen or dilute the conditions before the agency votes on the merger. The officials said they weren’t sure when the vote would take place.

Comcast is “gratified” by Genachowski’s action, Executive Vice President David Cohen said in an e-mailed statement. “We look forward to an expeditious vote in January by the full commission approving the transaction.”

‘Very Bad News’

U.S. Senator Bernie Sanders, a Vermont independent, in a statement called Genachowski’s action “very bad news” and said it would lead to “a monolithic media superpower.” He said the FCC should reject the merger.

Comcast, the largest U.S. cable company, would gain control of the NBC television network, broadcast stations, cable channels such as MSNBC and USA Network, a library of more than 4,000 movies, and part ownership of the Hulu online video service.

The Philadelphia-based company said yesterday it doesn’t expect the deal to buy the General Electric Co. unit to close until January.

Commissioners will “probably want more than a few days to review what is expected to be a lengthy order,” Rebecca Arbogast and David Kaut, Washington-based analysts for Stifel Nicolaus & Co., said in a note to clients yesterday.

The proposed conditions may help Netflix Inc., Amazon.com Inc., Google Inc. and Apple Inc. distribute Comcast-owned programming via online video services, Arbogast and Kaut said in a note to clients today.

Submitting to Arbitration

Comcast may be required to submit to arbitration in disputes about its programming from its regional sports networks and NBC-owned TV stations, Arbogast and Kaut said. Such conditions could help rival video providers DirecTV, Dish Network Corp., AT&T Inc. and Verizon Communications Inc., Arbogast and Kaut said.

Comcast told FCC officials that conditions relating to online video should be of limited duration, the company said in a disclosure filing posted today on the agency’s website.

If arbitration is required, participants should be able to appeal any ruling to the commission, Comcast said in the filing.

There’s no basis for a condition barring Comcast from interfering with subscribers’ Web traffic, since the agency’s adoption of open-Internet rules on Dec. 21 “resolves any concerns in this area,” according to Comcast’s filing.

Viacom Wants Conditions

The enlarged Comcast would have increased incentive and ability to use its market power to the detriment of independent programmers, Viacom Inc. told FCC officials, according to a disclosure filing posted today on the agency’s website. Viacom, owner of MTV Networks and Comedy Central, said the FCC should impose conditions “to ensure a competitive marketplace,” according to the filing.

The deal proposed last year also needs approval from the Justice Department. The review is ongoing, said Alisa Finelli, a spokeswoman for the department.

Comcast fell 2 cents to $22.18 at 4 p.m. New York time in Nasdaq Stock Market trading. The stock has risen 32 percent this year. GE dropped 2 cents to $18.04 in New York Stock Exchange trading.

Comcast is acquiring a 51 percent stake in NBC Universal from GE by paying $6.5 billion in cash and contributing cable channels valued at $7.25 billion to a joint venture that will own the entertainment company.

Bloomberg LP, the parent company of Bloomberg News, has filed documents opposing the Comcast-NBC Universal combination as it was proposed.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Allan Holmes at aholmes25@bloomberg.net.

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