Thursday, January 20, 2011

Oh boy! Comcast-NBC Merger Approved By the FCC

On Tuesday, the FCC approved Comcast's much-ballyhooed acquisition of NBC.

This deal has been a long time coming: General Electric agreed to sell NBC, then worth $30 billion, to Comcast in December of 2009, and this agreement followed some nine months of negotiations. Then, the deal passed to the Federal Communications Commission, who decided in a four-to-one vote that it was okay for a production company to be controlled by a company that distributes those productions.

As with the Net Neutrality restrictions that the FCC issued last month, there's a lot going on in this deal, and a lot of different people have a lot of very different things to say about it. In this week's episode, I'll try to parse the news and, as always, explain what the big deal is.

The Specifics

So, Comcast, cable TV and Internet service provider to a bunch of the people reading these words this very second, is buying NBC, purveyor of hit shows like Outsourced and The Marriage Ref and 32% stakeholder in steaming video site Hulu. That means that Comcast now has a vested interest in several of the channels they provide to customers, and an economic reason to prefer NBC content to comparable content from other places.

Likewise, they now have reason to withhold some or all of that content from other content providers, the Time Warner Cables and Verizons and Netflixes of the world. If our society ever again gets to the point where some must-watch show is airing on NBC, there is, in theory, a lot that Comcast could do to restrict its availability for non-Comcast consumers.

While Comcast's distribution of live TV over its regular old cable is certainly a component of this deal, the FCC's deliberations have overwhelmingly hinged on the Internet video question - even though this nascent market is still developing, the FCC wisely recognized that it would need to limit Comcast's ability to promote its own services (Hulu, or even just standard cable TV) at the expense of its competitors (Netflix, iTunes).

The Limits

While the FCC didn't block this merger outright, Comcast walked away from the year's worth of deliberation with no few terms and conditions, including many outside the scope of our subject matter. Among these: it's stipulated that Comcast must provide about 2.5 million low-income households with low-cost high speed Internet and options for purchasing computers on the cheap; Comcast's network needs to expand to include new homes and new rural areas; Comcast needs to provide some 600 low-income schools or libraries ("anchor institutions") with free cable and Internet. These parts of the deal are a convenient way for the government to push forward its stated goal to improve the country's Internet access.

This is all good stuff for consumers, but the more important restrictions are the ones that keep Comcast from stifling its competitors. Almost all of these work to combat the fact that Comcast has little to no interest in making content from NBC available for anyone other than Comcast customers.

For starters, Comcast is off the Hulu board of directors, a move that should keep company bigwigs from stifling the site's growth. By the same token, Comcast can't "unreasonably withhold programming from" Hulu, nor can they slow or stop streaming video from competitors. This means that those of us who have cut traditional cable should still be able to find NBC programming on the Web, and that Comcast subscribers who use Netflix instead of Hulu should continue to get an experience consistent with what they've got now. Comcast must also provide Hulu programming comparable to that offered up by Fox and ABC, which should at the very least cover most prime-time programming.

There's some language in there that should also preserve NBC's current and future licensing agreements with their now-competitors, mainly the bit where "Comcast may not, with certain narrow exceptions, require programmers or video distributors to agree to licensing terms that seek to limit online distributors’ access to content."

If you want more info (or if you're having trouble sleeping) take a look at the DOJ's press release on the subject.

My Take

Well, let's get this out of the way, in case it wasn't already evident: I don't like that this happened. Safeguards or no safeguards, I think it's a fundamentally bad idea to let giant companies continuously absorb one another, beholden only to the only entity more corrupt than American mega-corporations.

That being said, if we live in a universe where this has to happen (and it would seem that we do), things could be worse. The restrictions seem, at least for now, to keep Hulu and online video safe.

We won't know the true implications of the deal until some more time passes. In what ways will Comcast attempt to circumvent the FCC's regulations? Will NBC continue to offer all of its content to Comcast's competitors at fair prices? Will all of the other major networks also get snapped up by hyperglobalmegaconglomerates?

Whatever happens, this seems like the first step down a weird and potentially dangerous slope. One hopes that if Comcast tries to circumvent its restrictions, as any profit-driven company will try to do, that the FCC and lawmakers will be vigilant. You know, more vigilant than they were when they let this deal go through in the first place.