For all the talk about “synergy” and “vertical integration” in Comcast’s $13.75 billion cash and assets deal for NBC Universal, I think something far more fundamental is at play: fear.

Networks like NBC Universal’s USA Networks and Bravo are chafing under the control of cable operators like Comcast. Comcast always has the upper hand in negotiations: if you don’t like our terms, find another cable network for your programming.

When an operator controls more than 13 million subscribers, like Comcast, that means you’re giving up a big chunk of change if you leave its network. And if you don’t think Comcast would dump a big TV programmer, how about when Time Warner pulled Disney’s ABC network out of 3.5 million cable homes over a fees dispute in 2000?

So programmers seek every opportunity to find new sources of revenue other than cable. They’re not unhappy at all about a raft of new a la carte services emerging from the Internet, such as iTunes, Netflix or ZillionTV. As long as they get paid for each download or stream.

Comcast, whose life blood is lucrative cable subscriptions, hates the idea of consumers buying one-off services. But if it owns the programmers, it gets to make the rules. It gets the leverage to make networks’ content available online exclusively to its cable subscribers, not the public at large. Or if the programmer sells its content a piece at a time, at least Comcast gets a cut.

Comcast gets far greater control over what’s flowing down its pipe.  And that, not synergy, is what’s behind this deal — and all those other mega-media mergers.

Posted under Michael's Blog

I’m no big fan of Rupert Murdoch, but I think he’s right about Google and newspapers. Something has to be done about the fact that search engines get a completely free ride sourcing millions of articles on the Web…and then taking most of the advertising revenue.

Murdoch called Google’s actions “theft” at a Washington forum on the future of newspapers. That’s true, although it’s akin to leaving your trunk open and then bitching when your laptop is taken.

The question is how to fix the problem.

Murdoch’s own Wall Street Journal may have part of the solution, although it predated Murdoch’s acquisition of the newspaper.  The Journal is the only mass market newspaper I know of that gets away with charging for its product on the Web. If you want to read the full text of the newspaper online, you need to either have a subscription or pay $50 a year.

You can get away with that if you have a product so valuable people are willing to pay for it. But not if your competitors are willing to provide the same news when you start charging for it.

So one piece of the solution will undoubtedly be a consortium of publications willing to band together to charge — say, accessing all the articles from the L.A. Times, New York Times and San Francisco Chronicle for a set monthly fee.  That, and pressuring Google to give up a small piece of the billions of dollars it makes off newspapers’ backs.

Posted under Michael's Blog