Comcast Takes Controlling Stake in NBC Universal

Related subjects: Media, Net Neutrality, Press Freedom, Transparency Yield, U.S. Economy, U.S. Law Comments (0)

3 December 2009 :: staff

GE, the parent company of NBC Universal, has agreed to a deal that would give Comcast a controlling interest in the media giant. NBC Universal is one of the leading producers of feature films, network television and TV news. Its flagship news services, NBC News, MSNBC, and CNBC, could see their budgets affected by the sale, and there are concerns over conflict of interest for a cable TV and internet service provider owning a controlling stake in such a vast media enterprise. Congressional hearings and federal communications regulatory investigations are considered likely to ensue, before the deal can be implemented.

There is also concern that Comcast may use its new leverage over mainstream American media to oppose efforts to establish strong net neutrality regulations that would prevent it from using its position in web access to manipulate the content available to web users. It is clear the acquisition will strengthen Comcast’s media business and help to position the cable provider as one of the leading communications conglomerates, but media watchdogs are already ramping up campaigns of vigilance against abuses or attempts to manipulate content or access. Some seek to oppose the deal outright as a direct threat to the freedom of information and net neutrality.

The deal has Comcast paying $30 billion for 51% of NBC Universal. Comcast has pledged to make substantive efforts to preserve and reinforce the local news programming and other public interest programming at stations across the NBC O&O (owned and operated) family of media outlets. There are federal broadcast licensing agreements that will now transition with NBC Universal, requiring Comcast to take those substantive steps to guarantee funding for and access to local news programming.

Some of the commitments Comcast says it will honor, as per today’s press release, are as follows (bold type set by Robert MacMillan, for Reuters MediaFile):

• NBC has a proud history in broadcasting with both NBC and Telemundo. Notwithstanding the turbulence in the current media marketplace and the ongoing threats to the business model of a national broadcast network, the combined company remains committed to continuing to provide free over-the-air television through its 0&0 stations and through local broadcast affiliates across the nation. As we negotiate and renew agreements with our broadcast affiliates, we will continue our cooperative dialogue with our affiliates toward a business model to sustain free over-the-air service that can be workable in the evolving economic and technological environment.
• The NBC owned-and-operated broadcast stations (”0&OS “) have a demonstrated record of quality local programming in major markets around the country. Comcast also has demonstrated its commitment to local programming, including sports and public affairs, and in providing support for public, educational, and government (PEG) access programming. We want to use the combined resources of NBC and Comcast to strengthen localism
• We intend to preserve and enrich the output of local news, local public affairs, and other public interest programming on NBC 0&0 stations.
• Since NBCU was acquired by GE in 1986, the owners have abided by a policy (summarized in a filing with the FCC) of ensuring that the content ofNBC’s news and public affairs programming would not be influenced by the non-media interests of General Electric. The combined company will continue these policies with respect to the news programming organizations of all NBCU networks and stations, and will extend these policies to the potential influence of each of the owners. To ensure such independence, the combined companies will continue in effect the position and authority of the NBC News ombudsman to address any issues that may arise.
• Comcast and NBCU have strong track records in children’s programming and children’s issues. The combined company will make an expanded commitment to meeting the viewing needs of children, and the needs of parents to better control their family’s viewing.
• We reaffirm our commitment to provide clear and understandable on-screen TV Ratings information for all covered programming across all networks (broadcast and cable) of the combined company.
• We intend to expand the availability of over-the-air programming to the Hispanic community utilizing a portion of the digital broadcast spectrum of the Telemundo O&O’s (as well as offering it to Telemundo affiliates) to enhance the current programming of Telemundo and Mun2.
• As a cable operator, Comcast is committed to dealing fairly with all non-affiliated video programmers with whom we do business, and to promoting program diversity. Nearly six out of every seven channels carried by Comcast Cable systems will still be networks unaffiliated with Comcast upon the completion of this transaction.
• We plan to honor all of NBCU’s collective bargaining agreements. We respect NBCU’s existing labor-management relationships and expect them to continue following the closing of this transaction.

The deal has risks of all kinds that analysts in the fields of media, economics, stock-trading, and regulatory law, will be reviewing in excruciating detail. Congress may also be asked to hold hearings, and anti-trust lawyers at the Justice Department may also be brought in to evaluate the risks to competition in the media marketplace.

If, however, Comcast can demonstrate that it will not only honor NBC Universal’s commitments to public interest news programming and local media access, but can “strengthen localism” as it suggests and make the business profitable, the deal could wind up being of benefit to the cause of net neutrality, because an access provider would be benefitting from a media enterprise without having to stratify connection speeds in order to do so. Such an outcome could remove the perceived commercial incentive for access providers to manipulate web access in order to promote content in exchange for additional fees to content providers.