The Death of Internet TV?

Posted: February 24, 2011 in Uncategorized

By Cynthia Pyle, ’11 Political Science 

In this day and age where consumers seek out their entertainment rather than simply settling for what they want to see Internet TV has become a major influence on the television market. Americans are discovering that they don’t have to pay for both cable/satellite and broadband internet service and can save money by simply watching their favorite shows online.   Researchers estimate that the number of households that will substitute online TV for traditional cable and satellite providers will grow from 1.5 million at the end of 2009 to 8.1 million households by 2014.

Where’s the Competition

  • Comcast who has acquired a majority stake in NBC Universal – marrying the king of distribution with a household name in programming is likely to make free Internet TV trickier, not easier.
  • Comcast now controls not only what content gets produced but also how it is distributed, the powerhouse is in an unrivaled position to resist competition from Internet TV.
  • Federal regulators have undoubtedly attached conditions aimed at preserving competition and protecting the public interest in return for approval of the deal. Meanwhile, Comcast is conspicuously vague about his plans for Internet TV.

Too Much Control?

Comcast’s deal unfolded in three stages:

  • First it calls for General Electric Company to buy 20 percent of NBC Universal it doesn’t already own.
  • Comcast would then pay GE $6.5 billion for a 51 percent stake in a new joint venture containing NBC Universal and Comcast’s cable networks and online properties.
  • GE has an option to sell its stake in the venture to Comcast within seven years, giving Roberts 100 percent control.
  • Some people see NBC Universal’s 27 percent ownership in Hulu as problematic. The concern is that Comcast will look at Hulu as a competitor for its television distribution business and pull NBC Universals programming off it.

Access to All?

  • Without government intervention maintaining a healthy, competitive, and profitable market of online competitors is in serious jeopardy.
  • Direct TV would have been a flop were it not for the Satellite Home Viewer Act of 1988 and the creation in 1992 of “program access” rules.
  • Comcast, which counts seventy-eight former government  employees as lobbyists, has spent heavily to convince members of Congress to support this deal
  • In response to the Comcast NBC deal Wisconsin Senator Herb Kohl (D) is suggesting rules similar to those that allowed the satellite industry to flourish.
  • Despite the political and financial power of the cable powerhouse experts believe Comcast will not be able to avoid the gradual trend towards online television forever.



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