Search »

Opponents State Case at Congressional Hearing: Comcast-NBCU Update 2-04-10

The House Commerce subcommittee on communications began exploration of the proposed deal between Comcast and NBCU today.

Antitrust experts have said the Justice Department’s antitrust division and the FCC could take up to a year to work out conditions for the deal to be approved, writes Reuters.

Opponents of the merger believe a deal would hurt competitors and consumers by giving Comcast the ability to artificially inflate what it pays itself to carry its own channels, thereby making other distribution services pay the same amount. Those costs will be passed on to consumers, said Andrew Schwartzman, president of Media Access Project, a public policy law firm (via the Los Angeles Times).

Others, like Henry Waxman (D-CA), chairman of the House Energy and Commerce Committee, believe the transaction could lead to NBC’s best programming being transitioned to a pay TV service, which could challenge the future of free TV.

Independent NBC stations also worry that a deal between Comcast and NBCU would see the network moving its free programming to cable, or that it might show network programming on cable prior to airing it on the NBC network, BusinessWeek reports. The merger would give Comcast control of 10 NBC affiliates in cities including New York, Chicago and Los Angeles.

Independent NBC stations, about 200 of them, are concerned that the combined entity might move network programming from free over-the-air TV to cable, or might show network programming first on cable, said Michael Fiorile, head of the NBC Television Affiliates Board. The deal would give Comcast control of 10 NBC network broadcast stations in cities including New York, Chicago and Los Angeles.

Comcast CEO Brian Roberts and NBCU chief Jeff Zucker said, in a joint statement to the committee, “In this universe of content producers, with competitors such as Disney/ABC, Time Warner, Viacom, and News Corp., the new NBCU will have the incentive and financial resources to give consumers the high-quality programming they want and no incentive - or ability - to restrict competition.”.

Jan. 7: DOJ Beats FTC for Scrutiny of NBCU Deal

The Department of Justice, rather than the Federal Trade Commission, will work with the FCC to examine the $30 billion deal that will see Comcast take control of General Electric’s NBC Universal. 

The Justice Department also weighed in on Liberty Media Corp’s purchase of DirecTV and oversaw the Disney-ABC and Viacom-CBS deals, while the FTC scrutinized the AOL-Time Warner merger in 2000, the Los Angeles Times writes.

The decision ends a period of wrangling between the Justice Department and the FTC, each of which wanted the job.

Jeff Chester, of the Center for Digital Democracy, called the news “incredibly good” for opponents of the deal, pointing out that the Justice Department has gathered “unusual expertise that will forcefully analyze Comcast’s market power in the cable business.”

The Justice Department’s antitrust division chief, Christine Varney, will oversee the review.

Industry watchdogs worry about the effects the deal will have on the market; the Department of Justice is likely to put conditions into place that would prevent Comcast from denying access to NBCU channels from rival platforms, writes WorldScreen.com.

Comcast’s CEO Brian Roberts reiterated this week that the company will not turn the NBC network into a cable channel - though doing so would provide the company with significant affiliate fees and a dual revenue stream. “One of the commitments we made from day one is that we believe in the broadcast model,” Roberts said (via MediaPost).

Dec. 7: GE Commits $345 Million in Ads to NBCU

General Electric plans to purchase at least $59 million worth of ads from NBCU a year for each of the next five years once the Comcast-NBCU deal closes, according to a regulatory filing.

GE will also buy $50 million in ads for the 2012 Olympics, writes Adweek. The total five-year commitment is for at least $345 million.

The filing did not say whether that amount was an increase or decrease in ad spend for GE, outside of what it would have spent for movie ads. GE spent $1.2 billion on advertising in 2008, according to TNS Media Intelligence (via the AP). Most of the money was for advertising NBCU’s movies.

Before the deal can go through, regulators must sign off on it. The companies plan to file their antitrust documents with government regulators next month. The regulatory process is expected to take as much as a year.

Dec. 3: Comcast to Purchase Controlling Stake in NBCU
Comcast announced officially today that it is purchasing a controlling stake in NBCU.

