Comcast/NBCU Deal Announced; NBC Network Days Numbered
The news of the deal struck between Comcast and GE to sell 51% interest in NBC/Universal to Comcast leads me to think the NBC television network may be the first of the national broadcast networks to decommission itself.
Of course, this is speculation on my part–I don’t have inside knowledge. Logic tells me, faced with broadcast advertising revenue shrinkage continuing at its current precipitous pace, it will not take long for the Comcast quant guys’ internal five-year forecasts for national ad revenue from the broadcast network and local ad revenue from the owned-and-operated stations to be so far underwater that there will no longer be a business there.
There is certainly no shame in operating as a cable/online service. ESPN, CNN, and dozens of other national cable services operate as profitable businesses. There’s no reason to think NBC could not do the same. The broadcast network might morph into multiple cable services (with guaranteed carriage on the Comcast systems and likely carriage on other MSO systems too). It would be interesting to consider what that service lineup might look like in a year or two.
However, at some point all the cable services will be faced with yet another transitioning to a hybrid distribution model where online delivery supports the majority of the service’s viewers. Before that time, Comcast will need to have figured out how to continue extracting user subscription dollars or replace subscriptions with other direct payment solutions from the folks who don’t have a Comcast cable box. Comcast’s win in buying control of NBCU is that it will have to spend less of its subscriber revenue in content acquisition (getting Bravo content wholesale instead of retail, as an example). That will be a boost to bottom-line results for a time. But the time is coming when viewers equipped with high-speed Internet service and more capable devices for finding and playing video content will be reluctant to continue their cable TV service. Comcast had better know how to retain those TV sub revenues through another compelling value proposition.