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Comcast Considers Buying Shares of NBC Universal

Gina-Marie Cheeseman
| Tuesday October 6th, 2009 | 0 Comments

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General Electric (GE) Co. owns 80 percent of NBC Universal and is in talks with Comcast to buy part of its shares, which would give Comcast a controlling stake. Comcast is the largest cable TV provider with 24 million subscribers, about a quarter of the nation’s cable TV subscribers. Comcast also owns cable stations such as E!, Style, and sports channels. NBC Universal owns the Telemundo network, cable channels Bravo, USA Network, and CNBC. Comcast has 5 million subscribers to its broadband internet service, and its Comcast Digital Voice, Voice over Internet Protocol (VoIP) telephone service, has 6.5 million customers.

Analysts are worried that if Comcast buys a controlling stake in NBC Universal, free television shows on the internet may become rarer. “Hulu was started by NBC and Fox so they could compete with Comcast. So this is a defensive move to some extent by Comcast,” said Kaufman Bros. analyst Todd Mitchell. “Hulu will just become another choice of Comcast’s pay-TV buffet.”

“This deal (Comcast-NBC) has major implications on the success of TV Everywhere,” said Thomas Eagan, an analyst at Collins Stewart. “Comcast may decide to change Hulu to some degree to facilitate a premium Hulu service much faster.”

It would “accelerate new business models, momentum for online authentication, new approaches to on-demand and online windowing content, and interactive advertising initiatives,” said Bank of America Merrill Lynch analyst Jessica Cohen.

In August, a federal appeals court in Washington struck down the rule that limited Comcast’s business at 30 percent of the cable TV market. The first time the 30 percent rule was overturned was in a 2001 court decision.

Comcast spokeswoman Sena Fitzmaurice said of the ruling, “We are pleased the court has vindicated our position. This important decision affirms that rules must reflect the changing realities of the dynamic video marketplace where today consumers have more choice in video providers and channels than ever before.”

A media monopoly

Cable television is not the only area where a monopoly exists. Five corporations dominate the television news: AOL Time Warner, Disney (ABC), GE (NBC), News Corp. (Fox), and Viacom (CBS). The same companies also own television, radio and cable stations, networks, and program production companies. Together they control an estimated two-thirds or more of prime-time programming.

The Telecommunications Act of 1996, signed into law by President Clinton, deregulated the telecommunications industry by eliminating the restrictions on ownership of cable stations by broadcast networks, and joint radio-television ownership. The intention of the Act, which re-wrote the 1934 Communications Act, was to allow more companies to provide more services.

Economist and author, Jeremy Rifkin refers to the 1996 Act as, “A landmark piece of legislation that opened the media field to new competitors, including the large regional telephone companies and cable companies.”

“This act was billed as a transformation of sixty-two years of federal communications law for the purpose of ‘increasing competition,’” Ben Bagdikian wrote in his book, The Media Monopoly. “It was, with some exceptions, largely described as such by most of the major news media. But its most dramatic immediate result has been to reduce competition and open the path to cooperation among the giants.”


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Categorized: Policy & Government|

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