Comcast is fast becoming a powerful challenger to Apple and Amazon when it comes to selling downloaded movies and TV shows — the long-awaited replacement for DVDs and Blu-ray discs known in the industry as electronic sell through (or EST). …
Netflix had to make its potentially game-changing new deal to pay Comcast for improved service over its broadband lines because “there were some choke points around peak usage times,” the streaming service’s CFO David Wells said today at the Morgan Stanley Technology, Media and Telecom Conference. That should ease now that the agreement — which eliminates intermediaries handling Netflix traffic to Comcast — will “shore up the long-term subscriber experience.” Some investors are concerned that the arrangement might become costly. But Wells says not to worry: the additional outlays won’t change its forecast for fatter profit margins in its U.S. streaming business this year. The amount Netflix will pay Comcast “was incremental, but not to the point where we’re changing that.” Nor is he concerned that other broadband providers will now insist on large payments to improve Netflix transmissions. Others “could” ask for a similar deal, and the company is “somewhat caught in the middle” because it wants to ensure “a long-term subscriber experience” that will require more bandwidth as it offers more HD and, soon, 4K transmissions. Still, “not all ISPs are created equal,” Wells says, and “we’re not going to be interested in doing anything that will meaningfully change the economics.”
You can bet that government officials and opponents of Comcast’s $45.2B planned acquisition of Time Warner Cable will scrutinize its just-released third annual report describing how it has fulfilled the promises it made in 2011 to win FCC approval for the deal to buy NBCUniversal. Opponents already say the cable giant can’t be trusted. ”To the extent that Comcast has a history of breaching its legal obligations to consumers, such history should be taken into account when evaluating Comcast’s proposal for future market expansion,” Sen. Al Franken (D-Minn.) said last week in a letter to FCC Chairman Tom Wheeler. But Comcast says the new 90-page report shows that it has “continued to meet and in many cases exceed our obligations.” For example, it says that its Internet Essentials program has provided home broadband service to more than 250,000 low income families, and has exceeded by 64 the requirement to provide courtesy video and broadband to an additional 600 schools, libraries and community institutions in underserved areas. (The company says that tomorrow it will “make an important announcement about the future of the [Internet Essentials] program.”) For online video Comcast says it has “new or renewed agreements with Amazon and Netflix, among others” resulting in a third year in which it has made these deals to provide programming to potentially competitive services without having to go to arbitration.
In this week’s podcast, Deadline Executive Editor David Lieberman and host David Bloom look at the many implications of Netflix’s big, big deal with Comcast to ensure better video quality of its shows streamed by their mutual customers. The deal could affect the Comcast-Time Warner Cable merger, net neutrality issues, the business of online video and much more, and likely will serve as a template for other content-quality deals to come. They also take a peek at a multimillion-dollar production-incentive package that persuaded Disney to shoot a Netflix-only Marvel series in New York City and preview another interesting Disney online-content venture, this one involving live streaming online of this weekend’s Oscar telecast on ABC.
The cable giant has said that, if it buys Time Warner Cable, it will jettison systems with 3M subs to bring its market share below 30% — once a federally mandated cap. But instead of selling the franchises to another …
What goes up must — keep going up? That’s what investors seem to think about Netflix, even after it unveiled a “mutually beneficial interconnection agreement” with Comcast widely believed to include payments to guarantee that its broadband customers receive “a high-quality Netflix video experience for years to come”. Share prices for the market’s biggest gainer in 2013, with stock values +312%, are up another 21.4% so far in 2014 — and touched yet another new high today at $449.69. The price retreated a little to close at $447, +3.4% on the day. Investors believe that Netflix used its leverage to influence Comcast’s $42.5B deal to buy Time Warner Cable to negotiate payments that will be low enough to keep profits growing and high enough to help it dominate rivals. “Few others can match [Netflix's] spend without incurring massive losses,” Janney Capital Markets’ Tony Wible says. Barclays Capital’s Kannan Venkateshwar also sees the deal as a positive for Netflix, even though this is “the first time in the cable industry’s history a content provider will pay for direct access to the [broadband] pipe.”
