Comcast, the largest U.S. cable company, is buying a controlling stake in the entertainment giant NBC Universal for $13 billion, the companies announced Thursday.
The long-negotiated deal drew immediate criticism from consumer rights groups who say that combining Comcast's control over cable and internet distribution with NBCU's television stations and movie studio will give the combined company the motivation to choke free video services and gouge cable customers.
"In combining a major television network, a movie studio, a cable programmer and the largest internet service provider/cable operator, this new joint venture must be ready to take extraordinary steps to alleviate concerns about potential anti-competitive behavior if it expects the deal to be approved," said Gigi Sohn, the president of the open internet advocacy group Public Knowledge.
Comcast is paying GE about $6.5 billion in cash and $7.25 billion in programming for a 51 percent stake. GE remains in control of the rest of the company, valued at $30 billion in the complicated deal.
The Free Press, a kindred spirit with Sohn's group, wants regulators to block the deal and cataloged their monopoly concerns in a report on the proposed takeover.
Anticipating these and other objections, Comcast released a letter that included voluntary promises about how it would handle NBC News, programming for Hispanic audiences and local programming.
The merger could stymie the increasing migration of television and cable content to online services such as the popular, and NBC-owned Hulu.com.
The new company could move that content inside Comcast's network so that it is only available to ISP subscribers that also subscribe to cable, a way to boost revenue and compete with DSL and other cable companies on the availability of content -- not on price, speed and service.
Comcast, however, already owns a number of television channels, such as E! Entertainment, Style, Versus, G4, PBS Kids Sprout, TV One and the Golf Channel. It's not clear that adding to that stable will lead to anti-competitive behavior in terms of distribution via cable or the internet, however.
The proposed purchase also prompted skeptical interest from Representative Edward J. Markey (D-Massachusetts), a longtime backer of internet freedom and a former chairman of the Energy and Commerce Committee’s Communications, Technology and the Internet Subcommittee.
"This proposed deal raises significant questions about consumer choice and competition, innovation and investment in the media marketplace that merit close scrutiny by Congress, the FCC and the Justice Department," Markey said, telegraphing his interest in hearings on the matter.
As for the FCC, whose approval is necessary for the purchase, it's not telegraphing anything.
"The FCC will carefully examine the proposed merger and will be thorough, fair, and fact-based in its review," said spokeswoman Jen Howard.
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