Comcast-NBC Uni deal sets new tone

Commentary: Big mergers more sober, financially conscious

A lot has changed in the decade since the last megamerger in media circles: the ill-fated amalgam of Time Warner with AOL.

Even the mood and tone surrounding the Comcast-NBC Universal tie-up are decidedly different. For one thing, there's not the breathlessness of the moment (the thing has leaked in dribs and drabs for three months) or the same amount of money being thrown around. We're talking $30-odd billion rather than $100 billion, a sure sign that we live in a much less pumped-up, pound-the-chest business world.

Not that Brian Roberts and company are newcomers to the game: They were nibbling around at the Hollywood trough back then as well. Comcast quietly kicked the tires of Universal in 2001 -- as did Marvin Davis, Time Warner, et al. -- but its co-CFOs at the time, Larry Smith and John Alchin, were too skittish to recommend going forward with a bid. The studio eventually ended up in GE's clutches, and Roberts apparently rued the day he didn't go for it.

So what has happened in the interim, beyond the unsuccessful run that Comcast made for Disney in 2004?

For one thing, the cable giant, with more than one-fifth of all U.S. cable subscribers, probably has reached its growth ceiling in that business. Perhaps it's getting a little boring there in Philly, and more seriously, perhaps Roberts and his people feel they need more leverage over content to ensure the stickiness of all those subscribers. Sexy stuff this isn't, but smart, quite probably.

We're in a new decade, after all, where businesses must be shored up at the same time they have to be reinvented -- all while being more sober, more methodical, more bottom line-conscious than we were all those 10 years ago. And that might be just the rub.

These are, after all, cable guys who know how the pipes work but whose business is fairly dry and predictable. On the reassuring side, they've sat across from the content providers at the negotiating table for so long, they clearly have respect for how the stuff that flows through the pipes gets put together. (Roberts and company own a few such channels themselves, starting with E!, but the financial risks they take there are nothing to what Universal's Ron Meyer and his team deal with in greenlighting movie slates or Jeff Gaspin and his team at the Peacock in putting together and moving around its primetime pieces.)

Comcast might not come to Universal City with the re-engineering plans that Edgar Bronfman Jr. inflicted on the studio nor with the Six Sigma gymnastics that GE put the major through, but it is a frugal-minded company that simply might not have the appetite for rolling the dice the way Hollywood execs typically do or suffering the setbacks of multiple flops in order to secure one megahit.

Because of that likely reluctance, the company probably will accelerate the trend already noticeable among the Hollywood majors, which means fewer movies being put into production and fewer over-the-top deals with talent starring in them. Eventually, its business tilt might affect what gets made: If its aim is to fill its own pipelines with content for people at home watching cable, or accessing the movies via VOD or whatever, that could lead toward a certain homogenization of subject matter and approach.

Yes, as Comcast brass put it Thursday, content and distribution go together like love and marriage, but it can't escape folks that more media combos have been dissolved during the decade than sealed.

There will be some interesting tussles to play out in this union, which no doubt the regulatory watchdogs will try to get a handle on -- like what happens to Universal's ongoing pay TV deal with Time Warner's HBO when it comes up for renewal and how will Comcast's attitude toward retransmission consent, now that it will own a broadcaster, affect the other networks in their quest for such payments.

And speaking of networks, that's another thing that's changed dramatically since GE jumped into the media fray 25 years ago. Back then, as is clear from Jack Welch's book, buying a broadcaster was a sure hedge against a downturn in the conglom's industrial businesses, which were being rattled by competition from the Japanese.

Now, NBC is mired in fourth place, revenue is off, and the business model of broadcast TV is having to be re-invented.

From Comcast's perspective, the real jewel in the crown is -- surprise, surprise -- those cable gems, as in USA, Syfy, Bravo, even the Weather Channel, and how they might shine in the same setting with Comcast's own quartet of nichers. That's why execs such as Bonnie Hammer and Ted Harbert are rumored eventually to play a bigger role in the new combo.

Still, there's a ways to go.

When the AOL deal for Time Warner was unveiled in January 2000, most all the coverage was upbeat, with even ashen-faced Ted Turner saying he fully supported it. In those days it was all about online chutzpah and how Steve Case and company would revolutionize media dynamics: Content would be at the service of the Internet, and everyone was going to enthusiastically embrace synergy. Well, we know how that worked out. Within a year or two, no one was inviting the increasingly critical Turner to meetings, divisional fissures widened, and everyone's 401(k) started to crater.

It took several more years for the AOL-TW thing to unwind, then for the ship to be steadied under Richard Parsons and more recently for disposals and sell-offs of this and that to work through.

Thursday's announcement was made with much less fanfare, but the hookup could, given the impressive revenue of the joined components, be the deal that sets the tone -- and the agenda -- for the next decade.