Monday, December 7, 2009

Comcast: A Shark in the Water

GE and Comcast announced their plans for a joint-venture concerning GE’s NBC Universal last week. The two have been working toward smoothing out the details of the sale of 51% stake of NBC Universal to Comcast, with the ability of GE to gradually divest the remaining 49% over time. The sticking point was Vivendi’s 20% stake in NBC, which was worked out. Vivendi would sell its stake to GE for an estimated $5.8 billion, according to The deal is all but sealed, with the exception of regulatory approval. This transaction would essentially make Comcast one of the largest conglomerates in the cable industry. This is a win-win situation for the entities involved. It is a significant move for GE to sure up their bottom line, by divesting a business that is not lucrative. For Comcast, it would be an excellent way to be a cable service provider, as well as a distributor of content. The problem is that it seems to be a bit monopolistic and in some way poses a conflict of interest where consumers are concerned. Comcast would be the scary equivalent to Jaws in the ocean of service providers. As a consequence, customers will be subjected to higher fees and forced to pay extra for content that would have been included in the basic package. The are undoubtedly other issues to be considered.

It should be noted that there have been complaints about Comcast flexing its muscles in the past. Smaller providers have been victimized and bullied by Comcast much in the way that Intel was blocking AMD from eroding their market share. That is not a good sign. If this was an issue prior to Comcast purchasing the majority stake in NBC Universal, what can we expect from them if this venture is approved?

I know I said that this was a "win, win" situation, but that was speaking from the stand point of the entities involved. If I had to include how the consumers would fair should this acquisition pass regulatory approval, I would have to say win, win, lose situation.

K. Reilly

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