After dragging its feet for over a year the Justice Department’s Antitrust Division and the Federal Communications Commission granted Royal Assent to the NBC Universal-Comcast merger. The DOJ did not approve the merger as presented. Instead it imposed a series of conditions that will last for at least seven years. The one that stands out to me involves NBCU’s participation in the online joint venture Hulu, which provides internet streaming of broadcast television network programs:
Comcast must relinquish its management rights in Hulu, an [online video distributor]. Without such a remedy, Comcast could, through its seats on Hulu’s board of directors, interfere with the management of Hulu, and, in particular, the development of products that compete with Comcast’s video service. Comcast also must continue to make NBCU content available to Hulu that is comparable to the programming Hulu obtains from Disney and News Corp.
So NBCU must continue to support Hulu by providing content but may have no say in how Hulu is managed. That sounds like a nice competitive advantage for Disney and News Corp, which may still participate in Hulu management.
And, oh yeah, the DOJ managed to impose a “net neutrality” requirement on Comcast:
In accordance with recently established Open Internet requirements, Comcast is prohibited from unreasonably discriminating in the transmission of an [online video distributor's] lawful network traffic to a Comcast broadband customer. Comcast must also maintain the high-speed Internet service it offers to its customers by continuing to offer download speeds of at least 12 megabits per second in markets where it has upgraded its broadband network. Additionally, Comcast is required to give other firms’ content equal treatment under any of its broadband offerings that involve caps, tiers, metering for consumption or other usage-based pricing…
Remember, this settlement means the DOJ has access to all of Comcast’s internal documents and personnel for the duration of the order. Anytime the DOJ doesn’t like anything Comcast does, it can use this order as a weapon to sniff around and extract additional concessions.
This “settlement” makes the Antitrust Division a big player in the future of the internet. Because once one company agrees to such terms, it becomes progressively easier for the regulators to impose similar, if not harsher, terms on competitors.