2:22 PM
By Paul Thomasch and Jasmin Melvin
NEW YORK/WASHINGTON | Tue Jan 18, 2011 4:38pm EST
NEW YORK/WASHINGTON (Reuters) - U.S. regulators approved Comcast Corp's purchase of a majority stake in NBC Universal with the requirement that NBC give up day-to-day control of popular online video site Hulu.
The Federal Communications Commission and the Department of Justice approved the deal more than a year after the companies announced it. When it closes, it will create a media powerhouse that will control not just how television shows and movies are made, but how they are delivered to people's homes.
Comcast, the largest U.S. cable company, is buying a 51 percent stake in NBC Universal from General Electric Co to create a $30 billion business that would include broadcast, cable networks, movie studios and theme parks.
Approval had been expected for several weeks, and it came as little surprise that the FCC and Justice Department on Tuesday attached strict conditions to the deal.
Chief among the requirements is that Comcast give up what the Justice Department described as management rights to Hulu, the online video site co-owned by News Corp, Walt Disney Co and NBC Universal.
While Comcast and NBC Universal could remain part owners of the site, they will relinquish voting rights and board representation.
The requirement is unwelcome for company managers, but it amounts to an inconvenience in the context of a deal that brings Comcast cable networks like MSNBC and USA, along with the NBC broadcast television network, analysts said.
"It's of minimal concern since NBC was only one of the investors in Hulu with less than 30 percent ownership anyway," said Miller Tabak analyst David Joyce.
From the start, the future of online video as a competitor to traditional cable TV distribution was a major concern for the regulators. In the end, they will require Comcast to commit to a mechanism that would allow other online video providers -- a telecommunications company, for example -- to have access to certain NBC Universal shows.
"We have adopted strong and fair merger conditions to ensure this transaction serves the public interest," FCC Chairman Julius Genachowski said in a statement after the vote on Tuesday. The FCC voted 4-1 in favor of the deal.
Comcast Chief Executive Brian Roberts thanked regulators, and called it a "proud and exciting day" for the company, which his father, Ralph Roberts, founded in 1963.
Among other conditions, Comcast must commit to keeping an open Internet service. At the moment, it is the largest U.S. Internet service provider, and regulators want customers to be able to access all Web content.
Other key requirements are intended to ensure that Comcast deal fairly with rival cable and satellite providers since it will now be the owner of major content from NBC and its various cable channels.
In other words, it will not be able to withhold content from USA or CNBC, for instance, from a competing pay-TV company.
Many of the conditions will remain in place for seven years, a longer period than regulators usually require.
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