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Comcast + NBC = What?

Yesterday morning, Comcast staged a conference call for the press to announce its plans for its pending takeover of NBC Universal. But something went awry with the call; instead of the usual recitation of achievements and goals, the reporters on the line heard 10 minutes or so of awkward silence, punctuated by recorded requests to hang on, until the call finally got underway.

That seems like a fitting preview of the Comcast-NBC corporate union: We don't quite know how this will all work out, so we can expect some moments of silence or static while everybody deciphers the situation.

So today's column asks questions as much as it throws out value judgments. Overall, you can put me down as a skeptic; I can see how the merged company could shake up the distribution of video, especially online, but I doubt it will do so and am a little worried that it will instead use its new ownership of NBC's content to reinforce a business model that you all generally don't like much. (Me neither.)

Beyond my column, you should also read my the work of my colleagues Cecilia Kang, who covers the broad outlines of the deal; Frank Ahrens, who recaps the hazards of large media mergers; and Steve Pearlstein, who urges the government to use the merger review process to write rules that would "ensure that consumers can purchase the digital content and services they want, from whomever they want, without having to buy bundles of services or content that they don't want."

I can get behind that last idea. But I doubt Comcast will -- especially after sitting down this morning with David Cohen, the Philadelphia-based company's executive vice president. After going over some of the regulatory angles of the merger (he said what you'd expect, allowing that the company will have to make some concessions but predicting that it would not have to do anything too drastic, such as selling the local NBC stations currently owned by the network), I asked him about the changes the company might want to make with its newfound influence in the content business.

About online movie distribution -- one of the bigger annoyances in the media business -- Cohen did not exactly sound like a revolutionary. He said the company wanted to have a "rational conversation" with movie studios about increasing online availability of movies and moving that up, but only within the context of the existing, bureaucratic "release window" system. Cohen explicitly ruled out pushing to have movies available online or on DVD on the same day as their theatrical release.

Cohen also ruled out letting customers pay directly for online video instead of having to first pay for a traditional programming package -- the part of "TV Everywhere" that I hate -- saying that such a thing would not be economically viable, even if it would be popular among viewers. "If they got what they wanted, they'd eventually lose that content." He had the same thing to say about the idea of a la carte programming, in which you'd pay only for the channels, or maybe even the shows, that you liked, predicting that ESPN would cost $30 or $40 a month under such an arrangement.

I closed by asking Cohen whether he saw Comcast still selling separate TV and Internet service five years from now. He said yes, and went on to say that even in an "IPTV" scenario that involved TV service delivered over an Internet connection, we'd still pay for bundles of channels, although there could be a wider range of bundles to choose from. "I don't think anybody's come up with a sustainable business" to do otherwise.

I told him those positions would be a difficult sell with readers, and he did not exactly disagree.

What's your take on Cohen's comments, and the merger in general? What, if anything, would have the government do about it? And if you're a Comcast customer, what do you think about what the company proposes to do with your money? Let's talk about this in the comments -- and on my Web chat, starting at noon today.

By Rob Pegoraro  |  December 4, 2009; 11:56 AM ET
Categories:  Policy and politics , TV , Video  
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As an over-the-air DTV watcher with a low-rent (768k) DSL connection, I'm mostly on the sidelines for this party.

It would be fun to see what happens after a game changer like: ESPN leads the charge to paid online distribution. I could see a lot of Comcast customers deciding they don't need 400 channels if they can get the full ESPN family for $20 a month.

Posted by: KS100H | December 4, 2009 1:01 PM | Report abuse

It is interesting that the Comcast representative is not even *pretending* that this merger will help the consumer. Usually there's pro forma verbiage about increasing choice, giving people better value, etc. But unless you're leaving out a lot of substantive discussion, it seems like you asked about things consumers want, and he pretty much said "NO!"

Posted by: bucky_katt | December 4, 2009 4:39 PM | Report abuse

Comcast can go to hell.
Screw monopolies.

