My $.02 on Comcast's purchase of NBC/Universal

November 30, 2009, 10:56 PM · The long-rumored Comcast takeover of NBC/Universal now appears imminent, thanks to GE buying out Vivendi's remaining 20% stake in the company for a reported US$5.8 billion. With former Universal owner Vivendi out of the way, GE is now free to bring in Comcast as a co-owner, with an option to buy the whole thing. (The Vivendi deal was necessary because (a) Vivendi wanted out and (b) it effectively put a price on the company. Vivendi's 20% was worth $, therefore the whole thing's worth US$29 billion.)

We've had some fun with the idea of Comcast, a cable TV company, owning NBC/Universal. But what will this deal really mean for the owner of the Universal theme parks? (Okay, co-owner of Universal Orlando.)

Having lived through the collapse of the newspaper industry, I say with certainty that any business whose model is based on controlling a medium of distribution for content is dead. If not now, soon.

I also believe that the folks who run Comcast understand this. That's why they are making a play for a content business. Comcast needs NBC/Universal not to support its cable television business, but to replace its cable television business. Comcast must convert itself from a distribution company to a content company, and buying NBC/Universal provides the swiftest way to do that.

Comcast's COO is Steve Burke, an ex-Disney guy who once served as President of the holding company that runs Disneyland Paris. Remember, Comcast tried to get its hands of Disney a few years back, when the Eisner administration was floundering. And then it even made a play for Universal back then, too. So Comcast has been looking to buy content assets for some time.

Yeah, the content business is tough. With hundreds of thousands of viable, ad-supported websites now online, competition for ad dollars stands at an all-time high. But I'd still rather be in the content business than the distribution business. Internet distribution is about to make the cable provider as obsolete as it is now making the daily, printed, home-delivered newspaper. And theme parks, while only a small portion of the NBC/Universal balance sheet, can be a great cash cow, especially with the Wizarding World of Harry Potter coming online in Orlando.

Comcast is making a smart move... for Comcast. Whether this will be a smart move for NBC/Universal remains to be seen. At least under Comcast, NBC/Universal would be owned by a company that not only values entertainment content, but that sees it as the company's future. That ought to beat being owned by an appliance maker/defense contractor.

Replies (12)

November 30, 2009 at 11:24 PM · I still think the Marvel deal is a bigger blow to Universal than Comcast buying NBC/Universal. In fact, I venture it would be better since I am guessing Comcast has a bit more of a clue about entertainment then, well GE who is pretty much good in everything else.

There goes some of the jokes on 30 rock with Jack's microwaves!

December 1, 2009 at 4:23 AM · Anyone who has comcast as their cable operator (or phone & internet provider) knows they have no concept of what good customer service even is, which means any service oriented part of NBC/Universal would be a total disaster. Trust me, this would NOT be good news for the theme parks which already lag way behind Disney in customer satisfaction
December 1, 2009 at 7:11 AM · It’s getting to a point where I may have some problems remembering who owns what park…

Maybe Robert can create a new link to a new page here for the ever changing park owners….

December 1, 2009 at 8:49 AM · I agree with you on the idea of content and it's value Robert. The only issue is when television and internet (which Comcast also provides) become obsolete like the printed newspaper has. With the advent of HDTV and everything now becoming web based, it's hard to imagine that happening anytime soon.

There is a lot of money and politics involved with television, and some things would likely have to happen before TV completely goes the way of online. Those things would include regulation of the internet (please God no), and all businesses involved (tv stations, cable companies, studios, equipment manufacturers...etc) figuring a way to replace the piles of money that would eminently be lost with a simple switch to complete internet streaming.

I don't think that it's as much about "future planning" as it is about making more money while keeping their prices competitive in the present. It's fair to say that Comcast the cable company (and most other big cable companies) have hit the ceiling in terms of organic growth, and that the product can only grow by swallowing up other companies and charging their customers more. With content, Comcast has figured out a way to grow, and also to compound the money it already makes from it's product while keeping prices down. Not only does it own the content, but also the medium in which said content is distributed. If TV does become obsolete, Comcast already distributes the replacement...the internet.

Let's just hope that the theme park division is a priority, and that Comcast doesn't bring their much maligned customer service to Universal.

December 1, 2009 at 10:54 AM · Well what about Time Warner? They own their cable company along with the whole Warner Bros package and at one point, Six Flags.
December 1, 2009 at 11:10 AM · First off, Comcast ALREADY is a small player in the media content provider arena. They own (wholly or partly) the following E! Entertainment, Style Network, G4, Versus, The Golf Channel, AZN Television, FEARnet and a number of regional sports channels (SportsNet I believe).
Second, I would have to agree with everything that Robert said. I think that is why Disney has been so aggressive with their purchases of characters lately (Pixar, Marvel, etc). If you own the characters, it won't matter where they are (theme parks, TV, movies, internet, etc), you will still get paid.
I also agree with most of the posters that Comcast would be MUCH better for the Universal theme parks than GE. The theme parks are a VERY small part of a small division in a small business unit in a MUCH, MUCH larger conglomerate. And GE/Universal has been looking at dumping the parks for awhile now. The parks would be much more higher profile at Comcast and would fit better into Comcast's business model.
December 1, 2009 at 2:28 PM · Oh, but think of the fun Robert if a defense contractor, we can really do some upgrades to Men in Black on those guns LOL, or even a appliance maker, we can rename Storm Force to the Sit and Spin lol. Ok I had my fun, I just hope they keep up high standards or even more and continue to invest into the parks. With Steve Burke, hopefully they will.
December 1, 2009 at 5:36 PM · One fear besides customer service issues would be to see it become 'Comcast Studios Resort'!
December 1, 2009 at 6:32 PM · If UO management brings the Comcast brass - and their families - down for a week, they'll be on board with cultivating the parks. Having a corporate owned facility for meetings, client schmoozing, employee rewards, etc. is a huge, huge asset to any business.

Face it, a typical bigwig's kids and grandkids don't care about spending the week at some fat cat golf resort. But spending the week at Universal Orlando? (Or Disney World?) Now that's cool. Kids whine about what they don't like and gush about what they do. That influences the bosses, too.

Now, will the Comcast management team learn enough about theme parks to retain a top parks management, marketing and creative team? There's your billion-dollar-plus question.

December 1, 2009 at 7:26 PM · @Derek -- You wrote...

"The only issue is when television and internet (which Comcast also provides) become obsolete like the printed newspaper has."

Uhh... Derek? What do you think the HDTV and other content travels over to get to whoever's receiving it? In many cases, the Internet.

How do you think requests for web content gets to a server which supplies it? And how do you think that content comes back to the requester? That's right. The Internet.

The 'net itself, or at least the possibilities afforded by having a massive global data network, will never become "obsolete." The means we use to access it may change, what comes to us and goes from us will likely change, but the basic idea of interconnection (networking, if you like) has existed since the Stone Age, and will likely continue to exist long after we've gone to dust.

The web is merely an application running on top of the Internet, just like E-mail, instant messaging, VoIP, and all the other assorted 1's and 0's shooting all over the place (including, unfortunately, spam).

Happy travels.

December 1, 2009 at 8:10 PM · I thought that I pretty much said that. The internet won't be going away, but traditional coaxial fed cable (digital or otherwise) television will eventually go away in lieu of a high speed internet connection that many of us already have. As I said though, we won't be there for a while for several reasons. Comcast widely distributes both cable tv and internet, so they have no worries about being obsolete with their medium.
December 3, 2009 at 8:39 AM · The real purpose of the Comcast NBC Universal deal is the vast film library of blockbuster hits that Universal has which it can now charge fees to networks and othe cable providers.

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