01.05.2004 12:00 PM
Originally featured on BroadcastEngineering.com
FTC shows concern over NBC, Vivendi Merger

The pending merger of NBC and Vivendi Universal Entertainment has hit a snag because internal NBC documents have antitrust enforcers worried about the effect the deal could have on consumers.

USA Today has reported that the European Commission approved the $14 billion deal last month, but the Federal Trade Commission (FTC) issued a second request for information from the companies. The move followed the FTC’s receipt of documents showing some at NBC think the merged company could raise fees cable operators pay for its programming, the newspaper reported.

The cable networks involved in the merger include the USA Network, Sci-Fi Channel, Trio, CNBC, Bravo, and MSNBC, a 50/50 NBC-Microsoft partnership.

NBC Universal would combine General Electric’s NBC with Universal’s movie, TV production, theme park and cable assets under NBC control. It would be the world’s sixth-largest media company. Currently, NBC is the only broadcast network without major film and TV production units.

Former FTC officials say that without the documents, NBC Universal’s potential bargaining power in negotiations with cable companies would not warrant much concern.

James Langenfeld, a former FTC economist, told the newspaper that NBC might try to make cable operators pay higher fees to get the merged company’s larger group of channels. But he noted they would still face significant competition from the other five large media companies, including ABC-Disney and Time Warner.

“As long as cable companies have good enough alternatives, even with a merger, it’s hard to see how there would be damage to competition,” said Langenfeld, an LECG consulting director who is not working on the deal.

USA Today said NBC and Vivendi would not have the clout, or the incentive, to keep rivals off of certain cable systems — the concern in mergers such as AOL-Time Warner.

FTC officials would not comment. An NBC spokeswoman said, “We are proceeding through the normal regulatory review process and anticipate the deal should close in the first half of ‘04.”

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