FCC Imposes New Obligations On NBC O&Os

In approving Comcast’s acquisition of a controlling stake in NBC Universal from General Electric by a 4-1 vote yesterday, the FCC conditioned the grant on the NBC and Telemundo O&Os providing more news and children’s programming.

The new public interest obligation were among many affecting other areas of Comcast and NBCU businesses that were imposed not only by FCC, but also by the Department of Justice, which also blessed the $13.75 billion deal yesterday.

Now that the regulators have had their say, the parties are free to go to closing. That’s expected by the end of the month.

“After a thorough review, we have adopted strong and fair merger conditions to ensure this transaction serves the public interest,” FCC Chairman Julius Genachowski said in a statement. “The conditions include carefully considered steps to ensure that competition drives innovation in the emerging online video marketplace.”

After nine months of negotiations and three months of media speculation, Comcast announced its agreement to take over NBCU in December 2009.

In exchange for $6.5 billion in cash and $7.25 billion in programming assets, Comcast would acquire a controlling 51% share of a newly joint venture. GE would retain 49% interest.

Although most observers saw the deal as Comcast’s desire to snatch NBCU’s plum cable networks, notably USA, Bravo, Syfy, CNBC and MSNBC, Comcast executives were quick to say they were also committed to the broadcasting business, which includes NBC and the NBC and Telemundo O&Os.

In its grant, the FCC went a long way toward codifying that commitment.

To further “broadcast localism,” the FCC says in an outline of the conditions released yesterday, the O&Os must air “thousands of additional hours of local news and information programming.” On a conference call after release of the outline, FCC offcials were unwilling to provide details. However, in her statement, FCC Commissioner Mignon Clyburn said the NBC O&Os will have to “collectively produce an additional 1,000 hours per year of local news and information programming” for the next three years.

In addition, the outline says, some of the stations must enter into cooperative arrangements with locally focused nonprofit news organizations and they must provide free, on-demand local programming. An FCC source said the non-profit news requirement applies to only five NBC O&Os, including KNSD San Diego, which is already working with such an organization, Voices of San Diego.

Although the stations must cooperate with the non-profits, they are not obliged to carry any of the programming they produce, the source said.

The FCC is also requiring Comcast to expand its Spanish-language programming on the stations as well as on on-demand and online platforms. The Telemundo stations now air Spanish-language programming only.

For the sake of children, the FCC says in the outline, Comcast must also “increase the availability” of children’s programming on its TV stations and “add at least 1,500 more choices” to its on-demand offerings. According to the FCC source, the agency is demanding that the stations air one additional hour of children’s programming each week for the next three years. Under current rules, they must air three hours.

Another condition would require Comcast to provide additional on-screen ratings information on broadcast and cable channels and improved parental controls.

The FCC also said that it adopted a series of conditions that were agreed upon by Comcast and the affiliates of the Big Four broadcast networks.

Among other things, those conditions would protect “the integrity of over-the-air broadcasting, network-affiliate relations and fair and equitable retransmission consent negotiations” between the affiliates and Comcast.

Other conditions attached to the grant would require Comcast to offer broadband services to low-income households at reduced prices and provide high-speed broadband to schools, libraries and underserved communities.

The grant also contains safeguards designed to prevent Comcast from discriminating against other cable programmers seeking carriage on Comcast systems and other cable systems seeking to carry Comcast’s cable networks.

FCC Commissioner Michael Copps cast the dissenting vote. “[A]t the end of the day, the public interest requires more –much more– than it is receiving,” Copps said in a statement explaining his opposition. The joint venture “opens the door to the cable-ization of the open Internet,” he said. “The potential for walled gardens, toll booths, content prioritization, access fees to reach end users, and a stake in the heart of independent content production is now very real.”

Copps also addressed the impact on broadcasting. “Given that this merger will make the joint venture a steward of the public’s airwaves as a broadcast licensee, I asked for a major commitment of its resources to beef up the news operation at NBC. That request was not taken seriously.

“Increasing the quantity of news by adding hours of programming is no substitute for improving the quality of news by devoting the necessary resources,” he added.

For a look at the outline of the conditions, click here. The FCC is expected to release the entire order detailing the conditiions within the next couple of days.