THE CABLE PIPELINE

Reportedly a deal may be close with Comcast/NBCU. Ok, I’ve have been inundated with all the reasons why such a merger should not happen, from Wall Street’s pandering of a short-term profit loss, to the remembrance of the botched deal to acquire Disney in 2004. Well this is different, and the landscape has changed significantly since 2004.

Both Comcast’s (CMCSA,CMCSK) Brian Roberts and Steve Burke are out front selling the deal as a long-term strategy that will put the cable giant in a strong position to compete with  the Telco’s, DBS, Netflix, Boxee, and Apple TV, if that hobby ever comes alive.(see Apple Pitching Subscription TV to Content Owners)  Here is the crux of what the merger represents and what NBCU (GE) has to offer, including (Film) with Universal Pictures, Focus Features, and Universal Studios Home Entertainment; (Digital Media) including Hulu, iVillage, NBC.com, CNBC.com; and the (Television Group), with stations that will obviously have to be sold off where markets overlap.

It smacks of a good fit if you consider what Comcast brings to the table, including a footprint of over 24 million customers, Comcast Interactive Media with Comcast.net, Fancast, Fandango, DailyCandy, thePlatform, and Plaxo; its own stable of cable channels with Comcast Cable Networks including E! Entertainment Television, Golf Channel, Versus, The Style Network, G4, TV One, PBS KIDS Sprout, ExerciseTV, FEARnet, and Comcast Sports Group.

From both a long-term competitive and shareholder equity standpoint, the venture sets well with my analysis. After all, it will not break the Comcast bank and sends a stern message to those who might be thinking this company is not ready to take on all comers in the Digital TV and IPTV markets. 

The one question that remains in the back of my mind is whether Docsis 3 and PON (see SCTE Cable-Tec Expo ’09), technologies will be enough to carry the HFC platform, with a well put together content and footprint combination, and as a long-term strategy position? The Cable Industry continues to be convinced of this technology, and they have been around long enough to make well thought out decisions. But FTTH continues to be accepted worldwide as the (end-all) scenario in pushing broadband content and applications through the pipelines. Comcast should make sure that their vision meshes seamlessly with its pipeline capabilities.