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Friday, January 29, 2010

The Comcast - NBC Universal Merger & Minorities

Comcast and NBC Universal promised to beef up programming for minority viewers in their filing with the Federal Communication Commission in a bid to win federal regulatory approval of their proposed $30 billion merger. We applaud their sensitivity to this issue and hope to see more minority participation at the merged companies, particularly at the management and ownership levels. Of course, the politics of the deal provide some interesting perspectives. House Commerce Committee Chairman Henry Waxman (D-CA) wants hearings on Comcast/NBCU real soon and so does House Judiciary Committee Chairman John Conyers. The proposed merger of Comcast and NBC Universal will be the first big test of the Obama administration’s stance on the issue of media consolidation. It could put the Obama administration and Democrats in Congress at odds with a few of their largest supporters.

National Urban League President and CEO Marc H. Morial commented on news of a proposed merger:

The proposed Comcast-NBC Universal merger will benefit African American consumers if this new entity remains committed to minority hiring and diversity in entertainment and news programming. Both Comcast and NBC have a strong record in both respects. While it is too soon to make a definitive statement on the proposed merger, we look forward to hearing how we can work together to ensure that the positive culture of diversity that has marked both companies perseveres and becomes stronger at Comcast-NBC Universal.
Of course, Laren Kelly of The Columbia Chronicle is critical of the merger:

When a handful of companies own the majority of media outlets, the consequences are very direct. Concentration of media limits the diversity of views, cuts out minority-owned businesses and ignores local issues.
Comcast Corporation (Comcast) is not only the largest cable company in the United States, but also the largest internet service provider and the third largest home phone provider. Comcast has 25 million television subscribers, 15 million internet service costumers, and 6.4 million household telephone service accounts. Its current assembly of cable networks includes E!, Style, Golf Channel, and G4. NBC Universal, Inc. (NBCU) is a media and entertainment company created by the merger of General Electric's (GE) NBC and French Media Group's Vivendi Universal Entertainment (Vivendi). The two companies own 80% and 20% of NBCU respectively.

NBCU owns and operates 26 television stations, the Spanish language network Telemundo, and a dozen cable networks including USA, Barvo, Syfy, and CNBC. It also has a 27% stake in the internet venture Hulu. Vivendi has an annual option to sell its stake in NBC to GE between November 15th and December 10th of each year. Vivendi has been negotiating to get the best value for its investment, as the Comcast-GE agreement hedges on Vivendi's decision to exercise this option. GE has recently reached a tentative agreement with Vivendi to buy its stake in NBCU for $5.8 billion. Following a successful Vivendi buy out, GE would then sell 51% of its total ownership of NBCU to Comcast, who would merge its cable-TV channels and contribute $4 to $6 billion to the joint venture. Comcast is expected to buy the remaining 49% of NBCU from GE over the next seven years. (National Urban League, Illinois Business Law Journal, The Columbia Chronicle, 12/14/09)
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