So You Want to Stream NBCU Shows Online?

So you want to license some NBC Universal content and stream it online? The good news is that, under the conditions placed upon Comcast (s CMCSA) by the FCC and Department of Justice, the new joint venture will be required to make its TV programming available to online video distributors (OVDs) that want it. The bad news is that those OVDs will have to jump through a few hoops before NBC Universal strikes a deal with them.

The FCC and the DOJ, in trying to protect the nascent online video market from anti-competitive business practices, crafted conditions that they hoped would ensure a Comcast-led NBC Universal wouldn’t keep its content from being made available for streaming. But the bar set to trigger regulatory intervention is set pretty high, especially in a young market.

Based on reports of the approval order by the FCC, as well as the publicly released consent decree issued by the DOJ, the new NBC Universal will be required to negotiate with OVDs that wish to make its content available to their customers. But the requirement that gives OVDs access to that content is contingent upon other content firms licensing content shows for online consumption.

The new NBC Universal will be required to negotiate deals with online video providers under two different mechanisms. Under the first, the new joint venture will have to give OVDs a shot at its content after it’s negotiated a deal with its peers for comparable content under the same business model. So let’s say Netflix (s NFLX) strikes a deal with FX (s NWS) to make some scripted shows available as part of its subscription streaming service; NBCU may be required to negotiate a comparable deal for scripted content from its USA Network. However, Netflix won’t be able to use its subscription licensing deal with FX as a trigger to negotiate content from SyFy (since the content isn’t similar), or for live content as opposed to on-demand content.

The more interesting condition is one that could open the doors for virtual network operators to begin cropping up. Virtual operators would work like today’s cable companies, making a bundle of shows available online for a subscription rate. Under the conditions of the Comcast-NBCU deal, an online video distributor could license the entire lineup of NBC Universal programming in the same way that other cable companies do, and turn around and offer that package to subscribers. But the trigger for regulatory enforcement in this case is even more difficult; in order for NBCU to be required to strike a deal, the online provider has to obtained a substantial amount of linear content from other content producers.

BTIG Research analyst Richard Greenfield estimates that a company like Netflix would have to pony up upwards of $1 billion a year to get rights to stream live programming from NBCU, which it’s unlikely to do. But it would also have to strike some deals with NBCU peers — like Disney (s DIS) and Fox Broadcasting to make such a deal happen.

While it’s unlikely that an alternative online video provider would be able to pay enough to make a deal like that anytime soon, these conditions will be in place for the next seven years. But online video, as everyone admits, is a developing market, and practically anything could happen in that time.

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