Friday, October 9, 2009

Is NBCU The Best Fit For Comcast?

Comcast wants content and NBC Universal is for sale, but does that make it the best strategic fit? As the article suggests, Comcast seeks to expand its cable networks, but NBCU is more than just that; it includes broadcast and affiliates, a movie studio, theme park, and more. Would Comcast then have to spin off these non core assets to pare down to what they want. Sure NBCU may be motivated to sell cheap, but cheap doesn't necessarily get you a great deal.

Comcast needs to really determine what business they want to be in and whether this deal strategically, and not just financially, makes sense. And do they really want to own a broadcast channel with local affiliates. Could that add a whole new wrinkle to their distribution business? I'm sure it will raise an eyebrow or two with the FCC. There are plenty of other cable networks that could be ripe for acquisition. The article mentions some, including Discovery and Scripps, but others exist. Those acquisitions come with far less headaches and far more synergy.

"Still, Roberts is an opportunistic dealmaker, and sources said he thinks he can steal NBCU because parent company General Electric is essentially a distressed seller." Sometimes if a deal is too good to be true, it is too good to be true. Comcast must concern itself with its core business, cable distribution, and there they have much bigger issues. If this is a fundamental switch toward content AND away from distribution, that is one thing; but, if it is about both, and NBCU acquisition will cause many more problems and thin out resources, just as Comcast faces growing competitive problems from Verizon and AT&T. Strategically speaking, Comcast needs to decide which battle they want to fight, telco or FCC!

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