WASHINGTON — The government on Tuesday cleared the way for Comcast, the country's largest cable company, to take over NBC Universal in a deal certain to transform the entertainment industry landscape.
Comcast is buying a 51 percent stake in NBC Universal from General Electric for $13.8 billion in cash and assets.
The Justice Department and five state attorneys general said Tuesday they reached a court settlement allowing the companies to proceed with their combination, subject to conditions intended to preserve competition among video providers.
In addition, the five-member Federal Communications Commission voted 4-1 to approve the transaction, subject to similar but broader conditions.
Among other things, the government is requiring Comcast to make NBC programming available to competitors such as satellite and phone companies, as well as new Internet video services that could pose a threat to the company's core cable business. Officials want to guarantee online video services from companies such as Netflix, Amazon.com and Apple can get the movies and TV shows they need to grow — and potentially offer a cheaper alternative to monthly cable subscriptions. The government's conditions will help ensure that the transaction cannot "chill the nascent competition posed by online competitors," said Christine Varney, head of Justice's antritrust division.
Still, the conditions did not go far enough for Michael Copps, one of the three Democrats on the FCC and a vocal critic of media consolidation. Copps voted against the deal, warning that it "confers too much power in one company's hands."
Several public interest groups and a few members of Congress also decried the combination. "This will ultimately mean higher cable and Internet bills, fewer independent voices in the media, and less freedom of choice for all American consumers," Sen. Al Franken, D-Minn., said.
Philadelphia-based Comcast, which hatched the merger in the spring of 2009, has about 23 million cable TV subscribers and nearly 17 million Internet subscribers. It also owns a handful of cable channels, including E! Entertainment and the Golf Channel, and has a controlling interest in the Philadelphia 76ers and Flyers sports teams. Comcast's SportsNet Philadelphia channel carries Flyers, Phillies and 76ers games.
Taking over NBC will transform the company into a media powerhouse. NBC Universal owns the NBC and Telemundo broadcast networks; 26 local TV stations; popular cable channels including CNBC, Bravo and Oxygen; the Universal Pictures movie studio and theme parks; and a roughly 30 percent stake in Hulu.com, which distributes NBC and other broadcast programming online.
Most of the government conditions outlined Tuesday will remain in effect for seven years.
One key goal of federal regulators is to ensure that satellite companies, rival cable operators and other existing pay-TV providers can still get access to marquee NBC programming at reasonable prices once the deal closes. The FCC approval establishes an arbitration process to resolve disputes between Comcast and competitors that want to buy programming. It also prohibits Comcast from withholding programming during negotiations — a practice that broadcasters have been using recently to extract higher fees from cable companies.