Comcast buys NBC: Now watch it unravel

Dec 3, 2009

Today’s announcement that Comcast will buy NBC from GE for $30bn+ is bad news for both organizations.Brian Roberts – Chairman and CEO of Comcast (as well as being the son of the founder, Ralph Roberts) – has long wanted to combine media content and distribution in a way that will dominate the entertainment industry. On his watch, Comcast has taken stakes in the E! Entertainment network, regional sports channels, the Philadelphia 76ers, the Philadelphia Flyers and the MGM movie studio. He even took a $54bn shot at Disney in 2004 – which nobody liked, not even his own shareholders.

All of this is classic son-of-the-founder stuff – many business scions have a burning desire to demonstrate that they are more entrepreneurial than their founder-parent – but isn’t the core of the problem facing Comcast and NBC.

The core problem is that NBC has been so messed around over the last 15 years that it has little or no sustainable culture of its own – despite the protestations of top execs., it would likely collapse from the inside out if it was left to manage itself. One good thing that GE has done for NBC (amongst many bad things) is to have at least held it to a strict financial accountability (part of GE’s legacy from spending so long in Predictable Success).

As an organization in self-inflicted and prolonged Whitewater, Comcast is not in a position to do this. Nor can it ‘anonymize’ NBC post-acquisition (like Microsoft or AT&T would do) by swallowing it up and folding it into the parent company as a rebranded Comcast division.

Consequently, my best estimate of the aftermath of this acquisition is a sequence that goes something like this:

(1) Jeff Zucker, the CEO of NBC who is staying on after the acquisition, will run up huge losses trying to revitalize the flailing NBC brand;

(2) After a year or two of this, he will be reined in by an irritated Comcast board (read: Roberts);

(3) NBC’s culture and brand value will have eroded even further by then, to the point of near collapse;

(4) Comcast’s investment will be showing a huge loss, and a forlorn separation (a la Time Warner / AOL) will play out over a number of years, leaving Comcast badly weakened and NBC close to irrelevancy.

Not that I wish any of this to happen – quite the opposite – but the reality is that a massive organization in Whitewater, which is what Comcast is, simply doesn’t have the systems, processes and discipline to swallow such a huge acquisition effectively and efficiently. Watch this space.