Media Money with Julia Boorstin

Comcast and NBC Universal pitch merger to the FCC

Negotiating Pay

CNBC's parent, NBC Universal and cable giant Comcast are trying to convince the Federal Communications Commission to approve their planned merger — today filing a merger application and public interest statement.

The companies make the case that their merger is in the public interest and shouldn't raise anti-trust concerns. This filing to the FCC follows the companies' filing earlier this week to the Justice Department, which will focus on how the deal affects industry competition. And it kicks off what could be a yearlong review of the deal.

The filing speaks the language of the FCC --laying out their plans to address the commission's interests in localism, diversity, innovation and innovation. The companies argue that their merger will "increase the quantity, quality, diversity and local focus of video content."

In light of broadcast networks increasing push to be compensated by cable giants (see Fox's recent standoff with Time Warner Cable, Comcast commits to support NBC's free television and news programming. To address the FCC's interest in "localism," the filing commits to add a thousand hours of local programming. A note of public service: over three years the company promises to add 1,500 on-demand choices for children.

Anti-trust concerns about this merger of a content and a distribution giant are front and center. So the companies describe the merger as vertical rather than horizontal. And after the merger the company will cap will still be smaller than Disney and Time Warner -- i.e., this doesn't create an unstoppable behemoth. The filing points to a couple key stats about the merged company. It would control only one seventh of the channels Comcast offers to its subscribers. NBC would still have just the fourth largest piece of the cable market after the merger.

With Comcast starting to offer cable programming to subscribers online, and with NBC Universal owning a third of Hulu, there's been plenty of talk that the combined company could dominate online video. The filing dismisses that concern, pointing out that including Hulu, the two companies control less than five percent of online video-- the real behemoth is Google's YouTube. The companies are already drawing criticism for the filing, for not expanding their commitments to when it comes to online video.

In the filing Comcast insists it "lacks market power as a content buyer." It also points out that it's not in Comcast's best interest to favor NBC's programming.

The merger is expected to be approved-- the question is just how long it takes, and what changes, if any, the FCC demands. Comcast CEO Brian Roberts told me he's optimistic that the deal will be completed in less than a year. Now that the filings are submitted, let's see how much time the FCC needs.

Questions?  Comments?