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SBJ/Jan. 31-Feb. 6, 2011/Media
Comcast-NBC culture story has serious business implications
Published January 31, 2011, Page 14
The story line is irresistible. You have a cable company that watches every penny taking over a broadcaster that doesn’t. The potential for salacious stories is limitless.
It was, after all, this same type of story line that got the most play after the two biggest media mergers of the past 15 years: when Disney bought ABC in 1996 and when AOL and Time Warner merged in 2000. As late as 2006, when ABC broadcast its final Super Bowl, there were still gripes about longtime ABC employees booking five-star hotels while ESPN employees were parked at the local Marriott. Similarly, Time Warner executives were quick to complain about the upstart AOL executives and all of their perks.
These kinds of stories have been making the rounds long before Comcast’s NBC acquisition was formally approved this month. I started hearing them, literally, as soon as news leaked that Comcast was acquiring NBC. In these stories, Comcast and NBC always play the same roles: Comcast is cheap; NBC throws its money around.
For example, earlier this month, former New York Times reporter Sharon Waxman, who now runs TheWrap.com, reported that, “At the recent CES conference in Las Vegas, [Comcast Chairman and CEO Brian] Roberts was spotted standing in the taxi line even as town cars and limos with NBC logos went cruising by.”
For me, this angle has serious business implications. Take Comcast’s all-sports channel Versus, for example. Most of its original programming is not memorable. The shows, like the short-lived “Fanarchy” and “The Daily Line,” were produced cheaply, got anemic ratings and had scant advertising support.
But outside of Comcast’s regional sports networks, Versus is Comcast’s most profitable channel. It doesn’t look pretty at times, but it makes money for Comcast.
NBC, on the other hand, is coming off a Winter Olympics where it lost $200 million. As with all of Dick Ebersol’s Olympic productions, the Games were a critical success, but they didn’t make money.
How would Comcast view a $200 million loss? That could buy a ton of set-top boxes.
So the question is, How will these two cultures work together to remake Versus? Is it possible to improve its on-air look without spending a lot of money on it? Or does Comcast finally have to spend money on production to make money on ad sales and sponsorships? That’s one area where I’m looking to see how the clash-of-culture wars are happening.
Several executives who have been part of major media mergers over the past two decades say that too much ink is wasted on these types of stories, but they acknowledge that the stories are popular and expect reams of them to appear over the next few months.
Lou Borrelli, who was a senior AOL executive during its merger with Time Warner and has worked in the cable industry since the late 1970s, said the big mergers that work are the ones that try to assimilate both cultures.
“The question you should be asking is, can they allow the best of the two cultures to coexist,” he said. “What is the plan for maintaining the best of the performance cultures?”
Another problem with the clash-of-cultures story line is that it relies on stereotypes, like Comcast is cheap, Borrelli said.
“Comcast has not gotten where they are by saying no all the time,” he said. “People mistake good financial control and discipline to an unwillingness to invest.”
Borrelli pointed to Disney’s acquisition of ABC as a good model to follow. The fact that the deal was struck in 1996 and there’s still some tension between the broadcast and cable sides shows that there was an effort to assimilate both cultures, even if it’s clear that Disney/ESPN’s culture is the dominant one.
I couldn’t get anyone from ESPN or ABC to speak on the record for this column. There’s still a lot of lingering resentment and bruised feelings on both sides.
But the ones who did speak said it’s too easy to get wrapped up in the culture clash. The key is to have strong senior management dictating a corporate strategy while allowing for the two cultures to coexist.
“With Disney-ABC and Comcast-NBC, they have excellent management on both sides of the ball,” Borrelli said.
John Ourand can be reached at firstname.lastname@example.org. Follow him on Twitter @Ourand_SBJ.