The bigger-than-anticipated lobbying battle over the proposed mega-merger of Comcast and NBC shows no signs of quieting down, as the companies acknowledged this week that the deal will not win government approval this year.
The merger, which must be approved by the Federal Communications Commission and the Justice Department, has drawn the opposition of rival communications companies as well as public interest groups worried that the deal could negatively affect video programming on the Internet. And with net neutrality rules behind it, the FCC is expected to turn its attention to the deal.
At the same time, leaders of three prominent African-American groups recently threw their support behind the merger after Comcast agreed to help fund minority communications ventures and increase diversity in its workforce.
The consideration of the merger by the FCC follows a contentious fight over net neutrality rules, which the five-member panel approved along partisan lines Tuesday.
Although there had been speculation that the sale would be finalized by the end of this year, a Comcast official said Wednesday that was no longer possible.
“We believe the FCC and the DOJ continue to make substantial progress toward approval of our transaction,” Comcast spokeswoman Sena Fitzmaurice said in a statement issued Wednesday. "We believe the regulatory review puts us on track for a closing in January 2011.”
On Thursday, David Cohen, executive vice president of Comcast, issued a statement noting that the FCC was circulating a draft order covering the approval of the sale that he expected the commission will vote on in January.
“We will continue to work with the commissioners so that the FCC order will not undermine our business combination and will ensure that consumers will benefit and that competitors are treated fairly,” he said in the statement.
A Comcast official said that the cable company anticipated the opposition to the sale. “The usual suspects had the usual objections,” the official said.
Even with the delay, Andrew Schwartzman, senior vice president of the Media Access Project, said the merger moves “to the top of the menu” at the FCC.
His group has lobbied federal regulators to place conditions on Comcast to ensure the company will not be able to limit Internet video options such as Hulu, which carries NBC programming on its website.
Even though the FCC approved rules that require Internet providers not to discriminate against content, Schwartzman said that regulators should still separately force Comcast to abide by net neutrality rules.
He added that such a stipulation would provide a backup in case the FCC net neutrality regulations do not stand up to legal challenges. Comcast backed the net neutrality compromise crafted by FCC Chairman Julius Genachowski, who devised the new rules after the cable giant successfully challenged in federal court commission orders that providers keep their networks open to content.
Comcast has shifted its focus this year to winning federal approval of its acquisition of the network. It has mounted an aggressive lobbying and public relations campaign both on Capitol Hill and in the federal agencies to defuse criticism of the deal.
The company spent almost $8.8 million in federal lobbying in the first three quarters of this year and has retained a stable of 30 outside firms, a number of which have prominent former lawmakers as partners, according to disclosure forms filed with Congress.
In the recent midterm campaigns, Comcast’s political action committee contributed almost $1.7 million to federal candidates: $914,000 to Democrats and $767,000 to Republicans.
This month, company executives have met with FCC officials to hash out potential conditions that might be placed on the deal. According to filings with the FCC, on Dec. 17 and 18, Comcast officials discussed with commission officials the distribution of online video, Hulu, independent programming, the provision of broadband Internet services and set-top boxes.
“Applicants reiterated that there is no basis in the factual, legal, or economic record for conditions in these areas,” said the filing submitted by Michael Hammer, counsel for Comcast. At the meetings, the filing said that “applicants also described the negative consequences that conditions could have on competition, consumers and the Comcast and NBC Universal.”
Comcast is also fighting communications companies that fear the merger will put them at a disadvantage. Bloomberg has argued that as a condition of the sale, Comcast should be required to place existing business channels, such as Bloomberg TV, in the vicinity of CNBC. Bloomberg has stated that when its TV channel has not been placed in the neighborhood of CNBC, its viewership decreased by 66 percent.
“Bloomberg is convinced that after the merger, Comcast will both have the incentive and ability to harm Bloomberg,” said Kevin Martin, a former FCC chairman who is now lobbying for Bloomberg and several other opponents of the merger, including the Communications Workers of America.
The president of Allbritton Communications, Frederick J. Ryan, met with FCC Commissioner Mignon Clyburn’s staff Dec. 2 to discuss concerns that the acquisition could have “potentially grave implications” for its NewsChannel 8 television station in the Washington, D.C., market. Lobbyists Edward Fritts and Kenneth Inouye of the Fritts Group attended the meeting, according to FCC filings.
The media company Viacom, which owns MTV and BET networks and Paramount Pictures, has also weighed in with reservations. At a Dec. 16 meeting with FCC officials, Viacom executives expressed concerns that the proposed merger would give Comcast the ability “to limit the availability of programming to non-traditional distributors.”
On the other hand, Comcast won support of three African-American civil rights groups after reaching an agreement with them that would increase minority participation and opportunities in the merged company.
The agreement, which was submitted to the FCC, Comcast and NBC Universal, stated they would strive to increase African-American representation among the combined company’s employees and executives. The companies also stated that they intended to add four new networks in which African-Americans have substantial or majority ownership.
Comcast also said it would provide $20 million to a venture capital fund to help minority entrepreneurs in the development of new digital media.
‘Real Housewives’ and ‘Bad Girls’
The agreement noted that NBC has featured African-American actors and actresses “in strong positive roles including in NBCU’s popular cable shows such as Bravo’s Bad Girls and Real Housewives of Atlanta, Syfy’s Eureka, Stargate Universe, Beast Legends, and Warehouse 13, USA Network’s Psych, White Collar, and Facing Kate.”
The agreement won the praise of NAACP President Benjamin Jealous; Marc Morial, president of the National Urban League; and the Rev. Al Sharpton, the founder of the National Action Network.
“In recognition of Comcast’s leadership on diversity, we continue to express our support for the Comcast and General Electric proposed NBCU joint venture,” the three men stated in a Dec. 16 letter to Genachowski.
However, Rep. Maxine Waters (D-Calif.), a persistent critic of the merger, wrote a Monday letter to the commission in which she said that many of Comcast’s diversity commitments appear to be “a series of vague goals and nominal gestures — lacking specificity and binding authority on the applicants.”
On Capitol Hill, the merger proposal has not resulted in the kind of angry partisan response engendered by the net neutrality rules, which elicited denunciations and vows of more FCC oversight from Congressional Republicans. But aside from Waters, a number of Democrats have opposed the sale, including Sen. Al Franken (D-Minn.), a former member of NBC’s “Saturday Night Live.”
Earlier this month, Franken asked the FCC to consider blocking the merger or imposing strict conditions on the sale to protect competition in the media and the Internet.