Posts Tagged ‘Comcast’

FCC approves $30 Billion NBC – Comcast deal…with many strings attached

Friday, January 21st, 2011
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The Federal Communications Commission and the Justice Department approved a pending $30 billion joint venture which allows Comcast to own 51 percent of NBC Universal. The approval comes 13 months after the two sides announced their plan to merge one of the nation’s largest cable and internet operators with a broadcaster whose assets include NBC and Telemundo, USA, Syfy, Bravo, and Universal Pictures. Comcast controls 24 percent of the nation’s cable subscribers and NBC owns 12 percent of what is viewed on television. A match made in heaven? Not so fast… Over the last year this deal was met with heavy opposition from consumer advocate groups who argued consumers would have less influence over the newly formed company while online distributors worried about the possibility of having to pay a premium for NBC’s content, which would be controlled by one of their largest competitors in the distribution space. (Source: LA Times Blog, Entertainment News Buzz, January 2011.)

On paper this looks like an unstoppable combination in the making, and could potentially open the door for similar deals between content providers and cable and online providers. Although some were successful and some flopped, this is not the first time we’ve seen this type of marriage before – CBS/Viacom, AOL/Time Warner, Time Warner/Turner. With Comcast controlling NBC’s network and cable shows as well as their movies, it would seem their 15 million subscription base would be the perfect captive audience to view their content with competing cable and online providers forced to pay a kings ransom for the rights to their shows and movies. The FCC, however, put conditions on the deal to prevent any funny business with the hopes of maintaining as much “net neutrality” as possible.

One of the conditions requires Comcast to make its content available to all rival cable and satellite distributors as well as online distributors, and has to offer it’s content for the same price to everyone. They are also required to sell their internet service as a standalone service – this is significant since online distributors (Netflix) gives you the ability to access content without a cable subscription but requires internet service. The FCC is also asking Comcast to relinquish its day-to-day control of their online site HULU, allowing them to maintain an ownership stake but stripping them of any voting rights or the ability to suddenly make content unavailable from the site. (Source: Reuters, January, 18, 2011.)

So before everybody bows down to this newly formed Media behemoth, let’s remember… a lot has changed over the last 13 months since their initial announcement, and the conditions put on the new merger by the FCC (if enforced) will help neutralize any abuses of power. The consumer now has more options with the rise of online providers (Netflix, Google, and Apple TV) and will ultimately choose their services based on the quality of the entertainment, not the amount of channels offered or where the channel falls on the dial.

The pressure now falls squarely on the shoulders of NBC Universal. Without quality content from NBC, Comcast will quickly begin to wonder why they paid all of that money and went through all of the trouble of diversifying their business. The competition is sure to be fierce between cable and online providers; content providers will continue to fight for better licensing agreements for their content and in the end consumers will also have to ask themselves… is it all worth it?

Battles Rage Over Content, as Netflix Changes the Game in the Web TV and Streaming Video Space Once Again

Tuesday, December 7th, 2010

ba-netflix0811_f_SFCG1281474279With the help of Wikipedia, I learned the different types of battles that are fought. If you’ve been following what is going on in the latest turf wars between the cable providers (Time Warner Cable, Comcast), online providers (Netflix, Hulu) and media Companies (Fox, CBS) – you’d see very different strategies deployed by each side. All have one common goal in mind…control the distribution of entertainment to consumers, and all seems fair in this war. 

A “battle of attrition” aims to inflict losses on an enemy that are less sustainable compared to one’s own losses.

According to this New York Times, Netflix recently made a bold move by launching a new “streaming only” service, offering unlimited streaming movies and TV shows for a mere $7.99 a month. Also, in addition to Netflix paying the Post Office a whopping $500 million dollars a year in postage to mail out their signature red envelopes filled with disks, they will now pay studios another hefty sum for rights to their movies by recently completing a combined deal with Paramount, MGM and Lionsgate for one billion dollars. This does not include deals Netflix made earlier in the year with other major studios, such as Sony, Warner Brothers, Universal and 20th Century Fox.

So why are cable providers like Time Warner Cable and Comcast getting hot under the collar? Let’s take a closer look:

Netflix currently pays Starz, a pay TV channel, about 15 cents a month for each subscriber (which allows their customers to watch streaming movies from Sony and Disney), pennies compared to the $4 to $5 a month that cable and satellite owners pay for access to Starz, according to Rich Greenfield, an analyst at BTIG Research.

These types of deals, which allow consumers to access a larger catalogue of movies and bypass their local cable provider by accessing them online, couldn’t come at a worse time for companies like Time Warner Cable and Comcast. Cable providers already reported a net loss of 119,000 customers in the third quarter of 2010, the largest decline in 30 years.

