Independent Cable Networks Don’t Agree on Comcast-TWC Merger

Is it good for the little guy or not?

As Comcast prepares to add millions more subscribers to its already vast base, there's one group particularly vulnerable to this newest and biggest player: independent cable networks.

These folks don't have the leverage of channels owned by a Viacom or an ABC-Disney—they have to negotiate on their own individual merits, rather than as a value-add (or an additional burden, depending on whether the network or the MSO is talking) to the two or three must-have networks in a portfolio.

Eric Sherman, CEO of health and lifestyle network Veria Living, is unimpressed with the merger, which will give Comcast nearly a one-third share of the 100 million subscriber cable market. "Over our history, consolidation hasn't been beneficial, and I can't imagine more consolidation providing new opportunities," Sherman told Adweek. "I think there needs to be an aggressive approach from the government in putting conditions on this merger. If you're going to give someone so much power in the marketplace, you have to make sure it's fair."

Sherman points to the recent court victory effectively jeopardizing net neutrality laws and the ease of Comcast's purchase of NBCUniversal as evidence that cable and satellite operators are trying to collude against networks and ultimately, consumers.

"The Comcast-NBC merger [was going to provide] more opportunity for minorities, supposedly," he said. "That doesn't appear to have happened." Comcast's FCC-mandated minority-owned networks are mostly underdistributed outside Comcast and barely programmed, though El Rey in particular is seeking to break out with leg up from Univision, ironically a prime competitor of Comcast's own Telemundo. Aspire airs reruns of The Bill Cosby Show, The Flip Wilson Show and Julia four times a day each. For Sherman, the new deal will be another win for the big guy over the little guy unless there's more stringent regulation. "We're going to explore our options with the FCC, with the DoJ, with other government groups so that consolidation doesn't stop diversity in the industry and our growth specifically," he said.

But for Brad Samuels, evp of distribution for arts network Ovation (another independent net), Comcast's takeover of Time Warner's assets is potentially very good news. "Big is not always bad," Samuels said. "We've had a great relationship with Comcast for years; they've had a great appreciation of the distinctness of our brand." Samuels is politic about the company's relationship with Time Warner, but former CEO Glenn Britt tried to make an example of the network in 2012 when he loudly dropped it from the Time Warner lineup in order to "control costs" and send a message to other rerun-heavy channels. (Ovation returned to Time Warner's good graces by promising to air more originals.)

The gesture was largely symbolic, as far as Time Warner was concerned—the company probably can scrounge up the $10 million paid to Ovation over the years in its couch cushions—but it was a major blow to the network, which was trying to increase its footprint. Given its more cordial relationship with Comcast, seeing its old antagonist absorbed by a friendlier business partner has to feel good.

And Samuels said Comcast's strategies are solid on other fronts: "[Comcast executives] are doing so many of the right things in terms of the product and service offerings to customers," he said—Comcast has been at the cutting edge of authenticated VOD distribution since absorbing a content company. "We're all concerned about cord-shaving and cord-cutting. There are a lot of reasons to stay part of the pay-TV ecosystem." (Again, unsaid: the programming industry has frequently called down Time Warner for refusing to offer more digital services to customers, and current CEO Rob Marcus flatly said they were considering cutting services in order to maximize revenue. As for Time Warner's customer service, well…)

"Consolidation and concentration of buyers when you're a seller is generically never a good thing," Samuels admits. "There's been a lot of it over the last several years." Part of this is that most cable providers are publicly traded—they have to show quarter-over-quarter profit increases whether or not the market is growing or shrinking, and it's widely accepted that the market for U.S. cable subscribers is at least mature if not actually dwindling slightly.

"It's going to be critical for any programmer—and probably essential—to have success to get a deal done with Comcast," said Samuels. "It's not a great thing on paper in every case whenever this happens, but given our relationship with them, we think it's a good thing in this case."