For more information, contact:
Elaine Potter, Marketing Coordinator
Phone: 480-483-4441; Email: epotter@in-stat.com
Gerry Kaufhold, Principal Analyst
Phone: 520-363-9752; Email: gkaufhold@reedbusiness.com
| Multimedia Broadband Infrastructure |
SCOTTSDALE, Ariz., December 3, 2009 – Comcast announced their bid to acquire a controlling stake in NBC Universal, Inc. Comcast will acquire a 51 percent stake in NBC Universal for $6.5 billion in cash upfront and $7.25 billion in cable assets.
NBC Universal owns over 20 local TV stations, as well as the NBC TV and Telemundo networks. The deal makes Comcast a Cable-TV company that will own two nation-wide TV networks, plus local TV stations. Right now, Cable-TV operators are paying retransmission consent fees to NBC’s local TV stations and NBC affiliates. Cable companies paying Comcast for NBC TV programs creates an interesting problem that will surely be just one of many items that will come under regulatory review.
Market research firm In-Stat (http://www.in-stat.com) has assessed how the deal stacks up relative to other media company strategies.
In-Stat sees Time-Warner’s school of thought as divesting their infrastructure-based delivery system assets to become a “pure play” content provider. They recently divested both AOL and their Cable-TV systems, but retained their major Pay-TV assets, including HBO, and Turner Broadcasting System. Time-Warner is also a big promoter of the TV Everywhere approach that will deliver selected portions of their Pay-TV content to Internet and mobile users who subscribe to a Pay-TV service.
Viacom’s approach is to split “old media” assets from “new media” assets, observes In-Stat analyst Gerry Kaufhold. They spun out CBS Television and Showtime to focus on their Pay-TV Networks, which are mainly under the MTV Networks banner. In spite of MTV’s obvious appeal to people under 30, Viacom has struggled, while CBS is the top-rated broadcast TV network, and Showtime is gaining ground on HBO.
Disney has straddled the fence. They own no Pay-TV systems or Internet Service Providers, but they do own and operate an extensive group of online web portals so they can deliver their own “over the top” services to PCs and mobile devices. The Disney online presence already supports tens of millions of consumers who are directly connected to “the mother ship,” which permits them to collect massive amounts of audience data that can be used for advanced advertising. For Pay-TV, Disney gets both programming fees and advertising for their networks. ESPN is the one “must have” Pay-TV network for all service providers.
In-Stat believes Fox Entertainment has actually done quite well with “old media.” They own and operate 26 local TV stations, as well as the MyNetworkTV broadcast network. Fox Interactive Media owns MySpace.com, and also provides all of the online versions of content from News Corporation, which is Fox’s global parent. The News Corp. approach leverages the oldest of the “old media,” print newspapers, plus local TV stations, popular Pay-TV networks like Fox News, and has a solid footing with “new media.” Fox, NBC Universal and Comcast were among the original participants in Hulu.com, the broadcast TV online “over the top” service.
Which brings us to the Comcast-NBCU deal. Does it make sense? Absolutely! In-Stat sees the fundamental business model for all entertainment is changing. Free-to-air Television is under assault, and is on pace to lose up to 20% of their average annual revenues. Producing scripted television programs is expensive, and “free-to-air” relies solely on advertising. Plus, original series are exploding on the Pay-TV networks, from Discovery’s “Deadliest Catch,” to TNT’s “The Closer,” to AMC’s “Mad Men” all garnering increasing audience shares and Emmy nominations. Even NBC’s Pay-TV networks are showing growth, while their Broadcast network lingers in last place.
Pay-TV networks get predictable program licensing fees, and supplemental advertising revenue. Now, the Pay-TV service providers are beginning to deploy Advanced Advertising technologies that deliver the kinds of focused audiences advertisers are seeking. In-Stat sees the technology, developed primarily by the Cable-TV industry, as becoming the de facto standard, proliferating across multiple Pay-TV, Internet Service Providers, and Mobile operators.
With the merger, Comcast will be in the driver’s seat re-tool their business models and optimize revenue streams from subscriptions, pay-per-use, and advertising. The deal would put an enormous opportunity in the hands of the country’s largest Cable-TV service provider. Over the past decade, Comcast has shown the ability to execute on a very long term vision, and drive that vision forward by creating partnerships within the entire industry.
There’s a lot more to this story and we’ll keep you posted as it develops at: http://www.in-stat.com
Analyst Gerry Kaufhold is available to qualified press for direct commentary about the Comcast acquisition and strategy. Contact Gerry Kaufhold or Elaine Potter to set up an interview.
Related In-Stat research:
Global Interactive Program Guides and Content Discovery
CDNs and Data Centers to Usurp Video-on-Demand
Web-To-TV Video Changes Everything
US TV Viewer’s Response to Economic Turmoil
Monetizing the Internet Using Web 2.0 Business Models
In-Stat’s market intelligence combines technical, market and end-user research and database models to analyze the Mobile Internet and Digital Entertainment ecosystems. Our insights are derived from a deep understanding of technology impacts, nearly 30 years of history in research and consulting, and direct relationships with leading players in each of our core markets. In-Stat provides its research through reports, annual subscriptions, consulting and advisory services to inform critical decisions. Technology and semiconductor vendors, infrastructure and device manufacturers, service providers and media companies worldwide rely on partnerships with In-Stat’s tenured, experienced staff and on our in-depth market intelligence to support critical business, product and technology decisions.
