Video services

Comcast Merger May Hinge on Hulu

When Hulu was up for sale in 2013, Comcast was banned from taking part in any of the buyout negotiations. Despite being part owner of the online video service, Comcast had agreed under the terms of its NBCUniversal acquisition that it would not participate in Hulu operations because of regulator antitrust concerns. (See Comcast, NBCU Seal the Deal.)

New reports, however, suggest Comcast Corp. (Nasdaq: CMCSA, CMCSK) may have significantly influenced an eventual decision to pull Hulu LLC from the auction block. According to The Wall Street Journal and The New York Times, Comcast told co-owners Walt Disney Co. (NYSE: DIS) and 21st Century Fox in 2013 that it could help make Hulu the go-to streaming platform for cable providers. That argument played a role in the decision to withdraw Hulu from auction, and consequently kept the video service out of the hands of Comcast rivals including AT&T Inc. (NYSE: T) and DirecTV Group Inc. (NYSE: DTV).

Comcast's part in the aborted Hulu sale is now being scrutinized in the review of the cable company's proposed acquisition of Time Warner Cable Inc. (NYSE: TWC). Regulators worry that Comcast will amass too much power in both the pay-TV and broadband markets if the merger deal is approved. Conditions could be imposed to mitigate those concerns, but if Comcast shows a track record of not meticulously abiding by the terms of its NBCU purchase, then there is little reason to trust that new conditions would be effective.

Want to know more about pay-TV subscriber trends? Check out our dedicated video services content channel here on Light Reading.

Comcast remains adamant that it has fulfilled its obligations under the NBCU deal, and it will argue that position when it meets with the Department of Justice on the TWC matter for the first time today. (See What If the Comcast Merger Fails?)

A spokesperson explicitly stated that: "The decision not to sell Hulu was made only by the members of their managing board on which Comcast does not sit and has no role. At the time of the decision, executives of both Disney and Fox discussed publicly their compelling reasons not to sell."

If Comcast can convince the DoJ of its argument, then it can outline a potential path forward for establishing terms that would make a deal with Time Warner Cable palatable. If it can't, then merger opponents may get their wish, and a lot of cable executives could find themselves seriously revising their plans for the rest of 2015.

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— Mari Silbey, special to Light Reading

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MikeP688 4/24/2015 | 3:19:53 PM
Re: Merger condition (Brief Thoughts) With the deal now "Dead" we will have to see where the next shoe will fall.    Comcast will have to figure out a way to pick up the pieces because it will need to figure out how to somehow further scale its' business to avoid the wrath of regulators.   
jabailo 4/23/2015 | 10:58:01 PM
Re: Merger condition (Brief Thoughts) It's probably a balancing act.  Comcast (owners, executives) may be surveying the landscape and thinking...hey, we are in the wrong business.   We should be an OTT because that's where they easy profits are.

Problem is, who is going to want to run networks of wires and keep the connections.   How are you gonna keep 'em down on the farm when they've seen Hollywood Lights!?


MikeP688 4/23/2015 | 4:23:03 PM
Re: Merger condition (Brief Thoughts) As I assessed deliberations here this week, it is ever so  interesting how tables have turned over the last few days.     FCC Staff has recommended a hearing on this--because it appears that they're not that "keen" on the past record that Comcast has had overall including the push over the so-called interent essentials it touted as part of its' past acquisition strategies.    The drama is set to continue as we all see whether the recommendation by the FCC Staff is in fact adopted or whether the Comcast Lobbyists will prevail upon the Commision to override it--Based on what I have assessed this week, we have not even heard from the Justice Department--have we?   Now that the Country has at least a New Attorney General, we may see some movement on it soon.....
brooks7 4/23/2015 | 11:28:04 AM
Re: Merger condition jabailo,

So why would the content owners suddenly want to restrict their viewership?  They don't do so in broadcast.  So why in OTT?  With the Sports exclusivity, there are Billions of dollars spent.  And the content is available still in broadcast, so is available on every distribution platform.


jabailo 4/23/2015 | 10:54:59 AM
Re: Merger condition It would be a sad day for the viewing public if a company like Hulu, with exclusive rights to stream certain movies and TV shows, could only be viewable if you were part of a single Internet provider's network!

We already have that problem with sports streamcasts and the Olympics where you have to plug in a cable subscription before you can watch the internet stream.

brooks7 4/22/2015 | 10:31:30 PM
Re: Merger condition The cable companies are not owners of Hulu - the content owners are....Comcast is both.


danielcawrey 4/22/2015 | 9:03:09 PM
Re: Merger condition I've always thought it interesting that the cable providers would work together in cooperation with Hulu. Now that its had some success it is difficult to figure out what to do with the fully formed company!

This is why the operators don't work together often – it leads to fights. 
KBode 4/22/2015 | 5:03:21 PM
Re: Merger condition I think the antitrust concerns are more focused on the vertical integration and leverage in program negotiations issues, as well as the use of usage caps and other shenanigans to hinder OTT growth if Comcast's going to help the NCTA sue to disrupt net neutrality. The bad customer service is largely just a PR hammer on the nail, since Comcast can't seem to stay out of the papers for its horrendous customer service for more than a week at a time.
brooks7 4/22/2015 | 1:34:48 PM
Re: Merger condition And that is a monopoly problem under Taft-Hartley because....the like TWC's customer service?
Mitch Wagner 4/22/2015 | 12:07:36 PM
Re: Merger condition Many consumers concerned about the deal are concerned about poor customer service from Comcast. 
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