G.E. and Comcast Strike a Deal for NBC: What It Could Mean for the Future of TV and the Internet

BlogHer Original Post

The General Electric Company has agreed to sell a controlling stake in NBC Universal to cable giant Comcast. Comcast will own 51% of a new joint venture with G.E. retaining 49%.

While rumors of the pending deal have been swirling for months, the new venture still faces a regulatory confirmation process that deal watchers estimate will take anywhere from 9 to 18 months to complete.

Although what new media landscape might emerge from this deal is, at this time, speculative, Comcast has created a microsite about the acquisition and Chairman and CEO, Brian L. Roberts, is blogging about the announcement.

The desire to own a media content creation company is not new for Comcast. In 2004 Comcast attempted a hostile takeover of Disney that ultimately failed.

Comcast's interest in this area is not difficult to discern. Television and media watchers like myself have long seen some writing on the wall: winners in the new world will be the ones that can deliver any and all content to viewers on the device and at the time of their choosing.

Several solutions have been developing but none have been completely satisfactory. Comcast has developed its "On-Demand" service, Netflix has partnered with device makers in order to stream content directly to televisions, Apple makes its Apple TV box and using iTunes you can purchase television shows to download to your iPod, DVRs like TiVo allow time shifting of recorded shows, sites like Hulu and Clicker aggregate television content to facilitate one-stop online viewing of free over-the-air and cable television without the subscription or the television set, and television manufacturers are working on developing internet enabled televisions that will cut out the service provider and device middlemen.

However content creators still hold some important cards in this poker game for the future. Mailing physical DVDs is not the future and no company is more aware of this than Netflix (Full disclosure: I am a former employee of Netflix). That's why they've been developing their on-demand streaming services and what allows them to lead in this arena is the existing relationships they have with studios, from their original DVD-rentals-by-mail business, with whom they must negotiate to get the rights to stream their content.

Each new change in technology requires a new round of standards, permissions and deals to be made. As both the content creator (Universal Studios, NBC Television and the plethora of cable channels NBC and Comcast each own) and deliverer (Comcast's cable and internet services) Comcast positions itself to better take advantage of an ability to provide whatever consumers want, wherever they gravitate as broadcast TV, DVD and other media models rapidly decline. If they could manage to acquire a mobile phone service provider and device manufacturer, Comcast could completely dominate where I think we are headed: i.e., everything must be accessible via a handheld device like a cell phone. And in negotiation with themselves they can not only better control the process but profit from it as well.

BlogHer co-founder and CEO, Lisa Stone, sees the potential for an exciting future with the new Comcast:

Full disclosure: GE/NBCU are investors in BlogHer through the Peacock Equity Fund. But that doesn't change my opinion that, from the outside, the synergy of media assets between NBCU and Comcast is pretty exciting. The joint venture will be a video powerhouse immediately, but it seems to me that the sleeper opportunity is digital. Just imagine what one could accomplish for women online with the multimedia and .com assets of E! and DailyCandy to iVillage, BravoTV, and Oxygen, not to mention MSNBC and CNBC.com.

No crystal ball is without some clouds in the picture, however. The merger of AOL and Time Warner in an effort to dominate the future media world provides an important cautionary tale. Nevertheless it seems to make smart business sense for both Comcast and G.E.. The potential for monopoly power, however, frightens a number of observers, especially supporters of net neutrality principles who are particularly concerned given Comcast's previous troubles with the FCC over their perceived attempts to throttle the internet and to limit and control and, some believe, ultimately tier access.

As a keen observer of television (content and hardware) and opiner on its digital future (delivery, consumption and business models), I will be watching this deal and how the changes it ultimately will bring about play out. What possibilities do you see? Are you concerned about regulatory, monopoly or net neutrality issues? What opportunities could this deal create for women online?

Related Reading:

Staci D. Kramer at Paid Content: It's Official: Comcast Buys Majority of NBC Universal; NBCU Valued at $30 Billion

Marketplace New York Bureau Chief Amy Scott: What NBC Universal deal gives Comcast

I talked this morning with Porter Bibb, with Mediatech Capital Partners. He says the deal instantly makes Comcast the world's largest media conglomerate, a huge player in both media content and distribution.

BIBB: They are now the first and only totally vertically-integrated media company. They have
cable, they have broadcast over the air with NBC, they have wireless, and they have broadband on
the Internet
.

Time Magazine TV critic James Poniewozik at Tuned In: NBC-Comcast: A TV Deal for the Post-TV Era

Giant cable-TV provider Comcast has reached a deal with GE this morning to take over giant entertainment company NBC Universal. This means big changes ahead for 30 Rock's Jack Donaghy, who will have to adapt his core competencies from selling microwave ovens to pushing upgrades on DVR cable boxes. But what does it mean for you as a TV viewer?

In the short term, not much; probably not even that much in the medium term. (For starters, the deal faces an approval process which could take a year.) In the longer term, it says a few things about what the TV business is becoming, and what "TV" will mean in the future:

St. Petersburg Times TV/media critic Eric Deggans at The Feed: Comcast buys NBC Universal: What makes this deal better than all the other failed media mergers?

But if NBC Universal shows don't get preferred slots on Comcast cable systems, or NBC must remain as a fourth-place broadcast network or Comcast can't charge rival TV service providers higher rates for popular cable channels such as USA Network or Bravo, can the deal really make sense financially?

