NBC Papers Cause Regulatory Concern Over Vivendi Deal

31 December 2003

The merger of NBC with Vivendi Universal's US entertainment assets may have hit a regulatory snag.

The $14 billion (€11.1bn; £7.9bn) deal had been expected to pass through antitrust review on both sides of the Atlantic without any problems, and last week it received the green light from the European Commission. However, America's Federal Trade Commission has reportedly become concerned after reading internal NBC documents.

According to individuals close to the deal, the papers in question show that some NBC executives believe the merged company could be powerful enough to hike the price of its programming for cable operators.

After finding these documents, the FTC earlier this month released a second request for information from the two companies, though officials insist the review is still on course for completion in the first half of 2004.

Under the deal, broadcast network NBC -- a unit of General Electric -- will take control of the sixth biggest media firm in the world. This will consist of NBC's own assets plus Vivendi's movie studios, TV production businesses, cable interests and theme parks [WAMN: 09-Oct-03].

However, independent antitrust experts insist there is still enough competition to keep the FTC satisfied. "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," commented former FTC economist James Langenfeld.

According to George Cary, one-time mergers chief at the commission, the row over the NBC papers provides an important lesson. "Documents are the primary evidence on which the government relies," he declared. "If this is the source of the investigation, it emphasizes how important it is for people to not write things that are speculative and unfounded."

Data sourced from: USA Today; additional content by WARC staff