Posted by: Rocc00 | December 5, 2009 12:14 AM | Report abuse

Like everything in this country quality is going straight downhill. When we started to worship electronic toys we just hastened the decline of our civilization.

Posted by: n7uno | December 5, 2009 2:04 AM | Report abuse

This idea that a la carte cable television services is preferable to the current packages are not thinking clearly. It's a little bit like saying that Metro riders should pay the full costs of providing public transportation services via the fares they pay. This ignores the benefits reaped by those who drive exclusively and never even get on a bus. Their lives are greatly improved just by Metro being there. If they don't believe this, shut down Metro for a few days and see how they like it then.

No television station is always showing something I want to see, but the all SOMETIMES show something I want to see. Under any a la carte scheme I have ever seen, in order to obtain the service I have now, it would become MUCH more expensive, perhaps three to five times more expensive. It will greatly reduce the quality of my television life (or, if I actually paid as much as they would demand, my life otherwise).

But I do hope that regulators nix this merger. It smacks of anti-trust and is likely to render more content "exclusive," meaning that I won't get to see it because I am on Verizon FiOS. That's a BAD thing from the consumer's point of view.

When things go exclusive on cable providers, it denies access to that content to a majority of the population and they have no real recourse. This may make sense in some bizarro world of marketing that only views reality from the supply side, but nobody in their right mind has multiple cable television providers in their homes.

Posted by: FergusonFoont | December 5, 2009 10:56 AM | Report abuse

"in which you'd pay only for the channels, or maybe even the shows, that you liked, predicting that ESPN would cost $30 or $40 a month under such an arrangement."

So instead of just paying $30-$40 for the one or two channels that I actually watch, I am force to pay more than $100 to get the other 499 that i don't watch (like really, why do I have to pay to get "home shopping channel" or the golfing channel when I neither shop at home or pay golf. The reason these channels are included on the lineup in the first place is because Comcast owns a piece of many of the channels they add on to their system and then use adding them to justify raising the rates due to the 'increased cost of programming.' Of course, they didn't have the money available to invest in upgrading their network, but they somehow came up with several billion dollars to buy NBC-Universal. I would love to get Verizon FIOS but we can't in my apartment building because Comcast has an exclusive contract with the building owner that prohibits the owner from allowing a competing company to wire the building. As a result, I'm now stuck with using an shared internet service that is increasingly over subscribed, causing the internet speed to slow to almost dial-up rates during peak times in the evenings. The only time i truly get 'high speed' access is about 4 in the morning when everyone else is sleeping.

Posted by: dlpetersdc | December 5, 2009 11:03 AM | Report abuse

Comcast Is In its Heart Loner & seperatist. Blamer & disliker of Others. So Here, Comcast hopes to STOP deluge of FREE Internet Broadcasts. Hulu, Nbc, CBs History or even C Span. Theres' hundreds, yet stopping Internet broadcast to force people back to cable Is Impossible Task, one that Might Break Comcast & In General, dishonorable goal. public gone beyond simple TV Programing ,into Interactive World. Interactive World that Comcast couldn't Live With from Start. Comcast Penetrates Markets Cut off & Victimizes its Customers, particularly in first threee billing cycles & offers as bad of intenet service as any Telco, in security area. So Why Comcast at All.


Posted by: ThomasStewart1 | December 5, 2009 12:22 PM | Report abuse

Posted by: FergusonFoont | December 5, 2009 10:56 AM

"This idea that a la carte cable television services is preferable to the current packages are not thinking clearly. It's a little bit like saying that Metro riders should pay the full costs of providing public transportation services via the fares they pay. This ignores the benefits reaped by those who drive exclusively and never even get on a bus. Their lives are greatly improved just by Metro being there. If they don't believe this, shut down Metro for a few days and see how they like it then."

