The potential merger between Comcast and NBC Universal will be under the regulatory microscope of the Justice Department.
The U.S. Department of Justice confirmed Wednesday that it would be the agency to spearhead a review of the $30 billion deal that would give Comcast majority ownership of NBC, Universal Studios, and a host of cable TV franchises. Both the Justice Department and the Federal Trade Commission typically look into mergers that involve potential antitrust issues, but DOJ is taking the lead on this one. Ultimately, the Federal Communications Commission will also need to examine the deal.
First revealed, the merger would create a 51 percent owned by Comcast and 49 percent by NBC parent company General Electric. Comcast would pay GE about $6.5 billion in cash upfront. A special option would allow GE to eventually sell off pieces of its stake in the new venture to Comcast over a period of seven years.
Comcast is already the nation's largest cable provider with 23.8 million cable TV customers. The company also owns a few select cable channels, including E! Entertainment and two sports channels--the Golf Channel and Versus. If the NBCU deal is consummated, Comcast will also claim ownership of not just NBC and Universal Studios, but also an array of popular cable networks, including CNBC, MSNBC, Bravo, USA, SyFy, and Oxygen. NBCU also has a minority share in Hulu, while Comcast has Fancast, its own video streaming site.
Since the merger would turn Comcast into both a provider and distributor of news and entertainment, the DOJ has reason for concern. One hot button issue has been Comcast's treatment of cable channels outside its ownership.
On Wednesday, the Tennis Channel filled a complaint with the FCC accusing Comcast of giving preferential treatment to Comcast-owned sports networks. Comcast's Golf and Versus channels are free as part of a basic cable subscription, while the Tennis Channel is only available through a premium sports package that costs $5 to $8 extra per month, thereby hitting a smaller number of subscribers.
The National Football League also fought a lengthy battle with Comcast over the same issue. The two sides finally came to peace last May after Comcast agreed to move the NFL Network from its premium sports package to a less pricey digital package that would reach more customers.
Before the DOJ can begin its initial review, Comcast will need to file the necessary paperwork under the Hart-Scott-Rodino Act. That should be done shortly, a Comcast spokesperson told CNET. That would then give the DOJ 30 days in which to file a second request looking for more detailed information, which is typical in mergers of this size.
Comcast also confirmed that it would be filling a public interest statement with the FCC at the end of January.
Updated at 9:30 a.m. PST with response from Comcast.