Comcast’s impending Regulatory Hurdle: Simple Motives behind a Dream – NBC-UniversalBroadband's Impact, Expert Opinion, Transparency January 24th, 2010
Leonard Grace, Expert Opinion, BroadbandBreakfast.com
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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.
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.
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.
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.
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