Comcast to buy controlling stake in NBC Universal - Page 2  

Much as it pains me to agree with Bicker1, on the narrow interpretation he is right -- no one is being forced to buy programming, since the option exists to do without. I've exercised that particular option, put up an antenna, and am not paying a penny towards ESPN, to use your example.

That said, I agree with virtually nothing else that he has said in this thread. Cable/satellite is an oligopoly by any reasonable definition -- and vigorous competition with differentiated product offerings really doesn't exist. The problem is this: I'm in an unusually competitive area in that I can select between four multichannel video providers -- Comcast, FIOS (Verizon), DirecTV, and DISH -- but the service that they offer is basically the same. None of them offers a real choice in terms of how I can package and assemble the program offerings because they are all contractually precluded from offering a real choice at the extended basic level of service.

In this environment, the Comcast/NBCU merger is not in the public interest. We need to be breaking up the big media companies, reducing vertical integration, and investigating the contractual practices within this industry -- and Comcast/NBCU takes us in the exact opposite direction.

You are not alone:

http://www.avsforum.com/avs-vb/showt...3#post17666303


Which indicates that the problems you're highlighting have nothing to do with competition, and most likely have everything to do with consumer behaviors. If consumer behaviors prompted other types of offerings, then they would exist.

Beyond that, I have a choice of cat sitters. There is healthy competition. However they all offer exactly the same service. There is nothing wrong with that. Vigorous competition leads to each supplier left being a reflection of what consumer behaviors prompted it to become, and since they are competing for the same customers, they all will look the same.

It is called, "commoditization".

So essentially, the reality is basically the opposite of what you're implying. While commoditization is often natural result of competition, in this case we see commoditization resulting from a combination of oligarchy and directed regulation (which, essentially, was the FCC's intent). Essentially, the way a service is forced to be provided, combined with the manner in which consumer purchasing behaviors drive the provision of the service, turns the service into a commodity.

If you were expecting that if you could just get a bunch more competitors into the marketplace that that would result in a bunch of competitors who actually providing completely different services, then you don't understand market economics. This commodity market that we have today offers services that are little different from what they would look like in a market with perfect competition.

But wait! (you say) What about XXX? Whatever XXX is, if it is a commodity, like cable television service, but let's say in a more competitive marketplace, achieves service differentiation by showcasing. Essentially, each supplier seeks to trick customers into thinking that they have a unique product, when in reality, they don't (because it's a commodity). You even see a good bit of this in the cable television marketplace, even though you deny that there is significant differentiation: DirecTV spent millions pushing its 100 HD channels, while Comcast countered by talking about its 1000 HD choices. Today, FiOS pushes how it is all fiber, while Comcast talks about its World of More. That's the kind of window-dressing that you see in all commodity marketplaces -- differentiation of promotion, not of service. Going back a bit, McDonald's talked about how fun eating at their restaurants were, while Burger King talked about char-broiling. It was still just hamburger for dinner either way. Coke and Pepsi. GM and Chrysler.


Even if they were allowed to do more, they'd both figure out which kind of doing more you'd prefer, and they would both do it, and then you'd be back to "None of them offers a real choice in terms..."


Sure it is. The impact on viewers is negligible between having NBCU owned by Comcast versus super-conglomerate GE, and the members of the public who have financial interests in the two companies will benefit from the better fit of NBCU into Comcast than into GE.

T. Desmond says:
"In this environment, the Comcast/NBCU merger is not in the public interest."

bicker replies:

Come on bicker. How can you say that with a straight face? You know what the outcome will be. The merger might be in the best interest of the shareholders and executives (and I'm one of those shareholders happy to share in corporate profits). However, for the public at large, the CUSTOMERS, it will result in higher prices and probably reduced service. I don't equate more channels to better service when I don't want most of them - what about picture quality, responsiveness to problems, etc. Is more media consolidation really in the public interest (and I suspect this is only a beginning)? Hardly.

