Comcast-NBC Universal Deal Clears European Hurdle

A proposed joint venture between cable giant Comcast and media titan NBC Universal has cleared a major hurdle as European antitrust regulators have blessed the deal.

Because of significant differences between the assets involved in the American and European aspects of the deal, however, it seems likely that U.S. regulators will continue to scrutinize the venture more rigorously.

Comcast is America’s largest cable company and second largest internet service provider.  NBC owns major stakes in television, film, and cable programming as well as a major share in online streaming television service Hulu.  Under the deal, announced December 3, 2009, Comcast would buy a majority stake in NBC from its parent, General Electric.  As a result, Comcast and NBC would form a joint venture owned 51% by Comcast and 49% by NBC; Comcast would also manage the venture.  The deal is valued at $37 billion.

The European Commission has announced that the deal “would not significantly impede effective competition in the European Economic Area or any substantial part of it.”  But they pointedly noted that in Europe, unlike in the U.S., Comcast owns no cable assets.  Thus in Europe the deal creates no vertical relationship between a Comcast cable distribution platform and NBC’s programming assets.  Such a relationship would, however, result from the U.S. portion of the deal.

This vertical relationship was one of several concerns raised by opponents of the deal in a public comment period offered by the U.S. Federal Communications Commission, which has jurisdiction to review the deal.  The venture’s opponents believe it will lead to higher cable bills, fewer independent programmers and less public-service programming.  Comcast and NBC will formally respond to the public comments later this month.  But they have already argued that the deal would be a boon to consumers by improving broadcast operations, pressuring cable networks to lower prices and improve quality, and speeding the development of “anytime, anywhere” video service.  And they say the post-venture NBC would still only account for 12% of national cable network advertising and affiliate revenues, hardly enough to dominate cable advertising.

The FCC and the U.S. Justice Department, which shares jurisdiction over the deal, are expected to decide by year-end whether to approve or deny the deal or approve it with conditions, such as asset divestitures.

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