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NBCU deal: Comcast in bed with Hulu

Thu, 12/03/2009 - 8:34am
Mike Robuck

After months of courting, Comcast has finally consummated its deal with General Electric to become the majority partner in NBC Universal, which means Comcast is now a part owner in NBCU offspring Hulu.

Hulu has been a thorn in cable operators’ sides with its free over-the-top videos, and some may posit that Hulu is the reason Time Warner Cable, Comcast and others have come up with their own Internet video services.

News Corp. and NBC Universal launched Hulu in 2007. Earlier this year, Walt Disney, through a subsidiary of ABC Enterprises, bought into Hulu, which gave Hulu access to ABC shows.

It’s a bit ironic that Comcast and Disney now own a stake in Hulu. As you may recall, Comcast CEO Brian Roberts made a failed attempt in 2004 to buy Disney, but if the NBC Universal deal passes regulatory muster, Roberts and Comcast will rival Disney as one of the nation’s largest media giants.

Maybe Hulu saw the handwriting on the wall when it started saying recently that it was willing to work with cable operators to help them enable “TV Everywhere” type services.

In the big picture, the deal could mean that Comcast, which is the nation’s largest cable operator, can offer movies to its customers from Universal ahead the DVD release dates.

It would also appear that Comcast will be able to take NBC Universal’s content—including shows from cable networks USA, Syfy, MSNBC and CNBC, onto to its own online video service, which was recently renamed Fancast Xfinity and is set to launch later this month.

Comcast said that NBC Universal shows that now cost money over its cable video-on-demand service would be free for three years after the $30 billion deal closes, according to a story in the Associated Press.

Comcast also vowed to maintain free, over-the-air TV on NBC stations. Parks Associates analyst Kurt Scherf noted in an e-mail to CED that Comcast is now a significant player in both broadcast and cable television programming, which has to make AT&T and Verizon a little nervous when it comes to content deals.

“Time Warner Cable – which seems to follow in lock-step with Comcast – has really started a public outcry against what they see as unfair carriage fees that the operators pay cable channels,” Scherf wrote. “How will this change the dynamic now that Comcast is both an owner and a distributor of major cable content? Will Comcast help TWC in this fight, or will they sit back fat and happy with the huge bucks being raked in from the cable channels through advertising and carriage fees? Will this mean a rift between Comcast and TWC?”

Lastly, Comcast will get to tap into the results of recent dynamic advertising trials that Cox Communications, through its Cox Media unit, has been conducting with NBC Universal.

The kneejerk reaction to the joint venture between General Electric and Comcast was to compare it to the failed merger between Time Warner and AOL, which is set to officially unravel later this month.  A lot has changed since Time Warner and AOL merged— literally going from dial up to broadband to wideband—but Comcast was able to leverage its 2001 purchase of AT&T Broadband  into a position as a mega media company that few would have imagined when Ralph Roberts and others founded a small cable company in 1963.

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