Comcast’s Game Of Merger Musical Chairs Gains Momentum

These days all eyes are on Comcast, the acquisitive cable giant racing to expand its foothold in the streaming TV space.  What’s not to love? The crown jewel of its portfolio, NBCUniversal, and its flagship Peacock streaming service swept 30 million paying subscribers off their feet and onto their couches in 2023. 

Relative to Netflix’s 247 million subscribers, Amazon Prime Video’s 200 million subscribers, and Disney+’s 150 million subscribers, NBCUniversal is still the new kid on the block. 

Even so, at its current growth rate, there is a reasonable chance that it will emerge as a serious contender to the Big 3 in three years or less. Its subscriber base surged from 28 million in the third quarter of 2023 to 30 million by the end of the year. 

The fact that Peacock attracted a total of 10 million new subscribers in 2023 alone showcases its competitive potential in the streaming TV landscape, the sexiest segment of Comcast’s global media and technology conglomerate. 

Powered by NBCUniversal studios, it is winning subscribers by serving up a deep and broad library of episodic TV, films, news, and sports. 

Seeing The Forest Through The Trees

The built-in vertical integration between Peacock and one of the top film studios in the industry is especially enticing in that it owns both content and distribution. 

Think of vertical integration as a paper company that owns forests.  It’s a business strategy where a company takes ownership of two or more key stages of its operations to cut costs and have greater control over its supply chain. 

It’s also a cash machine for Comcast which generates over $121 billion in revenue from other vertically integrated business units including Xfinity residential cable, Comcast Business, and Xfinity Mobile. 

Fewer Players In A Growing Space

From a regulatory standpoint, a merger between Comcast and  Warner Bros. Discovery will face intense regulatory scrutiny as the combined company would own two of the five remaining major movie and television studios. 

Rather than competing with Paramount Global to be chosen by Comcast maybe Warner Bros. Discovery should buy Paramount Global and then turn around and sell to Comcast the whole consolidated package for a hefty premium. 

If Paramount Global were to merge with Warner Bros. Discovery it would create a more robust, even disruptive competitor in the streaming market. Their combined streaming platforms would blend the recently rebranded Max (formerly HBO Max) with Paramount+. 

As HBO Max’s parent company, Warner Bros. Discovery merged the platform with Discovery Plus to attract a younger audience by including reality television programming. 

Preconsolidated Acquisition Targets

Like the wooden dolls that fit inside each other, merging any of these media giants will contain mergers within mergers, until the industry is so consolidated that only a handful of major players remain. 

And that is precisely why regulators are so concerned. Both Warner Bros. Discovery and Comcast own valuable sports streaming rights which, if combined, would forever reshape the streaming TV landscape. 

Warner Bros. Discovery owns media rights to the National Basketball Association and Major League Baseball which the company has plans to leverage by offering live sports at no additional cost on their Max streaming platform. 

In 2024, it will launch a $9.99 per month live sports add-on package for Max memorably branded The Bleacher Report. Meanwhile, Comcast owns NBCUniversal, which has locked up the rights to distribute coveted sporting events like the Olympics and the NFL. 

Read The Fine Print

But here’s the rub. Due to the complicated legal terms resulting from the merger between Discovery and Warner Media, no negotiations to buy or merge with Warner Bros. Discovery can happen before April 2024. 

This leaves the door open to other qualified suitors like Paramount Global, a company unencumbered by this restrictive contractual obligation. 

When Warner Bros. Discovery’s merger talks with Paramount Global went public in December 2023 it was inevitable that NBCUniversal would come to the table. 

Whether Comcast merges with Warner Bros. Discovery or Paramount Global, most viewers could care less about which corporations own their entertainment. 

If regulators place themselves on the consumer’s couches, they will quickly realize that fewer channels are a blessing. In this case, what’s bad for competition is good for consumers.  Streaming TV is confusing enough as it is. 


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