Key senator calls for Hulu sale, other conditions if regulators OK Comcast-NBC Universal deal

By Joelle Tessler, AP
Wednesday, May 26, 2010

Key senator wants conditions on Comcast-NBC deal

WASHINGTON — A key member of the Senate Judiciary Committee wants federal regulators to force Comcast Corp. to sell NBC Universal’s stake in the online video site Hulu and impose other conditions if they allow the cable company to take control of NBC.

Sen. Herb Kohl, D-Wis., sent a letter Wednesday urging the Justice Department and the Federal Communications Commission to adopt strong conditions “to avoid the risk of injury to competition and consumers” if they clear the deal.

Comcast, the nation’s largest cable TV provider, wants approval from the Justice Department and FCC to buy a 51 percent stake in NBC Universal from General Electric Co. for $13.75 billion. Kohl’s letter figures to carry weight with the agencies because he chairs the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights.

Comcast hopes the deal broadens its stable of cable channels, which include E! Entertainment and the Golf Channel. The company also has a controlling interest in the Philadelphia 76ers and Flyers, and its SportsNet Philadelphia channel carries Flyers, Phillies and Sixers games.

NBC Universal would give it the NBC and Telemundo broadcast networks; 26 local TV stations; popular cable channels such as CNBC and Bravo; the Universal Pictures movie studio and theme parks; and a stake in Hulu, which distributes TV programming for free online.

Kohl said the deal would have “far reaching effects on our nation’s media landscape.”

“The stakes for American consumers and competition in the media industry arising out of this transaction, as well as the implications for diversity of information and entertainment, are very high,” he wrote.

Kohl said he is particularly worried that Comcast could put competing subscription video providers at a disadvantage by withholding or raising prices for popular NBC broadcast and cable programming. He also said the acquisition could give Comcast the ability to force rivals to buy expensive bundles of channels in order to get access to certain “must-have” programming.

In addition, Kohl said he worries that Comcast could refuse to carry channels owned by rival companies or relegate those channels to premium tiers that have fewer subscribers.

Finally, Kohl said he fears that Comcast could use NBC’s stake in to withhold popular content from the Internet and stifle the growth of the online video market, which could threaten Comcast’s core cable business.

To address these concerns, Kohl laid out nearly a dozen conditions that he would like to see attached to the deal. Those include:

— a pledge by Comcast to divest NBC’s stake in Hulu within one year and a promise not to require consumers to have a cable subscription in order to access NBC programming online. During NBC’s coverage of the Vancouver Olympics this year, Kohl criticized the network for limiting online access for some events to people who subscribed to a pay TV service.

— commitments by Comcast to make its online programming available to competitors on nondiscriminatory terms, not to coerce programmers into withholding content from online platforms and not to degrade the quality of online video delivered over its broadband networks.

— requirements that Comcast make its programs available to rival subscription video services on “reasonable and nondiscriminatory terms,” enter into binding arbitration to settle disputes over program access and refrain from pulling channels during arbitration.

— a promise by Comcast not to move NBC broadcast programming to cable for 10 years and not to discriminate against independent channels seeking to be carried on Comcast’s cable systems.

Joel Kelsey, policy analyst for the watchdog group Consumers Union, praised Kohl for “stepping up to the plate for consumers.” Kelsey said that while he remains skeptical that the deal should be approved at all, Kohl’s conditions offer “a good step down a long road to figure out if some of the harms could be eased.”

Comcast had no immediate reaction to Kohl’s letter. NBC Universal did not return messages seeking comment.

Comcast’s shares rose 37 cents, or 2.1 percent, to $18.04 in Wednesday afternoon trading.

On Tuesday, the governors of Pennsylvania, California and New York, three states with large numbers of Comcast and NBC Universal employees, advised federal regulators to approve the deal. They said “the significant benefits associated with the creation of this new joint venture far outweigh any potential harms.”

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