Comcast to Buy Cable Nets and Sell Rest of NBC?

Everything that NBC Universal has built up, the acquisition of USA and Sci Fi, then Bravo, Oxygen, and most recently The Weather Channel, could soon come apart. With a sale to Comcast, the only thing of value to Comcast are the cable nets, less so the broadcast network and its owned and operated stations. "One Wall Street player confirmed market rumors that bankers have already descended on the MSO's Philadelphia headquarters to work with management on selling the NBC Network and stations to a third party. Comcast had no immediate comment on that still-hypothetical possibility."

Is this what GE wants, will this provide Vivendi with the value they want for their investment? It seems Comcast knows exactly what they want and are not afraid to dismantle the infrastructure to get to their prize. It is a far more strategic plan than acquiring the whole thing. Will Universal and the theme parks go as well? I would expect so.

So who might want a broadcast network without cable networks to balance it out. Today the profit is in cable not broadcast. And with the current programming on NBC in prime time (i.e. The Jay Leno Show), this fourth placed network has less value to offer. Who would want this dog without and an affiliate network that has become less viable when the web can be much more hyper local. Is this the future for NBC Universal and who could possible want to buy this shell of an asset?

Tonight on TV

Cable networks were created to bring niche interests to the masses and compete with the general programming of broadcasters. But the cable landscape has changed and cable networks are no longer acting like niches but behaving like broadcast networks. Case in point, tonight's line-up:

A&E - should be called CBS 2 with reruns of Criminal Mind and CSI: Miami
TV Land - once the home of classic TV shows is featuring a movie, "Private Benjamin"
Bravo - once culture TV presents Americas Next Top Model and a movie "Sleepless in Seattle" - that's culture?!
MTV - so long music videos, we get "Scream 3"
Travel - ahhh travel. So where to tonight - "Ghost Adventures Live!" Ticket for one, please.

And so it goes. Cable networks continue to broaden their programming so that they begin to lose their individual identity. Was that show on Food Network or TLC, AMC or TNT? So hard to say, they all start looking alike. So goodbye to networks, with VOD, simply watch the show you enjoy, regardless of where it may have first appeared.

Cablevision To Raise 2010 Video Rates 3.7%

How do you protect yourself from competition, sometimes its by keeping prices steady, perhaps even lowering them. That is somewhat the case for Cablevision. While voice and data rates remain steady, cable subscription is rising. Initially, I would have thought that this move was wrong, especially when cable basic subscription falls. But when your competition also raises rates then the one who raises it the least may be the winner. "The increase is slightly higher than 2009, when video rates rose an average of 3.5%. But it is substantially below the 21% increase Cablevision rival Verizon Communications implemented for its legacy FiOS TV Premier Package earlier this month."

Ultimately, the consumer, faced with either price increase will look at the other choices and ask, which is cheaper. To them, cable, voice, and data has begun to look more like a commodity than a differentiated product. What differentiates one from the other on the cable side is minimal, one has HD channels of local sports (obviously because Cablevision owns those channels and has not agreed to license them to Verizon). The other just picked up Epix. For the most part, for the majority of consumers, each has enough networks to satisfy. Each delivers data at broadband speed. Each offers wireline telephone service. How they service their current customer and how they woo their competitors customers may make the difference. In the meantime, price will continue to be the motivating factor. Regardless of how much they increase their price, it is the one that offers the lowest total cost for the package that will see the bigger rise of subscribers. In essence, cable TV has become a commodity product and the companies have done little to nothing to change that impression.

Quincy Smith Leaving CBS Interactive - What Does It Really Mean

Quincy Smith, CBS Interactive CEO, is leaving after 3 years at the helm to head back to Silicon Valley and his own startup. And while the claim is that he will continue to consult for CBS, the question is why now when the job he started has not been completed. TV.com, his alternative to Hulu, seems to be a non-product to its competitor and has little if any consumer awareness. The CNET acquisition has yet to thrive and their acquisition of a little website called Wallstrip merely resulted in its being shut down. So what grade does Quincy Smith get for his leadership? And why will he still be on retainer?

As Comcast and others discuss TV Everywhere, where does CBS stand. CBS seems to have created product and tactics without strategy and don't seem to know the direction they are headed. When asked in a recent interview, Smith replied, "Yeah, and I think there is a lot more I can do outside of CBS on that particular issue than inside. CBS has clearly got the Kool-aid of it inside. We have always been adamant about saying yes. Streaming stuff for fans online is the right thing to do, but the question is, What is the business model to make it work?" Ahhh, more questions than answers. Really, being outside CBS will help him focus on CBS. Got it. Right.

Is CBS also dissatisfied with Quincy Smith's performance and is this a nice way to get him out of the way. We will know when we see what kind of interaction this new company will have with CBS and how long it lasts. My vote, 3 to 6 months. It is a nice way to say goodbye.

Will Consumers Pay for Online Content

Hulu wants to charge for online content. Will consumers pay? They pay for Netflix, they pay for Blockbuster, but will they pay a site that has been previously offering its content for free? I expect that consumers will simply get more annoyed at thesecompanies and will utlimately find a way around them. The challenge for Hulu is not how to build a subscription model, but how to build an authentication model that feeds off of its cable license fees. Authentication is really all about convergence for the consumer, "what you want, where you want, when you want, how you want" - one price for access across all devices.

The added wrinkle is that the relationship between the cable company and its customer base is a poor one - built on poor service, bad communication, mistrust, and bad feelings. As technological advances hit the masses, from Apple to X Box, cable technology, and the box that enables TVs to function, look and act like old fashion, rotary dial, phones. There is nothing 21st century, with cool looks and interfaces, and ergonomic design to make the consumer feel that they are getting the best product from cable. Rather, they feel overcharged, and under appreciated. Hence as competition enters the fray, the customer makes a quick exit to the door.

