Comcast-NBC deal on the brink

Cable provider Comcast is eyeing NBC-Universal for a price of about $30 billion, according to Bloomberg. In a previous post, I predicted this would happen, since it makes sense for cable companies to find ways to add value to customers, beyond just being a series of tubes.

What about you?

What does this mean for filmmakers, actors, writers, and directors? As with vertical integration in any industry, it should stabilize the demand for content, and those artists and skilled tradespeople who provide it... for a while. Let's face it: if you want to create art that takes $40 million of stars and special effects, you need a big studio behind you. Hollywood will continue to consolidate not only structurally, but in terms of content, too: big, comic-book, tent-pole movies will become Hollywood's main (perhaps ONLY) competitive advantage. There will be fewer shows made, probably, and they will likely continue to skew young. So if you're 18 and hungry, you should still plan on moving L.A. to jump start your movie-making career.

Regardless of NBC's short-term fate, the industry still faces larger issues, including a business model that doesn't depend on traditional commercial advertising and DVD sales. The music business highlights the importance of finding new ways to monetize digital content. NBC-Universal is a player; Universal Music Group, which bought BMG, is the largest of the "big 4" major labels.

So if you don't fit the major studio demo, or want to make movies outside that niche, try looking to the indie music industry, which is finding ways to redefine what business they are actually in.

No more fat pipes

Cartoon courtesy of Steve Greenberg

If you live on either coast (not counting the Third Coast), then you may have noticed Cox, Comcast, and Time Warner "capping" the amount of data traffic you can have on your connection, even if you paid for an unlimited account. This is an attempt to wring the last penny out of a failing business model.

Time Warner's latest attempt to avoid becoming just a "fat pipe" from which users download valued content is to buy NBC Universal from General Electric (GE)- maybe. Time Warner, which owns HBO, TNT, CNN, and TBS, plus film studio Warner Bros., would benefit by having additional content-producing channels like USA, Bravo, Sci-Fi, and CNBC, though it would probably shutter Universal Pictures, currently owned by NBC.

GE has tried for years to drop the multi-billion dollar entertainment anchor from it's roster, but with no luck. Despite some hit shows and movies over the past decade, the company does not fit into GE's corporate focus, and diminishing ad revenues plus movie piracy and dwindling DVD sales have made NBC more risk than reward.

This actually makes some sense to me, just as it made sense for Apple to threaten to become it's own recording label if the the Big 4 did not coporate with it's one-size fits all pricing policy (though recently Apple relaxed it's stance a bit).

Cable, satellite, and phone companies transmit bits, but add very little value, other than bill consolidation, if you have your phone, TV, and Internet service with a single company. They are merely "fat pipes" to the Wild West Web, where consumers can pick and choose content exactly to their liking, and watch or listen to it exactly when and where they want.

Some providers have exclusive agreements with certain sports teams or other channels, but for the most part, they struggle to justify their high prices. But if cable companies buy up studios, which are struggling even more, then not only do they control distribution, but they also directly control content (except for piracy, of course).

That could stave off the creditors for a while, until they can think up a real business model.