FCC says Comcast-NBCU deal meets standard, but rules are needed to protect competition

The Federal Communications Commission said Thursday that Comcast Corp.'s proposed deal to acquire a controlling interest in the NBC Universal Inc. entertainment giant met the standard of serving the "public interest," but it said it would impose conditions on the deal to ensure that the company didn't harm competition or emerging online services.

As part of the transaction, Comcast also agreed to offer a broadband Internet service to low-income families for $9.95 a month.

The FCC began circulating the widely anticipated order Thursday morning. It would allow Comcast to close on the $30 billion transaction with NBCU, possibly in early January.

The order, according to industry sources, is about 280 pages, and among the conditions is one that would force Comcast to sell NBCU content, such as Bravo and the USA cable channels, to new online competitors. That way Comcast could not keep NBCU content to itself as a competitive advantage. Comcast now offers an entertainment service online with its Xfinity brand.

Critics cited Comcast's withholding of Phillies games and other Comcast SportsNet games from satellite-TV providers as an unfair competitive advantage for the cable giant and one that the company should not be allowed to repeat with NBC on the Internet.

In the order, Comcast has agreed to abide by "net neutrality" conditions that the FCC passed Tuesday, even if those conditions are thrown out by the courts.

Comcast will have to "neighborhood" channels in the future, a provision sought by the financial cable channel Bloomberg TV.

Through NBCU, Comcast will acquire the highly profitable CNBC financial channel, and Bloomberg TV said it feared that Comcast would place Bloomberg on a distant spot on the channel lineup to protect the CNBC audience size and profit.

Conditions contained in the order could change in the coming weeks as FCC commissioners, who were seeing the order for the first time, seek changes or additional provisions.

The FCC order, which is not yet public, seems almost certain to get the necessary three yes votes: the two Republicans on the commission, Robert McDowell and Meredith Attwell Baker, and FCC Chairman Julius Genachowski, a Democrat.

The votes of Democratic commissioners Michael Copps and Mignon Clyburn are more uncertain. Clyburn, an African American commissioner, seems likely to support the deal, experts said. Comcast has reached agreements with Hispanic, Asian and African American groups to broaden diversity in its management ranks and add minority-owned or minority-targeted programming.

Some say they believe Copps, a longtime vocal opponent of media consolidation, might vote no.

If approved, the transaction would create a joint venture out of Comcast's entertainment properties, including the Philadelphia-based regional sports networks, and NBC Universal, which owns cable channels, the troubled NBC broadcast-TV network, Universal movie studio, and theme parks.

FCC officials spoke broadly on background about the order, without disclosing specifics on the conditions that later leaked from industry sources and government officials.

FCC officials indicated that a final vote on the order could be weeks away and that approval did not have to take place in a public FCC meeting. The next scheduled FCC meeting is in late January.

The Department of Justice also is reviewing the transaction, but it has not concluded its analysis. Senior FCC officials said they believed that the Justice Department was comfortable with the FCC's approach. If Comcast were forced to sell NBC TV stations or other assets, those conditions would most likely come from the Justice Department review. A Justice Department spokeswoman said Wednesday that the antitrust review was continuing.

David Cohen, executive vice president of Comcast, said the cable giant was "gratified" with the FCC's action. "After nearly a year, with one of the longest public comment periods in transaction-review history, the filing of thousands of substantive comments, and the production of over 500,000 pages of documents by Comcast, we look forward to an expeditious vote in January by the full commission approving the transaction."

Despite the conditions, critics remain. Sen. Bernie Sanders (I., Vt.) commented after hearing of the FCC order: "Time is running out to stop this deal. I hope the American people will take notice and stand with me to demand that the FCC change course, vote down the order, and reverse the disturbing trend of media consolidation."