And I go back to my earlier comment about too much ownership in too few hands. This extends across all media (papers, radio stations, TV networks, production facilities, etc.). When you look at the issue from that context we really don't have choices - its not just a TV matter. Turning off cable might be a tactical victory, strategically it would be a failure. Where would I get my news and information (recall we are in an "information age")? I'd probably be forced to get it from the same company but maybe OTA. Or I might use the internet on an infrastructure owned by them. Of course they may block access to views opposite to their corporate (or political) philosophy, not carry information because they don't want to pay a fee, or the content provider itself may choose to not allow access to it. Oh let's not forget, given the dependency we have now on the internet today to conduct many personal financial transactions, pulling the plug on that is not a viable option either. If you don't think corporate censorship is unlikely or that we'd see "net neutrality" in that environment, you are wrong. And BTW past excesses by private and government entities don't make it right in the future. You can not deny media consolidation in pursuit of the almighty dollar does the nation and its citizens a grave disservice.

Given the imporatance of the media (including all its elements: content, delivery, ownership, use of public airwaves and rights of way, etc.) and its influence on society, I am firmly convinced we need much tighter Government control. I think a regulated monopoly like a public utility is a good model to start with. I'm not adverse to corporations making a buck. My concern is that there are some operations where the capitalist, unregulated (or limited regulated), free market environment is inappropropriate. This is one area where I think it true.

Maybe Marshall McLuhan was more right than he realized when he said, "The media is the message."

I'm not entirely sure what the lack of differentiation in television service has to do with the Comcast purchase of NBC Universal. This isn't really about Comcast's television service. This is about Comcast adding NBC Universal's massive content empire to it's own already massive content empire, and the significant amount of leverage that will give Comcast should it decide to make that content exclusive to its own content portals.

And really, more than anything, this is about Comcast owning ten NBC O&Os in seven top-ten television markets (and whatever the breakdown is for Telemundo) in addition to providing television service in many of those markets.

The issue for me is that we've taken the completely wrong approach to monopoly regulation when it comes to media content. In most industries, vertical integration is a good idea. GM can lower prices to consumers thanks to economies of scale by controlling all elements of the supply chain necessary to build a car and sell it on the showroom floor. We're much more concerned about horizontal integration, where one company tries to buy up all of its competitors.

But when it comes to media content, vertical integration is really just as dangerous as horizontal integration. There really aren't economies of scale that justify allowing vertical integration. Instead, generally what you have is the ability to make your media content exclusive to your distribution portals. Vertical integration doesn't drive down costs to consumers; it drives down costs to the company because it allows the company to raise the price to access its content. In other words, in most markets, vertical integration allows you to bring the constituent parts of a given product together; it facilities your ability to supply. In the market for media content, we're not talking about constituent parts. We're talking about wholesale products (television series, television channels, television services). There is no vertical-horizontal distinction in the market for media content.

Because I look at things from a perspective broader than only my personal desire to consume things, instead looking at things from several perspectives, without limiting myself to just my own concerns.


Here is where I think you'r logic fails: Your wording clearly indicates your personal logic that "public at large" means "CUSTOMERS". I feel that anyone who equates the public interest only with what's best for customers may want to do some soul-searching, because the public interest goes well beyond just enjoying consumption of products and services. Especially this time of year, a lot of folks need a very stiff reminder that consumerism isn't the be-all and end-all of life.


As such, your comments in this regard are non-sequitur, since Comcast is not currently a significant generator of the kind of news and information you're talking about, and so this deal simply turns over the responsibility already held by a single company to a different single company.

Did any of the heads actually think for a single second they could ever challenge ESPN with VS?
That would be astonishingly rediculous.

Disney moved ABC sports to ESPN. Comcast could move NBC sports to VS. The remaining sports could well be VS on NBC. The company already views cable channels as their future, so it wouldn't surprise me to see sports all but disappear from NBC.

I could see an early confrontation between Comcast and Charlie.

Does anyone really still think that over-the-air broadcast is the future of the television business?

Fine, let everything go to cable or some pay model; I aint payin', though. I'll have to do without....I need to read more anyway.

From Broadcast Engineering, By Michael Grotticelli

What does the Comcast-NBC deal mean for over-the-air broadcasting?


The speculation surrounding what the new deal means for local NBC O&O stations is rampant.

Comcast, the cable operator, has now taken control of NBC Universal. It’s a huge deal affecting feature films, theme parks and especially pay television. But what does it mean for over-the-air broadcasters — the least mentioned part of the mega transaction?

