A fight may be brewing between antitrust regulators at the Department of Justice and Federal Trade Commission over review of the Comcast/ NBC merger.
The $30 billion deal, which was announced early this morning, calls for cable giant Comcast to acquire majority ownership of NBC Universal from parent company General Electric Co., which will own 49%.
The merger review is all but certain to be high-profile, and has already triggered statements from members of Congress about potential anti-competitive effects. Sen. Herb Kohl (D – Wis.), who chairs the Senate Judiciary Committee’s subcommittee on Antitrust, Competition Policy, and Consumer Rights, announced plans to hold a hearing and warned, "Antitrust regulators must ensure that all content providers are treated fairly on the Comcast platform, and that Comcast does not get undue advantages in gaining access to programming."
But it’s still undecided which agency will handle the review.
In most cases, it’s fairly clear-cut – hospitals, grocery stores, and oil and gas mergers, for example, almost automatically go to the FTC, just as airlines, agriculture, and financial services deals are routed to the DOJ.
But in a few industries, notably media, both agencies can make a case for conducting the antitrust investigation (and, if need be, challenging the union in court). In the past, it’s taken anywhere from a few days to a year for the agencies to decide who gets dibs on these contested deals in what is known as the “clearance” process.
“It should be a colossal clearance fight,” said one antitrust lawyer at a major firm with prior government experience. “Both agencies appear to have justifiable claims.”
The Justice Department, for example, has reviewed media mergers including Viacom’s $30 billion purchase of CBS in 1999 (the two companies subsequently split in 2005) and Walt Disney Co.’s $19 billion acquisition of Capital Cities/ ABC Inc., announced in 1995 and approved 1996, and the merger of DirecTV and Liberty Entertainment in 2008.
But the FTC reviewed NBC's $5.4 billion acquisition of Vivendi Universal's movie, television and theme park properties in 2004, as well as Comcast’s $18 billion joint acquisition (with Time Warner) of Adelphia Communications in 2005 –06, not to mention the merger of AOL and Time Warner in 2001.
The deal must also be approved by the Federal Communications Commission, which will evaluate it based on the public interest.
Arthur Burke and Ronan Harty of Davis, Polk & Wardwell are lead antitrust counsel for Comcast. Burke, who is based in New York and Menlo Park, Calif., represented Comcast before the FTC in the Adelphia deal, and before the DOJ in Comcast’s $52 billion acquisition of AT&T’s cable and broadband business. He’s also handled antitrust litigation for the company.
Harty, based in New York office, also worked on the AT&T transaction, and has represented companies including Gilette, CVS, and Hoffman LaRoche in antitrust matters. Counsel Stephen Pepper is also providing antitrust advice.
NBC Universal / General Electric has tapped Arnold & Porter partners William Baer and Deborah Feinstein in Washington for antitrust assistance. Baer, head of the FTC’s Bureau of Competition from 1995 - 2000, has represented GE in a variety of mergers and other matters. Feinstein’s experience includes representing NBC in the Vivendi deal.
For other aspects of the deal, GE/NBC turned to Weil, Gotshal & Manges M&A partners Howard Chatzinoff, R. Jay Tabor and associates Jaclyn Cohen and Gavin Westerman. Partner Charan Sandhu handled intellectual property, as did associate Caroline Geiger.
Partner Michael Kam oversaw benefits, while partners Angela Fontana, Andrew Yoon handled finance. Tax issues fell to partner Kenneth Heitner and associate Michael Breidenbach.
Comcast turned to Davis Polk corporate partners David Caplan, William Aaronson and Marc Williams and associates including Ashleigh Kyle, Johannes Wirtz, Carson Stewart, Robert Rasamny, Stefan Neata, Aman Solomon, and Andrew Delia. The tax team includes partners Avishai Shachar and Neil Barr and associates Craig Phillips, Kay Ng and Devasish Majumdar.
Partner Frank Azzopardi and associates Matthew Bacal and Pritesh Shah are providing intellectual property advice. Partner Kyoko Takahashi Lin, counsel Cynthia Akard and associate Gillian Emmett Moldowan are providing benefits advice. Partner Thomas Patrick Dore Jr. and associates Aaron Sacks, Jeffrey Meriggi and Lucie Shin are providing real estate advice. Partners Joseph Hadley and Jason Kyrwood and associate Derek Thomas Fears are providing credit advice. Partner Gail Flesher and associate Hayden Baker are providing environmental advice.