Comcast Might Want DTV Must-Carry2/20/2004 7:44 AM Eastern
According to Prudential Equity Group LLC analysts, if Comcast Corp. successfully acquires The Walt Disney Co., the MSO plans to shake things up even more by abandoning its cable brethren on a key regulatory issue pending before the Federal Communications Commission.
"Comcast," the report said, "would do a 180-degree turn and become a major advocate of digital must-carry, lobbying for a 6-megahertz spectrum allocation, as opposed to the requirement to send just a primary signal."
Comcast, along with the vast majority of cable operators, has claimed that after the transition to all-digital broadcasting, TV stations are entitled to carriage of a single programming service, and anything more than that has to be negotiated.
PEG analysts Katherine Styponias, Aaron Bearce and David A. Lyons said in the Feb. 19 report that Comcast’s incentives are about to change and floated a few theories that they said would justify a must-carry flip-flop by Comcast.
Yet none of them appeared to explain why Comcast would find marketplace negotiations so insufficient for itself that it would decide that the best way to protect its interests would be to support government handouts to its broadcasting competitors.
"Our position on must-carry has not changed," Comcast spokesman Tim Fitzpatrick said.
Comcast, the PEG report said, would find digital must-carry attractive because it would give the MSO "more allocation of the channel shelf space." Why this would be an issue, for example, in markets where Comcast is the dominant cable operator and the owner of the ABC affiliate was unclear.
The report also said that if broadcasters gained mandatory cable carriage for multiple services, that would be a plus for Comcast because that would likely fill up the basic tier and drive "MTV [MTV: Music Television] and Bravo" to digital tiers, helping to drive the penetration of digital services and speed the digital transition.
"The benefit to the cable side of the house is that it potentially forces subscribers to take up digital," the report said.
The report did not mention that after the transition to all-digital broadcasting -- the point at which TV stations would, in theory, first become eligible for multicast must-carry on cable -- the vast majority of TV households in a market would have already become digital-ready.
Lastly, the PEG report said, Comcast would support a multicast mandate on cable because the FCC would need to impose the same condition on DirecTV Inc. and EchoStar Communications Corp.
The report implied that direct-broadcast satellite would be hurt because a multicast mandate would occupy a "significant chunk" of bandwidth.
The report did not mention that unlike cable companies, DBS providers are under no obligation to carry local TV stations.