A “battle of envelopment” involves an attack on one or both flanks.

Comcast is fighting back on two fronts by slapping Level 3 Communications, a provider of internet backbone services, which handles Netflix content, with “additional traffic fees.” Incidentally, Comcast, who’s acquisition of NBC is imminent, already competes directly with Netflix through their new acquisition of Hulu (Comcast owns 32 percent stake in Hulu). The rate hike could easily be seen as a way for Comcast to milk their competition, however, they can make the argument that Netflix’s massive volume is overtaxing their system and therefore should pay more. A recent study by Sandvine, a broadband equipment maker, showed that Netflix’s 16 million customers accounted for more than 20 percent of all Internet download traffic in North America during peak evening hours)

A “battle of encounter” is a meeting engagement where the opposing sides collide in the field without either having prepared their attack or defense.

If all of this wasn’t enough to make cable executives nervous, Netflix followed up their unlimited streaming offer by announcing a deal with newly formed film studio, FilmDistrict. As highlighted in this New York Observer article, the part of this deal that could prove to be a game changer is that it doesn’t include the standard “pay TV window” wherein new releases go to the cable industry first, then premier on Netlifx a few months later. 

According to The New York Post, Netflix is also in talks with studios about gaining access to “current episodes” of primetime TV shows and is willing to pay between $70,000 and $100,000 per episode. This is a first since Netflix has always offered only TV shows from past seasons.

Through all of this, media companies have been in constant negotiations with all of the “content distributors” – cable providers (Time Warner Cable and Comcast) and online providers (Netflix) – with behemoths like Google, Sony and Apple waiting in the wings as all three plan to compete in the game of online streaming distribution. Google, however, has already met heavy resistance from the networks. ABC, CBS, and NBC who all said they would not allow Google TV to stream full episodes of their shows. This should make for some interesting future negotiations between the two sides. But I wouldn’t be surprised if the networks suddenly changed their mind if Google TV’s relatively new service begins to take off.

A “battle of annihilation” is one in which the defeated party is destroyed in the field.

So what about the consumer, the eyeballs everyone’s vying for in all of this? I for one couldn’t be happier with all of the choices I suddenly have to watch movies or TV shows. The Internet is once again threatening the “middleman,” or, as I like to think of it, just another case of the Internet once again replacing one of the “brokers” of the world. We’ve seen it happen to some extent with real estate, stock trading … and now entertainment.  For 30 years cable providers have been the “brokers” for entertainment, bringing media and consumers together. It appears, for the moment at least, another “broker” is in jeopardy of once again being replaced by the Internet.

So what are your thoughts? Who do you think will win the on-going battle? Are you happy with the choices you have to access entertainment content? Please share your thoughts with me and the readers of BurrellesLuce Fresh Ideas.

What’s In A Name?

Friday, March 5th, 2010

Valerie Simon

Comcast’s rebranding of its cable, telephone, and Internet services (now Xfinity in 11 markets), prompted an interesting article in Time regarding the value of a name change. “Here’s one thing we do know,” xfinitylogosays Tim Calkins, a marketing professor at Northwestern University’s Kellogg School of Management. “Comcast is going to spend a huge comcast_c2amount of money to get that brand to mean what it wants it to mean.” Here’s another thing we know: Shareholders should be asking, “Why?”

Was this name change a smart move? 25 years ago, my father and his colleagues at Manning, Selvage and Lee  surveyed the financial community about what kind of corporate names attracted investors and whether a name affected people’s decisions to buy or sell stocks. Nearly two-thirds of the securities analysts, portfolio managers and investment advisors surveyed said that a corporation’s name had a direct effect on whether a customer buys a stock. In fact, brokers and analysts shared that they had even turned down the recommendations of their own research departments when they did not like a name! Takeaways from the survey include:

  • Be wary of a name change and be prepared for a name change to take time (years and even decades) before it achieves the previous level of familiarity. At the time of the survey (1985), respondents derided the decision made by Tampa Electric to change to TECO Energy. While the new name did eventually take hold, it took years to build up the level of recognition Tampa Electric once had. While companies often change their names as a result of acquisitions and divestitures, because the focus of the business has changed, or to create an association with a trend, the survey indicated that many companies would be well served to think twice.
  • A name should be easy to pronounce and remember.  “Keep it simple and short,” my dad advised and pointed to the frustration of one investment advisor whose suggestion of “Harnischfeger” rarely resulted in more than a puzzled look.
  • Good names are recognizable, easily understood, highly identifiable, and give a clear impression of the business.  Although names like Exxon and Google can certainly work, give serious consideration to a name that describes your companies business. Personal and brand names are popular for these reasons. Survey participants responded well to names like National Semiconductor or Staples.  Likewise, start ups should avoid using initials. While initials are fine for a well established company as IBM, potential investors are more likely to be attracted to a product they can easily recognize.

