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Malone: Comcast Needs NBC Affils' OK

By Harry A. Jessell
TVNewsCheck, Nov 23 2009, 11:28 AM ET

To win government approval of its takeover of NBC Universal, Comcast may first have to win the approval of the NBC affiliates, Liberty Media Chairman John Malone said in an interview with John Faber on CNBC.

"That is going to be the biggest political issue in this whole thing: What will the broadcast affiliates of NBC say they want to not fight this transaction?" he said.

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"The big issue is localism," he said. "It's about broadcast affiliates locally, whether or not that model is viable."

According to Malone, the model is not viable: "Don't work," he said.

The networks will have to either subsidize their affiliates or dump them and become cable networks, he said.

As a cable network, the network would retain 100 percent of the ad inventory and get to program 24/7, he said. Whatever network made the move would become "the most powerful" cable network, eclipsing USA.

"Maybe two of these guys [broadcast networks] just become cable networks and two of them end up with retrans and support localism," he said.

"There are just too many advertising-driven businesses in the local marketplace to be viable, given the siphoning off of revenue" by the Internet, he said.

Malone also endorsed Comcast's takeover of NBCU, saying it "absolutely" makes strategy sense. "It's a way to get into content and get some market power in content without betting the farm."

Comments (14) - Post a comment

PhillyPhlash Nicknameposted 113 days, 17 minutes ago
Why would the affils support a deal that condemns local broadcasting to a slow kill? Comcast has made clear its desire to control the distribution of its programming under a pay TV model. What Malone fails to mention is the adverse effects of this proposed deal on marketplace competition and the public interest. If the government enforced the antitrust laws and prohibited media companies from owning both cable and broadcast properties, then broadcasters would actually compete with cable/broadband instead of being co-opted by the lure of retrans revenues... revenues that will evaporate if cable/broadband gets away with its avowed goal to destroy OTA broadcast TV.
PSIPthing Nicknameposted 112 days, 22 hours, 6 minutes ago
have you ever asked yourself if NBC is a failing network? Do you see potential buyers lining up? Is NBC running it in a good direction? Do affiliates have a better idea? You might want to review the demise of UPN and TheWB, and -- you probably don't have access to the real information on this one -- the types of deals that CW demanded when they replaced both those networks. It wasn't pretty (and, it was never reported anywhere that I know of.) You can rant an rave about the "public owning the airwaves" and "no property interest" but stations going fallow doesn't negatively impact those aphorisms.
Vincent Pepper posted 112 days, 19 hours, 55 minutes ago
I think the regulatory hurdles are insurmountable.
Bullmoose Nicknameposted 112 days, 19 hours, 54 minutes ago
Is the transfer of the NBC television stations to Comcast "...in the public interest, convenience and necessity....according the Federal Communication Commission, Act 1934 as amended?
PSIPthing Nicknameposted 112 days, 19 hours, 21 minutes ago
I believe that it will be impossible to transfer the television stations to Comcast in markets where there is overlap between NBC television stations and Comcast cable tv systems. There has been mention that Comcast will spin off the television stations and the NBC network.
Credo12 Nicknameposted 112 days, 19 hours, 30 minutes ago
MSNBC, CNBC, Weather Channel, Bravo, Universal, (and I'm sure I missed one) all controlled by Comcast. This is good for us? Also, the Network Model with local over the air distribution is not broken. It is how people receive news and information for free. Mr. Malone wants everyone to pay for media, and for Comcast to control all the media. Where are the watchdogs?
Sugarbear Nicknameposted 112 days, 19 hours, 29 minutes ago
Fascinating how a model that once worked so well has become so negated by the same people who built their fortunes on the same electronic signals emanating today from the same local television stations. Total the local programming television station shares in any market and that figure will dwarf the combined shares of the dozens of cable programming sources available. Maybe cable has surmised that the only way they can ever gain market viewing superiority is gettng rid of these pesky, service oriented dinosaurs!
HopeUMakeit Nicknameposted 112 days, 19 hours, 18 minutes ago
Why would anyone expect a cable guy to say anything other than cable is the way.. I would submit that the the exact opposit is going to happen when the viewing public will turns off cable the moment they try to pass down those $10. per month subscription increases as a result of retrans payments. NBC-cable will become a mini network just like all the other cable nets. Compare and contrast The West Wing verses Mad Men. Both stacked up trophies and neither had many viewers yet West Wing has sold a ton of DVD's. No one can find Mad Men to sample it.
Cars Nicknameposted 112 days, 17 hours, 24 minutes ago
Malone is former cable guy. Keep in mind he is chairman of the company that controls DirecTV, Comcast's largest competitor. I am not sure he wants Comcast to contol all media, Credo. Also, keep in mind that as chairman of Liberty, Dr. Malone has 100% control of two broadcast stations. He sees and understands the local television business pretty well. If you don't think Malone knows what he is talking about, your head is buried in the sand. Direct affiliation is currently in discussion with all the networks and it is a real possibility. Another real possibility is regulation related to retrans. With consumer prices affected and the broadcast industry opposed to the government's plan to take back its free spectrum, look out. Broadcasters can't have it all ways, free spectrum, retrans fees, no sharing with the networks, etc. If you get all sides alligned against you, it won't be pretty.
JamesV Nicknameposted 112 days, 16 hours, 30 minutes ago
Here's an interesting concept that I have not heard or seen discussed much. What if each of the networks that also has substantial cable networks - e.g., NBCU with USA, ScyFy, Bravo and whatever else, put the strongest of those networks on their multicast digital channels? While I haven't done any calculating, off the top of my head the strongest cable networks are mostly owned by the broadcast networks (e.g., ESPN, USA, etc.) with the exception of TNT/TBS. Presumably, this is not something that could happen overnight as I assume the contracts between the MSOs and networks have some language precluding such an option, for now. But, if the broadcast networks did that it could radically alter the current cable/broadcast business environment and relationships. It presumably would strengthen local affiliates as distributors of such programming, and would give these networks similar circulation as the broadcast networks, rather than the much reduced availability in homes with multi-channel distribution services (i.e., cable or satellite). On the down side, it would likely reduce the amount they could get from cable operators for licensing fees if they are no longer the "sole" distributor of such programming. Perhaps that lost value far exceeds what the networks could make up in additional distribution and, presumably, greater viewing levels. If the local affiliates are distributing such signals, and could benefit from increased ad revenues for whatever local spots are available, there probably also would need to be adjusted network/affiliate deals. I assume someone, somewhere within the networks has considered this option, and perhaps the economics don't work. But why should cable/satellite be the only distribution avenues for such programming?
onthesidelines Nicknameposted 112 days, 14 hours, 31 minutes ago
This is one of those unrealistic ideas that seem to constantly pop up again and again...

