Malone: NBC/Comcast Merger Would Juice Broadcast Ops
National TV advertising from the proposed Comcast/NBC Universal deal could give a big kick in the pants to the NBC broadcast operation -- but a lot would have to happen, according to media industry icon John Malone.
"Arithmetically, it's easy," says Malone, chairman of Liberty Media, speaking on CNBC Monday. "Sloth off the [network] affiliates, and get back 100% of the ads. National [TV] ads are selling better than local."
Media researcher SNL Kagan estimates that NBC pulls in $5.6 billion in advertising per year.
"You become a cable network," he added. "You become the most powerful network. You would eclipse USA Network." Malone was one of the main architects of the U.S. cable TV industry in the 1980s and 1990s -- especially with his dominant cable system operation, Tele-Communications Inc.
Getting in the way of NBC becoming a cable network could be NBC affiliates, which hold federal broadcast licenses and considerable sway -- overall federal agency approval of the deal.
"It's going to be the biggest political issue in this whole thing: What will broadcast affiliates of NBC say?" says Malone.
No matter what moves local TV stations, they will have to make some tough decisions. "There are too many local-driven advertising businesses to be viable, given the siphoning off of revenue the Internet has represented."
Another given: The broadcast network model will almost assuredly change, said Malone. The marketing is contracting -- and advertising cannot support all players.
"It's going to have to be subsidized to continue," he says. "Maybe four networks are too many. Maybe two of these networks become cable networks and two [networks] end up with [retransmission revenue] and support localism [by keeping their network affiliates]."