Comcast-Disney: cui bono?
In his Philadelphia Inquirer consumer column, Jeff Gelles has a smart analysis of the proposed Comcast-Disney acquisition. The question is cui bono?, that is, who benefits? And the answer is certain: not the consumer.
The column ("Comcast, Disney is not about us", 1/28/2004) notes that with some mergers the benefits to the consumer are clear, even if mixed with the problem of lost competition. Cingular's acquisition of AT&T Wireless should at least give their customers a more extensive roaming area with better coverage. Bank mergers like J.P. Morgan Chase/ Bank One mean that there are more ATM machines available in a wider area. These are not very big plusses compared to the layoffs, loss of choice, and further impersonalization of service, but they exist, and they are part of the expected persuasion package aimed at the public and antitrust authorities.
However, as the article puts it:
How would a Comcast-Disney deal measure up from a consumer perspective? What's most remarkable about the consumer benefits of this proposal - outlined in Comcast's initial "Public Interest Statement" about the offer - is how scant they are.
The main benefit offers is that Comcast can "accelerate the digital future by supercharging" video on demand, Internet content, interactive TV, and such. Perhaps the word "supercharging" is the operant word, as charging super prices is something that Comcast envisions.
The real question is how Disney fits into this. Sure, the Disney library would make a good start for an expansion of video on demand, but Comcast knows it has to lease rights from other companies to expand its offerings, so why not Disney. ESPN is usually trotted out as the key example, with Comcast eager to expand high-definition, stop-action, instant replay and other features on sports.
But someone has to pay for the financing of the added debt load and also for the new technology. As Gelles points out, "you can count on paying more for whatever Comcast offers you. Because the 'consumer benefits' here are entirely incidental."
