Three ways the Comcast-NBC merger could change television

As Americans’ media habits shift toward the Internet, cable companies are being marginalized. The potential Comcast-NBC Universal deal is Comcast’s bid to remain relevant.

By MARK GUARINO | Staff writer of The Christian Science Monitor

A pending merger between cable giant Comcast and NBC Universal is a sign that media providers like Comcast are moving toward a new business model that gives them authority over content – a development that is expected to change how viewers will watch their favorite TV shows and movies in the future.

The merger hangs on negotiations between NBC parent company General Electric and French telecommunications company Vivendi. The two sides are trying to reach an agreement on whether GE buys back Vivendi’s minority stake in the company, according to Forbes. If the deal goes through, the agreement between both companies is expected no later than Dec. 10.

The deal would give Comcast control of several cable networks (such as CNBC, Bravo, and the USA Network), a leading Hollywood movie studio (Universal Pictures), and a major broadcast television network (NBC).

If pushed through, consumers will see several effects:

More content, fewer subscriptions. Since NBC Universal owns the leading online video site (Hulu) and Comcast owns the third largest (Fancast), a merger would mean a boost in content, fueling this new platform for how users access shows or movies.

One-stop viewing. Like AT&T, Verizon, and other carriers, Comcast offers bundled deals involving broadband internet, cable, mobile, and landline phones. Ownership of the NBC’s broadcast and cable networks, as well as the Universal Pictures library (which ranges from Alfred Hitchcock films to “Jaws”), will help Comcast sell its service. If the deal is finished, no cable provider will have as much exclusive content as Comcast.

Online viewing outside the television. Comcast will be able to integrate its cable, Internet, and mobile phone services with its new library of content, allowing subscribers to access a vast number of TV shows and movies in new ways. “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.”

As the nation’s leading cable and residential Internet broadband provider, Comcast is pursuing NBC Universal precisely because it wants to transition from being just a subscription-based cable company to a media content provider. It attempted to buy Disney in 2004 for the same reason: It wants to make sure it can keep up with America’s changing media habits.

People are increasingly accessing what they want to watch on their phones or computers – essentially circumventing traditional cable subscriptions. As a result, the cable industry is suffering – losing out to free video sites like Hulu, YouTube, and to services like Netflix, which allows direct movie streaming into the home for no added cost.

In addition, DVR recording is wreaking havoc with the fundamental architecture of cable television. Channels and schedules lose their meaning when users can watch a program whenever they want, on whatever device they want. The media landscape is becoming an on-demand world without borders or cable subscriptions.

In this emerging media environment, Comcast’s revenue is down 3 percent from last year, says Rick Munarriz, senior analyst for The Motley Fool. Some 95 percent of Comcast’s current revenue comes from cable subscriptions – a business model that is “not sustainable,” he says.

“If I’m Comcast, I’m not going to put all my eggs in one basket. I’m going to say, ‘I need some content here,’ ” says Mr. Munarriz. “There are people out there who say, ‘I like to watch ‘Lost’ but I can stream ‘Lost’ online, so I don’t really need my cable subscription service. With all the different varieties to get video candy from, it’s very hard to be a cable subscriber anymore.”

“The name of the game [for Comcast] is to expand properties as much as they can,” says Munarriz.

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