Studios’ failed effort in 2012 to promote the Stop Online Piracy Act (or SOPA) made it clear: Big Media companies had better not mess with Silicon Valley. Too many people love the Internet, and they’ll crush anyone deemed to be a threat to the medium by its biggest service providers including Google, Apple, Facebook, Yahoo, and Netflix. That’s why Comcast needs to make peace with tech companies as the cable giant promotes its planned $42.5B acquisition of Time Warner Cable — and suggests that the new interconnection deal with Netflix is the first of many agreements with tech world Goliaths. If they’re unhappy, then they may embolden Washington regulators reviewing the TWC acquisition to demand a long list of concessions –and under extreme circumstances could even block the deal.
While terms with Netflix weren’t disclosed, the agreement will ensure that Comcast’s broadband customers receive, as the companies put it, “a high-quality Netflix video experience for years to come.” Bernstein Research’s Carlos Kirjner says this morning that he’d be “surprised” if the Comcast-Netflix agreement “was not conditional on a tacit (if not explicit) agreement by Netflix not to lobby regulators” to demand detailed promises to protect Internet access. Others, including Stifel analyst Benjamin Mogil, are waiting to hear about additional terms with Netflix, including a promise to add the service to Comcast’s set top box so subscribers don’t have to switch to a different input when they want to watch the streaming service on their TV sets.
NBC To Bring Back ‘Heroes’ As 13-Episode Event Miniseries In 2015: Video
By Nellie Andreeva – On the heels of Fox reviving its iconic drama 24 as an event miniseries, NBC is doing the same with one of its most popular serialized dramas of the past decade, superhero series Heroes. Creator Tim Kring is back shepherding the 13-episode new standalone arc entitled Heroes: Reborn, which will air in 2015.
Matt Ryan Lands Title Role In NBC Pilot ‘Constantine’ Based On DC Comic
By Nellie Andreeva – Welsh actor Matt Ryan (Criminal Minds: Suspect Behavior) is finalizing a deal to play the lead in NBC’s drama pilot Constantine, from Warner Bros TV. Based on the characters in DC Comics’ John Constantine stories, the project centers on John Constantine (Ryan), an enigmatic and irreverent con man-turned-reluctant supernatural detective who is thrust into the role of defending us against dark forces from beyond.
Netflix Agrees To Pay Comcast For Broadband Access; Public Knowledge Calls For FCC, DOJ Action
By Jen Yamato – There may be smoother streaming ahead for Netflix subscribers as Netflix has agreed to pay Comcast for direct broadband access. Comcast had previously denied Netflix’s request to connect to its broadband network free of charge, sending Netflix users’ streaming content through third party internet providers to access Comcast’s network.
CNN’s ‘Piers Morgan Live’ Ratings Sink To Second Lowest Ever, CNN Ties Sixth Worst Primetime Result
By Dominic Patten – Piers Morgan’s rocky ratings just took another dive for CNN. On Tuesday, the Brit’s 9PM show had its second worst result ever in the all important adults 25-54 news demographic. With a total audience of 270,000 watching, Piers Morgan Live drew a mere 50,000 viewers in the demo.
UPDATE: Netflix Agrees To Pay Comcast For Broadband Access; Public Knowledge Calls For FCC, DOJ Action
UPDATE, 2:53 PM: DC-based public interest group Public Knowledge raised its concerns over the Netflix-Comcast deal in a statement Sunday. Said John Bergmayer, Senior Staff Attorney at Public Knowledge:
“No one on the outside knows what is happening in this market.
While he hasn’t decided whether to oppose the deal in Washington, DirecTV CEO Mike White says Comcast’s $42.5B pact to buy Time Warner Cable would result in “unprecedented media concentration in one company.” The No. 1 satellite service provider is “still assessing some of the competitive implications” but White wants to “ensure it’s appropriately scrutinized” — especially the “effective broadband monopoly they might have in two-thirds of the country.” The owner of NBCUniversal also would have a lot of power to raise content prices. That “creates some significant changes in the competitive landscape that we have to think hard about.” Couldn’t Comcast use its clout, with 30M subs after a merger, to slow the rate of increase in programming costs? Perhaps, but “it’s a complicated dynamic because that leverage may not flow through to its competitors.”
White says he’ll continue to resist high programming costs.”None of our customers have an income like those of us on the call here.” He wouldn’t comment on the state of the carriage negotiations with The Weather Channel, which went dark on DirecTV in January, but says that his company “may have lost a few thousand customers in the first quarter” due to the dispute. “Fundamentally I continue to believe if your viewership goes down ….that should be reflected in the price.”