While there are a variety of other factors to consider when determining a name today (e.g. optimizaiton of the name in search engines, the availability of the website domain and/or username availability for social networking and bookmarking sites, among others), many of the insights from 25 years ago remain compelling.

How important do you think a name is to the success of a brand? What do you think of Xfinity? Please share your thoughts with me and the readers of BurrellesLuce Fresh Ideas.

A Watershed Moment in the Media World: Comcast- NBC Deal Changes TV Forever

Friday, December 4th, 2009


As a kid I remember hearing the voice-over announcement, that would precede NBC color television shows, “The following is brought to you in Living Color on NBC,” and watching the peacock spread its colorful feathers, thinking wow this is pretty cool. 

This week the first step was taken into a new era of television. When Comcast and General Electric (GE) finalize their deal that will give Comcast a controlling 51 percent stake in NBC Universal (NBCU), it will spawn a media behemoth. As reported in the New York Times, Comcast is agreeing to pay GE $6.5 billion in cash and contribute its own cable channels, such as E! and Style, estimated at $7.25 billion for a total of $13.75 Billion. The new joint venture will be headed up by the current head of NBCU, Jeffrey Zucker.

The significance of this deal lies in the potential derived from combining a TV and movie content creator with a media distributor. Comcast will now offer its extensive customer base to cable channels such as Oxygen and Bravo, NBCU’s movie studio Universal Pictures and the NBC Network.

The integration of Comcast’s internet, mobile phones, and cable with their shiny new toy box filled with NBCU’s extensive library of movies and TV shows is unprecedented.

“In the next five years, more people will be seeing ‘The Tonight Show’ online than on their television sets,” says Paul Levinson, a media analyst at Fordham University in New York. “The convergence will be so extensive that in 10 or 15 years, we won’t be talking television screen versus online because they’ll all be the same screens.”

This deal still has several hurdles ahead; a long regulatory review by the FCC and anti-trust regulators is expected. Several unanswered questions remain, particularly “How does Comcast intend to provide their ‘exclusive’ content to its competitors, like Verizon and Dish Network.

How will this deal affect network TV from a consumer standpoint? Will this mark the beginning of the end of “free TV”? While we wait to see, one thing is certain though: the peacock is once again spreading its wings, only this time it’s to an audience of about 45 million Comcast customers.

Please share your thoughts with the readers of BurrellesLuce Fresh Ideas.

Video Killed the Radio Star, But What Will It Do to the TV Star?

Friday, October 16th, 2009

Video killed the radio star, but what will it do to the television star?

Tuesday night I attended VideoSchmooze, a panel discussion loaded with heavyweights from within the television, cable, and video industry. We heard from executives at Hearst, Comcast, NBC and BlipTV – all of whom attempted to forecast the uncertain future of broadband/mobile video marketing and technology trends, paid vs. ad supported business models, and what the key broadband priorities are going forward for these companies.

Back in May I blogged about TV being at a crossroads as more people watch videos on mobile devices, PC’s, and laptops and what the new model for television might look like going forward.

Well here we are five months later and the question still remains: “What is the best way for video content providers to maximize profits from this explosion in online viewing?”  The challenges that exist are many. If companies like Comcast are successful with the launch of “TV Everywhere” (providing content on multiple platforms for existing customers at no extra charge) by the first of the year, how will this “untethered content” be monetized? How do you prevent cannibalizing incumbent models that remain key revenue streams for media companies (DVD’s and syndication)? How do you accurately measure the viewership online and will the ads be more targeted to the viewer?

For any of this to be a viable option the panel agreed the viewers would first have to be authenticated as a paying satellite or cable subscriber; the content would have to be protected through some sort of DRM (digital rights management) to prevent the undermining of the existing revenue streams (DVD’s and syndication) and there has to be a way to attach an add value to this nascent technology.

The question I find most interesting is “Who will dictate this new model? Will it be the cable providers, content providers, or the consumers?” With all this background noise, one thing is for certain: content remains king at a time when consumption is coming from more “non linear” mediums (e.g., smart phones and laptops PC’s). I live in Manhattan where there is a choice of over 18,000 restaurants, and while I’m always game for trying a new place, I usually return to my tried-and-true – the place where the food is simply just better. I’m not sure how the content will be distributed in the future, but one thing I do know for sure is that whoever figures out how to get the premium content I want and in the way that I want it will earn my loyalty. I’ll continue to try the latest and greatest technology but will always return to the place serving the best content. And as they say, “where there is good content there is ad consumption.”

As a marketing and public relations professional, how do these trends affect you? Please share your thoughts with the readers of BurrellesLuce Fresh Ideas.