Tamara Chuang, a.k.a. The Gadgetress at The Orange County Register: Cable's Comcast buys NBC, will TV prices go up?

Remember why our cable bills keep going up? Time Warner Cable blames rising carriage fees, or the price it must pay a TV network to carry the channels. Some of the highest prices charged to paid-TV providers are from the parent of ABC: Disney. Prices for Disney-owned ESPN, for example, are up to $4 per cable customer. Time Warner has said that the bulk of its prices are from these fees.

NBC owns a ton of channels, including USA, Bravo, SyFy, CNBC, MSNBC, the NBC network and Universal Studios.

Comcast itself owns a bunch too, including Versus, the Golf Channel, E Entertainment, the Style Network, G4, and FEARnet.

With the deal, Comcast gains more channels that could affect TV bills everywhere.

On the other hand, Comcast could use its power to keep TV prices down (yes, bear with me).

Stacey Higginbotham at GigaOm: With NBC Deal, Comcast's Pipes Just Got Smarter

The purchase gives the cable and Internet service provider access to popular cable networks such as E! Online, USA Bravo and the Golf Channel; web sites such as Hulu and iVillage; Universal Studios and a few theme parks. It also gives Comcast some of the smartest pipes around as ISPs worry about becoming dumb pipes that merely carry other companies’ content.

While I’m a little concerned about what happens to Hulu with Comcast managing NBCU, the move may be a savvy one if the cable operators can pass through the regulatory approval process.

Joseph L. Flatley at Engadget: Comcast takes control of NBC, promises not to crush Hulu 'like a bug'

When asked about TV Everywhere and Hulu, Comcast COO Steve Burke notes that "NBC has been careful not to put too much cable content on the Internet. We think that's a smart strategy... We think that going forward, you're going to continue to have free broadcast stuff on Hulu, and cable stuff on TV Everywhere." As for rumors of Hulu Premium? "That's certainly not in the cards." Web-based TV fanatics will be pleased to note that Roberts appears to be in your court: "We love Hulu and have no intent to crush it like a bug." That's all well and good, but as we know nothing's final until the government has its say: the FCC, the Federal Trade Commission, and the Justice Department are all sure to have strongly held opinions on the matter.

Diane Mermigas at BNET: NBC Universal-Comcast Will Eventually Exit Broadcast TV

Plans for NBCU to exit the broadcast network and TV station business would cause seismic shock to an industry that is groping for digital strategies while juggling legacy costs and declining advertising revenues. In that sense, the NBCU-Comcast deal will be a catalyst for this and other inevitable transformative changes in media.

Selling the television stations would eliminate a potential obstacle to regulatory approval in order to more swiftly close the deal.

and Comcast Memo Seeks Regulatory Approval of NBC Universal Deal

Comcast took an unusual step to head off regulatory concerns about its proposed co-ownership of NBC Universal by issuing a memo reiterating its “public interest” media commitments in tandem with the deal’s official announcement.

Matthew Lasar at ars technica: How the FCC might stop the Comcast-NBC merger

The Stop Big Media crowd is promising all-out combat against a proposed Comcast takeover of NBC Universal. The deal will have to pass muster with the FCC's always controversial media ownership rules, which are again in flux. We provide a refresher on how those rules have changed in the last eight years, and what it might mean for the merger.

Chris Albrecht at NewTeeVee: Out Comes Those Who Oppose Comcast/NBC

Karoli at Odd Time Signatures: Comcast: All your media are belong to us. Your internets and your politics, too

In Comcast’s case, they will own every available delivery and distribution network in addition to content ownership. There will be nothing to prevent them from charging whatever they want for access to that content, giving them potential for windfall profits.

and Comcast deal is nearly done. If we don't act, we lose.

Back in November, I wrote about the dangers of a Comcast/NBC Universal acquisition. It’s frustrating to me that a larger light hasn’t been shined on it until AFTER the deal is done. So, what happens now?

Well, it’s still subject to antitrust laws, and that’s about the only avenue we have to preserve an Internet that isn’t under the control of a megacorporation.

Josh Silver at The Huffington Post: Too Big to Block? Why Obama Must Stop the Comcast-NBC Merger

Marvin Ammori at The Huffington Post: Comcast-NBCU Merger is Bad for Democracy

BlogHer CE Megan Smith: Podcast: Interview with Julia Boorstin of CNBC (audio and transcript)

Confused about new media? Wondering what all that streaming of TV shows online will mean to your regular viewing patterns? Curious about how the new media business models will affect how you consume news and entertainment?

Never fear, if you're reading this post, odds are you probably know a little something about blogs, the internet and new media, but if you want to learn more, listen to my podcast interview with Julia Boorstin, the media and entertainment reporter for CNBC.

Julia's a former writer for Fortune Magazine and uses her current beat to explore topics like what the opening box office numbers for "Mamma Mia" may mean about the movies you see next year, what kind of advertising you might see if you watch TV shows online, or why user content generated websites like YouTube, may not have significant growth in the near future.

BlogHer CE Maria Niles watches the business of the future of television at Fizz from ConsumerPop and television of the future at PopConsumer and Beyond Help.

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