News

Kohl: Get Hulu Out of Comcast-NBCU

5/31/2010 12:01 AM Eastern

Washington — Sen. Herb Kohl (D-Wis.),
chair of the Senate Judiciary Antitrust Subcommittee,
is calling for a raft of strong
conditions on Comcast’s deal for control of
NBC Universal.

Notably, he’d like the media firm to divest
its stake in online video site Hulu within a
year and apply program-access rules to online
video.

NBCU has a minority interest (32%) in
Hulu, a leading online video site, and a nonmanagerial
seat on its board.

The call on divestiture will not be made by
Kohl, but by the Federal Communications
Commission, and a requirement that NBCU
shed its stake in Hulu is considered unlikely.

Kohl’s move is one more indication,
though, that online video has entered the
merger review — something the FCC had
already signaled.

Kohl’s laundry list came in a letter to the
Justice Department and FCC chairman Julius
Genachowski. Kohl said the proposed
joint venture “has the potential for serious
anti-competitive and anti-consumer effects
in at least three respects.”

The three areas are: competitors’ ability
to access NBCU-owned broadcast and
cable content; the ability of “independent
programmers” and diverse voices to gain
access to the combined company; and the
effect on online distribution.

Kohl would like the FCC to look carefully
at online content to ensure the deal does
nothing to “stifle, block or retard” the emergence
of that medium.

Other conditions he recommends are nondiscriminatory
access to any programming
in which Comcast has a financial interest;
binding arbitration over any retransmissionconsent
disputes; firewalls between the two
companies to prevent sharing pricing or contract
terms; not allowing Comcast to favor its
own content; allowing competitors access to
online distribution of content from any programming
or channel that Comcast or NBCU
has an interest in; not tying NBC content on
the Web to a cable subscription; not allowing
Comcast to migrate NBC broadcast-network
content to cable for at least 10 years; and not
allowing Comcast to discriminate or degrade
any Internet distribution of programming
that competes with the MSO’s plans to offer
programming to authenticated subscribers.

Kohl’s subcommittee held a hearing on
the deal Feb. 4. He said he has since been investigating
the merger’s impact on the marketplace,
apparently with a particular eye
toward the impact on online video.

One reason the FCC extended the comment
deadline on the deal and stopped its informal
merger-review clock until June 3 was
to get input on the impact of the Comcast-
BitTorrent decision on the deal’s broadband
elements. In April, a federal court vacated
an FCC order concerning how Comcast had
managed its broadband networks in regards
to BitTorrent file sharing.

There is the suggestion that even if the FCC
wanted to put some online access conditions
on the deal similar to ones under program
access rules for traditional program delivery,
the BitTorrent legal ruling has left that
authority in doubt.

The FCC is planning at its June meeting to
issue its notice of inquiry and notice of proposed
forbearance to reclassify the transmission
element of broadband as a Title II
service, but that is getting major pushback
from a growing number of Republicans.

If there is any hitch in that process, a congressional
effort to clarify the FCC’s online
regulatory authority might not come before
the FCC’s planned year-end wrap-up of the
vetting of the Comcast-NBCU arrangement,
which would leave the media firm as a Comcast-
controlled joint venture with NBCU’s
current owner, General Electric.

Comcast had no comment on the specifics of
the letter or its many conditions, instead merely
stressing the deal is an all-around good thing.

“This partnership is pro-competitive,
pro-consumer and in the public interest,”
the company said. “Together, Comcast and
NBCU will enhance the entertainment experience
through bold innovation and expanding
consumer choice. We expect a thorough
and expeditious regulatory review and that
any conditions will not unduly burden either
Comcast’s or NBCU’s businesses.”

Comcast has already offered up a number
of its own voluntary public-interest conditions,
including promising its own shot clock for program-
access complaints and its own firewall
between Comcast and NBCU owned-and-operated
stations in retransmission-consent negotiations,
or at least the promise that Comcast
would not “improperly” influence them.

Comcast has argued that the transaction
will not pose any harms to the marketplace
for online video.

NBCU had no comment at press time.

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