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Synergistic Comcast proves to be legitimate broadcast competitor

Every time the Flyers scored a goal during their two first-round NHL playoff games in Pittsburgh, Comcast SportsNet, which was broadcasting the contests in Philadelphia, cut to a shot of raucous patrons celebrating at Xfinity Live! the brand-new dining/entertainment/bull-riding shed that opened across the street from the team’s home arena.

It’s not a new concept. Home team heads onto the road for a big game, and local fans aggregate to watch the game and cheer for their heroes. It’s a natural magnet for TV cameras eager to provide a little local color to the broadcast. The difference is Xfinity Live! (Why the exclamation point?) is owned by Comcast, which also happens to be the parent company of the Flyers. Talk about synergy. By showing footage of delirious patrons, Comcast was able to promote its new business venture – which happens to be named for its cable-TV product – while also feeding viewers’ excitement about the team it controls. Oh, and the action was brought to fans on Comcast’s Xfinity feed. Now, that’s a perfect business model.

If ESPN isn’t taking Comcast’s recent move into the realm of all-sports programming seriously, then the folks in Bristol are making a horrible mistake. For years, the Philadelphia corporation searched for a content option to match with its multiple delivery systems – TV, phone, Internet – and now that it owns NBCUniversal, it has that. But Comcast’s formidability is not limited to the strong pairing of product and distribution. It lies also in the company’s relentless business model, which is designed to limit competitors’ options and create opportunities for the Comcast brand to thrive.

Sunday, Philadelphia Inquirer business writer Jeff Gelles amplified that point by breaking down the continuing dispute between Comcast and satellite TV providers DirecTV and Dish Network. According to Gelles, despite government intervention and promises made by Comcast in order to purchase NBCUniversal, the corporation refuses to allow the satellite providers access to its Philadelphia SportsNet station. That means Philly-area residents who opt for the often-cheaper satellite option don’t get access to Flyers, Sixers and Phillies games, because Comcast SportsNet is not up on the bird.

As Gelles illustrates, this condition dates back to the 1992 Cable Act, which contained a loophole allowing land-based content distributors to keep proprietary programming from competitors. Though Congress closed that door two years ago, Comcast continues to deprive local satellite customers and even competitive cable companies of the most coveted local programming. This competitive advantage is huge. How huge? Consider that in 2006, according to Gelles, the FCC estimated that “satellite providers served 40% fewer households in the Philadelphia market than they would otherwise expect.” DirecTV put its market share drop at 50%.

You can’t always get what you want, and as Gelles points out, only 11% of Americans have a secondary competitive cable choice. But according to attorney Barry Barnett, who in 2003 filed a class-action lawsuit against Comcast that asserts the company built an unfair competitive advantage by squeezing competition, Comcast charged customers $875 million more from 2000-09 than it would have been able to had satellite challengers been given a level playing field.

In other words, if Comcast had made its SportsNet available, and customers had flocked to the cheaper satellite options, the company would have had to cut its high costs (and they are high, believe a Comcast subscriber) to be more competitive with a rival that could offer similar programming options. Instead, Comcast was able to charge a premium for something that was in high demand and limited supply. Even when Verizon offered its FIOS TV service, Comcast took a little shot at the competition. Though Comcast SportsNet is available on FIOS, its sister station, TCN can’t be seen in HD on FIOS.

Comcast says it has used the loophole from the ’92 Cable Act to make SportsNet a high-quality alternative to ESPN. (Full disclosure: I appear on SportsNet and contribute to its on-line site, CSNPhilly.com.) And the production value – not to mention the top-flight on-air talent! – is national-caliber.

According to Gelles, DirectTV and Dish Network have tried to negotiate with Comcast to carry SportsNet (they do air the company’s other regional offerings) but have been stymied by what they consider exorbitant carrying charges. That makes sense. If Comcast were to offer SportsNet to the satellite companies at a relatively reasonable charge, it would lose business, since customers would flock to the cheaper satellite alternative once they were able to get everything they wanted.

So, what does this all mean for ESPN? Only that Comcast has the resources and proven determination to do whatever it takes to win. It may seem now that NBC Sports Network is a small-time aggregation of NHL games and minor sports options, but that condition won’t last for long. Comcast has proven that it doesn’t shoot for second place, and its continued unwillingness to play ball with the satellite providers in its own backyard – despite some government pressure – is an indication that whatever it deems important deserves maximum effort. It won’t happen overnight, because ESPN owns the rights to many prime TV properties. But Comcast will be quite a worthy adversary, and in the next decade it will be interesting to watch two powerful media giants slug it out.

Let’s hope the collateral damage isn’t too great.

Michael Bradley is a writer, broadcaster and teacher headquartered in suburban Philadelphia. His written work has appeared in Sporting News, ESPN the Magazine, Athlon Sports, Hoop and Slam, among others. He is a host on 97.5 the Fanatic in Philadelphia and contributes analysis for Yahoo! Sports Radio and Sirius Mad Dog Radio. He appears on CSNPhilly.com, writes a weekly column on Philadelphia Magazine’s “Philly Post” and has authored 26 books. He teaches sports journalism at Saint Joseph’s, Villanova and Neumann Universities.

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