Comcast has agreed to pay $6.5 billion in cash and $7.25 billion worth of cable channels. A group of 5 banks, including JP Morgan Chase, Goldman Sachs, Bank of America Merrill Lynch and Citigroup, are putting in $9.85 billion in new debt, writes the Wall Street Journal. The deal will give Comcast a 51% stake in NBCU.

The deal became possible after Vivendi agreed to sell its 20% stake in NBCU to GE for $5.8 billion.

Lawmakers including Herb Kohl, Democrat of Wisconsin and chairman of a Senate subcommittee that reviews antitrust laws, and Representative Henry Waxman, Democrat of California, called for hearings about the deal so consumers can get a better sense of how it could “affect their access to diverse programming and information, especially as they more often look to the Internet for such services,” reports The New York Times.

NBCU chief Jeff Zucker will report to Stephen Burke, Comcast’s operating chief who will be overseeing the takeover, when the deal is finalized.

The deal will allow for distribution and content to work more closely together. “We could look for new, innovative ways to bring content to market by just doing deals with media companies, but the truth is that it’s much easier to take risks and try new things when you’re in the same company,” Burke says.

Dec. 12: Vivendi to Sell 20% Stake in NBCU to GE

General Electric has come to a tentative agreement with Vivendi to buy the French media conglomerate’s 20% stake in NBC Universal for around $5.8 billion, reports The New York Times.

Should the sale go through, it would clear the way for Comcast to purchase NBCU from GE, reportedly for $30 billion.

Comcast wants NBC in order to have control over more of the content that it shows on its cable systems, while GE wants to offload NBC because of its rising losses. A deal with Vivendi is likely to be announced Thursday.

NBC has suffered in terms of ratings for the last several years, being stuck in last place among the networks and, like the other broadcast nets, has seen advertising revenue shrink. The network hoped to begin to remake its fortunes with a risky move to bring late-night talk show host Jay Leno to prime time five nights a week. But Leno’s ratings have been mediocre at best, falling below the threshold at which NBC says the show needs to remain in order to be profitable multiple times.

Nov. 10: Comcast to Speed Addressable Advertising via NBCU Deal

The new company that could potentially be formed by Comcast taking control of General Electric’s NBCU could speed the development of addressable TV advertising

A person familiar with the way Comcast executives are thinking about the deal says they are looking at addressable advertising as a benefit of the deal, the Wall Street Journal reports.

Addressable television advertising allows advertisers to reach targeted segments of the population, down to the neighborhood or even household level, based on income, ethnicity, gender or other characteristics, via set-top boxes. Comcast reportedly is thinking it could use its infrastructure to help NBC’s networks start selling addressable ads.

In order for a deal between Comcast and GE to go through, French conglomerate Vivendi must agree to sell its 20% NBCU stake back to GE. Vivendi and GE spent the weekend in negotiations about the value of that 20% stake, with Vivendi playing hardball in order to “squeeze every nickel they can out of GE,” a source told The New York Post.

Vivendi has a window from now through Dec. 10 to either sell its stake back to GE, take it public, or hold onto it for another year.Nov. 10: GE, Comcast Peg NBCU Valuation at $30B

GE and Comcast have come to an agreement on the valuation of the joint venture between NBCU and Comcast - via which Comcast would gain a 51% stake in the entertainment company - pegging it at about $30 billion.

Though the agreement brings the two parties closer to a deal, Vivendi, which owns 20% of NBCU, has not yet agreed to a deal, according to a source, Reuter reports. Vivendi said last week it was in no hurry to sell its stake in NBCU. But the source said that Vivendi continues to be in talks with GE, and that valuation of the French company’s 20% stake is still being negotiated.