Using ESPN as an example, hell will freeze over before Disney puts it on a multicast channel -- right now, they're getting paid about $4/month per subscriber to keep ESPN on cable and satellite. If ESPN was available over the air, the amount that cable and satellite would pay for ESPN would plummet -- possibly all the way to nothing, and certainly to well under a buck per month per subscriber. Why on earth would they give up that money (which works out to over $3 billion a year) in order to turn ESPN into a digital subchannel?

As an OTA TV viewer, I'd love to see this happen. I'd also like to win the Mega Millions jackpot. Both have an approximately equal chance of happening...

The more realistic scenario is for new networks to pop up as digital subchannels. This model, however, is still largely dependent on gaining cable/satellite carriage for the subchannels, which essentially gives cable operators the opportunity to pretty much cripple these new networks. That's a reason why I support multicast must carry. To use an example, while Nickelodeon isn't going to migrate to broadcast television, a new children's network might have a shot at success as a digital subchannel if it could also be assured of cable carriage -- something that isn't happening without multicast must carry, since cable doesn't want to support a free alternative to their kids' channels.
PSIPthing Nicknameposted 112 days, 14 hours, 18 minutes ago
while you are generally right, onthesidelines, there apparently is an entity that has obtained some "terrestrial" rights to much if not most cable/satellite programming networks and is contemplating how to deploy these rights. I can't say more, as I have been sworn to secrecy. If this well-financed name-brand entity decides to fully enter the terrestrial/mobile market, things might change a bit. It's possible this entities' interest and plans will become clear by the time of NAB '10.
J. R. Smith posted 112 days, 12 hours, 27 minutes ago
Are some of us "still" delivery-system (cable,broadcast etc.) loyalists? Must the fight against electronic evolution continue to slow the obvious migration pattern? Isn't it really about using content to deliver viewers/users to the advertiser's message?
luke Nicknameposted 108 days, 18 hours, 5 minutes ago
The concentration of controlling of stations ( including cable) with programming production and libraries, must cease. In 1946-47 the major theater owing chains had to divest themselves of their production facilities under the theat of a a major anti-trust suit by the US Government. Fox Theaters cast off Twentieth Century Fox Studios, Loew's theaters cast off MGM, Paramount Theaters cast off Pararmount Pictures, RKO Theaters cast off RKO Studio, and Warner Brothers Theaters cast off Warner Studio. Columbia, United Artists, and Universal
had no theater holdings in the US. Yet, concurrently Universal concluded a longterm contract with Rank of the UK which had some 1,800 theaters in the then British Empire and Europe.

The parallels with today's structure of the television industry is all too apparent. Instead of the FCC approval
of the MGM sale with its its giant library, it should seek, in concert with the Department of Justice, seek the breakup of television industry along the same lines. Power threatens control. Absolute Power controls absolutely.









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