the regulatory microscope of the Justice Department.
The U.S. Department of Justice confirmed Wednesday that it would be
the agency to spearhead a review of the $30 billion deal that would
give Comcast majority ownership of NBC, Universal Studios, and a host
of cable TV franchises. Both the Justice Department and the Federal
Trade Commission typically look into mergers that involve potential
antitrust issues, but DOJ is taking the lead on this one. Ultimately,
the Federal Communications Commission will also need to examine the
deal.
First revealed last October, the merger would create a joint venture
51 percent owned by Comcast and 49 percent by NBC parent company
General Electric. Comcast would pay GE about $6.5 billion in cash
upfront. A special option would allow GE to eventually sell off pieces
of its stake in the new venture to Comcast over a period of seven
years.
Comcast is already the nation's largest cable provider with 23.8
million cable TV customers. The company also owns a few select cable
channels, including E! Entertainment and two sports channels--the Golf
Channel and Versus. If the NBCU deal is consummated, Comcast will also
claim ownership of not just NBC and Universal Studios, but also an
array of popular cable networks, including CNBC, MSNBC, Bravo, USA,
SyFy, and Oxygen. NBCU also has a minority share in Hulu, while
Comcast has Fancast, its own video streaming site.
Since the merger would turn Comcast into both a provider and
distributor of news and entertainment, the DOJ has reason for concern.
One hot button issue has been Comcast's treatment of cable channels
outside its ownership.
On Wednesday, the Tennis Channel filled a complaint with the FCC
accusing Comcast of giving preferential treatment to Comcast-owned
sports networks. Comcast's Golf and Versus channels are free as part
of a basic cable subscription, while the Tennis Channel is only
available through a premium sports package that costs $5 to $8 extra
per month, thereby hitting a smaller number of subscribers.
The National Football League also fought a lengthy battle with Comcast
over the same issue. The two sides finally came to peace last May
after Comcast agreed to move the NFL Network from its premium sports
package to a less pricey digital package that would reach more
customers.
Before the DOJ can begin its initial review, Comcast will need to file
the necessary paperwork under the Hart-Scott-Rodino Act. That should
be done shortly, a Comcast spokesperson told CNET. That would then
give the DOJ 30 days in which to file a second request looking for
more detailed information, which is typical in mergers of this size.
Comcast also confirmed that it would be filling a public interest
statement with the FCC at the end of January.
Updated at 9:30 a.m. PST with response from Comcast.