Where Have I Heard This Tune Before?

Yesterday reports surfaced that the FCC was ready to approve the Comcast and NBC merger, but there are “conditions for the approval.” The statement reminded me of what happened in 2001 when the AOL and Time Warner merger closed.  Back in January of 2000, the world woke up one morning to see that AOL bought Time Warner with AOL’s inflated stock price.  We all know how the merger turned out, and I hate to say it but the day of the announcement, I thought to myself this is either an ingenious move or this will end in a disaster.

It was interesting living through the year between the announcement and the closing of the merger (to be exact the closing took 362 days).  The exact headline from the FTC website says “FTC Approves AOL/Time Warner Merger with Conditions” and that they did.  The issue was that in the 12 months the merger took to close the world changed.  No longer was AOL the dominant force on the internet and Time Warner was not the only broadband provider.

The two main conditions the FCC imposed are as follows:

  • Comcast must provide broadband to low income houses and expanding the broadband network to rural communities
  • Comcast must provide online video content to a web service if rivals do the same

Its the last one that could be most troubling because one would assume Comcast would want to control their own content.  Now in many ways the FCC has made the decision on how Comcast’s content will be distributed.  I wonder what these conditions on the merger may mean in 12 or 24 months for NBC and Comcast.

No one considered the conditions placed upon AOL and Time Warner to be that big of an issue at the time, and we were both ready to close the deal.  I think the same goes for the NBC and Comcast marriage.  While they may be excited to get over the regulatory rulings to close the deal, they may not be considering what these conditions mean even 1 year from now.  Eventually a bunch of the conditions placed on AOL were removed due to changes in market conditions, but it was too late to change the fate of the merger.




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