Commentary

Comcast's Raid of Disney: Deja Vu All Over Again?

One company, the instigator, has an enormous digital media asset, with unrivaled power in their arena. Generally characterized as an aggressive player in every space it populates, this company charges its subscribers too much for service that it regarded as perhaps not the industry's best. But, its bandwidth is such that no matter how much its competitors and others cry on about its monopolistic practices, it's still the industry king.

The other company is a somewhat old-school and disparately arranged collection of onetime profit centers that is left to rely on its longest held keystone assets to prop up its value. In recent years, this company has made acquisitions that shareholders have complained about, and it has assuredly lost its focus, leaving its once celebrated CEO embattled and analysts questioning what's next.

As you can probably guess by now, I'm not writing about Comcast and Disney. I'm writing about AOL and Time Warner.

Or am I?

We all know how well the AOL acquisition of Time Warner turned out. Last I checked, the company name had returned to Time Warner after a couple of years as AOL/Time Warner. And there was a best selling book or two about what pure folly this merger of giants represented.

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But, Brian Roberts hasn't read "Fools Rush In," I Suppose.

Just as we hear reports from the iMedia Summit that decision makers from major brands are crowing about the migration to interactive and their disappointment with broadcast advertising, the company that has a broad pipe into 21 million US homes wants to buy a content conglomerate (with a hockey team, movie studios, a music label, an education division, huge amusement parks, and more.) Does this sound like as bad an idea on its face to any of you as it does to me?

But, Comcast has been down this road before - not making money the way that analysts project they will, instead making it by wringing every last drop from its partners - the very content providers represented by the enormous one they intend to acquire now. We've all read about how Comcast pays less for cable content than anyone thought possible and that it strong-arms its partners with somewhat monopolistic tactics. Hey - that's not a pretty game anyway - it's not for the faint of heart. The content providers still get to drive nice cars and all.

But, has anyone reading this seen one consumer benefit or gleaned one corporate benefit to Comcast from their acquisition of ATT Broadband a couple of years ago? I live in Philly - where Comcast is based. And I use Comcast broadband alongside my Comcast cable, like many of you probably do.

Do they look alike? Has Comcast leveraged any of the obvious synergies between the two access points? Is digital cable any easier to get here - three blocks from their HQ than it is anywhere else? Obviously, these are all "no" answers.

But, this isn't just a consumer wondering why Comcast hasn't taken advantage of the obvious branding and leveraging capabilities implied by having two access points on the one wide pipe (that costs me $89.99/month, even with basic cable. I don't have a choice. In many markets, none of us does... earth to the FCC.) This is about Comcast making a bet on old school media when interactive is stealing old school media's lunch - and Comcast hasn't a clue as to what they already own.

Why hasn't Comcast looked into relationship marketing? I'm not talking about CRM, I'm talking about Friendster and Tickle and other such companies that gather detailed demographic and psychographic profiles on users and market against them. They already have the broad pipe and the dual access points into 21 million homes. Why they think they need to BUY the bachelor when they could STAGE 20 versions of it online and sell it against local advertisers is beyond me.

For you media veterans who are thinking that I have no idea how hard it is to sell that kind of local cable, think again. To its credit, Comcast has reinvented this market, and they sell local media targeted more precisely than zip codes today. This is part of why the Disney acquisition makes no sense to me. Comcast has figured out how to monetize all it can in cable already, and its strong arms have wrung the margins into a larger range. If all Comcast did was figure out how better to leverage the multimedia digital asset it already has, it wouldn't need to consider buying content.

Try this - call Comcast today and ask the switchboard to connect you with the department responsible for branding across Comcast assets. They don't have one. Then ask for the department responsible for strategic initiatives between cable and broadband. You'll probably get his voicemail. That's right. It's one guy.

If Comcast weren't so busy trying to eat their partners, they might just become the largest media company in the world. As it is, they stand to make a very large mistake - one that AOL made just a short time ago.

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