Comcast Corp., the largest cable TV company in America, has launched a bid for what is one of the most treasured brands in the world, Walt Disney Co.
The proposal is barely two days old. Wall Street already is signaling that the initial price of almost $50 billion is too low and that other players may go after the troubled house that Mickey Mouse built.
Critics of media consolidation are complaining that such a merger of creative content and distribution channel would not be in the public interest. Why, exactly? The answer almost invariably comes down to “dangerous concentration of media power,” although there is little to suggest that this particular merger would face serious anti-trust issues.
The reality is that companies involved in the creation of entertainment and information and those involved in its distribution via broadcast, cable or satellite TV, movies or the Internet have been struggling for years now with how to compete in a world where technology is changing everyone’s business models.
Linking content and distribution has been viewed as a way to create synergies and advance business prospects. That’s why AOL bought Time Warner, Vivendi SA bought Seagram Co. and its Universal Music Group, and News Corp. bought a controlling stake in the largest U.S. satellite TV company, DirecTV. (Tribune Co., which owns the Chicago Tribune, has been a strong proponent of such linkages.)
Not all those acquisitions worked out quite the way the visionaries predicted, of course. Some of them hold the promise of fostering more competition; a deeper-pockets DirecTV should be better positioned to compete with cable.
The danger doesn’t come from linking content with distribution. That’s inevitable as these once-separate industries try to maintain their competitive edge in this new digital world.
The risk would come if that linkage is used to control access to choices. If you could only view Disney movies or TV shows on Comcast cable systems after this takeover, that would not be in the public interest. But it also wouldn’t be in Comcast/Disney’s interest. Rupert Murdoch had to promise not to engage in such practices to get the regulatory green light for his DirecTV purchase. If Comcast gets the mouse, expect a similar agreement.
