Cablevision Fox Negotiations Are Why Comcast and NBC Shouldn't Merge

In three days, Cablevision customers will either still be enjoying their Fox broadcast channel and cable nets or will find static. Just in time for MLB baseball on Fox. The ultimate loser in the negotiation is the consumer. No signal, no programming, higher license fees, higher pass through costs on the cable bill. Bad for all, but even worse, bad for Comcast and NBC.

Assuming the merger went through, how could Comcast prepare to drop a broadcast channel like Cablevision is threatening. Won't cries of unfair trade be screamed from door to door and across the legal system. Can real negotiation occur? How else can Comcast be assured they are getting the best deal? Too much pressure not to be seen as monopolistic.

The solution of having the government negotiate carriage deals for Comcast seems absurd. The government can't negotiate their own deals without overruns, misspending, and other bureaucratic bungling. Owning a major broadcast entity seems ripe for bigger problems then Comcast needs.

And what about the other side of the business, Universal Studios. As cable operators fight for shorter windows to get movies from theaters into homes ASAP, is Universal's best interest being considered. And doesn't this vertical ownership from creation to distribution remind anyone of the days when studios owned the theaters. Back then, the concern was that smaller theaters would get squeezed out of films because they weren't owned directly by the studio. For a while, laws were enacted to protect theaters from this monopolistic activity. Doesn't this merger have a similar smell?

So Cablevision and Fox will fight to the finish. Most likely, a deal WILL NOT get done till after the networks are off the air. It happened with ABC, It happened with Scripps. It seems likely it will happen again with Fox. Call it squeezing any last drop out of the negotiation, call it acrimonious. But it is now the SOP, standard operating procedure for negotiation between content and distribution. And it is the biggest issue facing the Comcast NBC Universal merger as well.

Magazines Not Dead

Don't worry friends, magazines aren't dead. In fact, the ad market is showing a bit of a rebound. "Paced by automotive and technology ads, consumer magazines posted ad-page gains of 3.6 percent in the third quarter compared to a year ago, marking the second consecutive quarter of growth for the embattled industry." A healthier economy with more jobs will increase consumer spending and increase advertising. People still read and printed media will not go away any time soon, although usage patterns are changing.

At the same time, there will continue to be a shift of reading from print to digital as an ever growing number of devices hit retail. The iPad will be sold in Walmart and Target, Kindles and other e-book readers continue to make a splash too. and online subscriptions are increasing. The Financial Times just announced some intriguing results of their subscription base, "In the five months since its launch, the (Apple iPad) app has attracted 400,000 downloads and accounts for 10% of new digital subscriptions". That is a huge percentage for such a short period of time.

These are exciting times for media with new opportunities emerging through technological changes. Embracing change and adapting to it will determine which publishers excel and which are destined to perish.

Hulu IPO Would Benefit Some

GE, Fox, and others built this online content distribution service from scratch and appear ready to hand it off to the market place with a stock offering. "Hulu is ready to raise $200 million to $300 million in a deal valuing the company at about $2 billion, and could file a prospectus with the U.S. Securities and Exchange Commission before the end of the year, one source said." It also is an opportunity for its owners to reduce their ownership stake by selling stock to the public, too. So is the motivation to raise more capital and deliver an exit strategy.

Hulu's latest gambit has been to add a subscription package to its service, thus adding a second revenue stream to add to its ad model. As a private company, these figures don't need to be shared; as a public company, we would also be able to peek under the velvet curtain. An early IPO would come with the explanation that since the subscription service is new, a slow start could be easily explained. At the same time, investors would be able to quantify their ownership and perhaps even reduce their level of holdings. And if the Hulu model is shaky, a good time to take the money and run.

Will Hulu be a profitable company? Or is this IPO an opportunity to cash out their investment and play with just house money? Just wondering.

MGM To Enter Bankruptcy

When the Hollywood risks the loss of one of its once powerhouse studios, MGM, it is a clear sign in the sand that it is out with the old and in with the new. Old Hollywood rules are out, the new digital age of direct to home is gathering steam. If businesses don't change to meet the changing needs of their customer, then they will be replace by those willing to adapt in order to survive and excel.

And while bankruptcy won't put the MGM name into the grave, it will symbolize that the business model that once thrived is now outdated and studios must creatively find new doors to open.

