Two Takes On Content-Distribution Synergies At UBS Conference
With Comcast’s planned acquisition of a controlling stake in NBC Universal, talk of corporate synergies between content creators and distribution companies is back in the air on Wall Street.
Yesterday, at the 37th annual UBS Global Media & Communications Conference in New York, Comcast CEO Brian Roberts told a capacity crowd of investment managers that the addition of cable and broadcast networks will make the nation’s largest cable operator “strategically complete.”
In a nod to the Universal Pictures film unit that comprises a very small portion of the acquisition (at least in terms of projected operating cash flow), Roberts said that Comcast is looking for the studio to play a key role in its development of both video-on-demand and digital distribution platforms.
“Five years ago, we couldn’t get past the DVD distributors to open a dialog,” Roberts said. With completion of the NBC Universal acquisition likely a year or more away, “it’s early to know exactly what we can do.” But perhaps, Roberts said, Comcast’s distribution platforms can “replace some of the lost DVD profitability that was a moment in time for studios.”
Speaking at the same conference this morning, Time Warner Cable’s Glenn Britt offered an alternative view of vertical integration —which the nation’s second largest cable provider extricated itself from earlier this year.
With the cable provider now in its third quarter of independence from Time Warner Inc., “we’re ‘strategically complete’ at Time Warner Cable,” Britt quipped. The media conglomerate retained a majority ownership in the cable company for nearly two decades before investors began clamoring for a spinoff last year.
As Britt sees it, would-be synergies between content and distribution have historically manifested themselves as “risk avoidance”: the content division’s gains in a given quarter offset the distribution unit’s losses, and vice versa. “Not only can you never lose” under such a scenario, Britt says; “you also can never win.”
Though borrowing Roberts’ phrase, Britt hastened to add that he wasn’t putting words in the Comcast executive’s mouth regarding NBC Universal. To Britt, Roberts “doesn’t seem to be saying, ‘It’s about synergies.’” Rather — and more simply — “he seems to be saying, ‘We think this is a good investment.’”