I don't think you can equate subsidies for public transportation to having subscribers subsidize entertainment channels for other cable subscribers. And that wasn't really my point at all. The point was that Comcast fails to disclose that they have economic interests in the channels they add to their lineup and then use the cost to add those channels to the bundle as justification for increasing their cable rates. And with more and more channels providing less and less quality entertainment (I mean really, how many more 'reality' shows can one tolerate) the only way that these companies are going to make any money is through forced subscriptions. Indeed the golf channel may indeed fold if it were only people interested in golfing who would pay for providing the service (just using that channel as an example). Then maybe these channels will have to provide more worthy entertainment to attract subscribers, rather than dumping crap onto the system because it doesn't matter who watches as long as there are millions of 'subscribers' paying for the service.

Posted by: dlpetersdc | December 5, 2009 12:25 PM | Report abuse

I certainly don't feel like a "valued customer."

Instead, I feel that Comcast has made enough profit from me and others like me to expand and expand, finally gobbling up NBCU.

And now, having done so, they clearly intend to continue the practices they've used to make those profits. No surprise.

I live in the boondocks, and can't get DSL: I've been on the list for notification for some years. Once it's available (or better yet, FIOS), you can bet I'll vote with my feet.

Posted by: rick5 | December 5, 2009 3:19 PM | Report abuse

I pay for Comcast service because it is the only option I have in Boulder, Colorado. If there was another cable service that provided high speed internet (hopefully cheaper), I'd switch in a heartbeat.

Comcast is the worst company in the history of business. Worse than phone companies. Block the merger, and make Comcast responsible for its extremely poor level of service.

Posted by: tazmodious | December 5, 2009 5:03 PM | Report abuse

Comcast is evil. Whatever they do, you can count on consumers getting screwed, because that is what they're best at. All this talk of the merger and few seem to mention the third option: cancel cable and stop paying Comcast anything. I did just recently, and I do not miss it.

Posted by: john65001 | December 5, 2009 6:21 PM | Report abuse

I've never had a problem with Comcast...and since NBC is my favorite network, I WIN!!!!

Posted by: cbmuzik | December 5, 2009 8:48 PM | Report abuse

It's interesting how Comcast "knows" that A La Carte would cost consumers more, but refuses to try it. They haven't even had any test markets (from what I've read). If that's really the case then: a) there's too many channels with only marginal content which we're "subsidizing" or b) Comcast is afraid that by giving consumers choice, they will make less money.

If the price would change that much in an a la carte model, then we clearly have too many dedicated video networks. Comcast should dump those networks which don't perform and put them on an IPTV platform allowing only those who are interested to pay for them. Or, programs can launch on an aggregator site like Hulu or YouTube, which allows consumers to sample them and to build an audience.

Bottom line, video programming is the only business where consumers are forced to pay substantially for things they don't use in order to get the ones they do. Allow the market to set the appropriate priorities. Put ESPN in a separate sports tier and don't make me pay for it anymore!

Posted by: dannews | December 7, 2009 11:37 AM | Report abuse

My wife and I don't have cable tv service. Instead we watch internet tv exclusively via NBC is a majority owner of Hulu.

My understanding of this deal is that Comcast will put an end to our free internet tv watching, requiring that we input a cable tv subscriber id in order to watch online tv shows.

I hate Comcast... with a passion...

Posted by: ryland22 | December 8, 2009 8:39 AM | Report abuse

dannews - Amen!!!!!

Posted by: Max231 | December 9, 2009 3:40 PM | Report abuse

It would have been an entertaining exercise to read aloud some of your comments to Comcast's CEO when we had him over for this interview yesterday...

- RP

Posted by: robpegoraro | December 9, 2009 5:38 PM | Report abuse

yeah Rob, you could have thanked him for this yearly rate increase letter, I just recieved today. These guys are great at the monopolistic priceing free for all!
It sux Verizon is my ony other choice, with the Comcast controlling some key sports networks!

Posted by: Max231 | December 10, 2009 11:37 AM | Report abuse

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