Initially, Comcast will take control of NBC Universal’s 10 owned-and-operated stations, which reach 27 percent of U.S. households. This will trigger an FCC investigation. Even though a 2002 court decision threw out formal rules preventing a company from owning a cable system and a broadcast station in the same market, the FCC is certain to review any deal that transfers broadcast licenses in so many major markets.

NBC owned-and-operated stations include such major broadcasters as WNBC in New York City, KNBC in Los Angeles, WRC in Washington, D.C., WMAQ in Chicago, WCAU in Philadelphia, KNTV in San Francisco and KXAS in Dallas/Fort Worth.

The FCC scrutiny will certainly allow — or force — Comcast to sell off many or all of the broadcast stations. In fact, many experts think the FCC is almost certain to approve the transfer of the broadcast licenses in exchange for Comcast agreeing to such a sale. Some sources say that’s the plan anyway, since Comcast doesn’t want to own the stations.

In an open letter to policymakers released simultaneously with the announcement, Comcast promised to support over-the-air television. “The combined company remains committed to continuing to provide free over-the-air television through its O&O stations and through local broadcast affiliates across the nation,” said David L. Cohen, a Comcast executive vice president. “As we negotiate and renew agreements with our broadcast affiliates, we will continue our cooperative dialogue with our affiliates toward a business model to sustain free over-the-air service that can be workable in the evolving economic and technological environment.”

However, since Comcast is unlikely to be able to keep the stations, the promises mean little. Though Comcast promised to keep the NBC television network as on on-air service, sources said the cable operator is likely to fold the network into existing or new cable channels.

Sources also reported that Hearst-Argyle, a major NBC affiliated TV station group, could be a likely buyer of NBC’s 10 O&Os. Given the uncertainty about broadcast TV’s future at a time when online video is upending traditional business models and valuations, the TV stations could be sold at a deep discount.

Hearst, Comcast and NBC officials have declined comment. Other major NBC-affiliated TV station group owners such as Gannett or Belo also could be interested in acquiring all or some of the NBC TV stations.

It could take months for the TV station scenario to play out. However, for NBCU to exit the broadcast network and TV station business would cause seismic shock to an industry that is searching for digital strategies while balancing legacy costs and declining advertising revenues. In that sense, the NBCU-Comcast deal will be a catalyst for other transformative changes in over-the-air media.

The deal is part of a broader plan for General Electric to exit the broadcast business entirely. That exit will take seven years to complete. Comcast, say sources, will remain a major pay-television player and will use NBC’s assets for cable television programming.

The NBC Network, now in fourth place, will post a loss this year on declining revenues. The network and O&Os, which have been in an economic free fall, now contribute only about 14 percent of NBCU total earnings. NBCU’s overall revenue growth, which will drop a record 10 percent this year, will never gain more than 4 percent annually over the next five years, an analyst at Credit Suisse reported.

The NBC network’s news and entertainment programs may be transferred to new or existing cable channels. Under one possible scenario, the NBC News, CNBC and MSNBC brands could be organized into a single news unit servicing cable, online and mobile devices. The same could occur with all of NBCU’s and Comcast’s sports, children’s and daytime program franchises, sources said. The programming could also feed Hulu, the Web site currently partly owned by NBCU.

There's no good reason why OTA broadcast can't be part of the future of television. Considering how hot wireless technologies are in virtually every other segment of consumer electronics, the inherently wireless nature of OTA broadcast has real value to viewers. The robust, reliable nature of OTA broadcast service is another real value: my OTA digital service keeps working in weather conditions where cable and satellite subscribers find themselves staring at a blank screen.

The universal nature of broadcast television is yet another factor: note that when MNF moved from ABC to ESPN, it lost about 1/3 of its viewers. Finally, digital television allows a mix of HD and multicasting that could potentially satisfy the interests of many viewers without requiring a monthly fee -- consider Britain's highly successful "Freeview" service as a model.

Now I'm aware that the above is only one side of the story. On the other side is a business and regulatory environment that is downright hostile to broadcast television -- and has been so for many years. Recent proposals to turn most (or all) of the remaining broadcast television spectrum to broadband companies for subscription services is just the latest (and most extreme) example. It's also consistent with a general mentality amongst economists and regulators that services that generate subscription fees are somehow more economically efficient than free, advertiser-supported services. And the policies that have flowed from that mentality have strangled broadcast television.