So online content may try to find a subscription model. Just don't expect the consumer to roll over and take it. We have been mistreated for too long and will find other alternatives to satisfy our video cravings.

Fios To Exceed Cablevision Subscribers by 2010

In just a few short years, Verizon's rise in cable subscription has been fast and furious. While growth has slowed in the last quarter, Fios is the 6th largest cable operator, set to overtake Cablevision and the number 5 spot in 2010. And with partnerships with Direct TV in markets that don't have Fios, Verizon is still able to offer a triple play option to compete with cable. What makes Verizon most dangerous to cable in this competitive environment is that they can offer a fourth play, wireless communication, and build a compelling, competitive offer.

Sure Verizon has had to deal with the loss of customers from wireline, but that is mainly due to technological changes; consumers are switching off wires for cellular. To me that means that this third leg for cable is not the real hook that consumers need. Rather, cable must find a wireless product and build out a wireless broadband model. Consumers no longer want to be tethered to their home or to their devices. Devices must follow them.

As Fios' growth exceeds Cablevision, what does that mean for them? Does it push Cablevision to finally sell itself to Time Warner in order for it to better compete in the region? Verizon is reaching scale and no longer needs to sit at the kid's table; they are a major player in the cable distribution industry and will continue to demonstrate a strong voice in the months to come.

My hint to Fios. Buy some independent cable networks and create a stronger programming arm.

Hulu Needs To Grow Revenue

The idea of Hulu sounds impressive; bring TV content to the computer, build an advertising stream, gain new viewers by providing another avenue to watch shows, and hopefully move those viewers back to TV to strengthen the primary business. Why not. Most viewers would prefer the TV experience to computer and would rather watch long form in a sit back living room type experience.

Except Hulu seems to have some unintended consequences. Younger viewers see the computer as an alternative to TV, are getting content through the web, and eliminating their cable bill. Others are more technophiles and can connect the PC to their big screen and still enjoy long form content in a sit-back environment. In fact, TV makers are adding USB ports to support that connection. And advertisers aren't flocking to web video so that the CPM on the web is much less than the TV; hence, the owners of Hulu, NBC and Fox, are seeing "analog dollars being exchanged for digital pennies". It is not a fair trade. Some may contend that Hulu is additive to the TV experience, but my informal research tells me that it is talk without proof. The web is another distribution path for content and consumers are choosing the web to fill more and more of their entertainment interests.

So what is the next step for Hulu. Well according to the NY Post's article, Adieu free Hulu, it's time for Hulu to find incremental revenue models like subscription. "The online video site that offers full-length versions of current TV shows -- one of the fastest growing sites on the Web -- could start charging users as soon as next year, according to reports." Perhaps Hulu should tie itself back to cable and get a license fee in exchange for enabling authentication so that only cable customers can access cable content.

Will cable pay? Comcast is already building out its ondemand online model to compete with the Hulu model. Others may follow Comcast or embrace Hulu. Either way, it would have been naive to think that the free model from Hulu would last forever. The almighty dollar is far too powerful a force to keep it free forever. Will consumers adapt to this change to paid content? Not if it is accessible in other ways for free. The rise of free on demand viewing of these same programs, network websites, and even Apple's iTune store may become the more preferred means to access content. As Hulu becomes a pay model, it may simply become the first step to its destruction.

Can Twitter Generate Revenue?

If Twitter can find a business model, it may be due to the good fortunes and marketing savvy of Microsoft and Google. Both may be willing to pay Twitter to organize a search engine around its tweets. "The deals represent the latest evidence of the intense interest in what is known as the real-time Web — the constant stream of posts and updates on Twitter, Facebook and similar services. Unlike traditional Web pages and blogs, that real-time information has not been easily integrated by search engines."

As 99% of posts seem inane to me, what is there really to search for. Isn't the real news, already searched on web sites, simply linked to Twitter to spread the news. Is there anything fresh and unique only on Twitter that needs to be searched. I doubt it. It seems to me to be at first glance to be deals only in the best interest of Twitter and not of real long term value. We will have to wait and see to prove out my prediction.

TV Everywhere; Not Quite Yet

Comcast's alternative to Hulu is Fancast and with it, the chance to marry online content with cable subscription. I mean why buy the cow if the milk is free. Ideally, that subscription would lead to viewing outside the TV screen, on any other device authorized by your cable provider. Unfortunately, as long as Hulu is around, that authentication doesn't matter. Perhaps that is ultimately why Comcast will buy NBCU ( a founding partner of Hulu), to kill Hulu off. But back to Fancast, its authentication process today is limited to the wired home.

"On Demand Online will move from trial to reality later this year but not as the TV Everywhere wonderland all the hype might lead subscribers to expect: the streaming on demand will be limited to some cable shows and movies, access will be limited to in-home computers—and, at first, access will be possible only through Comcast’s own ISP, barring anyone who does not pay Comcast for video and broadband. But, as promised, the actual service will be free to cable subscribers; access will be through Comcast.net or the company’s video portal Fancast."

Ultimately, a deal will be needed with a wireless carrier to support the authentication process; with Verizon and AT&T doing their own thing, cable may have to do a deal with Sprint to add this piece to their puzzle. Will customers try Fancast or On Demand Online? It certainly depends on the content. If they offer full length shows not available on Hulu, TV.com, iTunes, or elsewhere, and can establish themselves as the only place for valuable online content then they may break through the current clutter.

Today though with so much video content available on these aggregators as well as other cable and broadcast websites, finding unique content to own may not be easy for Comcast and On Demand Online. They need to build their authentication process quick and demonstrate to content creators the importance of limiting their content sharing to authenticated sites in order to save the subscription revenue business.