Comcast is eying the end of about 150 regulatory restrictions placed on it during its purchase of NBCUniversal in 2011.
Bloomberg discovered the revelation this week, when NBCU sources clued it to plans to launch an SVOD service similar to CBS All Access in the next 12 to 18 months. The timeline coincides with the sunsetting of the deal restrictions, the last of which expire in September 2018.
“The handcuffs are off,” Amy Yong, an analyst at Macquarie, told the news service. “Now that the conditions are expiring, they’re more free to explore their options.”
By virtually all measures on quarterly earnings reports, Comcast’s purchase of NBCU has been an unquestionable success. The NBC broadcast network went from last place to first place and is now generating a healthy profit, despite audience erosion. The story is very much the same at film division Universal Pictures. Theme parks are spinning off nice profits, too. These are just a few of the success stories.
But Comcast and NBCU have had their hands tied on some issues relative to their competitors.
Current restrictions prevent NBCU from taking down programming during carriage and broadcast retransmission licensing disputes. Dish Network exploited this disability a year ago when the two sides were carving out a renewal deal.
Meanwhile, NBCU was also forced to silence its voice within Hulu’s ownership group, which also includes 21st Century Fox, Walt Disney and Time Warner Inc. When its Hulu partners began to seriously migrate away from an ad-supported model in 2015, NBCU—which disagreed with the strategy—was powerless to stop it.
NBCU has also been required by the conditions to charge online distributors like Netflix the same program licensing fees it charges pay-TV operators.
“The conditions have served as backstop against any concern about anti-competitive behavior that would have arisen,” said MoffettNathanson analyst Craig Moffett added. “All those concerns will be front and center again if Comcast is completely unshackled from these rules.”
Moffett does, however, note one mitigating factor. Comcast experienced regulatory backlash to past deeds when it unsuccessfully tried to purchase Time Warner Cable in 2015. With Comcast certainly interested in future M&A endeavors, it may be more concerned about its longterm reputation with the FCC and Justice Department.
“Comcast is quite careful about creating regulatory bad will because it has already come back to bite them multiple times,” Moffett said. “It’s not going to be like flipping a light switch where they are suddenly unfettered to do all this crazy stuff so let’s go do it.”