Tuesday, May 31, 2011

The Challenge of Vertical Integration for Comcast and Bloomberg

Back in the 1940's, an antitrust case was decided that had long lasting effects on distribution and content. In US vs Paramount Pictures, the courts decided that vertical integration, in this case the owning of both a studio and a movie theater, was illegal. Studios were forced to sell their theaters and an oligopoly was destroyed.

So it is of no surprise that the vertical integration of content and distribution is popping up once again in cable. That was the concern behind the merger of NBC Universal and Comcast and thus rises the latest accusation between Bloomberg and Comcast. "In order to win antitrust approval to purchase a controlling stake in NBC Universal, Comcast promised not to favor its dominant business news network, CNBC, over rivals such as Bloomberg TV. Bloomberg claims that as a condition of the deal, Comcast is obligated to place its business channel closer to other news channels, including Comcast's CNBC and MSNBC."

Smaller studios faced similar troubles. With big studios owning all the movie theaters, smaller studios couldn't get placement of their films. They were in blocked out. And while the media world has changed and digital has opened up distribution alternatives, cable remains the leader at the moment. Limiting or restricting viewership of cable channels is simply history repeating itself; vertical integration causing smaller networks to not get their content in front of audiences. While Bloomberg may have deep pockets to fight this battle, there are other networks paying close attention to this fight so as to demonstrate why they also deserve equal access.

Thus begins another chapter in cable, a fight over antitrust behavior. yes the entertainment landscape may have changed but history is a funny thing; when we don't learn from our mistakes, we repeat them.