January 18, 2013
A consequence of this growth is media and communications corporations seeking to leverage this growth by seeking to grow themselves, and one easy way to accomplish this is by mergers and acquisitions.
Two years ago today, the largest merger of media companies in history was approved by the Federal Communications Commission (FCC) and the Department of Justice (DoJ).
That merger was Comcast’s acquisition of NBC Universal (NBCU) from General Electric Corporation.
The planned merger was publicly announced in December 2009, and on January 28, 2010, GE, NBCU and Comcast filed their application seeking “authorization to assign and transfer control of broadcast, satellite, and other radio licenses from GE to Comcast” as required by the Communications Act of 1934.
As stated above, the merger was eventually approved on January 18, 2011, but not before the FCC imposed “unprecedented” conditions on Comcast.
These conditions (some of which the FCC labeled as “voluntary commitments from the applicants”) were created to “address potential harms posed by the combination of Comcast, the nation’s largest cable operator and Internet service provider, and NBCU, which owns and develops some of the most valuable television and film content.”
These conditions, only scheduled to last until 2018, include:
- Making broadband services and personal computers available at low prices to low-income households;
- Increasing the availability of children’s and Spanish-language programming;
- Imposing safeguards ensuring the continued accessibility and signal quality of public, educational, and government programming channels; and
- Imposing a commercial arbitration process for negotiations between the new Comcast-NBCU joint venture (JV) and both multichannel video programming distributors (MVPDs) and (“legitimate”) online video distributors (OVDs).
(OVDs include service providers like Hulu and Netflix, while MVPDs include cable TV providers (like Comcast) and satellite TV providers.)
There is a fair amount more to the conditions than that, and if you’re really interested, you can read the almost 300 page report of findings by the FCC.
The bulk of that report is seemingly committed to assuaging fears of how the merger could impact the country’s communications and media industry; specifically, that the merger created a very real “potential for walled gardens, toll booths, content prioritization, [and] access fees to reach end users.”
In short, opponents of the merger believed (and continue to believe) that it represents “a stake in the heart of independent content production.”
These quotes are all excerpts from Michael J. Copps, the only commissioner who dissented from the FCC decision approving the merger.
Copps’ dissent describes the merger as “a damaging and potentially dangerous deal” that is lopsided in its benefits, with too few for the American public and too many for the corporations involved.
Copps professed his “respect for the business acumen of the applicants,” but further declared that “simply blessing business deals” is not the “FCC’s statutorily-mandated job.”
Actually, the FCC hadn’t done much more than “simply bless” business deals that came across its desk; that is, until the failed AT&T acquisition of T-Mobile in December of 2011.
Whether the rejection of the AT&T/T-Mobile merger is indicative of a change in direction for the FCC or simply the result of less powerful and well-connected lobbyists backing the AT&T deal is not entirely known.
However, we may find the answer to this through the FCC’s review of any major mergers and acquisitions in the future.
If the FCC continues to “simply bless” business deals, as Copps believes to be the case with the Comcast/NBCU merger, the AT&T/T-Mobile situation may be just an aberration.
On the other hand, many of the conditions imposed on Comcast by the FCC were “unprecedented,” so it’s entirely possible that the FCC is finally moving towards putting away the rubber stamp.