My premise is that leadership alone can enable certain companies to succeed where others have failed. Competent leaders create the direction for their businesses, manage the opportunities, and actively build the culture and capabilities required for strong performance. This kind of leadership will make Comcast successful in its absorption of NBC Universal in spite of opinions to the contrary voiced in the trade press (David Carr, NYT, 10/25/09) and reflected in the decline of Comcast’s share price since the announcement.
For years, media executives have been guided by a simplistic view of what defines success:
Executive Guide to Media Acquisitions
(sound byte version)
Content is King.
Distribution is King.
Synergy creates value.
You need a presence on the Web, regardless.
Buy only the market share leader.
Media companies have relied on these tired maxims for the past 20 years to justify gobbling up one another. The results are not pretty. Many of these acquisitions have been failures largely because the management of the acquiring company did not have a strategy in place to achieve its most important goal – increasing shareholder wealth. Many individuals buying media companies, particularly motion picture studios, were making ego-driven investments and seemed to ignore to the principles of rational business analysis.
Comcast has a plan. Its leadership is facile and focused. They want to be in the sports business; they want to sell their products on the web, and they want to satisfy their increasing appetite for entertainment programming. They understand that their greatest business opportunity is to deliver consumer-friendly content to as many households as possible. Remember when Comcast made its unsuccessful run at acquiring Disney a few years ago? The industry veterans and pundits in the media world did not view them as a serious player. Well, there’s a new sheriff in town.
Keeping this in mind, let’s look at what they’ve got to manage and the pitfalls they need to avoid.
Synergy. Synergistic opportunities are not intrinsically good. Having access to content and multiple distribution platforms does not guarantee that the resultant product is of any value. NBC Universal was never able to engage the popular culture. There were no memorable hits and there was no exploitation of popular content properties across multiple platforms. Synergy is a two edged sword – it needs to be managed.
Culture. The bloated bureaucracy and overheads at NBC Universal keep those companies from acting like the lean, facile Philadelphia-based Comcast. You can expect Comcast to introduce a more disciplined way of operating throughout NBC Universal.
Content is King. Under GE’s purview, NBC went from #1 to #4, see Synergy above, only because there isn’t a #5. As an aside, in the context of a finite and shrinking universe of broadcast television viewers, just how much upside was there for GE to buy NBC anyway?
On the positive side, this acquisition increases Comcast’s prominence in the sports business, sets the foundation for monetizing entertainment programming over the internet, and serves to satisfy its appetite for entertainment programming.
Sports. Comcast is successful in both the national and regional sports business. They own Versus, a nationally distributed, advertiser-supported sports network. The Golf Channel is theirs. They own or participate in a number of regional sports networks through Comcast SportsNet, SNY, CSS and the mtn.
When you add NBC Sports to the mix, you can envision professional football, the Olympics, the World Series. Think ESPN.
How much further away can a Fox/CBS combination be?
The Internet. Comcast has a solid base of understanding of how consumers use the Internet through its ownership of Comcast.net, Fandango and Plaxo.
Comcast likes people viewing its product on the Internet; it just wants to be paid for it. With its purchase of NBC, the company will have an important voice in Hulu, a Web-based service that delivers premium content free to its users. Hulu poses a threat to cable operators like Comcast who wish to sell this same content to their customers. Figure Hulu’s NBC content will not be free for long.
Comcast is testing a few ways to get consumers to pay for content delivered over the Internet. They are participating on a trial basis with Time Warner’s TV Everywhere. Additionally, Comcast is offering their cable-delivered content free of charge over the Internet to certain of their cable subscribers.
Content is King. Comcast needs content to feed the wide array of networks it owns and controls. Beyond sports, they own or control E!, Style, G4, Sprout and a few others.
NBC Universal owns or controls a wealth of cable television networks. NBC has interests in Bravo, CNBC, MSNBC, the History Channel, National Geo and Biography. Universal owns the USA Network, Universal HD and the SyFy Channel. (There’s a name change that set the brand back.) These networks give the company additional bargaining leverage with the cable industry and the production community.
Of course, Universal is also motion picture and television production and distribution company. NBC produces and distributes some terrific programming. They have an important global news operation.
Distribution is King. Comcast is the largest cable system operator in the U.S. You could argue that they should acquire access to additional households by buying Time Warner Cable.
The leadership at Comcast needs to stay in a Philadelphia state of mind. Planning, focus and solid execution got Comcast where it is today. What lies ahead is complex, confusing to outsiders, and seductive.
Comcast needs to ferret out the gold in this vast array of video and leverage it into other markets and additional media. The company will need to look long and hard for a new model which supports a traditional broadcast network or a motion picture production and distribution company.
My guess is that Brian Roberts’ leadership and management skills are up to the task. He will devise new models and different ways of doing business. He and his shareholders will be rewarded with a stronger, more vibrant company.
Robert M. Kreek is President of Kappa Associates, International, where he leads new ventures, growth initiatives, and reinventions of companies poised for growth.
