I have long been advocating the position that Comcast’s business continuity plans in the face of major disruptions in the media consumption behavior of its customers (particularly the younger ones – the customers of the future) would have to necessitate a deep strategic review of the company’s business plans.
As most industry followers doubtlessly are aware, Comcast has the ignominious distinction of being the most hated company in America. But one has to give credit where due. The company leadership is obviously looking very seriously into its addressable market segments and core lines of business and thinking about evolution.
First came the $45 billion TWC acquisition. Increasing economies of scale and according to some, increasing free cash flow per share for Comcast. Comcast claims it will give customers a better deal because it will allow it to have better leverage in negotiating with content providers – but the author feels, simply put, that its bunk. Consumers will suffer due to monopolies in the short to medium term before market and technology reacts to produce other options. Long story short – the acquisition, while it addresses some short and medium term concerns for Comcast – it does nothing to address the evolution of the industry and the demographic habits of the newly emergent potential customers for Comcast.
Of course, Comcast might choose in the future to be just dumb pipes – in other words, divest itself of all content acquisitions like NBC – and focus on 2 core business areas – a) ISP b) Infrastructure player where content providers lease bandwidth for distribution to end customers (in my mind, it has the additive benefit for customers to choose ala carte what they want to view).
And then finally, the reason I thought about writing this post – Comcast becoming a player in the wireless space. As mentioned before, I have long held the view that it is a logical outcome of Comcast’s investment in the core fiber infrastructure and hotspots makes it a natural player in the wireless provider space.
However, I would have assumed that the most natural way for Comcast to enter the market was not necessarily through an acquisitive process but through partnerships with existing wireless players (which Comcast has been open to – given its partnership with Verizon Wireless etc.). And the reason I say that a partnership would be a far viable option is because I also happen to have years of experience firsthand as a consultant in seeing and being involved in, very closeup, about the operational challenges of merging Telcos – let alone the new swathe of challenges that would come in acquiring and integrating an MSO.
I know decisions regarding corporate mergers and acquisitions are rarely taken with integration challenges being factored – there are too many parties with distorted interests – CxO ( think stock price movements), Investment Bankers (fat consulting fees) and a host of other players across all levels of the organizations with own defined self-motivations.
Comcast has a legitimate case for eyeing the wireless provider market – especially with its ability to integrate content consumption in ways that add value over the current telecom stack. However, it would behoove them to very seriously and deliberately think of the challenges involved before getting into the acquisition mode – these mergers with Telcos are much easier planned for than accomplished.