Area Hearings Scrutinize Deal for NBC Universal

It’s being called historic on one hand, yet on another a move with the potential to limit programming, particularly shows created by and for minorities. Whatever the opinion on the proposed merger between cable giant Comcast and entertainment conglomerate NBC Universal if the deal goes through it will bring long-term changes to the entertainment industry. Federal regulators continue to analyze the deal announced last year that would have Comcast buying a majority share in NBC Universal from General Electric, which would retain a 49 percent ownership. If approved, Comcast would go from being a content distributor to owning a film studio and television network, additional cable channels and theme parks in the U.S. and overseas. What this brings are additional sources of revenue for a company reliant on subscriptions to its cable, high speed Internet and phone services. Those new sources may be vital in the long term as consumers migrate away from traditional cable to Internet subscription services and threaten the revenues it has been used to, which in the first quarter of 2010 added up to $9.2 billion. “Those are predictable streams of revenue,” said Jonathan Handel, an entertainment attorney and blogger about industry issues. “That may not be as consistent a business as it has been.” New attempt Comcast had tried once before to acquire a media company – five years ago with The Walt Disney Co. – and found a more willing partner in GE. Rumors had circulated for months that Comcast would buy out an ownership stake and relieve GE of its operation of a division so much different from its core business and one in which it is difficult to predict revenues. From the start, the merger was targeted by critics and media watchdogs as being too big and would limit choice to consumers and increase cable bills. Comcast Chief Executive Brian Roberts and NBC Universal Chief Executive Jeff Zucker assured federal lawmakers in February that if the deal is approved it will result in more investment of programming by Comcast and it would foster innovations in technology. The pair also assured that NBC would remain a free, over-the-air network. Both Comcast and NBC Universal took their lumps at a June 7 hearing of the House Judiciary Committee at the California Science Center in Los Angeles over their records of minority hiring and giving access to programming aimed at minority audiences. Witnesses testified before the committee members of how the companies have fallen short in minority representation, yet there were others with only praise for Comcast in putting minority programs on its cable system. A merger could result in favoritism toward other cable networks at the expense of those few that are totally minority owned, said Stanley Washington, president and CEO of the National Coalition of African American Owned Media. “We have no opportunity to thrive or survive,” Washington said. Speaking in favor of the merger was Alfred Liggins, chairman of TV One, a cable channel aimed at the African American market. Comcast owns 33 percent of TV One. Other cable providers were not interested in working with TV One, but Comcast executives understood the value and importance of African American viewers, Liggins said. “They gave us significant exposure on their cable systems, which helped create momentum with advertisers,” Liggins said. Diversity initiatives Prior to the hearing, NBC and Comcast announced efforts that would improve diversity in operations and programming, including adding two independently owned and operated cable networks in the next three years; creating diversity advisory councils; and bolstering minority programming. Committee members, however, were of the mind that the merger required close scrutiny and that it should not be rushed through. There is an assumption among the industry people he talks to that the merger will eventually meet federal approval. Handel said. “Under this regulatory regime I would expect the deal to go through with no doubt conditions,” Handel said A question mark could arise over the Universal Studios theme parks and whether Comcast would want to continue operating those or instead sell them off. The answer may lie in how well characters and story lines from Universal films can be used at the parks. So far, NBC Universal hasn’t shown a history of developing content that can be transferable to the parks, said Jack Kyser, chief economist with the Los Angeles Economic Development Corp. “Disney has made it work quite well,” Kyser said.