Comcast hopes Disney magic can help protect its flanks

Comcast is the nation’s largest cable company, made even bigger last year through its merger with NBC Universal.

But it can never relax, not without competitors such as Netflix eating into its customer base.

 

That’s the backdrop for the 10-year deal Comcast just struck with the Walt Disney Co. Comcast bought the rights to distribute Disney’s products both over its cable network and on mobile devices. Those products include not just family movies, but ESPN and ABC as well.

Analyst Ken Doctor says Comcast is willing to make that bet to bolster its business model even as cable subscriber numbers remain flat.

“I think it’s an agreement basically about certainty amid uncertainty,” says Doctor. “We have the Comcast business, the cable business which is trying to hold together selling packages of content … to TV watchers at the same time where the digital media are taking apart packages.”

Mixed news for local users

The good news is that with an agreement in place, ESPN fans won’t miss a game next year to blackouts, which the media giants use to negotiate.

Moreover, Marcien Jenckes, a senior vice president at Comcast, says the company has also bought the rights to distribute Disney content “seamlessly” to customers’ smartphones and tablets, not just their TVs.

“The value of this deal is that we have unlocked the rights with ABC and Disney to make the broadest array of content available to consumers across multiple platforms,” said Jenckes. “It can basically travel with them, throughout their house, on many devices, and even outside their home.”

The bad news, according to Ken Doctor, is “buying more than what we need, that’s the structure of the industry.”

Analyst: ‘It’s their best play’

The agreement announced yesterday did not include a price tag. But analysts estimated that the rights to ESPN content alone could be worth upwards of $20 billion.

“It’s smart. It’s their best play,” Doctor says. “That says basically we’re going to try to stay high priced. We have been charging a high subscription price, we’re going to try to keep that price but we’re going to give you more.”

Comcast says Philadelphians won’t see price increases tied specifically to this deal, but noted that fees evolve over time.