Comcast-NBC Universal Deal Approved with Conditions; Hulu Rules Included

NBC Comcast Hulu

Get ready for a new media giant. According to The Hollywood Reporter, both the FCC and the Justice Department have approved-with many conditions-the $13.8 billion Comcast-NBC Universal merger. Only one FCC commissioner, Democrat Michael Copps, dissented in the 4-1 decision.

As for all the conditions and restrictions, some of which were self-imposed by Comcast in an attempt to ease the approval process, FCC Chairman Julius Genachowski said, “After a thorough review, we have adopted strong and fair merger conditions to ensure this transaction serves the public interest.”

Some of the key conditions include: Comcast must keep NBC programs on free over-the-air stations and it must follow program access rules designed to prevent the company from abusing its market share. There are regulations on access to schools, libraries, and underserved communities and broadband pricing and Comcast may be required to distribute content online if a competitor does. There will also be an arbitration process established by the FCC so competitors will have recourse should they think Comcast isn’t providing NBC Universal content at a fair price. In an unusual move, many of the conditions will remain in effect for seven years

Because NBC Universal is a partner in video content provider Hulu, one of the big questions about this merger was how that would be handled. Tech Crunch reports that Comcast will be forfeiting the NBC Universal seat on Hulu’s board of directors. In a release, the Justice Department set out its conditions:

“Comcast must relinquish its management rights in Hulu, an OVD. Without such a remedy, Comcast could, through its seats on Hulu’s board of directors, interfere with the management of Hulu, and, in particular, the development of products that compete with Comcast’s video service. Comcast also must continue to make NBCU content available to Hulu that is comparable to the programming Hulu obtains from Disney and News Corp”

Similarly, the FCC set forth its Hulu-related restrictions in a release:

“Does not enter into agreements to unreasonably restrict online distribution of its own video programming or programming of other providers.

Does not disadvantage rival online video distribution through its broadband Internet access services and/or set-top boxes.

Does not exercise corporate control over or unreasonably withhold programming from Hulu.

Comcast will still have an economic stake in Hulu, but it seems it will not have any decision-making authority, which is key since Hulu itself is a threat to Comcast’s cable subscription service.

Because these conditional approvals just came out, there is still much more to be gleaned from them, and opinion remains split on this deal, but the bottom line is that this conditional approval by the regulatory agencies means the deal, which will give Comcast a 51% stake in NBC Universal, is now expected to close this month.