PHILADELPHIA — Six months into the regulatory review of its proposed $30 billion deal for NBC Universal Inc., Comcast Corp. is spending tens of millions of dollars on lawyers, accountants, lobbyists and bankers.
The merger has become such a hot topic in Washington that the cable giant has published full-page, pro-deal advertisements.
Comcast’s tab for the merger, which includes financing costs, will easily exceed $100 million. Through the second quarter, the company spent almost $90 million, and the government’s exhaustive scrutiny — Comcast has produced millions of pages of documents — likely won’t wrap up until fall.
More importantly, the Justice Department, the Federal Communications Commission or both are likely to ask for conditions to limit Comcast’s flexibility in running the huge entertainment conglomerate before approving the deal. NBCU includes the Universal movie studio, the NBC broadcast TV network and cable TV channels.
The uncertainty is taking its toll, analysts say. While peer cable stock prices have soared, both because of a recovering economy and the strength of cable’s Internet business, Comcast has returned more modest gains to shareholders over the last year.
On a positive note, Comcast has outperformed competitors Verizon Communications Inc. and AT&T over the same period.
“The gorilla in the room is NBC Universal,” said Matthew Harrigan, an analyst with Wunderlich Securities in Denver.
Comcast chief executive Brian Roberts “will have to go in there and make a lot of concessions to get this done,” he said. “It will be hard to get a lot of synergies out of the deal.”
Roberts has said the deal will not lead to large-scale employee cutbacks at NBCU or Comcast, which would be one way to justify the deal. Government restrictions, meanwhile, could prevent Comcast from experimenting with new business models to generate new revenue and profits by combining the nation’s largest cable system with NBCU.
According to one trade publication, the Justice Department’s Antitrust Division has had 30 lawyers working on the review. The FCC separately has appointed a special outside official to handle the thousands of public comments and steer the review process.
Areas of interest appear to be Comcast’s possible use of NBC content as exclusive programming for its cable customers or online subscribers.
Another area of analysis has been the Internet. Some have suggested that Comcast should sell NBCU’s ownership position in Hulu, a popular Internet site of broadcast TV shows.
Fearful the review could drag on, Comcast has pushed the merger agenda to both regulators and members of Congress. It also has agreed to place a Latino member on its corporate board of directors and says it will finance $20 million for African-American businesses and $6 million for independent films or TV shows — measures that silenced potentially vocal critics.
