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

Just because you can do something doesn’t mean you should. Analyst Jason Bazinet of Citigroup estimates in a new report that combining Comcast with Time Warner Cable could achieve $1.6 billion in programming savings and could add something like $7.1 billion, or $2.46 a share, to Comcast’s value.  That mega-company would control about 37% of the U.S. cable market — permittable now that rules barring cable companies from controlling more than 30% of the U.S. cable market have been overturned

The analyst’s assumption is that regulators would cast a blind eye to this oligopoly because new TV entrants like AT&T, Verizon, Dish Network and DirecTV redraw the traditional definition of what constitutes the pay TV market. But he’s conveniently forgetting these giants’ move into telephones, Internet and wireless, and their growing ability to dictate the terms of content distribution.

Wall Street might get richer from such a scheme, but consumers would be poorer as rates rise and programming choices fall.

Posted under Michael's Blog

Sprint Nextel and Clearwire’s reported $12 billion joint venture to roll out ultra-fast wireless Internet access would be a significant boost to the cellular aspirations of Comcast, Time Warner Cable and Google.

The Wall Street Journal said the two companies have raised $3.2 billion in outside financing, including $1.05 billion from  Comcast, $550 million from Time Warner Cable, $500 million from Internet giant Google and  $1 billion from Intel. 

Cable companies are fretting at the wireless advantage of AT&T and Verizon, both of which have rolled out IPTV service to millions of customers over the last year. This combination, which reportedly will allow them to brand the service as their own, would allow them to add high-speed wireless to their TV, Internet and telephone options.

For Google, the deal helps cement its position as the dominant search provider in wireless in advance of an expected Google phone over the next 12 months.

Intel, which wil merge its broadband wireless services into Clearwire, gets a new breath of life for its data services, which have been sorely underutilized as subscribers flee its service.

According to the Journal, the new service will ultimately be as much as eight times faster than existing coverage.

See Also

• Sprint, Clearwire Deal Near

Posted under Uncategorized

Talk about a tempest in a teapot.

A Comcast executive’s revelation at Digital Living Room last week that the cable company is testing cameras in its DVRs in the living room set off a storm of angry blogs.

It began when Chris Albrecht of NewTeevee quoted Gerard Kunkel, Comcast’s senior vice president of user experience, as saying the company is testing cameras that recognize you when you turn on your cable box, allowing your TV set to make recommendations about what you might want to see, or to serve up tailored ads.

The angry comments started on the New Teevee site, ranging from "officially the most absurd thing I’ve ever heard in my life" to "Comcast is trying to make Orwell’s vision of 1984 come true". From there the commentary spread to PC World  (Comcast’s Creepy Experiment) and the New York Times, among other places).

Kunkel responded to the outcry with a posting of his own on NewTeeVee, emphasizing that Comcast’s experimental camera-based gesture recognition device is "in no way designed to – or capable of – monitoring your living room".

The incident illustrates once again the morass cable companies and telephone companies are potentially stepping into as they continue to offer "triple play" services that combine TV, high-speed Internet and telephone service. Even if Comcast’s system doesn’t currently offer in-room monitoring, it clearly could without too much modification. And you can bet that when it becomes a reality, the government in its search for "terrorists" will be close behind.

It’s only fair to mention, however, that panelists at the show also talked about more benign uses for such technologies: monitoring a home when a family is away, for example, or allowing family members to monitor elderly parents.

As we move toward two-way video communication in the home, these issues are going to only intensify. It’s good to have an early heads-up.

See Also

• Comcast Cameras to Start Watching You?
• Comcast’s Creepy Experiment Puts Cams Inside DVRs to Watch You

Posted under Uncategorized