Comcast-NBC Universal deal: Can company now crush its rivals?

The Comcast-NBC Universal merger is on a scale that even the experts don’t quite grasp, many observers say.

America’s largest cable operator, Comcast, has cleared its final hurdle in its bid to take a 51 percent stake in NBC Universal, with the Federal Communications Commission and the US Department of Justice signing off on the $30 billion deal. As is the case with many a prenuptial between two high-profile entertainment figures, the agreement is full of devilish details for both sides.

But this is one contract that will be pored over by more than the standard looky-loos: Since this merger touches both film and television content, as well as Internet and telecommunications-services distribution, it creates a vertically integrated media behemoth. And it’s on a scale that many observers say even the experts don’t quite grasp.

The regulatory requirements placed upon this new giant attempt to rein in its ability to crush nascent rivals in areas such as original online video content. It’s also required to expand children’s programming and local news and to create new outlets for both African-American and Latino participation on local channels.

In response to one of the most sharply articulated concerns – about the cable operator’s ability to play favorites with its broadband Internet distribution, giving faster download speeds to its own content – the FCC has slapped restrictions on this technique, forcing a certain level of “net neutrality.”

However, as the new deal’s critics point out, a number of these conditions expire within seven years. And the language is full of terms such as “reasonable” and sufficient” that will keep flocks of lawyers, not to mention watchdog groups and industry insiders, busy interpreting what compliance looks like.

“This gives new meaning to vertical integration,” says Robert Thompson, founder of the Bleier Center for Television and Popular Culture at Syracuse University in New York. “How much does this damage or help the public?”

The main “sticks” in the FCC arsenal are its ability to pull a license or assess monetary fines, ranging from $250 “up to a million,” according to FCC spokeswoman Jessica Almond. If history is any guide, however, says Mr. Thompson, “yanking a license is more theoretical than real.”

Whenever an access provider controls the content, says Jonathan Askin, a media expert at Brooklyn Law School, consumers suffer in the long run – “regardless of the lip service that regulators give to ensuring competition.” The agreement’s conditions give the appearance of putting constraints on the power that Comcast will wield over both consumers and content creators, he says.

“The regulators will do little to enforce the merger conditions,” he says via e-mail. Beyond that, he says, the agreement does little to guard against price gouging by Comcast, opening the door “for Comcast/NBC to game the system.” He adds, “This is the lesson regulators have failed to learn since the first efforts by media empires to control both content and access.”

But government is not the only regulator in the swiftly evolving new-media landscape, says Paul Levinson, author of “New New Media.” When it comes to putting pressure on companies to provide the best service and opportunities, “the marketplace is much better at communicating precisely what it needs and wants – much better than the government regulations,” he says. Net neutrality, he adds, is an issue that users will solve as they encounter problems, “not the government.”

The agreement, he says, does help NBC: “This is the best thing NBC could have done, because the network’s future was looking very dim.”

The agreement also opens a door for other content creators, according to a statement from Jean Prewitt, president-CEO of Independent Film and Television Alliance in Los Angeles. “The closing of the joint venture triggers the July 12, 2010, agreement between the Independent Film and Television Alliance and Comcast-NBCU, which will provide real opportunities for independent producers on the Comcast and NBC platforms, and increase the public’s access to diverse programming,” she says in her statement.

According to a press release, that agreement includes increased development and pitch opportunities, a development fund devoted to independents, and greater access to Comcast’s new-media platforms.