Comcast Said to Face Online, Web Conditions for NBC

Comcast Said to Face Online-Video, Web Conditions for Deal
Comcast would be bound by open-Internet conditions for seven years, according to FCC officials. Photographer: William Thomas Cain/Getty Images

Comcast Corp. may have to provide television programs to online competitors and wouldn’t be allowed to interfere with subscribers’ Web traffic to satisfy regulators vetting its planned purchase of NBC Universal, people familiar with the deal said.

The requirements were among those proposed by Federal Communications Commission Chairman Julius Genachowski on Dec. 23, three agency officials in Washington said in interviews. They declined to be identified because the conditions haven’t been made public.

Genachowski, a Democrat, asked his four fellow agency members to approve the acquisition of the General Electric Co. unit on condition the combined company meet his proposed requirements.

Critics have urged the commission to keep Comcast from unfairly withholding NBC content from the growing market for online video and to ensure Comcast’s 17 million high-speed Internet customers have access to Web content not controlled by the company.

Genachowski’s colleagues -- two Democrats and two Republicans -- could accept, reject or modify the conditions. The agency hasn’t set a date for its vote on the deal.

Comcast, the largest U.S. cable company, announced in December 2009 it 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 transaction is being reviewed separately by the Justice Department.

No Favoring Content

Comcast would acquire 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.

Sena Fitzmaurice, a Washington-based Comcast spokeswoman, declined to comment. In a blog posting yesterday, Comcast Executive Vice President David Cohen said the deal was entering “the final days of this government review process.”

FCC spokeswoman Jen Howard declined to comment.

Under Genachowski’s proposed conditions, Comcast would be bound by open-Internet conditions for seven years, regardless of the fate of net neutrality rules the agency passed Dec. 21, the officials said. The rules, which bar service providers from blocking or slowing Web content sent to homes and businesses, may face legislative and legal challenges.

The proposed conditions would forbid Comcast from favoring what would become its affiliated content such as Hulu over other Web traffic and wouldn’t be allowed to use set-top boxes to unfairly direct subscribers away from competing programming, the officials said.

Comparable Programming

Any caps the cable company placed on Internet usage to manage traffic would have to apply equally to Comcast’s Web fare and competitors’ content, the officials said. Comcast lets subscribers watch its cable programs over a high-speed Web link at no extra cost.

If a competitor sells programming to an online video provider, Comcast must offer comparable programming, with any deal to be negotiated at market rates, officials said.

“Regulators want to ensure that online video providers have fair access to NBC-Universal programming at market-based rates,” Paul Gallant, a Washington-based analyst with MF Global, said in an interview today.

The combined company may use its power to raise prices, withhold programs from rivals and block competing online video, rivals and advocacy groups such as the Washington-based Media Access Project have said.

U.S. Representative Henry Waxman, a California Democrat, in a Dec. 7 letter called for conditions “to safeguard against potential harm to the emerging online video market and to promote an open Internet.”

Cable companies including Comcast now face requirements to make programming available to competitors such as DirecTV and Dish Network Corp.

Philadelphia-based Comcast dropped 12 cents to $22.60 at 4 p.m. New York time on Nasdaq Stock Market trading.

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

-- Editors: Allan Holmes, Joe Winski

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