14 February 2013Copyright

Comcast NBC: the implications for IP

The USA’s biggest cable TV operator Comcast has completed its buyout of media company NBC Universal for $16.7 billion, in a deal that raises interesting IP questions.

Comcast already owned 51 percent of NBC but has now assumed full ownership of the company, paying off US conglomerate General Electric. The deal was expected, with the companies agreeing to complete it before 2018.

While IP is not believed to be a key motivating factor behind the deal, the buyout sees cable distributor Comcast become a fully-fledged content creator, either directly or indirectly acquiring the rights behind NBC’s lucrative TV channels and movie shows.

“What is interesting is that the companies are in different IP positions – NBC is a content creator that is normally concerned with IP infringement whereas Comcast has historically been more of a distributor,” says Dale Cendali, partner at Kirkland & Ellis LLP, New York. “It’s a bit of an apples and oranges situation.”

Bruce Ewing, partner at Dorsey & Whitney in New York, adds: “Comcast has fully crossed over into the role of content creator. It’s a huge thing. Comcast has become one of the biggest global media companies through a process of vertical integration.”

How the acquisition affects the ownership of IP rights depends on how the deal was structured. Details of the deal are unknown but Cendali says that under a typical merger the company buying out the other would acquire all its IP rights.

But Ewing says NBC had already been operating as a successful specialist unit and he would be surprised if there are any major changes to copyright ownership.

“On the IP side, there would probably not have been too much due diligence, as NBC already operates successfully, so it’s likely NBC will retain all its lawyers and copyright. It’s difficult to know how the operations will work but I’m not sure that they would merge everything – NBC will probably stay separate because this business has been so successful.”

Either directly or indirectly – depending on the deal – Comcast now has a vested interest in protecting copyright. One of its prized deals, which NBC won, is the $4.38 billion contract to air the next two Olympic Games in the US.

Cendali says: “To some degree, Comcast will have a heightened focus on piracy and be more concerned about copyright than before. But it doesn’t have to recreate the wheel – NBC already has copyright experts in this field.”

One of the more interesting sides to the deal covers the pending six-strikes anti-piracy scheme, which is set to kick off in the US this year. Comcast is one of six US Internet providers that has agreed to monitor and act against copyright infringement. One of the rights holders groups that is working with the providers is NBC Universal, through its subsidiary Universal Studios.

This means, in effect, that Comcast is now protecting its own copyright rather than others’. It will be interesting to see how Comcast will treat infringement of its own rights compared with those of other companies.

“There could be an increased level of copyright enforcement but it’s hard to say,” says Ewing. “What’s important is that Comcast is now a global media company that will have to protect its IP across the world.”

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