Nov. 4: Vivendi in ‘No Hurry’ to Sell 20% NBCU Stake, Comcast Remains Mum

The potential deal between General Electric and Comcast, via which Comcast would acquire a majority stake in NBCU, could result in Comcast taking full ownership of NBCU in seven years, people familiar with the situation said last month. However, such an acquisition would depend on Vivendi deciding to sell its 20% stake in NBCU, and the company is in “no hurry” to do so, says Simon Gillham, Vivendi’s vp of communications.

Each year, from Nov. 15 to Dec. 10, Vivendi has the option to sell its stake, but it apparently has no plans to do so this year.

Vivendi is in the process of attempting to purchase Brazilian phone company GVT (Holding) SA, but says it does not need to sell NBCU in order to make the purchase, writes Bloomberg.

Comcast announced third quarter results this week, posting a 22.5% increase in earnings. During a conference call with analysts, the company would not comment on NBCU, but said it would take a “disciplined approach” to acquisitions.

However, people familiar with the situation say an announcement is possible in the next week or two, according to the Wall Street Journal.

Oct. 23:
Bankers for Comcast have been approaching financial institutions to find backers for the potential NBCU deal as Comcast executives perform due diligence at 30 Rockefeller Plaza. Potential partners include JP Morgan, Bank of America and Union Bank.

Top brass at both companies met this week, where groups representing Universal Studios and NBC Television made presentations on the financial situations of their divisions, according to The Wrap.

It still seems as though NBCU pres and CEO Jeff Zucker will remain in place should a deal go through. One top executive involved in the negotiations has said that Comcast founder Ralph Roberts has already told Zucker he’ll stay on the job.

Former Fox television chairman Peter Liguori has been advising Comcast on the purchase, and it is presumed that he will take a senior position if the deal is executed. Former News Corp. pres and COO Peter Chernin has also been advising Comcast on the deal.

Oct. 13:
The Comcast deal to buy 51% of NBCU from General Electric may be as good as done, in principal, say those close to the deal, Hollywood’s The Wrap reports.

One executive with knowledge of the deal is quoted as saying, “They’ve all agreed to agree.”

And if the deal happens, NBCU CEO Jeff Zucker may still have a job. In a BusinessWeek report this week, General Electric CEO Jeff Immelt said that if Comcast does indeed swap assets for a 51% stake in NBCU, GE would “totally” like to see Zucker stick around, while Comcast is also reportedly close to making the decision to hang onto Zucker.

The proposed deal would give GE the ability to offload its stake over several years, with Comcast committing billions more to the joint venture, according to a person close to the situation (via the Associated Press).

Oct. 1:

Comcast is in negotiations to combine its own programming assets with NBCU in a move that would spin off a separate company, of which Comcast would own a 51% stake. Comcast would also contribute an estimated $6 billion to $7 billion to do the deal, according to The New York Times. NBCU would retain 49% of the new company and would contribute about $12 billion in debt to the new company.

Comcast’s move to purchase a piece of NBCU is an indication that the company is worried that the internet will one day become of the leading forms of television distribution, writes the Wall Street Journal. Comcast’s traditional cable television subscriptions - now at 24 million households - made up more than half of Comcast’s revenue in the first half of 2009. But with the internet’s current promise of free content, there looms the possibility that subscribers will begin to cancel their cable subscriptions in favor of viewing content online.

Former News Corp. pres and COO Peter Chernin recently gave cable networks a dire prediction for the future, saying cable will ultimately face the same “digital destruction” that has nearly decimated newspapers and has negatively affected broadcast television and other traditional media.

Brian Roberts, Comcast CEO, has said that too much is being made over worries about the so-called “cable bypass.” Whether such a cable bypass is headed for the industry or not, owning the programs and the channels is one way to stop it from happening by keeping the content off the internet, by charging for online content, or by requiring users to prove they subscribe to a pay TV service in order to access the content.

Should the Comcast-NBCU deal come to fruition, Comcast would not only be the biggest owner of cable systems in the country, but would also hold themost significant cable television assets in the world, according to the article. Craig Moffett, an analyst for Sanford C. Bernstein & Company, said that such a deal would mean that Comcast would be “calling the shots for a significant portion of American viewing hours.”