Visit website

Comcast- NBCU Merger: Fear, Fact and Fiction

Comcast  NBCU Merger: Fear, Fact and Fiction

Comcast  NBCU Merger: Fear, Fact and FictionFear is always the driving force in forecasting dire consequences a large merger could have on competition within the marketplace. This is no different with the proposed coupling of Comcast (NASDAQ: CMCSK, CMCSA) and NBC Universal (NYSE: GE).

Each company brings its own set of complimentary offerings to the table marrying the largest cable operator in the U.S. with its vertically integrated programming which includes Cable Networks, Interactive Media, Spectacor and Comcast Spotlight with a long-time creator and owner of programming like NBC (Television Group), Universal Films, and Digital Media- (Hulu/CNBC) including Parks & Resorts- (Universal Studios) promoting content to a global audience.

It is quite a combination which could possibly influence the way consumers’ access programming for a long time to come having overtones of size, infrastructure and breadth of programming to fill those pipes. But, does the merger deserve the ominous speculation of market dominance and price gouging that has been reported in the media since the announcement in late 2009? Here is the fear, fact and fiction of the merger.

Competition

Comcast is still below the 30% threshold the FCC established as a cap for cable operators, reaffirmed in 2007, and then vacated by a Federal Court of Appeals in 2009, stating sufficient competition existed within the market after adding DBS (Direct Broadcast Satellite) to the mix.  With Direct TV, Dish Network, ECHOSTAR,  HughesNet, AT&T (U-Verse), and now Verizon (FIOS) competing head-to-head with Comcast in various markets, the idea of a monopoly should not enter the picture. Competition is apparent and thriving with many alternatives including over-the-top competitors like NetFlix, Apple TV, Google TV and others appearing on the horizon competing directly for cable TV and broadband consumers. The idea that a lack of sufficient competition exists is a moot point and is relegated to fiction.

Vertical Integration

Comcast is vertically integrated as with many other companies and was an early strategic decision to control rising programming costs.

NBCU adds Entertainment TV:

The impressive array of content the merger brings to a new Comcast/NBCU cannot be denied, but does it constitute the fear of smaller competitors that their companies will be held hostage in contract negotiations and channel placement on their networks? That remains to be seen, but Comcast has reiterated that NBCU would be managed as a separate company thereby taking a hands-off approach to those type negotiations.  I believe those fears can be seen in recent disputes arising from the News Corporation – Cablevision and Time Warner Cable debacles that stranded consumers without popular programming in recent months. And this is where an arbitration rather than regulation model could benefit the consumer. See (Washington Post editorial: Comcast-NBCU merger without net neutrality conditions)

If companies are required to go through an arbitration process that concedes fair market value for their products, then each will benefit from the positive consumer relationships that kind of process will create.  There has to be fairness and equality in a competitive market. I’m relegating this to a fear which has not materialized even with Bloomberg’s relevant point of channel positioning relative to CNBC. See (What’s Bloomberg’s beef with the Comcast NBC Merger?  The TV Dial)

Fear, Fact and Fiction

It all comes down to the interaction and negotiations with competitors when it to comes to content. Will Comcast truly take a (hands-off) position with regard to NBCU content when it comes to competitor content positioning and price? If anything we must realize that the free market system takes care of most business issues, however a watchful eye of large mergers is not and their market impact needs to be considered as an anti-trust issue; that is if abuses arise they should be addressed swiftly and succinctly.  In reality there is all of the above; including fear, fact and fiction lurking within the merger of Comcast / NBCU merger. See (U.S. Congresswoman Raises Concerns over Comcast/NBCU Merger)

Comcast  NBCU Merger: Fear, Fact and Fiction
Comcast  NBCU Merger: Fear, Fact and Fiction Leonard Grace (270 Posts)

Founder of Broadband Convergent, a Broadband-Mobile-Cable-Wireless-Telecom market website focused on highlighting industry news and strategic issues within technology arenas. Highly researched and experienced insights and trends both inform and enlighten readers on current industry convergence of Broadband-Cable-Mobile-Wireless and Telecom Sectors.

Comcast  NBCU Merger: Fear, Fact and FictionComcast  NBCU Merger: Fear, Fact and FictionComcast  NBCU Merger: Fear, Fact and FictionComcast  NBCU Merger: Fear, Fact and FictionComcast  NBCU Merger: Fear, Fact and FictionComcast  NBCU Merger: Fear, Fact and Fiction