Consider, again, the example of MNF football moving from ABC to ESPN. Same parent company, same team producing and announcing the games. 1/3 fewer viewers. But much higher profits for Disney (the parent company), despite much higher rights fees under the agreement that moved the games to ESPN. Simply put, moving MNF to ESPN allowed Disney to pass the cost of the agreement on to cable/satellite subscribers -- meaning that viewers (even those who don't watch MNF) are paying a significant amount of money for the dubious privilege of seeing MNF move from one channel to another. By no reasonable definition is this in the public interest...

Taking it even further, and again using ABC and ESPN as an example -- common ownership of cable and broadcast networks will increasingly provide a perverse incentive for the parent companies to move valuable programming from the free broadcast platform to a paid cable/satellite platform. The sale of NBC Universal to Comcast will likely accelerate this trend.

Regulatory efforts to prevent this sort of migration from happening would certainly benefit the public by ensuring near universal access to marquee programming -- as well as keeping costs down for those who do choose to subscribe to pay television services. It would also reduce industry profits -- but so what...there's never been an obligation on the part of government and regulators to maximize industry profits. At one time, it was considered reasonable to strike a balance between industry profits and interests of the broader public.

If we were to go back to that attitude, I believe that there would be an ongoing role for OTA broadcast television in a multichannel world. It would coexist with multichannel pay services and video over the Internet.

Sure there is: Money. The best resources of the industry will invariably be directed to the distribution channel or channels that afford suppliers the greatest returns, not the distribution channel that is plagued with a terminal inability to satisfactorily monetize the work of the industry.


But the nature of OTA broadcast, and especially the way many members of our society view it, also effectively undercuts the conversion of that value into profit.


What was the effect on the profitability of MNF? As you said
That is unequivocally the crux of the issue.


The consistent analog to Freeview, here in the United States, would broadcast solely PBS stations.


Right on-target. And I appreciate that you see the reasons why OTA cannot be part of the future of television. Can we change the nature of reality, so that people become willing to pay subscription fees for what they currently call free television? Not likely.


That's ridiculous. A for-profit corporation being able to do a better job fulfilling its paramount obligation is absolutely in the public interest. Corporations are constructs of society specifically. They exist to pool the resources of individuals who singly couldn't hope to achieve what together they are able to. The system works because these constructs are focused on purpose, helping the owners feed the families, afford homes, save for future needs such as college and retirement, etc. This is all in the public interest.


That doesn't benefit "the public" -- that benefits individual viewers. Unless you believe in the ancient Roman philosophy of panem et circenses (bread and games) then the provision of entertainment is not an overriding obligation of society, like provision of news and information is. By contrast, the superior economic activity that is fostered by making highly-value programming does serve the public interest, for the reasons I alluded to above.


I think a lot of younger folks actually forget the fundamental underpinnings of the government's obligations to society. First and foremost is safety and security; keeping the peace and keeping our nation secure. Second is economic activity. These two tenets were the reasons why we built the Interstate Highway System, for example.

No where on the top 10 is an obligation for government to provide entertainment. Sorry.


The problem, I believe, is that people have confused their "inexpensive fun" with "interests of the broader public". The balancing you're referring to was between industry profits and working condition, industry profits and public safety, and more recently, industry profits and environmental impact. Not between industry profits and "inexpensive fun".

Personally, I believe Bicker1 might sway more to his side of the argument (this and so many others) if he would stick to his opinions – even if he believes them factually based – and dispense with the continual personal attacks (or at the very least, sly digs) at those he disagrees with:

.. so people saying that is are either relatively clueless, or deliberately deceptive…”

“…You've raised a red herring….”

“…I look at things from a perspective broader than only my personal desire to consume things, instead looking at things from several perspectives, without limiting myself to just my own concerns.”

“…you'r (sic) logic fails…”

“…your comments in this regard are non-sequitur…”

.. That's ridiculous….”

And that is not to even mention his bald assertion that:

“I think a lot of younger folks actually forget the fundamental underpinnings of the government's obligations to society. First and foremost is safety and security; keeping the peace and keeping our nation secure. Second is economic activity. These two tenets were the reasons why we built the Interstate Highway System, for example.

