If its acquisition of The Walt Disney Co. succeeds, launching new cable channels will be atop Comcast Corp.'s to-do list.
That's what Steve Burke, president of Comcast Cable Communications Inc., said last week at the press conference discussing his company's bid for the mouse house. Having access to content from Disney and Comcast's 21.5 million subscribers yields a unique opportunity to create new networks, according to Burke.
"When a cable channel is created and works, it creates billions of dollars' worth of value, and we think that is a very high priority," he said.
ALREADY BUSY
Through its existing content unit, Comcast has already bought stakes in channels and launched cable networks on its own. Earlier this year, an African-American targeted service that Comcast partially owns TV One, premiered. And this fall, Comcast will expand its foray into regional sports when it debuts Comcast SportsNet Chicago. Comcast has also launched its own video-game network, G4.
With Disney's ABC-owned stations, Comcast could wield one of a distributor's biggest weapons — retransmission consent — as a bargaining chip to potentially secure rate increases for its cable networks, or to get carriage for new channels.
Comcast might "overhaul" Disney's past strategy of using retransmission consent as a powerful tool to do things like launch channels, one cable-network executive said.
"On the other hand, it's not a company that dislikes leverage," the executive said. "And every piece of leverage they have they'll try to exploit. … No one's job in affiliate sales will get easier as a result of this, except maybe at Disney."
NOT SO EFFICIENT
While one programmer called Comcast "the best-run MSO in the business," other network officials cited inefficiencies in the way the cable operator's cable-network unit — which has 11 channels, including E! Entertainment Television, The Golf Channel, G4, Outdoor Life Network and four regional sports services — has been managed.
"Comcast has not done a good job coalescing their programming services," one consultant said. "They're all diverse, all over the country, all separate organizations."
Comcast has been searching about two years for a seasoned "programming czar" to run its content unit, and has yet to find anyone. And looking to jump-start G4's distribution, the MSO was in negotiations to buy TechTV and merge it with G4, although that deal still hasn't happened.
Swallowing Disney's cable channels will give Comcast many such opportunities — and challenges.
"They're not programmers," one cable official said. "They know the distribution game. They're operators. So this is going to be a bigger animal."
Last week Comcast boasted about its success with QVC: It sold its stake in the network to Liberty Media Corp. for $8 billion, a huge profit. But programmers point out that running an electronic retailer is quite different than managing a traditional cable network.
Comcast projects it will save between $300 million to $400 million alone in terms of duplication and economies of scale through the acquisition, Burke said. This time around, cable officials expect Comcast to merge the many separate affiliate sales and ad-sales forces that its giant stable of networks has, to centralize those functions, like Viacom Inc.'s MTV Networks.
"You don't need a separate group for Disney, a separate group for ESPN, a separate group for E!, a separate group for Outdoor Life, a separate group for Golf," one network official said.
Added another programmer, "Unfortunately, a lot of people will lose jobs, just like any consolidation."
ABC FAMILY SWIPES
Comcast will also have to find a way to turn around ABC Family, which Burke was particularly critical of last week.
"ABC Family, which Disney paid over $5 billion for just a couple of years ago, by our calculations is not making money, or making very little money, and certainly not a fair return on investment," Burke said.
Since ABC Family's president, Angela Shapiro, left late last year, the network has been without its own CEO and been put under the wing of Anne Sweeney, president of the ABC Cable Networks Group.
Disney's efforts to repurpose ABC's programming on ABC Family has met with mixed success.
While Burke stressed Comcast's mission to launch new cable channels, programmers said one of the MSO's biggest upsides is to increase carriage for Disney's cable networks. For example, Disney's animation channel is only in 43.7 million homes, compared with Turner's high-rated Cartoon Network, in 86.3 million.
"Toon Disney could be a much, much stronger network," one programmer said. "Look at the value Cartoon Network has."
