Communications and Media

Dear Cropps,
Early September 2009 there were rumors floating on the web and other sources that Cable giant Comcast is trying to build an entertainment empire and in doing so they are planning to buy NBC Universal from General Electric. The officials from NBC Universal denied any such news but rumors were circulating for months that General Electric are looking to unload the news and entertainment company.  As you would know that finally after almost nine months of hard fought negotiations both the companies have put pen to paper. The deal is finalized and according to the deal Comcast would pay General Electric about 6.5 billion in cash out of the total amount of 13.75 billion. The deal would create a joint venture with Comcast owning 51 of the total shares of the company (Kurtz, 2009).

As a media consumer I have certain reservations in this regard and that is why I am writing you this letter. The biggest concern which I have observed around myself is that although this deal would mean that movies would reach rapidly to the viewers after showing in theaters, but it would give too much power to Comcast in the entertainment industry. Comcast that already supply a quarter of all U.S households that pay for the TV would gain control of the NBC broadcasting company and eventually this would lead the industry towards a monopoly.

Some of the consequences that the consumers would face as a result of this deal include higher prices for even non Comcast consumers, as the merger would give Comcast more bargaining power and they would be in a much stronger position to pressurize other cable providers (Whitelaw, 2009). Secondly the primary objective of Comcast from this deal is to get access to the entertainment content and in this regard Comcast would be able to charge extra for the video on demand offering (Peers, 2009).

The reason as per my understanding that why Comcast made this deal is because they are very eager to spread out their holdings, as recently news came out that they were facing infringing threats from online video suppliers, and a more intense competition from the satellite and telephone companies that are providing TV subscription.

Apart from the consumers the businesses that are affiliated with this industry would also suffer as this deal in other words means that Comcast would be able to offer chartbuster movies on the channel ahead of their DVD release. By doing this it would have an effect on the business of the DVD providers. Moreover as Comcast would own NBC Universal the traditional route of movies from theaters to home entertainment would become shorter.

Also history tells us that mergers between the content providers and distribution companies dont work, and a very good example in this context could be given of Time Warner which finally cracked their cable systems operation this year. AOL and Time Warner are undoing their wretched relationship where Time Warner already has got rid of their cable operation business. This example gives the higher authorities a clear message that big media deals rarely works and time Warners breakup is one example (Thomasch, 2009).          
To cut it short I just want to say that apart from consumers point of view just as an observer I believe that with the advent of internet the future for the cable channels are murky as the internet access is only going to increase with the passage of time. Comcast is doing very well with its cable TV operations and it would have been better if they would have strengthened their cable operations rather than getting into content business.

Thank you keeping acknowledging my considerations I hope to see your reply soon.

Thanks and regards