THE CABLE PIPELINE

Since announcement of the Comcast/NBC-Universal merger consummated the deal creating subsequent analysis and conjecture about how the new venture will be structured, with its impact on programming distribution and fears of dominance, and anti-trust issues within the marketplace; Comcast  is set to go before regulators to convince a skeptical crowd how this union will benefit competition and the continued adoption of broadband access.

News of the deal set-off a firestorm of controversy from public interest groups, competitors, and Internet Access Providers alike, all concerned over the potential abuses such a merger could unleash on Broadband stakeholders and their ability to access, and compete in what is perceived as a Free Internet World.

Ultimately though, a deal such as this has long been the dream of Comcast leadership including lessons learned from previous merger attempts to bond programming and pipeline, thereby creating market dominance along with a competitive edge for the long haul; and it all may be as simple as this scenario which drive the motives behind the acquisition of NBC-Universal. But upcoming regulatory scrutiny will decide how the merger will stand-up under the glare of legislators.

The Pipeline:

Comcast has always, since its inception, believed in the pipeline and the business benefits of building an infrastructure with which to carry interesting, informative, and socially beneficial programming on a broad scale within a national market. The pipeline is the core business, or the building blocks if you will, of which all other Comcast businesses are constructed. The strategy has not changed, and it fits well with the advent of high cost content that has driven smaller operators to the merger or take-over table.

The Programming:

To fill the concept of a pipeline with relevant content, generating concurrent and steady revenues on a monthly basis, Comcast realizes the need to be more than just a pipeline filled with expensive to carry programs. It needs a strong formula to deliver vertically integrated demand driven content that will outstrip the competition in securing bundled revenue streams in an increasingly broadband proliferated genre. Hence, the NBC-Universal   merger that gives the right recipe of owned versus purchased programming rights.

Regulatory Finesse

The cable giant has not under-thought the implications of the regulatory hurdles it would face with its merger. The company has for many years relied upon strategic thinking within a 5 to 10 year framework in predicting where the pipeline industry is headed, and then acting upon that strategic intelligence to formulate a plan of action. So, it is not a mere coincidence that NBC-Universal came into its sights at this time, but was more of researching all the implications, including regulatory, and waiting for the right opportunity at the right price. NBC-Universal filled this need as an underperforming part of GE-Vivendi SA considered not a good operational fit from the get-go. It has continually and concertedly moved to reassure regulators of its intentions to run NBC-Universal as a separate company, making it more transparent and independent, to include Hulu with its free Internet content concept.

In conclusion, Comcast motives are simple. Acquire more vertically integrated programming to fill the pipelines serving 24 million customers with unique and relevant content used both in a linear and broadband format that preserves the status-quo and addresses the future. It’s a win-win situation for Comcast; its customers, and the Cable Industry.

Related articles by Zemanta

• To get NBC, Comcast still has persuading to do (sfgate.com)
• Justice Dept. to scrutinize Comcast-NBC deal (news.cnet.com)
• Josh Silver: Comcast Launches “TV Everywhere”: Say Goodbye to Free Online Television (huffingtonpost.com)
• GE profit tops analysts’ estimates, shares ease (financialpost.com)

 Read More →

It happened, as predicted by some and discounted by others; a Comcast-NBC Universal merger that has wide-ranging implications on both future Content and Internet usage. However, the tough part for Comcast begins now, today, and that is to placate dissenters like the Consumer Federation of America, the Free Press, and tough Federal Regulators that this will help both competition and increase access to broadband, not hinder it.

The Free Press has issued a press release denouncing the merger while giving reasons that the deal should be at least, a violation of Video Competition Anti-Trust Laws; see (Comcast-NBC Merger: Just Say No). On the other hand, Comcast CEO Brian Roberts released his own statement regarding the merger designed to get out front of the expected controversy that the deal would attract. (Comcast and GE to Create Leading Entertainment Company)

 “We are prepared to make affirmative commitments to ensure that the pro-consumer and public interest benefits of the transaction are realized,” Roberts said. “Today, we have announced a number of initial commitments that expand on the capabilities that Comcast and NBCU have built over the years, and the new opportunities that this combination makes possible. These commitments address the needs of various audiences and stakeholders, and we will provide additional details on these and other commitments in our public interest filing with the Federal Communications Commission.”

The merger announcement comes after the National Cable Telecommunications Association press release of Adoption Plus (A+) Program, a pilot initiative of cable operators, manufacturers and vendors of which Comcast is a member, creating a public/private partnership to provide increased broadband participation to a vulnerable part of the population, underprivileged Middle School children. This does partner with the FCC’s vision of increasing broadband adoption and access to the underserved population.

Comcast may have to make serious concessions to pass the regulatory scrutiny that will certainly come such as, keeping Hulu cost free for consumers, share fairly its newly acquired content with competitors, separate retransmission negotiations with NBC from cable operations, and possibly divest itself of NBC stations in overlapping markets. Comcast has not come this far to lose the game in the “home stretch”, and it will use all the lobbying and public relations power needed to win that regulatory approval.

 Read More →