Comcast Merger May Hinge on Hulu
When Hulu was up for sale in 2013, Comcast was banned from taking part in any of the buyout negotiations. Despite being part owner of the online video service, Comcast had agreed under the terms of its NBCUniversal acquisition that it would not participate in Hulu operations because of regulator antitrust concerns. (See Comcast, NBCU Seal the Deal.)
New reports, however, suggest Comcast Corp. (Nasdaq: CMCSA, CMCSK) may have significantly influenced an eventual decision to pull Hulu LLC from the auction block. According to The Wall Street Journal and The New York Times, Comcast told co-owners Walt Disney Co. (NYSE: DIS) and 21st Century Fox in 2013 that it could help make Hulu the go-to streaming platform for cable providers. That argument played a role in the decision to withdraw Hulu from auction, and consequently kept the video service out of the hands of Comcast rivals including AT&T Inc. (NYSE: T) and DirecTV Group Inc. (NYSE: DTV).
Comcast's part in the aborted Hulu sale is now being scrutinized in the review of the cable company's proposed acquisition of Time Warner Cable Inc. (NYSE: TWC). Regulators worry that Comcast will amass too much power in both the pay-TV and broadband markets if the merger deal is approved. Conditions could be imposed to mitigate those concerns, but if Comcast shows a track record of not meticulously abiding by the terms of its NBCU purchase, then there is little reason to trust that new conditions would be effective.
Comcast remains adamant that it has fulfilled its obligations under the NBCU deal, and it will argue that position when it meets with the Department of Justice on the TWC matter for the first time today. (See What If the Comcast Merger Fails?)
A spokesperson explicitly stated that: "The decision not to sell Hulu was made only by the members of their managing board on which Comcast does not sit and has no role. At the time of the decision, executives of both Disney and Fox discussed publicly their compelling reasons not to sell."
If Comcast can convince the DoJ of its argument, then it can outline a potential path forward for establishing terms that would make a deal with Time Warner Cable palatable. If it can't, then merger opponents may get their wish, and a lot of cable executives could find themselves seriously revising their plans for the rest of 2015.
- Comcast Says TWC Deal Will Close Later
- DC Insiders Handicap Cable's Big Merger
- FCC Demands Details on Cable Licensing Deals
— Mari Silbey, special to Light Reading