Time Warner Cable execs sounded pretty darn sure of themselves last week when they told investors that they believe Comcast’s $42.5B acquisition agreement will fly in Washington and benefit shareholders. But the No. …
Hell still hath few furies like a shareholder with legal representation feeling scorned. In what seems to be the first but most likely not the last such legal move, a Time Warner Cable shareholder has launched a potential class action suit against the company to halt its acquisition by Comcast in a $45.2B all-stock deal. Filing in the Supreme Court of New York (read it here) one day after the TWC-Comcast deal was formally announced on February 13, Breffni Barrett is accusing TWC, its chairman and CEO Rob Marcus, former Sen. John Sununu and other members of the company’s board of cutting themselves a sweet deal and breach of fiduciary duty. The shareholder also says in the action, which also names Comcast as a defendant, that the mega-merger risks regulatory wrath. Of course, while it is easy to file an action such as this one, it is very hard to prove that a board acted as badly as Barrett alleges — especially when it had its own teams of lawyers going over every detail before anything was made public. Additionally, the merger is subject to approval by shareholders from both companies as well as a careful look from both the FCC and the Department of Justice. Put together, those facts mean there is little chance of Barrett’s filing stopping much of anything.
In this week’s podcast, Deadline Executive Editor David Lieberman and host David Bloom kick the tires from several perspectives on that $45 billion Comcast-Time Warner Cable merger that would remake the cable industry. What will it mean for the cable industry, Hollywood and consumers? And what are its prospects for winning regulatory approval?
The Davids also check in CBS’s red-hot quarter and continued optimism on retransmission fees despite the big cable merger; welcome the long-in-coming videogame industry revival; and engage in shameless speculation about the latest reports of an Apple set-top device, and whether it might survive the Time Warner-Comcast merger.
Let’s not overthink Brian Roberts‘ rationale for engineering Comcast‘s $45.2B all-stock deal today to buy Time Warner Cable. I don’t think he did it, as some observers say, primarily because he’s concerned about the falling number of cable video subscribers, the threat of competition from phone and satellite companies, or to help resist rising programming costs. Roberts pulled the trigger because he could pick up some of the country’s most important cable systems — including Manhattan and parts of Los Angeles — without having to write a check. The deal will be virtually tax free. And his power will be secure even after TWC shareholders own 23% of Comcast’s Class A shares. Roberts controls the company’s Class B shares which have 15 votes apiece, enabling him to cast a third of all votes. The deal was almost a no-brainer: Roberts keeps Charter Communications and its largest shareholder, Liberty Media’s John Malone, from becoming rival industry powers. And he scores TWC’s 11M subscribers, 52 news and local programming channels (including New York’s NY1), and two regional sports networks in Los Angeles. In addition to NYC and LA, TWC has substantial franchises in large markets including Dallas, Kansas City, Milwaukee, Cleveland, Cincinnati, Buffalo, Rochester, Hawaii and most of the Carolinas. They complement Comcast’s holdings in Philadelphia, Northern California, Houston, Minneapolis, Boston, Seattle, and Miami.
Analysts may feel Comcast‘s just announced $45.2B all-stock deal to purchase Time Warner Cable is a good bet, but there will certainly be more than a few voices coming out against the mega-merger. One of the first to formally oppose the deal is the Parents Television Council. The sometimes controversial and always vocal advocacy group today said the deal “will invariably be anti-consumer and anti-family” in a statement. While the PTC is known for coming out against the TV rating system, on-air profanity and content, the group also has been consistent in its opposition to cable bundling — the source of its issues with the TWC-Comcast deal. “A horizontally and vertically integrated Comcast/Time Warner Cable entity would wield calamitous market leverage over consumers,” PTC president Tim Winter said today in a statement. “Unless and until Comcast – or, for that matter, any other potential suitor of Time Warner Cable – agrees to allow customers to choose and pay for only the cable networks they want coming into their homes, the Parents Television Council will vehemently oppose any such merger.”
The PTC has long advocated cable unbundling as part of its agenda, with the argument that the present system “forces families to underwrite explicit content.” The group isn’t the only one against bundling: Last May, Sen. John McCain introduced The TV Consumer Freedom Act of 2013 to, in part, end bundling, though that effort has been quiet since. Regardless, Comcast and TWC as well as investors will have to wait for a potentially long regulatory approval process from the FCC and the DOJ.