No where on the top 10 is an obligation for government to provide entertainment. Sorry.”

(And now, having read his view of the #1 and #2 government “obligations”, I am anxiously awaiting numbers 3-10.)

Thanks for your opinion. Sorry, but I disagree with your characterization of my comments.

Is it really your position that Comcast's corporate interests are are a better manifestation of the "public interest" than the everyday viewer?

So, does anyone think that Comcast might have to sacrifice their cherished loophole exclusion that allows them to keep Philadelphia sports programming unavailable to their satellite competitors?

I certainly can see the logic of this purchase from Comcast's perspective. USA, Syfy, and CNBC are pretty valuable channels. Then again, given the way that Jeff Zucker and Ben Silverman ran NBC into the ground over the last five years, you'd think that Comcast would get at least a $5 billion discount for promising to keep Jeff around.

I think it's pretty clear that Comcast will move NBC Sports (football, golf, and Olympic programming) onto cable. Disney folded a once-storied sports division into its ESPN juggernaut; expect Comcast to do the same. Things don't look any better for NBC's broadcast affiliates between Jay Leno and the Comcast buyout.

My biggest concern in this whole proposed buyout is that Comcast Entertainment sucks. E! sucks, Style and Fearnet are worse, and G4 sucked the life out of what good there was in Tech TV. I don't want to see these bozos led by Jeff Zucker destroy the good programming that NBC Universal still offers. The change from Sci-Fi to Syfy was a bad move, but putting the channel under the same division that previously had E! as a flagship channel?!

I suspect one of the first things to disappear will be the so-called "terrestrial exemption" which allows Comcast to keep its Philadelphia RSN (and Cox is San Diego RSN) off satellite.

Comcast officials have all but admitted as much -- though they equate their exclusivity with the Philly RSN with DirecTV's NFL Sunday Ticket.

The potential affects on net neutrality worry me more than the potential that NBC might go off the air. The future of television delivery is on the internet. For people in their early 20s and younger, they're already getting a lot of it this way.

With this purchase, you now have the second largest broadband ISP in the US (by only 0.1% as of last year, they may be the largest now) controlling one of the largest media companies in the world. Comcast would have a vested interest in steering customers to their content online, most likely by degrading, throttling and surcharging access to other companies' content. Which is why the telcos and ISPs have been so desperately fighting against Net Neutrality.

This is definitely true. A lot of people I know who are younger than me don't even have cable TV. They watch all the latest network shows online (which is really annoying, because you can never talk about the show you watched last night, for fear of giving something away, since they haven't watched it yet).

More than anything else, I think we're just talking past each other because Bicker1 has some fundamentally different beliefs about regulation and the public interest than I (and several other folks here) do.

In short, he seems to sincerely believe that maximizing profits is equated with maximizing the public interest -- and that the appropriate regulatory role of the government is to stay away from any role that might interfere with that profit maximization. In summary, that the public interest of the shareholders for maximizing profits outweighs the public interest of viewers to access affordable programming from a diverse collection of sources.

Needless to say, I disagree (strongly) with that belief system. In my opinion, appropriate broadcast (and media) regulation should seek to maximize the number of independently owned voices, and should protect the interests of customers and viewers. The profit interests of companies cannot be completely neglected, of course, but profitability should not be the primary consideration of the regulators. I would strike a balance in regulation that places more emphasis on the interest of viewers and less on profit maximization that would Bicker1.

And that's the heart of the disagreement.

It's also a disagreement that goes far, far beyond broadcast and media issues -- and into the broader debate over "market fundamentalism" versus "regulated capitalism". But that's a debate that is more suited to "Calculated Risk" than the AVS Forum.

Well said TD - Echoes my sentiments.

It is wonderful how you were able to articulate your differences with bicker1 so clearly and succinctly, Thomas, without even a hint of personal disparagement.

Bravo.

Thanks!

Time for another logo.

http://en.wikipedia.org/wiki/NBC_logos

Maybe ...


Turning away from broadcasting and setting the sights lower.

The peacock needs to be wearing a tool belt.

Won't Comcast need a new slogan? NBCU has already been using the one you suggest.

Well an alternative slogan could be "What's this big C poking me on my behind?"

Oh wow...

Good one. Did you make it?