Stifel Nicolaus Analysts: Comcast/NBCU Deal Would Likely Pass Government Muster
Advisory Says Joint venture Would Face Close Scrutiny From DOJ, FTC
John Eggerton 10/2/2009 10:52:34 AM
Analysts at investment firm Stifel Nicolaus expect that a Comcast/General Electric jointly owned NBC Universal, if consummated, to pass government muster in Washington, though only after close scrutiny by the Department of Justice and perhaps the Federal Trade Commission.
In an advisory, company telecom and media analysts David Kaut and Rebecca Arbogast said they thought Justice would be "more open to theories of vertical integration harm" than under the former administration, but that "it will continue to be difficult to establish that vertical deals are sufficiently anticompetitive to support blocking a merger."
Kaut and Arbogast said the approval would likely come with conditions addressing increased concentration in video programming and cable distribution. They pointed to the DirecTV/News Corp. deal and its conditions of baseball-style arbitration for disputes over regional sport networks, collective bargaining for small cable operators and program access guarantees as likely precedent for those conditions.
They also pointed to the rise of AT&T's U-verse and Verizon FiOS TV as video competitors, which would likely push hard for conditions, as well as online video interests like Hulu, in which NBCU has a stake, as factors that would complicate the analysis.
"However, in the end, we believe the deal is likely to be approved," they said.
One veteran communications attorney agreed the deal would likely go through and gave it a "flashing green light."
Others weren't so sure. One cable executive expects there will be an alliance of broadcasters, smaller cable operators and public-interest groups massed against it.
A representative of one such group, Jeff Chester of the Center for Digital Democracy, put it bluntly: "The DOJ or FTC is going to place Comcast's corporate DNA under an intense antitrust microscope. A Comcast/NBCU deal is the equivalent of Godzilla swallowing Rockefeller Center. Such an unholy marriage between the country's leading cable ISP and multichannel programmer with a broadcast/cable/studio powerhouse will be a political test for the Obama team at the FCC, FTC or DOJ."