Another Rumor on the Verizon iPhone

No confirmed news from either Apple or iPhone, in fact, just the opposite. Verizon announced no iPhone. It's just that no one believes them. Maybe to protect sales of current phones maybe to keep building the excitement for the eventual announcement. Regardless, the rumor of a Verizon iPhone won't go away. "The Wall Street Journal reports that the CDMA-based iPhone is real, the rumors of Verizon getting the device are substantiated, and an order has been placed with manufacturing plants for millions of the device."

So when does the AT&T exclusivity deal expire and when will Apple or Verizon finally make the "official" announcement. "One leading theory is that Apple and Verizon will officially make the announcement of a Verizon iPhone in early January at the world's biggest trade show, the Consumer Electronics Show in Las Vegas." Don't expect the announcement any sooner. Or just ask AT&T when their deal ends; perhaps that is the ultimate reason why an announcement is on hold.

Howard Stern: Will He Leave Sirius?

Will Howard sign his contract? Others at Sirius have committed. "Today, reports emerged that the latest on-air talent to re-sign with the satellite radio company are Opie and Anthony, who are said to have signed on for two more years. The company also appears to be close to finalizing a deal with the National Football League." It may be a negotiation ploy, but I think Howard will eventually re-sign. He can set his terms, develop new shows and reap the rewards of producing and not just being the online talent.

Check out the article and vote your prediction.

FilmOn Sued By Broadcasters

Historically, broadcasters have offered their signal over the air, free to homes. Their revenue came from advertising. Today, they still offer free, over the air, but they also are getting license fees from cable operators. So a site offering to redistribute free content to devices sounds promising for consumers, but problematic to the license fee model. "On Friday, CBS, NBC, ABC and Fox filed a copyright infringement lawsuit against FilmOn.com, which offers subscribers who pay $9.99 a month access to live high definition feeds of TV online. The suit follows a battle with another online streaming outfit ivi, Inc., dual moves that indicate the major broadcast networks are starting to get aggressive in policing the Internet for unauthorized transmissions."

Why let another company make money over your content? Broadcasters may be right in stopping and perhaps should kick themselves for not being more aggressive in bringing their content to online devices. Flo TV is dying, Slingbox is a stopgap solution. Broadcasters have not been proactive in getting their signals seen through wireless connections. FilmOn has simply discovered an opportunity to regain eyeballs for broadcasters. Perhaps better to partner with them instead of sue.

More Info Needed on Comcast NBC Merger

Comcast and NBC are hoping that before the end of the year, the FCC will approve the merger of these two media powerhouses. It seems, however, that the FCC is not in the same rush. "The Federal Communications Commission is requesting additional information from Comcast Corp. and NBC Universal as it reviews the cable operator's plan to acquire a controlling stake in the media company." Can all the information received so far, plus this new information, be analyzed before the end of the year so that the FCC can make a decision? And doesn't the Department of Justice have a voice in the approval process, too. I wonder if a decision could possibly be reached before the start of the new year.

As to the question, should NBC and Comcast be allowed to merge, many see negative consequences to such a move. "The combination has raised worries among satellite companies, rival cable operators and other subscription video providers that Comcast would use its control of NBC Universal to push up prices for must-have programming or even withhold it altogether." I too wonder the overall impact to competition and to content received outside the cable pipeline.

It seems NBC is closing those deals now, before the potential merger. New deals with Netflix and others enable NBC Universal programming to be viewed without a cable subscription. Should NBC and Comcast merge, could those future deals be denied by management. Does this merger do too much to hurt competition? And should their be a delineation between distribution and content? Time Warner separated its programming arm from Time Warner Cable. CBS/Viacom got out of the cable platform more than a decade ago and ABC has no ownership either. The Comcast NBC merger would be a first. And the FCC and DOJ have a lot to consider.

Sirius Subscribers Keep Growing

A friend of mine recently bought a new car with Sirius included. He took the trial membership and while his commute in the morning is short, he still enjoys his 15 minutes of Howard Stern each way. So I asked, "will you keep it when the free trial expires?" His answer, as long as he has the lease, he will continue to keep it. With the economy modestly improving, and car sales ticking upwards, Sirius' strategy of including in the car appears to be paying off. "The satellite radio company’s raised guidance means it expects its net subscriber growth for fiscal 2010 to be about 1.3 million, ahead of its August prediction of 1.1 million."

It seems Sirius is seeing an uptick. It most likely makes sense to assure your lead star, Howard Stern, remains part of the content strategy. He may not be the only reason consumers keep their satellite radio, but he does reach a very loyal audience.