Are there 'vertical integration' benefits?

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NEW YORK >> While many are skeptical of the business logic behind AT&T's desire to buy Time Warner, a similar deal from earlier this decade, Comcast's marriage with NBCUniversal, foreshadows some of the possibilities — as well as the potential competitive and consumer harms — that could result.

Comcast's acquisition of all of NBCUniversal closed in 2013, and gave the company a big boost in its most recent quarter due to the Rio Olympics broadcast. One example of the cross-company gains: Comcast took advantage of the Olympics to highlight the upgraded features of its fancy X1 cable box, which it aims to have in half its customers' homes by the end of the year. Most of these types of efforts "are still in the early stages," say Barclays analysts.

For the Rio Olympics, Comcast integrated online streams and TV video feeds — what it said was more than 6,000 hours of programming — into its X1 cable box. Anyone with a cable subscription could watch the athletes on NBC and other channels and use NBC's sports app, but Comcast cable customers could search for their favorite sports, athletes and countries, and see medal counts, stats and athlete profiles on their TV.

Comcast says ratings, though down overall compared to the London Games, were nearly 20 percent higher in the homes of Comcast subscribers compared than those of non-subscribers.

The company wants to build on the upgrades it made for the Olympics. For example, it's adding stats, player profiles and voice commands to X1 and its voice-activated remote control tied to this NBA season.

Until recently, cable-based video-on-demand services would only store the five most recent episodes of TV shows. Now, though, the trend is toward storing all episodes of the most recent season. Comcast has said that such "stacking" rights are very important for the industry, and NBC has gone after them.

For the 2016-17 season, Comcast says that more than 90 percent of NBC's scripted shows will let its subscribers watch the full lineup of the season's episodes on demand, a higher percentage any other broadcast network. NBC says other traditional TV distributors — Dish, DirecTV, Charter — have those same rights to its shows.

Comcast also began selling digital versions of movies from its in-house Universal studio to its customers in November 2013 and later struck deals with other major studios. Such home-entertainment sales are not a sexy business, but they are a major revenue source for studios.

Comcast has trumpeted its ability to promote its own products, movies and TV shows across its channels, theme parks, websites and even in its Xfinity cable stores. "You can take the entire company and get behind a movie or a television show or a new theme park attraction and we've done it time and time again," NBCUniversal CEO Steve Burke said at an investment conference last year.

For example, he said that for the 2015 blockbuster "Jurassic World," the company had "dinosaurs running across the ticker on Squawk Box" on CNBC, as well as a Super Bowl spot aired on NBC. The "Today Show" went to the Olympics in Rio. There's free "Xfinity" Wi-Fi at NBCUniversal theme parks — the same brand name Comcast uses for home cable and internet.

In the past few years, it has made some "cross-marketing" capabilities available outside the company, pitching consumer products from Microsoft and competitors' movies, like Disney's "Frozen."


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