U.S. Department of Justice allows Comcast-NBCU joint venture with conditions

On 18 January 2011, the U.S. Department of Justice (“DOJ”) announced a proposed settlement with Comcast Corp. (“Comcast”) and NBC Universal, Inc. (“NBCU”) that allows the parties to proceed with their joint venture. The settlement is conditioned, however, on the parties, among other things, licensing their programming to competitors of Comcast’s cable TV services. The conditions will, according to the DOJ, preserve competing content distribution models – particularly emerging online distribution competitors – which the joint venture would have threatened.

The settlement is accompanied by a Federal Communications Commission (“FCC”) order allowing the transaction with conditions, some of which pertain to the same issues as the settlement with the DOJ and complements it in others.

Under the settlement and the FCC’s order, the joint venture must make available to online video distributors the same broadcast and cable channels (i.e. video feeds from NBCU) that it sells to traditional video programming distributors as well as certain broadcast, cable, and film content that is comparable to the content the online video distributor receives from its programming peers. Licensing disputes between the joint venture and online video distributors are subject to resolution under specific mechanisms.

The settlement also includes several provisions that seek to prevent Comcast from evading the objectives of the settlement. In particular, Comcast must adhere to certain Open Internet requirements the FCC has recently promulgated.  Under these requirements, which prevent Comcast from discriminating against its online content competitors, Comcast is prohibited from unreasonably discriminating in the transmission of an online video distributor’s lawful network traffic to its broadband customers and is obliged to maintain its existing high-speed Internet services in certain markets. Comcast is also required to give other firms’ content equal treatment under its broadband services involving usage-based pricing.

As to the other protections in the settlement, Comcast may not impose terms limiting content owners in their dealings with Comcast’s competitors or retaliate against certain companies that license their content to Comcast’s competitors. Comcast must also relinquish its management right in Hulu and continue to make certain NBCU content available to Hulu. [Juha Vesala]