Am I the only one that thinks Comcast has made a mistake here? Everyone seems to be worried about how Comcast is going to stomp all over both sectors, while reducing choice for consumers. But I think the whole idea of marrying content with the last mile and everything in between is just a bad idea that at best will flounder and at worst will make us all forget about the AOL/Time-Warner debacle. My reasons:
- Loss of focus – the content business and the cable/bandwidth businesses aren’t just slightly different. They are entirely different worlds that require different priorities, management styles, planning, risk taking, and on and on. Vertical integration is like a salad. With the right mix of ingredients, you get something vastly better than you started with. But mix it with the rest of dinner and you’ve just got a mess no matter what dressing you use. Comcast’s proposed salad now has a bit of everything in the network kitchen. If they mix it, they’ll get a mess, but if they don’t mix it, then they don’t get the synergies.
- Unbearable scrutiny – So many of the possible paths Comcast might take to squeeze synergies out of the deal will be instantly challenged as anti-competitive, that even the ones that actually aren’t will still be cast that way. Comcast is painting a giant bulls-eye on its back. Anything they try that leverages their last mile position and makes them money at someone else’s expense will be followed by an instant media attack and regulatory scrutiny.
- What looks good on a spreadsheet… – The guys who put these deals together and work up the financial justifications make assumptions – a lot of assumptions. Many are about the details of the future direction of technology – always a dicey subject. When such assumptions turn out wrong, fancy footwork is required to for a change of direction, but Comcast isn’t exactly light on its feet anymore. If they stumble, getting up will take years let alone changing direction.
There’s a reason Google hasn’t bought XO or Level 3, and the same goes for Apple. Comcast is now bigger, but IMHO actually less dangerous. Well, except perhaps to internet backbones and CDNs due to the precedent they are trying to set with Level 3, but I don’t see that as being made worse by the NBC purchase. Level 3’s linkage there was opportunistic – the situation would be the same if the NBC deal hadn’t been on the table.
Oh, and that picture up there? That’s a ‘Jar Jar Binks Salad’, which also must have seemed like a good idea at the time to someone… in a galaxy far… oh never mind.
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