• by Diane Mermigas , October 3, 2010

Steve Burke will need to reinvent -- not simply integrate -- portions of NBC Universal and Comcast when the entities begin their extended merger next year to make the most of the combined assets.

Comcast has nothing to lose and all of big media has everything to gain from the process. Comcast garners half of NBCU's annual cash flow and a likely 10% return on its $15 billion investment in a gradual takeover that assumes no new growth scenarios. But that's exactly what big media must forge in the burgeoning mobile interactive social networking and e-commerce space.

The NBC-TV network's fourth-place prime-time ratings and Universal's cyclical box office pale by comparison to the upending of big media economics. Even as the nation's largest cable operator, Comcast is as threatened as its peers by mobile and online streaming video competition.

Burke, Comcast COO and newly appointed NBCU CEO, understands the broader ramifications at stake -- even as deal protestors claim the cabler wants to use NBCU's content to extend its market power into the Internet and mobile space.

That the deal occurs during a period of extreme uncertainty and change provides an opportunity for bold, forward-looking game plans that could stand as an industry road map. While not all of this can be put into place on day one, Burke can trigger change from the get-go.

Having frequently spoken with and written about Burke and Comcast chairman Brian Roberts, I believe they would seek to replace rather than embrace broken business models. Comcast has a unique opportunity to rejuvenate the content and advertising businesses into something much more. That is, provided it doesn't let its cable operating point of view get in the way.

Here are some of the many considerations: *Comcast wants to control content to share new economic models. This is Comcast's steepest learning curve, as most of its content efforts have been organic and niche, from The Golf Channel to Sprout. Restructuring the content production economics and pricing proposition are two of Burke's biggest challenges. As lines continue to blur between broadcast, cable and streaming video, Burke will need to weigh the interests of NBC-TV, NBC's cable networks and Hulu with Fancast, Comcast's On Demand and VOD services and TV Everywhere. Comcast's slow-to-launch interactive Canoe Ventures could help to redefine and extend existing broadcast, cable and online TV advertising into bigger interactive marketing and transactions.

*While Comcast will have more leverage and hedge to rising and divided content pricing, the combined entity's cable networks will provide 85% of the joint venture's earnings, based on an average annual 7% growth in revenues, advertising and subscription fees. Cracking the code on paid content across any Interactive devices has to be a win-win for both sides of the merged company's ledger.

Comcast has promised that "marrying of content and distribution" will spur innovation and competition." But because content and distribution don't naturally work together, "You have to make them work together. You have to do things that sometimes aren't immediately advantageous for both sides," Burke said earlier this year. It will be interesting to see what that means.

*Regulators and the public mistakenly fixate on the new company's present influence rather than the role it will play in the rapidly changing competitive and economic landscape. Regulatory and corporate rules of play must change. Comcast will not tolerate broken business models for long. The results can be positive.

Burke will need to radically change the NBC TV network model into a broader producer and distributor of programs for local broadcasters, cable operators and its own cable networks, streaming video and mobile. It could make NBC-TV's hallmark live, big events and sports. It will consolidate its entertainment resources and news -- NBC News, CNBC, MSNBC -- across all platforms.

Such realignment would stand in sharp contrast to what Disney is reportedly contemplating: selling its ABCTV Network (most likely to Time Warner) and its owned broadcast stations to large ABC-affiliated group TV station owners, whose community ties, correctly mined, can be valuable hyperlocal assets.

As a cable operator, Comcast could realign its relationship with NBC-TV owned and affiliated TV stations to, as it has said, "reinvigorate local broadcasting, expand the distribution of independent networks and accelerate the anytime, anywhere video choices that consumers are demanding today."

*It is all about execution, which is far more treacherous than the decade AOL and Time Warner spent destroying more than $200 billion in merger value. Comcast will work to keep cable from being marginalized into a dumb pipe and TV from deconstructing like music and newspapers, while making bold digital interactive advances. So far, Comcast Digital Entertainment mobile Web sites and apps are about as digital as it gets.

While all the talk is about the appointments and who makes the cut, the boldness of Burke's plan will dictate his management team. Burke's selection signals there will be no decentralization, which means new appointees are as likely to come from outside as inside NBCU. Whether that includes NBCU's current television entertainment chairman Jeff Gaspin or former Showtime entertainment president Bob Greenblatt, or splitting the cable channels and digital operations between USA boss Bonnie Hammer and Bravo head Lauren Zalaznick, Burke's overall reorganization and two-year plan for the company will be the real star.

*Burke is a hybrid media executive. At Philadelphia-based Comcast, he has stayed on the outskirts of big media's New York and Hollywood hubbub. He worked for Disney decades ago during its early struggles with EuroDisney and its retail store launch. He oversaw the ABC-owned TV stations after his father, Dan Burke, and Capital Cities CEO Tom Murphy acquired ABC and eventually flipped the entire company to Disney. After jumping to Comcast in 1998, Burke successfully executed the $72 billion integration of Comcast-AT&T Broadband with an aggressive plan that replaced most AT&T top brass.

Burke has pushed the MSO as far as it can go for now, juggling small business data and voice against softening video subscribers. Like other cable operators, Comcast is scrambling to avoid disintermediation by Internet bypass, streaming video and mobile by segueing into wireless ubiquity.

Providing new leadership and vision to NBCU will require Burke become an innovator in a new media world, inspired by the iPad he professes to love.