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Cable Technology Feature Article

June 22, 2010

NBC-Comcast Deal Invites Criticism from Rivals

By Rajani Baburajan, TMCnet Contributor

Comcast, a leading U.S. cable Multiple System Operator or “MSO,” is excited with its acquisition of a controlling 51 percent stake in NBC Universal (News - Alert), a joint venture with General Electric. 
The NBC-Comcast deal, according to company officials, is the first ever where a network and a cable company have joined forces. Through this deal, Comcast hopes to serve one fourth of the nation’s pay-TV households supported by large content creation empire.
Comcast’s stake in NBC Universal, a leading U.S. media company enriched with a vast content library, will prove to be beneficial for Comcast to expand its own video-on-demand opportunities, company officials added.
The news of Comcast’s merger with NBC Universal has stirred the market with rivals claiming that the new conglomerate would control too much media. They fear that the $30 billion transaction will give Comcast the sole power to control not just how TV shows and movies are made, but how they are delivered to homes.
Comcast already faces severe competition from both telecom and satellite service providers. With the new development, Verizon (News - Alert) Communications FiOS-TV and AT&T U-verse TV product are likely to make the entertainment, information and communications market extremely competitive, along with Comcast, says Zacks Investment Research.
Among the satellite operators, Dish Network and DirecTV (News - Alert) are the major competitors for Cocast. Intra-industry competition among cable MSOs has also gained momentum. Dish, which competes for subscribers with Comcast, told the FCC (News - Alert) that the marriage of Comcast and NBC Universal "poses a direct threat" to the satellite industry's ability to offer a competitive product. Dish and DirecTV fear that Comcast will withhold content from its rivals.
Major cable companies to compete with Comcast are Time Warner Cable, Cablevision System, Cox (News - Alert) Communications, and Charter Communications.
At the end of the first quarter of 2010, Comcast had 16,329 million High-Speed Internet customers, 7,895 million Voice customers, 23,477 million Video customers and 18,843 million Digital Video customers.
According to Zacks Investment Research, Comcast is well-positioned to leverage its two-way network to offer more interactive, on-demand programming to subscribers. The company continues to manage its business profitably, resulting in healthy revenues, operating cash flow, earnings per share and free cash flow generation.

Rajani Baburajan is a contributing editor for TMCnet. To read more of Rajani's articles, please visit her columnist page.

Edited by Juliana Kenny