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Comcast and NBC in Talks for Merger

7 Oct, 2009 Response This Week

NEW YORK and PHILADELPHIA – Reports from various sources reveal that Comcast and NBC Universal are in talks about a merger, a move keeping with the recent trend in a loss among ad-supported media and an upswing in media with a revenue coming directly from customers.

Comcast is aiming to buy 51 percent of NBC, which would allow the cable operator to combine its cable assets with NBC’s cable networks, movie studio and theme parks. The nation’s largest cable operator is expected to pay $4 billion to $6 billion in cash, merge its cable networks into a spun-off NBC Universal and help shoulder $10 billion to $12 billion of debt at the new company. The outcome would be an entertainment company that would own 30 percent of Hulu and cable channels such as Bravo, E! and Syfy.

Comcast is operating on the assumption that consumers will continue to pay for the content they want, where and when they want it – a shift towards consumer-controlled media. It could tack on fees for online videos to its already monthly fees for cable, broadband, premium, pay-per-view and digital video recorders.

Comcast previously made a bid for Walt Disney Co. back in 2004 as an effort to find more content for its cable and broadband platforms. Today, Comcast could offer ads on NBC channels, while also gaining access to a broader national ad-sales force as well as a relationship with major marketers.

On the flip side, Comcast offers NBC set-top-box data, interactive and addressable advertising and “TV Everywhere,” which makes online viewing of TV shows available to consumers who pay for cable.

In addition, experts say that free television shows in general could be harder to come by on the Internet. The merger might also mean changes for online vide site Hulu, in which NBC has a stake. Hulu, owned by NBC, News Corp. and Walt Disney Co., is potentially worth billions of dollars if consumers had to pay for content. Hulu had 40 million unique viewers in August, more than Comcast’s 24 million paying subscribers.

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