Wednesday, January 5, 2011

Comcast NBC Internet Mergers Control Content Increase Profits Enormously

Tags: Comcast NBC Universal Merger Profits Cable Bonnie Hammer FCC CJR Analysis Newspapers Magazines

NBC cable has been a showcase in popular programming such as the USA Network. The woman who made it is in the top management at NBC now. Hammer was hired from the Boston Public Television where she was the President. She believes strongly in working as a team and considering the opinion of everyone seriously, not the usual ineffective top down only approach at most corporations.

"Bonnie Hammer, currently the head of NBC Universal cable networks, will take the title of chairman of the NBC Universal Cable Entertainment and Cable Studios. The position will be key in the new company, as the cable networks have been profitable for their respective companies in recent years amidst falling profits in other divisions."

Read more: Comcast names NBC Universal management team | Los Angeles Business from bizjournals

Even though NBC-General Electric has given up controlling interest of NBC universal, it still stands to profit enormously if Comcast does not interfere with programming.

Mergers occur because controlling the market allows the corporations to charge more for their products. This happened in the newspaper industry where profits approached close to 50 percent in markets such as Los Angeles. Then came the Internet and Cable television. Advertising dropped sharply and the high salaries paid to reporters and management no longer were affordable. The FCC did almost all their discussions with Comcast and their supporters with a few distracters. Remember they have to get a job after they leave.

I want newspapers and magazines to survive because they are the ones which really provide original content that the Internet bloggers thrive on. I still subscribe to the New York Times, Wall Street Journal, and my local Eugene paper The Register Guard which I find quite good for a smaller city of 150,000.

I also want to keep magazines in business because they do more investigated reporting never done on television or the Internet with rare exceptions. I found Newsweek and Bloomberg Business Week particular good. Sharon Begley has a great article on all the myths of improving intelligence and memory, but also provides some things that do work including physical exercise such as walking for 45 minutes daily. One philosopher, Immanuel Kant, was sickly as a youth and adult. He started walking each day until he was able walk and think for hours. He became strong to become a great philosopher.

I predict that Comcast will change its name to Infinity, a name now used for their own content for a fee enterprise.

The following is a long article appearing in the Monthly CJR magazine.

Jim Kawakami, Jan 5, 2011,

Real Consequences of the Comcast Merger with NBC John Dunbar Columbia Journalism Review


Update: Two days before Christmas, Julius Genachowski, the chairman of the Federal Communications Commission, recommended approval of the Comcast-NBC Universal merger. The draft order, which still requires majority approval by the five-member FCC, includes a condition that will in some form require Comcast to provide NBC Universal programs to online-only competitors, like Google TV and Hulu, according to a source familiar with the document.

The Justice Department, which also must approve the transaction, worked closely with the FCC and will likely follow its lead. The pre-holiday timing of the announcement undoubtedly deflected attention from the chairman’s decision, which consumer groups may oppose, but it also came in advance of a new Republican majority in the House of Representatives, which may object to the conditions placed on Comcast.

Logic dictates that if viewers can watch what they want via their Internet connection, it makes no sense to keep paying for both broadband and cable or satellite service. But Comcast in 2009 collected more than $19 billion in revenue from cable TV service and nearly $8 billion in revenue on its broadband service. It is number one in both categories, with more than twenty-two million TV subscribers and more than 16 million Internet subscribers. The company wants to keep both revenue streams, and to grow them.

One way to do that is to keep competition in check. Comcast would be in a unique position to do just that, especially because, by adding NBC Universal to its holdings, Comcast will become one of the nation’s largest television programmers, too—the only company to have such a large position in programming, cable, and Internet distribution. Because it will control not only what content gets produced but also how it is distributed, the powerhouse will be in an unrivaled position to resist competition from Internet TV wannabes.

Merger opponents are concerned that the company could disrupt competitors’ content flowing over its broadband connections, meaning it could make Comcast-produced shows easier to watch over its online network than shows produced by others. It could also refuse to provide its content to online competitors—thus depriving them of any lifeblood—and it could extend its practice of requiring customers who want to watch popular shows online to prove they are subscribers to their local cable service.

Federal regulators will undoubtedly attach conditions aimed at preserving competition and protecting the public interest in return for approval of the deal. Meanwhile, Comcast is conspicuously vague about its plans for Internet TV. …

Neither Comcast nor NBC is an Internet neophyte. They haven’t waited for the online barbarians to reach their gates; rather, each controls a user-friendly path for its content to migrate to the Web.

In addition to shows available on its own, NBC partnered with News Corp. to create Hulu in March 2007, with Disney joining in April 2009. The ad-supported website opened to the public in March 2008 and now dominates the free Internet TV world, allowing anyone with a broadband connection to choose from among 2,600 current prime-time television shows for viewing. Hulu’s offerings are extensive, but not all shows are available on the site and, for many TV series, only a few recent episodes are available for free.

Comcast will assume NBC Universal’s 27 percent ownership in Hulu if the deal goes through unscathed by regulators.

Comcast, for its part, joined with Time Warner in June 2009 to create a system called “TV Everywhere” that streams television shows to customers over the Internet—as long as they keep paying their monthly cable bill. It started when Time Warner agreed to allow Comcast cable customers online access to shows from Time Warner networks TBS and TNT. Today, a Comcast subscriber enters a code into a website to access cable shows that are not available for free online. The selection of shows available to stream over the Internet corresponds with the subscriber’s cable package, making sure one isn’t able to access a program online that hasn’t been paid for with cable subscription.

Although management has been guarded about what will happen with online video after the merger, “lots of broadcast content” would go to Hulu and “cable content” would go on TV Everywhere, said Steve Burke, a Comcast executive and the new chief of NBC Universal. Burke was addressing Wall Street analysts the day the deal was announced.

Critics say Comcast will make NBC content less accessible, not more available.

“Comcast will build extensive moats around their content,” predicted Susan Crawford, former special assistant to President Obama for science, technology and innovation policy, who is writing a book about the deal. “I can tell you confidently in the future you will need a cable subscription from Comcast to access online any cable channels that would otherwise be bundled by Comcast.” …

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